Spirit Technology Solutions Ltd

Annual Report 2022
Do IT with Spirit

ASX:ST1

Table of Contents

A Letter From The Chairman 

A Letter From The Managing Director 

Board Members 

Executive Members 

SpiritONE™  

Directors' Report 

Auditor’s Independence Declaration 

Statement of Profit or Loss and 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 

Additional Shareholder Information 

Corporate Directory 

5

6

8

10

14

19

45

47

49

51

55

57

111

113

119

122

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Annual Report 2022

A Letter From
The Chairman

Dear Shareholders,

I’m pleased to present our Annual Report for 2022 – a year 
that presented numerous challenges for Spirit and carried 
a theme of transforming the company toward its long-term 
ambition of being one of Australia’s leading providers of 
modern and secure digital workplaces.

It is acknowledged upfront that the financial outcomes for 
the year ended 30 June 2022 (FY22) fell well short of our 
goals. As outlined below and within the Directors' Report, 
the Board has responded to those shortcomings and 
implemented restructuring measures to materially improve 
the forward financial performance of the Group. That 
noted, the Board remains firm that the vision and ambition 
are sound and the underlying foundation for success and 
growth is now in place.

As part of the ongoing evolution of the operating structure, 
we matured to a more defined segment reporting 
framework comprising Collaboration and Communication, 
Cyber Security, and Managed Services. Noting the 
challenging operating environment in the first half of 
FY22 (impacted by state lockdowns) the Board is pleased 
with the ongoing performance of the Collaboration and 
Communication and Cyber Security divisions. Revenue and 
earnings growth remain solid reflecting the maturity and 
stability of the operating structures and teams in those 
businesses. The financial performance challenges have 
been constrained to the Managed Services segment, which 
is the product of numerous factors inclusive of inflationary 
labour and margin pressures. We also acknowledge that 
our recent acquisitive growth resulted in a complexity of 
product offerings, customer sizes, and systems, with these 
factors placing strain on backend support structures. 
Management is focused on rectifying these matters to 
streamline the operations and improve financial outcomes.

Due to the matters facing the Managed Services 
segment, an impairment expense was booked in FY22 
that contributed predominantly to the Net Loss After Tax 
recorded.

It is important to highlight that significant progress was 
made on transitioning Spirit to its long-term strategic 
focus of being a technology solutions provider and with 
less focus on telecommunications. In this regard, the 
company divested non-core assets inclusive of its consumer 
broadband and fixed wireless broadband holdings. This 
strategy focuses Spirit on sales and an improved customer 
experience and less on capital intensive infrastructure. 
Importantly, these asset divestments released $18.5M 
capital to invest in growth products and transformation.

Spirit is now well placed to help Australian businesses 
establish the technology required to facilitate remote 
and hybrid employment options, and unlock the freedom 
associated with working from anywhere. This positioning is 
typified by our new modular approach to service delivery 
that sees the presentation of Spirit's four distinct solution 
categories under the ‘SpiritONE’ guide – Workspace, Meet, 
Connect, and Guardian. 

This is business IT solutions made simple and we look 
forward to seeing our customers embrace this transparent 
and uncomplicated approach. This fits with Spirit’s vision 
of building long-term business partnerships based on trust 
and mutually beneficial outcomes.  

We enter the new financial year (FY23) a more streamlined 
and focused company, but also acknowledge we still have 
significant work to do in 'right-sizing' to realise our full 
capabilities. 

As part of our move to focus on solutions enabled by 
technology, we were very pleased to appoint Michelle 
Bendschneider as a Non-Executive Director to the Board.  
Michelle is an experienced Executive, with an expansive 
background in building growth businesses in technology 
and professional services. We were also pleased to welcome 
Julian Haber to the Board as an Executive Director. Julian is 
currently CEO of Spirit’s Cyber Security business and brings 
a lens of cyber strategy and growth experience to overlay 
on the Group.

As Spirit moves to its next phase of strategic positioning 
and focus on organic growth, the Board was also very 
pleased to welcome Julian Challingsworth as CEO and 
Managing Director of the Company on 11 July 2022. Julian is 
a proven ASX listed CEO, with a strong professional services 
and corporate finance background and his experience will 
see a more targeted focus on organic earnings growth.

Finally, I also wish to acknowledge Sol Lukatsky, who 
led the company through a significant growth phase in 
our transition from a wireless telco into a full range IT 
technology solutions provider.

I would like to thank our shareholders for your continued 
support. There is much to be optimistic about as Spirit 
continues its drive to be a leading provider of modern and 
secure digital workplaces to Australian businesses.

James Joughin
Chairman

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A Letter From
The Managing Director

Dear Shareholders, 

I would first like to acknowledge your support for Spirit 
during the Financial Year 2022. I began this role 11 July 2022 
and am genuinely excited about the opportunity that lies 
ahead of us.

The year presented unique challenges for companies within 
our sector. Facing these challenges, the Spirit team has 
worked with vigour to consolidate acquired brands, pivot 
toward emerging trends, and capitalise on opportunities 
presented by the current hybrid workplace movement. 

We were not immune to wider financial headwinds during 
this period, as evidenced by the presentation of our 
company accounts and addressed in the Chairman's letter. 
Behind the numbers, our team is extremely passionate 
about delivering our customers with market leading 
solutions across the three business units: Collaboration 
and Communication, Cyber Security and Managed 
Services. Spirit is becoming a modern workplace market 
leader, resilience within our team is strong, morale is 
strengthening, and we are determined to bring our 
ambitious vision to life.

Moving forward, our long-term success is contingent 
upon enabling our customers to succeed in adopting new 
technologies that improve their business performance, 
making them more successful and resilient to change.  

This financial year saw Spirit make some redefining 
movements. We welcomed a significant volume of new 
talent into our ranks, with a strong focus on uplifting our 
capabilities and performance. An industry as dynamic as 
ours requires constant renewal, and I am driven to ensure 
that our success in collaboration and communication, 
and cyber security units will enable us to deliver a fruitful 
restructure to our managed services arm. This will provide 
the framework for improved group profitability and deliver 
a strong foundation that enables us to grow profitability in 
all our target sectors. 

The pandemic era forced many organisations to deeply 
consider the nature of human endeavour, and more 
specifically, the way we work. What does a professional role 
look like today? How will that change in the coming years? 
How does management keep a geographically dispersed 
team engaged, focussed, motivated, united, aligned, 
productive, connected, and secure? What will be the lasting 
implications to the way humans address their work-life 
balance? These are some of the questions we consider daily. 

In the short-term, we are committed to creating secure, 
modern digital workplaces that capitalise on cloud-based 
solutions, collaborative software products, all protected 
by robust cyber security which is at the core of everything 
we do. We are moving towards a fully integrated business 
technology company that can deliver holistic managed 
IT services to Australian businesses of sufficient growth 
potential. We are purposefully re-sizing over the next 12 
months to focus on more profitable sectors and client 
groups that are aligned with our capabilities. We have 
expanded our national reach. We have bolstered the 
industry accreditations of our people to deliver at scale our 
key solutions.

We have also reviewed and radically refined our vendor 
relationships, focusing on a streamlined offering that can 
ensure we deliver excellence. This was evident in our recent 
Cisco announcement where we were listed as their number 
one partner for communication in Asia pacific, China and 
Japan.

We have sharpened our sales focus. We have simplified 
our service offerings to deliver simple, scalable, and 
modular modern workplace solutions. We have enhanced 
our marketing and communication strategy to drive 
transparency and accountability to our shareholders.  
With the combined impact of these improvements 
just beginning to manifest, I am confident we are 
now repositioned to reap the rewards of this hard and 
meaningful work.

If we look forward, the coming workplace revolutions will 
focus on IoT, process automation, machine learning, and 
the increasing value of data accumulation and analysis. 
The business technology world is in a state of constant and 
necessary change. As a future-oriented company, we aim 
to be at the forefront of these exciting opportunities and 
developments. Our team is increasingly light, nimble, and 
poised to rapidly transition into emerging growth markets 
and products. 

In summary, 2022 path has been beset with rocky patches, 
but I am confident we have the tools, plan, strategy, skills, 
team, and vision to successfully navigate the next part of 
the journey. 

I look forward to continued collaboration with my fellow 
Board and team members as we head boldly into the 
future.       

Thanks again for your ongoing support, 

We craft our solutions by enabling Spirit customers to 
address these questions, redefine their organisations 
and deliver their ambitions in a complex and challenging 
environment.

Julian Challingsworth
Chief Executive Officer & Managing Director

6

   
The Spirit Group's

Board Members

James Joughin
Chairman

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 

the firm for 17 years and headed the Mergers and 

Acquisitions division in Melbourne.

James is an experienced company director and 

holds Non-Executive directorships of a number of 

private and public companies. 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.

Julian Challingsworth
Chief Executive Officer & Managing Director 

Julian is a proven leader of ASX-listed companies, 

with a strong professional service and corporate 

finance background. He has extensive experience 

managing enterprise, government, and critical 

infrastructure clients. During his most recent 

appointment as Co-Chief Executive Officer of 

Tesserent, Julian oversaw a period of significant 

growth achieved via both acquisition and organic 

means.

8

 
 
   
Michelle Bendschneider
Non-Executive Director 

Michelle is an experienced executive with an 

impressive technology and business leadership 

background that includes stints with IBM, Telstra, 

and CBA.

She has held multiple senior positions across 

professional and managed services, consulting, 

technology innovation, cyber security solutions, 

cloud services, and digital transformation. Her 

impressive skill set is an instrumental asset as 

we transform from a telco into a full business 

technology solutions provider.

Julian Haber
Executive Director

Julian is a highly regarded leader in cyber security 

and information technology, having built one 

of Australia’s most reputable cyber security 

companies, Intalock Technologies, which was 

acquired by Spirit in December 2020. Intalock 

provides mission critical services to Australia’s 

largest enterprises. Having a wealth of experience, 

Julian has been invited to sit on numerous Global 

and Regional Partner Advisory Boards for some of 

the world's largest technology companies.

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, also serves on the 

board of Life Without Barriers and PNG Sustainable 

Development Program. Greg is experienced in 

leading businesses in multiple countries, cultures, 

economic circumstances and market conditions.

9

 
 
 
   
The Spirit Group's

Executive Members

Julian Challingsworth
Chief Executive Officer & Managing Director 

Julian is a proven leader of ASX-listed companies, 

with a strong professional service and corporate 

finance background. He has extensive experience 

managing enterprise, government, and critical 

infrastructure clients. During his most recent 

appointment as Co-Chief Executive Officer of 

Tesserent, Julian oversaw a period of significant 

growth achieved via both acquisition and organic 

means.

Elie Ayoub
Co-CEO Nexgen

Elie co-founded Nexgen in 2009 and has over 24 

years’ experience in the communications industry 

across SMB, residential, corporate and government 

segments.

10

 
 
   
Julian Haber
CEO Intalock 

As the founder of Intalock, Julian has over 20 years' 

experience in Data Information and is a highly 

respected cyber security leader.

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.

James Harb
Co-CEO Nexgen

Along with Elie, James co-founded Nexgen in 

2009 and has over 20 years’ experience in the 

communications industry.

11

 
 
 
   
Mark Dioguardi
Chief Technology & Information Officer

Mark 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 1,350 engineers and managed a 

USD600mil budget to grow their network.

Zoe Rosenwax
Head of People

Zoe is an experienced people and culture leader, 

with over 10 years experience leading the HR 

function for some of Australia's leading businesses.

Previously filling senior positions at BHP, VicTrack, 

Deloitte and Sportsbet, Zoe holds the reins for 

Spirit's cultural strategy and is an advocate for 

creating an inclusive, diverse and enjoyable 

environment for our staff and customers.

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A single technology partner to enable Aussie businesses

The Spirit difference

SpiritONE TM

Workspace
Managed services, devices, 

Guardian
Cyber security - At the 

Connect
Fixed wireless, fibre, 

Meet
Collaboration tools, voice 

software & more

centre of everything

ethernet & more

platforms & more

14

Annual Report 2022

A single technology partner to enable Aussie businesses

The Spirit difference

FY22 has been a pivotal year for Spirit, 
We continue to innovate with our 
partners to deliver value to our 
customers

Largest Varonis deal
in Southern Hemisphere

Secures largest Varonis deal in

southern hemisphere to date

Customer expansion
with mid market and
corporate wins

(Healthcare, Banking and

Financial Services, Mining)

Spirit divests 
Spirit divests
consumer 
consumer assets
assets for $5.1M
for $1.5M

Spirit completes divestment

of consumer assets

2021

Nov

2022

Oct

Jan

Spirit Wins in
Spirit places in
t
the AFR Fast 100
the AFR Fast 100

chnology

16

Annual Report 2022

Gartner has projected a total Australian IT 
spend of AU$117.2 billion in 2022 in its latest 
forecast, increasing by 13.1% from 2021* 

https://www.crn.com.au/news/aussie-it-spend-to-grow-13-percent-to-117-billion-in-2022-578444

New MD and CEO

Appointment of

Julian Challingsworth

Cisco deal

Spirit subsidiary

announces Cisco deal

Sol Lukatsky
steps down

Julian Haber interim MD

Apr

Jun

May

Jul

Spirit places at 
Spirit wins at
Deloitte Technology 
Deloitte Technology
Fast 50
Fast 50

Spirit divests 
fixed wireless 
network

Implementation
update

Spirit Strategy -
implementation update

Annual Report 2022

17

Directors' Report

Spirit Technology Solutions Ltd 
Directors' report 
30 June 2022 

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 2022.  

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 Julian Challingsworth (Managing Director and Chief Executive Officer - appointed 11 July 2022) 
Mr Julian Haber (Executive Director - appointed 1 April 2022) & Interim Managing Director (16 May 2022 to 
11 July 2022) 
Mr Sol Lukatsky (Managing Director - resigned 2 July 2022) 
Mr Gregory Ridder (Non-Executive Director) 
Mr Mark Dioguardi (Executive Director - resigned 1 April 2022) 
Ms Michelle Bendschneider – (Non-Executive Director - appointed 1 April 2022) 
Ms Inese Kingsmill (Non-Executive Director - resigned 30 September 2021) 

Principal activities 

During  the  financial  year  the  principal  activities  of  the  Consolidated  Entity  consisted  of  the  provision  of 
Collaboration and Communication services, Cyber Security services and Managed IT services. 

Dividends 

There were no dividends paid, recommended or declared during the current or previous financial year. 

Operating and Financial Review 

Entity’s operations  

The Consolidated Entity continued its evolution to become one of Australia’s leading providers of modern and 
secure  digital  workplaces  with  a  focus  purely  on  the  business-to-business  market  by  providing  a  complete 
offering  across  Telecommunications,  Internet,  Cloud,  IT  Managed  Services  and  Cyber  Security,  backed  by 
service  excellence.  The  Spirit  business  model  offers  the  full  solution  for  the  modern-day  business  to 
communicate  with  its  staff  and  customers  whilst  also  protecting  the  business’  data  and  infrastructure.  The 
Company remains positioned to capitalise on the ongoing structural changes occurring in the modern workplace 
in terms of cyber risk, remote worker needs, demand for data, cloud and shortage of IT skills being seen by all 
markets through its range of technology and IT offerings. 

The Company progressed its strategy to divest non-core assets inclusive of its consumer broadband and fixed 
wireless  broadband  assets.  This  strategy  focuses  Spirit  on  sales  and  service  and  less  on  capital  intensive 
infrastructure.  Importantly  these  asset  divestments  released  capital  back  to  invest  in  growth  products  and 
transformation. 

The financial year to 30 June 2022 (“FY22”) represented a very challenging period. The first half of FY22 was 
dominated  by  COVID-19  related  lockdowns  which  stretched  across  Sydney,  Melbourne  and  Brisbane  and 
constrained the ability of the Consolidated Entity to fully execute on required installations across the three capital 
cities. This represented one of the most difficult markets seen in generations and the resilience of revenue in 
the first half reflected the strength of the business model in terms of product and geographic diversification. That 
resilience in revenues however, did not translate into earnings resilience. The Company overall continued to 
manage with supply chain disruptions and ongoing technology sector labour market challenges in the form of 
both retention and increased labour costs. The second half of FY22 saw revenues increase relative to the first 
half by 5% but well below the Company’s stated objective. Furthermore, underlying EBITDA* remained under 
significant  pressure  and  did  not  recover  and  grow.  These  revenue  and  earnings  pressures  were  largely 
attributable  to  the  Managed  Services  (IT&T)  business  unit  with  the  other  two  operating  divisions  exceeding 
internal expectations. 

2 

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Spirit Technology Solutions Ltd 
Directors' report 
30 June 2022 

As a consequence of a change in strategic financial objectives, divestments, internal realignment of business 
accountabilities and profitability pressures, the Consolidated Entity moved to a more defined segment reporting 
framework  that  aligns  to  the  following  key  operating  businesses  (as  outlined  in  Note  4  to  the  Financial 
Statements): 

  Collaboration  and  Communication  offering  award-winning  voice  solutions,  data  and  office technology  for 

small business; 

  Cyber security offering specialist cyber managed services and industry leading solutions to corporate and 
enterprise customers delivered through a 24/7 Security Operations Centre and professional service teams. 
This  capability  also  enables  Spirit  to  put  cyber  security  at  the  core  of  all  key  market  solutions  provided 
across our segments, improving the resilience and security of all our customers; 

  Managed  Services  (IT&T)  offering  a  comprehensive  range  of  managed  IT  and  professional  services 
including end-user, public cloud, infrastructure and networking, data and voice solutions to SMB and mid-
market customers. 

Review of operations and financial position 

The loss for the Consolidated Entity after providing for income tax amounted to $53.166M (30 June 2021: profit 
$1.157M). Total revenue and other income for the Consolidated Entity for the financial year ended 30 June 2022 
was $138.7M (30 June 2021: $104.5M). The following table summarises the key financial metrics for the period: 

2022 
$'000 

2021 
$'000 

  Change 

$'000 

Revenue (refer Note 5 to the financial statements) 
Other income (refer Note 6 to the financial statements) 

135,338  
3,394  

102,786  
1,683  

32,552  
1,711  

Revenue and other income 

138,732 

104,469 

34,263 

Earnings before interest, taxes, depreciation & amortisation 
(EBITDA*) 
Profit on divestment of consumer & fixed wireless assets 
(refer Note 6 & Note 35 to the financial statements) 
Acquisition, divestment and integration costs** 
Restructuring costs** 
Net fair value loss on remeasurement of contingent 
consideration on business combinations** 
Impairment of non-current assets** 
Share-based payments** 

(46,216) 
(1,823)  

2,040  
1,413  

2,747 
48,374  
721  

8,619 
-  

2,100  
-  

168 
-  
620  

(54,835) 
(1,823)  

(60)  
1,413  

2,579 
48,374  
101  

Underlying EBITDA* 

7,256  

11,507  

(4,251) 

(Loss)/profit after income tax benefit/(expense) 

(53,166)  

1,157  

(54,323)  

* 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 
acquisition, divestment & integration costs, net fair value loss on remeasurement of contingent consideration on business 
combinations, restructuring costs, impairment of non-current assets and share-based payments. Underlying EBITDA for the 
year ended 30 June 2022 also excludes gain/(loss) on divestment of consumer and fixed wireless assets. The Directors 
consider that these measures are useful in gaining an understanding of the performance of the entity, consistent with internal 
reporting. 
**Refer Statement of profit or loss and other comprehensive income. 

Despite growing sales revenue (up 32% on the full year ended 30 June 2021), underlying EBITDA* was down 
37%. This was driven by a combination of ongoing scaling investment in the corporate functions combined with 
challenging  cost  pressures  across  the  business  through  needing  to  maintain  staff  levels  during  lockdowns, 
supply chain delays and inflationary labour and margin pressures. Sales revenue and associated gross margins 
did not sufficiently compensate for the downside cost impacts. 

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Spirit Technology Solutions Ltd 
Directors' report 
30 June 2022 

As detailed in Note 4 of the financial statements, the Managed Services (IT&T) segment struggled to achieve a 
positive profitability position at an underlying EBITDA* level. The earnings shortfall within this segment was the 
product  of  numerous  factors  over  a  challenging  period.  In  addition  to  the  cost  pressures  noted  above,  the 
complexity and breadth of product sets, range of customer sizes, vendors and systems (that flowed from a fast-
paced acquisition strategy) placed strain on the delivery and backend support structures to enable a streamlined 
and efficient customer experience. As was highlighted in our interim report for the period to 31 December 2021, 
Spirit  has  a  well-defined  standard  operating  environment  (“SOE”)  and  a  history  of  integrating  acquired 
operations  into  that  SOE. The  integration  program  in  FY22 completed  its  core  objective  of moving  acquired 
entities  into  the  SOE  with  consistent  platforms  and  processes  to  minimise  risk  and  reduce  cost. However, 
acceleration is now required to move from integration to transformation to realise further efficiencies, improve 
the customer experience and release ongoing synergy savings. 

In recognition of the financial performance shortfall in this segment, a strategic review was undertaken with the 
objective to uplift profitability and cashflow returns over the ensuing 6-12 months. The immediate outcome of 
that  review  was  acknowledgement  that  the  customer  base,  and  associated  supporting  overhead  structure, 
needed  refinement  to  concentrate  on  a  more  defined  target  base  being  mid-market  customers  where  the 
business can focus on providing secure and connected modern workplace solutions. 

Following this review, the Board implemented a restructuring plan that will likely result in an initial reduction in 
revenue  for  the  Managed  Services  (IT&T)  operating  segment  over  the  short  to  medium  term.  This  revenue 
reduction  will  be  accompanied  by  a  reduction  in  operating  costs  within  that  operating  segment  and  at  the 
Corporate level. An initial restructuring provision of $1.1M was recognised as at 30 June 2022 to provide for 
estimated costs associated with employee restructuring costs at the Corporate level. Further once off costs are 
expected in the financial year to 30 June 2023 as the Managed Services (IT&T) restructuring is executed.  

That  restructuring  program  carries  both  opportunity  and  risk.  Given  the  historic  financial  performance,  the 
ongoing medium term inflationary environment and restructuring risks, conservative assumptions were adopted 
in the value-in-use calculations to assess the recoverable amounts of assets within that cash generating unit 
(CGU). The outputs from that calculation for the Managed Services (IT&T) CGU resulted in the carrying amount 
of  the  underlying  assets,  which  included  goodwill,  to  exceed  their  recoverable  amounts.  Accordingly, a  non-
cash impairment expense of $48.4M was booked in the financial year ended 30 June 2022 (of which $43.1M 
was directly related to goodwill). 

The  Board  remains  of  the  view  that  the  forward  opportunities  within  this  segment  to  crystalise  growth  and 
medium-term earnings stability remains attainable and progress on that improvement will be communicated to 
all stakeholders through the Company’s forward ASX and Half Yearly reporting platforms. 

Noting  the  impact  on  profitability  associated  with  the  Managed  Services  (IT&T)  segment  and  the  Corporate 
division, the Board is pleased with the financial performance of the other two segments as outlined in Note 4 of 
the financial statements. The Collaboration and Communication division (Nexgen brand) achieved an underlying 
EBITDA*  for FY22  of  $9.9M  on  a  full  year sales  revenue  of  $34.98M.  Revenue  in  the  first  half  of  FY22  was 
constrained given  the  lockdowns  at  $15.57M  relative to  H2  FY22  of  $19.41M  (up  25%). The  Cyber  Security 
division  (Intalock  brand)  achieved  an  underlying  EBITDA*  for  FY22  of  $2.4M  on a full  year sales  revenue  of 
$31.4M. Performance was steady throughout the year reflecting the stability of the demand for cyber security 
related products and services. 

Cash inflows from operating activities were $3.6M for the year ended 30 June 2022 (2021: $5.0M). This reflects 
the  cash  impact  of  the  forementioned  ongoing  cost  pressures  and  revenue  shortfalls.  Cash  obligations 
associated  with  business  acquisitions  and  capital  investment  were  largely  satisfied  from  the  proceeds  on 
divestment of the non-core consumer and fixed wireless assets. Net cash outflows from investing activities were 
$1.4M (2021: $52.9M). During the financial year the Company drew down net debt from its banking facility of 
$3M as part of its capital management. 

The basic and diluted earnings per share for the financial year ended 30 June 2022 was a loss of 8.08 cents 
(30 June 2021: profit of 0.21 cents). 

The net assets of the Consolidated Entity decreased by $50.3M to $59.4M as at 30 June 2022 (30 June 2021: 
$109.7M). This decrease primarily reflects the non-cash impairment of non-current assets. 

4 

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Spirit Technology Solutions Ltd 
Directors' report 
 30 June 2022 

Prospects for future financial years and Business Risks 

The Consolidated Entity has evolved significantly over the last two years as it has progressed its transition into 
a Modern Technology service provider. That evolution has been accelerated through a period of acquisition and 
organic  growth,  and  more  recently  through  a  divestment  phase  of  non-core  assets.  Spirit  is  positioned  to 
leverage the solution and product sets it has assembled to drive future organic growth and deliver a solution 
focused customer experience.  

The Company’s immediate strategic priorities are improved profitability performance, driving organic growth and 
increasing  positive  cash  flows  from  its  operations.  As  part  of  that  focus,  there  will  be  ongoing  business 
restructuring  within  the  Managed  Services  (IT&T)  business  segment  to  accelerate  that  division’s  more 
sharpened customer focus. In conjunction the Consolidated Entity needs to maintain its investment in human 
capital and technology platforms to build a sustainable and profitable business generating long-term shareholder 
returns. 

The evolutionary path of building a scalable and profitable company inherently involves risk. Those risk factors 
change over time in both nature and weighting. Management and the Board of the Company actively manage 
risk and apply mitigation strategies (where possible) to reduce the impact of the stated risk on the Company’s 
achievement of its goals. The key forward material business risks that the Company foresees that could impede 
the achievement of its future operational and financial success at the time of signing the Directors' Report are 
set out below. 

Ongoing Supply Chain Disruption 

As a continuing consequence of the COVID-19 pandemic, and other global disruption factors, there remains 
ongoing supply chain disruption which impacts the ability of the Company to secure product delivery on time 
and at guaranteed price levels. This remains largely outside the control of the Company and has impacts on 
revenue  recognition  alongside  gross  margin  stability. Customer  contracts  are typically  priced  and  ordered  in 
advance  and  due  to  a  competitive  landscape,  the  Company  may  need  to  absorb  any  price  fluctuations  that 
cannot otherwise be passed through to the customer. Management of this risk involves active communication, 
planning  and  forecasting  of  customer  requirements  and  supply  chain  management  and  leverage.  Spirit  has 
invested in establishing an experienced procurement team and supply chain systems enhancements. 

Labour Market Shortages and Inflationary Pressures 

Access to required human capital talent within the Australian employment pool remains a key business risk. The 
Company  operates  in  a  highly  competitive  industry  and  requires  a mix  of  skilled  professionals to  execute  its 
business  plan.  Spirit,  like  all  companies,  is  not  immune  to  the  ongoing  challenges  in  sourcing  and  retaining 
skilled staff in a wage inflationary environment. Mitigation of this risk is largely only possible through immigration 
and broader opening of international borders. 

Spirit  has  developed  strategies  to  retain  its  workforce team  and  will  continue  to  invest  in  not  only  employee 
retention programs but also the enhancement of initiatives to be an employer of choice. 

Funding Risk 

In recognition of the profitability outcomes in the financial year ended 30 June 2022, the Company is focused 
on earnings growth alongside managing residual acquisition contingent and deferred consideration obligations 
over  the  ensuing  12  months.  The  Consolidated  Entity  will  continue  to  require  access  to  external  capital  in 
addition to its own operational cash flow generation abilities. The funding strategy includes utilising and sourcing 
a  mix  of  debt  funding,  non-core  asset  divestment funding and shareholder  equity.  During  the  year  ended  30 
June 2022, the Company divested its consumer broadband and fixed wireless broadband assets that collectively 
returned $18.5M to its balance sheet, net of divestment costs. As at 30 June 2022 the Company had a net debt 
position of $1.3M and net current liability position of $10M (30 June 2021 net current liability position: $14.8M) 
which  is  primarily  associated  with  the  residual  business  acquisition  liabilities  linked  with  the  acquisitions  of 
Intalock Technologies Pty Ltd (“Intalock”) and Nexgen Investment Group Pty Ltd (“Nexgen”). 

22

5 

Spirit Technology Solutions Ltd 
Directors' report 
30 June 2022 

As outlined in Note 34 Business Combinations to the financial statements, the forward contingent consideration 
payments  primarily  relate  to  Nexgen  and  are  based  on  historic  and  forward  earnings  performance  against 
baseline targets for Calendar 2022 and Calendar H1 2023. Any contingent consideration payable is not capped 
and out performance against those targets will result in additional consideration payable that may be over and 
above  what  the  Company  estimated  as  at  the  acquisition  date. The  earn-out  consideration  is  settled  30%  in 
shares of the Company and 70% in cash. Accordingly, there are funding obligations and funding risks associated 
with these payments. 

Cyber Risks 

Cyber related attacks are an inherent risk faced by every organisation and the financial and operational impact 
that  this  risk  can  have  on  an  organisation  is  very  high.  Accordingly,  as  a  material  business  risk  it  requires 
constant  management  and  risk  mitigation.  In  December  2020  Spirit  acquired  Intalock  Technologies  Pty  Ltd. 
Intalock  is  one  of Australia’s  leading  cyber  security  services  companies  and  operates  a  Security Operations 
Centre providing 24/7 monitoring, technical services and support for enterprise size clients including banks and 
other  similar  high  risk  profile  organisations.  Intalock  also  provides  internal  support  services  for  Spirit.   The 
Consolidated  Entity  therefore  has  the  internal  capability  of  this  division  to provide  proactive  and  reactive 
solutions  management  of  any  Cyber  related  events  that  present  against  Spirit and  its customer  base.  Cyber 
Security services  are  now  a fundamental  risk  management  requirement  for  any  organisation  and  is  a  critical 
defence mechanism for all companies across their IT infrastructure and software layers. 

Aspirational Risk 

The Consolidated Entity can still be classified as a small company as measured against other companies listed 
on the ASX. As the Company continues to achieve growth and scale, the potential complexity and degree of 
risk may also increase in the absence of mitigation strategies. The Company’s forward strategic goal is also to 
accelerate entry into the mid-market customer space. That strategy will increasingly focus on targeting more 
complex mid-market customers and transactions.  To achieve these goals, this process will involve an ongoing 
investment in people, marketing/branding and systems enhancements. 

Spirit  had  pursued  accelerated  growth  through  an  acquisition  strategy.  Acquisitions  carry  risk  in  terms  of 
successful execution, integration and achieving pro-forma contributions of the acquired business. It also carries 
cultural integration risk. 

Pandemic and Global Stability Risk 

There  remains  ongoing  risk  associated  with  the  COVID-19  global  pandemic  and  other  international  stability 
risks.  At  the  date  of  this  Directors’  Report,  local  and  international  markets  are  in  a  delicate  recovery  mode, 
tempered  by  inflationary  pressures.  Given  the  fluid  and  unpredictable  nature  of  these  external  factors  there 
remains  ongoing  risk  that  further  disruptions  may  occur  that  impact  the  ability  of  the  Consolidated  Entity  to 
achieve its stated forward objectives. 

Significant changes in the state of affairs 

On 9 September 2021, the Consolidated Entity announced the results of earn-out incentives for performance of 
businesses acquired by the Consolidated Entity.  

The  total  incentive  payments  in  respect  of  the  period  ended  30  June  2021  in  relation  to  the  acquisitions  of 
Trident Technology Solutions, Altitude IT, Beachhead Group and Reliance IT was $1,940,041 in cash and equity 
in the amount of $675,721, issued in the Company’s fully paid ordinary shares, in accordance with the terms of 
the respective Share Purchase Agreements for each acquisition.  

Additionally, Beachhead Group and Intalock Technologies both had deferred consideration amounts payable 
which totalled $3,773,164 in cash and an additional $318,785 in shares, in accordance with the terms of the 
respective  Share  Purchase  Agreements  for  each  acquisition.  All  payments  were  factored  into  Spirit’s  FY21 
contingent and deferred consideration liabilities as recorded in the 30 June 2021 audited accounts.  

6 

23

 
 
  
 
 
 
 
 
 
 
  
 
 
Spirit Technology Solutions Limited 
Directors' report 
30 June 2022 

On 9 September 2021, the Consolidated Entity announced the issue of 4,059,173 fully paid ordinary shares for 
no cash consideration, of which: 

● 

● 

● 

 1,024,218  fully  paid  ordinary  shares,  issued  at  a  fair  value  price  of  $0.245  (24.5  cents)  per  fully  paid 
ordinary share were issued in relation to Target 2 Incentive Shares associated with the Trident acquisition; 
 1,648,142 fully paid ordinary shares at a fair value issue price of $0.245 (24.5 cents) per fully paid ordinary 
share in relation to deferred consideration and incentive payments to Beachhead Group; and 
 1,386,813 fully paid ordinary shares at a fair value issue price of $0.245 (24.5 cents) per fully paid ordinary 
share in relation to Incentive payments for Reliance IT and Altitude IT.  

On 10 September 2021, the Consolidated Entity issued 49,338 fully paid ordinary shares to Mr Sol Lukatsky (or 
his nominee) in relation to the exercise of vested performance rights. 

On 29 October 2021, the Consolidated Entity announced the completion of the sale of its non-core consumer 
residential Internet business to Melbourne based broadband and telecommunications provider DGtek Pty Ltd 
(DGtek) for a cash transaction value of $5.1M. Under the agreement, DGtek acquired the consumer business 
including the customer base and relevant infrastructure assets. 

On 11 January 2022, the Consolidated Entity issued 103,844 fully paid ordinary shares to Mr Mark Dioguardi 
(or his nominee) in relation to the exercise of vested performance rights. 

On 31 January 2022, the Consolidated Entity announced that it was in an exclusive period of due diligence with 
the preferred buyer of its fixed wireless tower assets after receiving and considering multiple all cash offers. 

On 31 March 2022, the Consolidated Entity announced the issue of 8,219,178 fully paid ordinary shares for no 
cash consideration, issued at a fair value price of $0.145 (14.5 cents) per fully paid ordinary share, as part of 
the deferred consideration in relation to the Nexgen acquisition. The shares are subject to voluntary escrow until 
9 April 2022. 

On 7 April 2022, the Consolidated Entity announced the issue of a total of 13,000,000 Performance Rights to 
Directors and Employees in relation to FY22, pursuant to the terms of the Spirit Employee Incentive Plan. The 
Performance Rights vest on satisfaction of performance hurdles over a three-year period (being 1 July 2021 to 
30 June 2024), expiring 7 April 2025. The Director Performance Rights were approved by shareholders at the 
Annual General Meeting held on 29 November 2021, pursuant to Resolutions 8 and 9. 

On 9 May 2022, the Consolidated Entity announced it had entered into an agreement for the sale of its fixed 
wireless  assets  to  Maret  Infrastructure  Pty  Ltd  for  $15M  upfront  consideration,  plus  up  to  $6M  in  earn-out 
payments over two years, subject to revenue targets being achieved. 

On 16 May 2022, the Consolidated Entity announced that Managing Director, Mr Sol Lukatsky, was stepping 
down from his role with the agreement of the Board with effect from 2 July 2022. Mr Julian Haber assumed the 
role of interim Managing Director, whilst a search for a permanent replacement was found. 

On 1 June 2022, the Consolidated Entity announced the completion of the sale of its fixed wireless assets to 
Maret Infrastructure Pty Ltd. The sale had effect from 1 June 2022. 

On 30 June 2022, the Consolidated Entity provided an update on steps to progress an acceleration in its financial 
profitability and cash flow position. 

There were no other significant changes in the state of affairs of the Consolidated Entity during the financial 
year. 

24

7 

 
  
  
  
  
 
 
 
 
 
 
 
 
 
 
Spirit Technology Solutions Limited 
Directors' report 
30 June 2022 

Matters subsequent to the end of the financial year 

On 7 July 2022, the Consolidated Entity announced the appointment of Mr Julian Challingsworth as Managing 
Director and Chief Executive Officer of the Company, effective 11 July 2022. On 11 July 2022, the Company 
issued 6,250,000 Performance Rights to Mr Julian Challingsworth (or his nominee) as part of his employment 
agreement. The  Performance  Rights  vest  over  a  three-year  period  (1  July  2022 to  30  June  2025)  subject to 
continued  employment  and  satisfaction  of  a  relative  Total  Shareholder  Return  (TSR)  performance  hurdle 
measured against a comparator group of companies, expiring 30 June 2026. 

No  other  matter  or  circumstance  has  arisen  since  30  June  2022  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 

Refer ‘Entity’s operations’ and ‘Prospects for future financial years’. 

Environmental regulation 

The  Consolidated  Entity  is  not  subject  to  any  significant  environmental  regulation  under  Australian 
Commonwealth or State law.  

Information on Directors 

Name: 
Title: 
Qualifications: 
Experience and expertise: 

Other current Directorships: 

Former Directorships (last 3 
years): 
Special responsibilities: 

Interests in shares: 
Interests in options: 
Interests in rights: 

 Mr James Joughin  
 Non-Executive Chairman 
 Bachelor of Business, CPA, GAIDC 
 James Joughin brings over 31 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 and public companies. 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. 
 MyDeal.com.au Ltd (ASX: MYD) 
Bio-Gene Technology Ltd (ASX:BGT) 
 None 

 Member, Audit and Risk Committee,  
Chair, Nomination and Remuneration Committee (Member up to 19 April 2022 
and Chair from 20 April 2022) 
 4,764,936 fully paid ordinary shares 
 Nil 
 Nil 

8 

25

 
  
  
 
 
 
 
 
Spirit Technology Solutions Ltd 
Directors' report 
30 June 2022 

Name: 
Title: 
Qualifications: 

Experience and expertise: 

Other current Directorships: 
Former Directorships (last 3 
years): 
Interests in shares: 
Interests in options: 
Interests in rights: 

 Mr Julian Challingsworth 
 Managing Director and Chief Executive Officer (appointed 11 July 2022) 
 Julian  has  a  Masters  of  Organisational  Consulting  from  Ashridge  Business 
School  (UK),  a  Graduate  Diploma  in  IT,  Swinburne  University  (Aust)  and  a 
Bachelor  of  Business,  Accounting,  RMIT  (Aust).  Julian  is  a  member  of 
Chartered  Accountants  (CAANZ),  Fellow  Australian  CPA  (FCPA)  and  a 
Graduate, Australian Institute of Company Directors (GAICD). 
 Julian  has  been  the  Co-Chief  Executive  Officer  of  Tesserent,  (ASX  TNT) 
Tesserent  provides  cybersecurity  to  enterprise,  government  and  critical 
infrastructure  customers.  Under  Julian’s  leadership  the  organisation  grew 
significantly through both acquisitive and organic means. Julian spent 3 years 
in  the  role  before  he  resigned  and  stepped  down  from  his  role  as  Co-Chief 
Executive in November 2021. 

Julian joined Tesserent after serving as Managing Director and a Partner of 
The Litmus Group for over ten years and a board member and Partner of PPB 
Advisory.  In  addition  to  advising  over  twenty  organisations  on  growth 
acceleration strategies in Australia, Asia and Europe, Julian was a key driver 
in  growing  Litmus  in  Australia  and  internationally  before  it  was  acquired  by 
PPB Advisory. 

Julian was a Director of Cordence Worldwide, a global consulting partnership 
with  2,800  consultants  across  60+  locations.  Julian  worked  with  the 
international team to develop sales and growth strategies for the 8 member 
firms. 

Julian  is  a  proven  ASX  listed  CEO,  with  a  strong  professional  services  and 
corporate finance background. 
 None 
 Tesserent Limited (ASX: TNT) 

 Nil 
 Nil 
 6,250,000 Performance Rights 

26

9 

 
  
  
 
 
 
 
 
Spirit Technology Solutions Ltd 
Directors' report 
30 June 2022 

Name: 
Title: 

Qualifications: 
Experience and expertise: 

Other current Directorships: 
Former Directorships (last 3 
years): 
Interests in shares: 
Interests in options: 
Interests in rights: 

Name: 
Title: 
Qualifications: 
Experience and expertise: 

Other current Directorships: 
Former Directorships (last 3 
years): 
Interests in shares: 
Interests in options: 

Interests in rights: 

 Mr Julian Haber 
 Executive  Director  (appointed  1  April  2022),  Interim  Managing  Director  (16 
May 2022 to 11 July 2022) 
 Nil 
 Julian  is  a  highly  regarded  leader  in  Cyber  Security  and  Information 
Technology,  having  built  one  of  Australia’s  most  reputable  Cyber  Security 
companies, Intalock Technologies over the last 11 years which was acquired 
by  Spirit  in  December  2020.  During  that time Intalock evolved  from  being  a 
small  start-up  to  providing  mission  critical  services  to  Australia’s  largest 
enterprises and government departments across Australia, including Whole-
of-Government cyber services protecting the G20 Brisbane summit. As CEO 
of Intalock (Spirit’s Cyber business), Julian oversees the strategy and growth 
of the company ensuring that it continues to innovate and deliver sophisticated 
cyber security solutions to its managed and professional services customers 
across  varied  industries.  Previously  at  Symantec,  the  world’s  largest 
Information Management and Cyber Security company at the time, Julian was 
responsible for the Public Sector - Queensland, Northern Territory and Pacific 
Islands.  Under  his  five  years  of  leadership,  this  region  delivered  annual 
revenue growth of over 300% and resulted in some of the largest and most 
loyal customers in the ANZ region. 

Having  a  wealth  of  experience,  Julian  has  been  invited  to  sit  on  numerous 
Global and Regional Partner Advisory Boards for some of the world’s largest 
technology companies. 
 None 
 None 

 5,693,092 fully paid ordinary shares 
 Nil 
 Nil 

 Mr Sol Lukatsky 
 Managing Director (resigned 2 July 2022) 
 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 16 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. 
 None 
 None 

 3,354,421 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.  
 2,905,102 Performance Rights (relates to balance retained at cessation on 2 
July 2022) 

10 

27

 
  
  
 
 
 
  
  
Spirit Technology Solutions Ltd 
Directors' report 
30 June 2022 

Name: 
Title: 
Qualifications: 
Experience and expertise: 

Other current Directorships: 
Former Directorships (last 3 
years): 
Interests in shares: 
Interests in options: 

Interests in rights: 

Name: 
Title: 
Qualifications: 
Experience and expertise: 

 Mr Mark Dioguardi 
 Executive Director (resigned 1 April 2022) 
 Master of Business Administration, Bachelor of Engineering Hons 
 Mr Dioguardi is an experienced CTO and COO with over 26 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 a Non-Executive Director of TimedotCom (a 
listed Malaysia telecommunications company). 
 Time Dotcom Bhd (KLSE: TIMECOM) 
 None 

 1,547,972 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; 
 5,860,018 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, both 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. 

Other current Directorships: 
Former Directorships (last 3 
years): 
Special responsibilities: 

Interests in shares: 
Interests in options: 
Interests in rights: 

 Chairman, Kogan.com (ASX: KGN) 
 None 

 Chair, Audit and Risk Committee from 15 July 2020 
Member, Nomination and Remuneration Committee from 15 July 2020 
 1,750,000 fully paid ordinary shares 
 Nil 
 Nil 

28

11 

 
  
  
  
 
 
 
Spirit Technology Solutions Ltd 
Directors' report 
30 June 2022 

Name: 
Title: 
Qualifications: 
Experience and expertise: 

Other current Directorships: 
Former Directorships (last 3 
years): 
Special responsibilities: 

Interests in shares: 
Interests in options: 
Interests in rights: 

Name: 
Title: 
Qualifications: 
Experience and expertise: 

Other current Directorships: 

Former Directorships (last 3 
years): 
Special responsibilities: 

Interests in shares: 

Interests in options: 
Interests in rights: 

 Ms Michelle Bendschneider 
 Non-Executive Director (appointed 1 April 2022) 
 Bachelor of Information Technology and GAICD 
 Michelle  is  an  experienced  Executive,  with  an  expansive  background  in 
building  growth  businesses  in  the  Technology,  Professional  Services  and 
Telecommunications sectors. During her career at IBM, Michelle held multiple 
including  consulting, 
Senior  Executive  roles 
professional services, and managed services. 

in  Technology  services 

At  Telstra,  she  successfully  led  the  formation  of  a  professional  services 
business  spanning  cutting  edge  network  services,  cyber  security  solutions, 
collaboration solutions, Cloud services and IoT solutions, through a series of 
acquisitions and organic growth. Michelle went on to run the Product Group 
for Telstra Enterprise, where she led the strategy to transition and modernise 
legacy  product  portfolios  to  embrace  Software  Defined  Networking,  Cloud 
Services  &  Technologies,  Cyber  Security,  IoT  and  Digital  transformation 
capabilities. At CBA, Michelle led the delivery of technology enabled Security 
and Privacy solutions, addressing significant areas of risk for the organisation. 
Michelle  is  currently  the  Chief  Operating  Officer  at  PaperCut  Software,  an 
innovative Australian software company with global presence, with a remit to 
help steer the company towards growth and transformation. 
 None 

None 
 Member, Nomination and Remuneration Committee from 1 April 2022 
Member, Audit and Risk Committee from 1 April 2022 
 Nil 
 Nil 
 Nil 

 Ms Inese Kingsmill 
 Non-Executive Director (resigned 30 September 2021) 
 B. Bus in Marketing, MAICD 
 Over the course of a career spanning 26 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. 
 Non-Executive Director, Rhipe Limited (ASX: RHP) 
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  to  30 
September 2021 
Member, Audit and Risk Committee from 15 July 2020 to 30 September 2021 
 187,500 fully paid ordinary shares (as at date of cessation on 30 September 
2021) 
 Nil 
 Nil 

12 

29

 
  
  
 
  
 
 
 
Spirit Technology Solutions Ltd 
Directors' report 
30 June 2022 

'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 

Ms  Leydin  holds  a  Bachelor  of  Business  majoring  in  Accounting  and  Corporate  Law.  She  is  a  member  of 
Chartered  Accountants  Australia  New  Zealand,  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 (now part of Vistra). 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. 

Ms  Leydin  has  over  26  years’  experience  in  the  accounting  profession  and  over  16  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 2022, and the number of meetings attended by each Director were: 

Full Board 

Remuneration Committee  Audit and Risk Committee 

  Attended 

Held 

  Attended 

Held 

  Attended 

Held 

Nomination and 

Mr James Joughin  
Mr Julian Haber* 
Mr Sol Lukatsky 
Mr Mark Dioguardi** 
Mr Gregory Ridder 
Ms Michelle Bendschneider*** 
Ms Inese Kingsmill**** 

12  
3  
10  
9  
12  
3  
3  

12  
3  
10  
9  
12  
3  
3  

8  
-  
-  
-  
8  
1  
6  

8  
-  
-  
-  
8  
1  
6  

2  
-  
-  
-  
2  
-  
1  

2 
- 
- 
- 
2 
- 
1 

Held: represents  the  number of meetings  held  during the  time  the  Director  held  office  or  was  a member  of the  relevant 
committee. 

 Mr Julian Haber was appointed to the Board effective 1 April 2022. 
 Mr Mark Dioguardi resigned from the Board effective 1 April 2022. 

* 
** 
***   Ms Michelle Bendschneider was appointed to the Board effective 1 April 2022. 
****  Ms Inese Kingsmill resigned from the Board effective 30 September 2021. 

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. 

30

13 

 
  
  
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
  
 
Spirit Technology Solutions Limited 
Directors' report 
30 June 2022 

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 

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. 

Non-Executive Directors remuneration 
The annual Non-Executive Director Chairman fees are $120,000 per annum, which took effect from 1 July 2021. 

The annual Non-Executive Director member fees are $75,000 per annum, which took effect from 1 July 2021. 

The  annual  Chair  Fee  for  the  Chair  of  the  Audit  and  Risk  Committee  and  Nomination  and  Remuneration 
Committee are $10,000 per annum, which took effect from 1 July 2021. Committee members do not currently 
receive any additional fees. 

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. 

14 

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Spirit Technology Solutions Ltd 
Directors' report 
30 June 2022 

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. 

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  2022,  the 
Company  engaged  a  specialist  remuneration  consultant,  SLM  Corporate  for  remuneration  benchmarking 
purposes (2022: $31,350; 2021: $11,000). 

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 
generally incorporates into its performance measures both a Relative Total Shareholder Return (Relative TSR) 
and Absolute Total Shareholder Return (Absolute TSR) hurdles. 

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Spirit Technology Solutions Ltd 
Directors' report 
30 June 2022 

The  LTI  Plan  is  part  of  the  Company’s  remuneration  strategy  and  is  designed  to  align  the  interests  of 
management and shareholders (Total Shareholder Return measurement) and assist the Company to attract, 
motivate  and  retain  executives.  In  particular,  the  LTI  Plan  is  designed  to  provide  relevant  directors  and  key 
employees with an incentive to remain with Spirit and contribute to the future performance of the Group over 
the long term. Further details on the LTI Plan are presented in Share Based Compensation of this Directors’ 
report. 

Voting and comments made at the Company's 29 November 2021 Annual General Meeting ('AGM') 
At the 29 November 2021 AGM, 95.16% of the votes received supported the adoption of the remuneration report 
for the year ended 30 June 2021. The Company did not receive any specific feedback at the AGM regarding its 
remuneration practices. 

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 (resigned 2 July 2022) 
● 
Julian Haber, Executive Director (appointed 1 April 2022) & Interim Managing Director (16 May 2022 to 11 
● 
July 2022) 
 Gregory Ridder, Non-Executive Director  
 Michelle Bendschneider, Non-Executive Director (appointed 1 April 2022) 
 Mark Dioguardi, Executive Director (resigned 1 April 2022) 
 Inese Kingsmill, Non-Executive Director (resigned 30 September 2021) 
 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-
employment 
benefits 

  Long-term 
benefits 

  Share-based 
payments 

Cash 

Non- 

Super- 

Long 
service 

bonus 

monetary 

annuation 

leave 

$ 

$ 

$ 

$ 

Equity- 

settled 

$ 

Total 

$ 

2022 
Non-Executive Directors: 
James Joughin 
Gregory Ridder 
Michelle Bendschneider* 
Inese Kingsmill** 

Executive Directors: 
Julian Haber*** 
Sol Lukatsky****+ 
Mark Dioguardi#+ 

Other Key Management 
Personnel: 
Paul Miller+ 

Cash salary 
  and fees 
$ 

110,856  
85,000  
17,045  
21,250  

-  
-  
-  
-  

172,532  
378,461  
330,000  

-  
35,000  
55,989  

291,250  
  1,406,394  

37,500  
128,489  

-  
-  
-  
-  

-  
-  
-  

-  
-  

11,085  
-  
1,705  
-  

-  
-  
-  
-  

-  
-  
-  
-  

121,941 
85,000 
18,750 
21,250 

17,253  
57,821  
47,844  

3,929  
26,942  
15,051  

-  
272,239  
336,812  

193,714 
770,463 
785,696 

39,688  
175,396  

6,407  
52,329  

54,017  

428,862 
663,068   2,425,676 

* 
** 
*** 

  Ms Michelle Bendschneider was appointed to the Board effective 1 April 2022. 
  Ms Inese Kingsmill resigned from the Board effective 30 September 2021. 
Mr Julian Haber was appointed to the Board effective 1 April 2022. The remuneration disclosed represents his remuneration 
for the period 1 July 2021 to 30 June 2022. The amounts he received pre-1 April 2022 in his capacity as CEO of Intalock 
Technologies Pty Ltd was $118,740 and post 1 April 2022 in his capacity as Executive Director was $74,974. 

****    Mr Sol Lukatsky resigned from the Board on 2 July 2022. 
# 

+ 

 Mr Mark Dioguardi resigned from the Board on 1 April 2022. The amounts he received pre-1 April 2022 in his capacity as 
Executive Director was $540,739 and post 1 April 2022 in his capacity as Chief Technology Officer was $244,957. 
  Mr Lukatsky, Mr Dioguardi and Mr Miller were awarded cash bonuses in respect of their FY22 performance, determined and 
paid in FY23. In addition to statutory superannuation on base salary and the FY22 cash bonus,  the superannuation for Mr 
Lukatsky, Mr Dioguardi and Mr Miller also includes statutory superannuation on the FY21 cash bonus. 

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Spirit Technology Solutions Ltd 
Directors' report 
30 June 2022 

Short-term benefits 

Post-
employment 
benefits 

  Long-term 
benefits 

  Share-based 
payments 

Cash salary 
  and fees 
$ 

Cash 

Non- 

Super- 

Long 
service 

bonus 

monetary 

annuation 

leave 

$ 

$ 

$ 

$ 

Equity- 

settled 

$ 

Total 

$ 

81,815  
1,249  
66,250  
66,250  

-  
-  
-  
-  

381,538  
330,000  

163,000  
89,650  

241,667  
  1,168,769  

66,250  
318,900  

-  
-  
-  
-  

-  
-  

-  
-  

8,181  
-  
-  
-  

-  
-  
-  
-  

-  
-  
-  
-  

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  
24,323  

20,069  

354,694 
660,183   2,284,677 

2021 
Non-Executive Directors: 
James Joughin 
Terence Gray* 
Gregory Ridder 
Inese Kingsmill** 

Executive Directors: 
Sol Lukatsky*** 
Mark Dioguardi*** 

Other Key Management 
Personnel: 
Paul Miller*** 

  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. 

The proportion of remuneration linked to performance and the fixed proportion are as follows: 

Name 

Non-Executive Directors: 
James Joughin 
Terence Gray 
Gregory Ridder 
Michelle Bendschneider* 
Inese Kingsmill** 

Executive Directors: 
Julian Haber *** 
Sol Lukatsky**** 
Mark Dioguardi# 

Other Key Management 
Personnel: 
Paul Miller 

Fixed remuneration 

At risk - STI 

At risk - LTI 

2022 

2021 

2022 

2021 

2022 

2021 

100%   
-   
100%   
100%  
100%   

100%   
60%   
50%   

100%   
  100%  
  100%   
-   
100%  

-   
47%   
49%   

- 
- 
- 
- 
- 

- 
5% 
7% 

- 
- 
- 
- 
- 

- 
- 
- 
- 
- 

- 
- 
- 
- 
- 

-  
17%  
12%  

-   
35%   
43%   

-  
36%  
39%  

78%   

76%   

9% 

  19%  

13%   

5%  

* 
** 
*** 
**** 
#  

Ms Michelle Bendschneider was appointed to the Board effective 1 April 2022. 
Ms Inese Kingsmill resigned from the Board effective 30 September 2021. 
Mr Julian Haber was appointed to the Board effective 1 April 2022. 
Mr Sol Lukatsky resigned from the Board on 2 July 2022. 
Mr Mark Dioguardi resigned from the Board on 1 April 2022. 

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Spirit Technology Solutions Ltd 
Directors' report 
30 June 2022 

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: 

 Julian Challingsworth 
 Managing Director (appointed 11 July 2022) 
 11 July 2022 
 No  fixed  term.  Ongoing  until  terminated  by  either  party  with  three  months 
written notice. 
 Effective  11  July  2022,  fixed  remuneration  of  $400,000  per  annum,  plus 
statutory superannuation. 

Mr Challingsworth will be entitled to a potential short-term incentive (STI) of 
up to $100,000 per annum, representing 25% of his base remuneration. The 
STI  is  subject  to  achievement  of  Key  Performance  Indicators  (KPIs)  to  be 
determined from time to time by the Board. 

On  commencement,  Mr  Challingsworth  will  receive  an  initial  long-term 
incentive (LTI) grant of 6,250,000 Performance Rights, vesting over a three-
year period (1 July 2022 to 30 June 2025) subject to continued employment 
and satisfaction of a relative Total Shareholder Return performance hurdles 
measured  against  a  comparator  group  of  companies.  After  the  initial  LTI 
detailed above for FY2023, from FY2024 Mr. Challingsworth will be entitled to 
an  annual  allocation  of  Performance  Rights  pursuant  to  the  terms  of  the 
Company's  Employee  Incentive  Plan  (EIP).  An  LTI  entitlement  of  75%  of 
Annual Base Salary can be paid to him from FY2024. Subject to shareholder 
approval, the LTI will be granted on an annual basis from FY2024, and vesting 
will be contingent on the achievement of specific performance hurdles. 

Mr.  Challingsworth  has  agreed  to  purchase  at  least  $75,000  each  year  of 
shares.  He  must  ensure  that  he  complies  with  the  terms  of  the  Securities 
Trading Policy before doing so. 

The Company also intends to offer to implement a Loan Share Plan and offer 
Mr. Challingsworth $380,000 each year to purchase shares on the terms to 
be  finalised  in  good  faith  and  subject  to  shareholder  approval  which  is 
intended to be sought in November 2022. 

 Julian Haber 
 Executive  Director  (appointed  1  April  2022)  Interim  Managing  Director  (16 
May 2022 to 11 July 2022) 
 16 May 2022 
 No  fixed  term.  Ongoing  until  terminated  by  either  party  with  three  months 
written notice. 
 As  Chief  Executive  Officer  of 
fixed 
remuneration  of  $137,662  per  annum,  plus  statutory  superannuation. 
Effective 16 May 2022, Mr. Haber was appointed as Interim Managing Director 
pending  a  permanent  replacement.  He  held  this  position  until  11  July  2022 
when Mr. Julian Challingsworth was appointed in that role. During this period 
Mr.  Haber’s  fixed  remuneration  increased  to  $400,000  per  annum,  plus 
statutory superannuation. In the 2023 financial year, Mr. Haber will be entitled 
to  a  potential  short-term  incentive  (STI)  of  up to  $200,000  per  annum  (pro-
rated from the commencement date of Mr. Haber’s Interim Managing Director 
role to its conclusion), representing 50% of his base remuneration. No long-
term incentive (LTI) will be awarded given the interim nature of the role. 

Intalock  Technologies  Pty  Ltd, 

18 

35

Name: 
Title: 

Agreement commenced: 
Term of agreement: 

Details: 

 
  
  
  
 
 
 
 
 
  
 
  
 
 
 
Spirit Technology Solutions Limited 
Directors' report 
30 June 2022 

Name: 
Title: 
Agreement commenced: 
Term of agreement: 

Details: 

Name: 
Title: 
Agreement commenced: 
Term of agreement: 

Details: 

Name: 
Title: 
Agreement commenced: 
Term of agreement: 

Details: 

 Sol Lukatsky 
 Managing Director (resigned 2 July 2022) 
 23 April 2018; terms revised on 27 July 2020 
 4 years and termination provisions will be a period of 12 weeks’ notice by the 
employee and 26 weeks’ notice by the Company or payment in lieu of notice. 
 Effective  1  July  2020,  fixed  remuneration  of  $400,000  per  annum,  plus 
statutory superannuation. Mr Lukatsky will be entitled to a potential short-term 
incentive (STI) of up to $200,000, representing 50% of his base remuneration. 
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. In the 2022 financial year, Mr Lukatsky was issued an LTI 
in  the  form  of  6,000,000  Performance  Rights,  vesting  on  satisfaction  of 
performance hurdles, over a three-year performance period commencing on 
1 July 2021 and ending on 30 June 2024. 

 Mr Mark Dioguardi 
 Executive Director (resigned 1 April 2022) and Chief Technology 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 
statutory  superannuation.  In  the  2022  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 remuneration (excluding superannuation). Mr 
Dioguardi was also entitled to a long-term incentive (LTI) of up to $110,000, 
representing  33.3%  of  his  base  remuneration  (excluding  superannuation) 
which was approved by shareholders at the Annual General Meeting held on 
13 October 2020. In the 2022 financial year, Mr Dioguardi was issued an LTI 
in  the  form  of  5,000,000  Performance  Rights,  vesting  on  satisfaction  of 
performance hurdles, over a three-year performance period commencing on 
1 July 2021 and ending on 30 June 2024. 

 Mr Paul Miller 
 Chief Financial Officer 
 25 November 2019, terms revised on 1 October 2021 
 No  fixed  term.  Ongoing  until  terminated  by  either  party  with  three  months 
written notice. 
 Effective  1  October  2021,  fixed  remuneration  of  $300,000  per  annum,  plus 
statutory  superannuation.  In  2022  financial  year  Mr  Miller  is  entitled  to  a 
potential short-term incentive (STI) of up to $75,000, representing 25% of his 
base remuneration (excluding superannuation). In the 2022 financial year, Mr 
Miller was issued an LTI in the form of 1,500,000 Performance Rights, vesting 
on satisfaction of performance hurdles, over a three-year performance period 
commencing on 1 July 2021 and ending on 30 June 2024. 

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 2022. 

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Spirit Technology Solutions Ltd 
Directors' report 
30 June 2022 

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 

  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 

Name 

  Number of 

  Grant date 

Sol Lukatsky 
Sol Lukatsky 
Sol Lukatsky 
Mark Dioguardi 
Mark Dioguardi 
Mark Dioguardi 

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 

Options granted carry no dividend or voting rights. 

  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   

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 2022. 

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 

22 April 2020 
22 April 2020 
13 October 2020 
13 October 2020 
13 October 2020 
11 June 2021 
11 June 2021 
29 November 2021 
29 November 2021 
11 March 2022 
11 March 2022 

  Vesting date and 
  exercisable date 

  Expiry date 

  1 July 2022 
  1 July 2022 
  30 June 2023 
  1 July 2023 
  30 June 2023 
  30 June 2023 
  30 June 2023 
  30 June 2024 
  30 June 2024 
  30 June 2024 
  30 June 2024 

  22 April 2023 
  22 April 2023 
  12 November 2023 
  12 November 2023 
  12 November 2023 
  11 June 2024 
  11 June 2024 
  7 April 2025 
  7 April 2025 
  7 April 2025 
  7 April 2025 

Name 

  Number of 

  Grant date 

rights 
granted 

  Vesting date and    Expiry date 
  exercisable date 

Paul Miller 
Paul Miller 
Sol Lukatsky 
Sol Lukatsky 
Sol Lukatsky 
Mark Dioguardi 
Mark Dioguardi 
Mark Dioguardi 
Paul Miller 
Paul Miller 
Sol Lukatsky 
Sol Lukatsky 
Mark Dioguardi 
Mark Dioguardi 
Paul Miller 
Paul Miller 

164,634   22 April 2020 
164,634   22 April 2020 
457,457   13 October 2020 
457,456   13 October 2020 
457,456   13 October 2020 
251,601   13 October 2020 
356,816   13 October 2020 
251,601   13 October 2020 
154,391   11 June 2021 
154,392   11 June 2021 

  1 July 2022 
  1 July 2022 
  30 June 2023 
  1 July 2023 
  30 June 2023 
  30 June 2023 
  1 July 2023 
  30 June 2023 
  30 June 2023 
  30 June 2023 
3,000,000   29 November 2021   30 June 2024 
3,000,000   29 November 2021   30 June 2024 
2,500,000   29 November 2021   30 June 2024 
2,500,000   29 November 2021   30 June 2024 
  30 June 2024 
  30 June 2024 

750,000   11 March 2022 
750,000   11 March 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 
  7 April 2025 
  7 April 2025 
  7 April 2025 
  7 April 2025 
  7 April 2025 
  7 April 2025 

vesting 

  Share price    Fair value 
  hurdle for 
per right 
  at grant date 
$0.1084  
$0.1250  
$0.3417  
$0.3661  
$0.3700  
$0.1815  
$0.2800  
$0.0970 
$0.0540 
$0.0720 
$0.0160 

$0.00  
$0.00  
$0.00  
$0.30   
$0.00  
$0.00  
$0.00  
$0.33  
$0.00  
$0.33  
$0.00  

vesting 

  Share price    Fair value 
  hurdle for 
per right 
  at grant date 
$0.1084  
$0.1250  
$0.3417  
$0.3661  
$0.3700  
$0.3417  
$0.3661  
$0.3700  
$0.1815  
$0.2800  
$0.0970 
$0.0540 
$0.0970 
$0.0540 
$0.0720 
$0.0160 

$0.00  
$0.00  
$0.00  
$0.30   
$0.00  
$0.00  
$0.30   
$0.00  
$0.00  
$0.00  
$0.33  
$0.00  
$0.33  
$0.00  
$0.33  
$0.00  

20 

37

 
  
  
  
 
   
 
 
 
 
   
   
 
 
 
 
 
  
 
 
   
   
 
 
 
 
 
   
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
 
   
 
 
   
   
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
   
   
 
 
 
   
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Spirit Technology Solutions Ltd 
Directors' report 
30 June 2022 

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 performance hurdles for 2022 are based on the Company’s TSR performance. 

Relative TSR 

(a) 50% of the Performance Rights that are subject to the Relative TSR performance hurdle will be eligible to 
vest and become exercisable into Shares, assuming the relevant performance hurdles are met, at the end of 
year  2,  and  the  balance  at  the  end  of  year  3  (with the  opportunity  for  a  catch  up  at the  end  of  year  3  if  the 
milestones are not met at the end of the second year but are met at the end of the third year). 

The Relative TSR would only be achieved subject to a minimum share price of $0.33 (33 cents). The vesting 
schedule would be as set out below: 

• 
• 
• 

If the TSR is at the 50th percentile of the peer group, 65% of the rights will vest; 
If the TSR is at the 90th percentile of the peer group, 100% of the rights will vest; and 
If the TSR is between the 50th and 90th percentile, a pro rata number of rights will vest. 

Measurement 

The number of Performance Rights which vest is determined by assessing the performance of the Company, 
as measured by TSR relative to a comparator group of companies. The VWAP of the Shares in the one-month 
preceding  the  Performance  Dates  compared  to  the  VWAP  of  the  Shares  in  the  one  month  preceding  the 
commencement of the Performance Period, will be used in calculating TSR over the Performance Dates. The 
TSR  incorporates  capital  returns  as  well  as  dividends  notionally  reinvested  and  is  considered  the  most 
appropriate means of measuring the Company’s performance. 

Absolute TSR 

(b) 50% of the Performance Rights that are subject to the Absolute TSR performance hurdle will be eligible to 
vest and become exercisable into Shares, assuming the relevant performance hurdles are met, at the end of 
year  2,  and  the  balance  at  the  end  of  year  3  (with the  opportunity  for  a  catch  up  at the  end  of  year  3  if  the 
milestones are not met at the end of the second year but are met at the end of the third year). The portion of 
Performance Rights that are subject to the Absolute TSR will only vest and become exercisable into Shares as 
per the vesting schedule set out below: 

•  50% at 33 cents 
•  100% at 40 cents 
•  The difference between 50% and 100% based on a sliding scale between 33 cents and 40 cents. 

Measurement 

The number of Performance Rights which vest is determined by assessing the Share price performance of the 
Company.  The  VWAP  of  the  Shares  in  the  one-month  preceding  the  Performance  Dates  will  be  used  in 
calculating Share price performance over the Performance Dates. 

The  Nomination  and  Remuneration  Committee  will  test  performance  against  the  Performance  Hurdles  to 
determine whether the Performance Rights are eligible to vest shortly after the end of Performance Dates. 

If the Performance Hurdles are not satisfied by the end of the Performance Period, the Performance Rights will 
lapse unless the Nomination and Remuneration Committee exercises its discretion to waive the Performance 
Hurdle in whole or in part. 

38

21 

 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Spirit Technology Solutions Ltd 
Directors' report 
30 June 2022 

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 behaviors, 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. 
At the Annual General Meeting held on 29 November 2021, the Board sought to change the terms of previously 
issued Performance Rights to remove the Return on Invested Capital (ROIC) vesting condition and replace it 
with the TSR performance hurdles as outlined above. The Board considered that the previous ROIC hurdle was 
no longer fit for purpose or relevant to the Company, as the cost of capital on which the ROIC was based has 
changed significantly over the years, and establishing the appropriate capital base for the determination of ROIC 
is challenging considering the business strategy has changed. 

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 2022 are set out below: 

Name 
Sol Lukatsky* 
Mark Dioguardi 
Paul Miller 

  Number of    Number of    Number of    Number of 

rights 
granted 

rights 
granted 

rights 
vested 

rights 
vested 

  during the    during the    during the    during the 

year 
2022 
6,000,000  
5,000,000  
1,500,000  

year 
2021 
1,372,369  
860,018  
308,783  

year 
2022 

49,338  
103,844  
-  

year 
2021 

- 
- 
- 

* The balance of these performance rights that remain as at the date of this report is 2,009,124 as a result of the pro-rata 
lapse of Mr Lukatsky’s Performance Rights on his cessation on 2 July 2022. 

Additional information 
The earnings of the Consolidated Entity for the five years to 30 June 2022 are summarised below: 

Revenue and other income 
Net (loss)/profit before tax 
Net (loss)/profit after tax 
Share price 

2022 
$'000 
     138,732   
(55,041)  
(53,166)  
$0.053  

2021 
$'000 
104,469  
1,345  
1,157  
$0.26  

2020 
$'000 

2019 
$'000 

2018 
$'000 

34,874  
(2,043)  
(1,515)  
$0.24  

17,452  
(1,009)  
(824)  
$0.26  

16,300 
1,031 
571 
$0.245 

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: 

Ordinary shares 
James Joughin 
Julian Haber* 
Sol Lukatsky 
Mark Dioguardi** 
Gregory Ridder 
Michelle Bendschneider*** 
Inese Kingsmill**** 
Paul Miller 

  Balance at    

Balance 

  Additions 

the start of     on the date of  
  appointment  

the year 

  Disposals/    Balance at  
the end of  
the year 

other 

4,353,736  
-  
3,252,583  
1,444,128  
1,650,000  
-  
187,500  
196,127  
11,084,074  

-  
5,693,092  
-  
-  
-  
-  
-  
-  
5,693,092  

411,200  
-  
101,838  
103,844  
100,000  
-  
-  
-  
716,882  

-  
-  
-  
-  
-  
-  
(187,500)  
-  
(187,500)  

4,764,936 
5,693,092 
3,354,421 
1,547,972 
1,750,000 
- 
- 
196,127 

17,306,548 

22 

39

 
  
  
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
  
Spirit Technology Solutions Limited 
Directors' report 
30 June 2022 

*    Mr Julian Haber was appointed to the Board effective 1 April 2022. Upon appointment, Mr Haber held 5,693,092 shares 

in the Company. 

  Ms Michelle Bendschneider was appointed to the Board effective 1 April 2022. Upon appointment, Ms Bendschneider 

**   Mr Mark Dioguardi resigned from the Board on 1 April 2022. He remains a key management personnel. 
**
* 
**
** 

  Ms Inese Kingsmill resigned from the Board effective 30 September 2021. The balance disclosed in "Disposals/other" 

column represents her shareholding on the date of resignation. 

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 

the start of    
the year 

9,000,000  
9,000,000  
18,000,000  

  Balance at     Granted 

  Exercised 

Expired/  
forfeited/  
other 

  Balance at  
the end of  
the year 

-  
-  
-  

-  
-  
-  

-  
-  
-  

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 
Sol Lukatsky* 
Mark Dioguardi** 
Paul Miller 

  Balance at     Granted 

the start of    
the year 

Vested/ 
exercised 

Expired/  
forfeited/  
other 

  Balance at  
the end of  
the year 

1,619,428  
1,380,018  
638,051  
3,637,497  

6,000,000  
5,000,000  
1,500,000  
12,500,000  

(49,338)  
(103,844)  
-  
(153,182)  

(197,721)  
(416,156)  
-  
(613,877)  

7,372,369 
5,860,018 
2,138,051 
15,370,438 

*  Mr  Sol  Lukatsky  resigned  from  the  Board  on 2 July  2022.  Following  his  departure  4,467,267  performance rights 
were forfeited, leaving 2,905,102 retained subject to the terms of the applicable employee incentive plan. This was 
determined based on the proportion of the vesting period that Mr. Lukatsky was an employee up to his cessation 
date. 

**  Mr Mark Dioguardi resigned from the Board on 1 April 2022. He remains a key management personnel. 

This concludes the Remuneration Report, which has been audited. 

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  
price 

Number  
  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. 

40

23 

 
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
 
 
 
 
 
 
  
 
  
 
   
 
 
 
 
   
 
 
 
 
 
 
 
 
   
 
  
 
 
   
 
  
  
  
Spirit Technology Solutions Limited 
Directors' report 
30 June 2022 

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 

22 April 2020 
13 October 2020 
11 June 2021 
29 November 2021 
11 March 2022 
11 July 2022 

  Expiry date 

  22 April 2023 
  12 November 2023 
  11 June 2024 
  7 April 2025 
  7 April 2025 
  30 June 2026 

Number  

  under rights 

653,943 
1,755,996 
620,685 
7,009,124 
2,000,000 
6,250,000 

18,289,748 

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 2022 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 
2022 and up to the date of this report on the exercise of Performance Rights granted: 

Date Performance Rights granted 

12 September 2018 
18 February 2019 

  Conversion    Number of  

price 

  shares issued 

$0.00  
$0.00  

49,338 
103,844 

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. 

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 30 to the financial statements. 

24 

41

 
  
  
  
 
   
 
 
   
 
 
 
 
 
 
 
 
 
   
 
 
 
   
 
  
  
 
 
 
 
 
 
 
 
 
  
  
  
Spirit Technology Solutions Limited 
Directors' report 
30 June 2022 

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  30  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. 

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 2022 

42

25 

 
  
  
  
 
  
  
  
  
  
  
  
Auditor's Independence Declaration



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 2022, 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 2022 

Steven Bradby 
Partner 

26 

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 separately owned firms and does not accept any  
responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms. 

45

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statement of Profit or Loss and Other 
Comprehensive Income

Spirit Technology Solutions Ltd 
Statement of profit or loss and other comprehensive income 
For the year ended 30 June 2022 

Revenue 

Other income 
Cost of sales 

Expenses 
Employee benefits expense 
Share-based payments 
Administration and corporate expenses 
Acquisition, divestment and integration costs 
Restructuring costs 
Selling 
Marketing 
Net fair value loss on remeasurement of financial liabilities 
Impairment of non-current assets 
Depreciation and amortisation expense 
Finance costs 

(Loss)/profit before income tax benefit/(expense) 

Income tax benefit/(expense) 

(Loss)/profit after income tax benefit/(expense) for the year 
attributable to the owners of Spirit Technology Solutions Ltd 

  Note  

Consolidated 

2022 
$'000 

2021 
$'000 

5 

6 

135,338  

102,786 

3,394  
(67,523)  

1,683  
(51,220) 

  40 

7 
7 
7 

8 

(47,923)  
(721)  
(11,309)  
(2,040)  
(1,413)  
(1,199)  
(1,699)  
(2,747)  
(48,374)  
(7,655)  
(1,170)  

(31,550) 
(620) 
(7,498) 
(2,100) 
- 
(1,163) 
(1,531) 
(168) 
- 
(6,666)  
(608) 

(55,041)  

1,345 

1,875  

(188) 

(53,166) 

1,157 

Other comprehensive income for the year, net of tax 

-    

-   

Total comprehensive (loss)/income for the year attributable to the 
owners of Spirit Technology Solutions Ltd 

(53,166) 

1,157 

Earnings per share for (loss)/profit attributable to the owners of Spirit 
Technology Solutions Ltd 
Basic earnings per share 
Diluted earnings per share 

  39 
  39 

(8.08)  
(8.08)  

0.21 
0.21 

Cents 

Cents 

The above statement of profit or loss and other comprehensive income should be read in conjunction with the 
accompanying notes 
27 

47

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
 
 
  
 
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
  
Statement of Financial Position
Statement of Financial Position

Spirit Technology Solutions Ltd 
Statement of financial position 
As at 30 June 2022 

Assets 
Current assets 
Cash and cash equivalents 
Trade and other receivables 
Inventories 
Contract assets 
Other assets 
Total current assets 

Non-current assets 
Contract assets 
Property, plant and equipment 
Assets held for sale 
Right-of-use assets 
Intangible assets 
Deferred tax 
Other assets 
Total non-current assets 

Total assets 

Liabilities 
Current liabilities 
Trade and other payables 
Lease liabilities 
Provisions 
Unearned revenue 
Deferred consideration 
Contingent consideration 
Total current liabilities 

Non-current liabilities 
Borrowings 
Lease liabilities 
Deferred tax 
Provisions 
Unearned revenue 
Contingent consideration 
Total non-current liabilities 

Total liabilities 
Net assets 

Equity 
Issued capital 
Reserves 
Accumulated losses 

Total equity 

Note 

Consolidated 

2022 

$'000 

2021 
(Restated) 
$'000 

  9   
  10   
  11   
  13   
  12   

  13   
  14   

  15   
  16   
  17   
  12   

  18 
  19 
  20 
  24 
  21 
  34 

  22 
  19 
  23 
  20 
  24 
  34 

  25 
  26 

11,733  
11,575  
4,281  
1,222  
4,342  
33,153  

2,893  
1,415  
-  
2,577  
78,859  
4,086  
528  
90,358  
123,511  

16,705  
1,661  
4,510  
6,028  
2,611  
11,660  
43,175  

13,000  
1,369  
5,544  
583  
422  
-  
20,918  
64,093  
59,418  

8,493  
12,784 
2,577  
143  
4,130 
28,127 

1,544  
13,895  
1,301 
3,891  
124,561  
2,619  
1,375  
149,186 

177,313 

16,142 

2,004   
3,444  
3,655  
15,327  
2,399  
42,971 

10,000  
2,016  
5,870  
352  
2,823  
3,603   

24,664 

67,635 

109,678 

114,874  
1,826  
(57,282)  
59,418  

112,689  
1,187  
(4,198) 

109,678  

The above statement of financial position should be read in conjunction with the accompanying notes 
28 

49

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
  
 
 
 
 
  
 
 
     
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
Statement of Changes in Equity
Statement of Financial Position

Spirit Technology Solutions Ltd 
Statement of changes in equity 
For the year ended 30 June 2022 

Consolidated 

Balance at 1 July 2021 

Loss after income tax benefit for the year 
Other comprehensive income for the year, net of tax 

Total comprehensive income for the year 

Transactions with owners in their capacity as owners: 
Share-based payments (Note 40) 
Transfers 
Issue of shares to the vendor as part of the earnout 
consideration in relation to the Trident acquisition 
Issue of shares to the vendor as part of the earnout 
consideration in relation to the Altitude IT acquisition 
Issue of shares to the vendor as part of the earnout 
consideration in relation to the Beachhead acquisition 
Issue of shares to the vendor as part of the earnout 
consideration in relation to the Reliance IT acquisition 
Issue of shares to vendor as part of deferred 
consideration in relation to the Nexgen acquisition 

Issued 
capital 
$'000 

  Reserves   Accumulated 

 Total equity 

$'000 

losses 
$'000 

$'000 

112,689  

1,187  

(4,198)  

109,678 

-  
-  

-  

-  
-  

251 

77 

404 

262 

1,191 

-  
-  

-  

721  
(82)  

- 

- 

- 

- 

- 

(53,166)  
-  

(53,166) 
- 

(53,166)  

(53,166) 

-  
82  

- 

- 

- 

- 

- 

721 
- 

251 

77 

404 

262 

1,191 

Balance at 30 June 2022 

114,874  

1,826  

(57,282)  

59,418 

The above statement of changes in equity should be read in conjunction with the accompanying notes 
29 

51

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
 
 
 
 
 
  
  
  
 
 
 
 
  
  
  
 
 
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
 
 
  
 
Spirit Technology Solutions Ltd 
Statement of changes in equity 
For the year ended 30 June 2022 

Consolidated 

Balance at 1 July 2020 

Issued 
capital 
$'000 

  Reserves   Accumulated 

 Total equity 

$'000 

losses 
$'000 

$'000 

42,852  

567  

(5,355)  

38,064 

Profit after income tax expense for the year 
Other comprehensive income for the year, net of tax 

Total comprehensive income for the year 

Transactions with owners in their capacity as owners: 
Contributions of equity, net of transaction costs (Note 
25) 
Share-based payments (Note 40) 
Issue of shares to the vendor as part consideration in 
relation to the VPD Group acquisition 
Issue of shares to the vendor as part consideration in 
relation to the Ancore Pty Ltd acquisition 
Issue of shares to the vendor as part consideration in 
relation to the Beachhead acquisition 
Issue of shares to the vendor as part consideration in 
relation to the Reliance IT acquisition 
Issue of shares to the vendor as part 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) 

-  
-  

-  

44,835 
-  

7,250 

573 

624 

1,660 

2,457 

12,164 

274 

-  
-  

-  

- 
620  

- 

- 

- 

- 

- 

- 

- 

1,157  
-  

1,157 
- 

1,157  

1,157 

- 
-  

- 

- 

- 

- 

- 

- 

- 

44,835 
620 

7,250 

573 

624 

1,660 

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 
30 

52

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
 
 
 
 
 
  
  
  
 
 
 
 
  
  
  
 
 
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
 
 
  
Statement of Cash Flows
Statement of Financial Position

Spirit Technology Solutions Ltd 
Statement of cash flows 
For the year ended 30 June 2022 

Cash flows from operating activities 
Receipts from customers (inclusive of GST) 
Government grants received 
Payments to suppliers and employees (inclusive of GST) 
Deposits refunded/(placed) 
Interest received 
Interest and other finance costs paid 
Income taxes paid 

  Note  

Consolidated 

2022 
$'000 

2021 
$'000 

  151,085  
1,184  
  (147,815)  
136  
-  
(980)  
-  

110,058 
83  
 (104,528) 
(100) 
3  
(471) 
- 

Net cash from operating activities 

  38 

3,610  

5,045 

Cash flows from investing activities 
Payments for property, plant and equipment 
Payments for intangibles 
Cash payments to acquire businesses, net of cash acquired 
Acquired income tax liabilities paid 
Business acquisition, divestment and integration costs 
Proceeds from disposal of assets & right of use 

Net cash used in investing activities 

Cash flows from financing activities 
Proceeds from issue of shares 
Share issue transaction costs 
Proceeds from borrowings 
Repayment of borrowings 
Repayment of lease liabilities 

Net cash from financing activities 

Net increase in cash and cash equivalents 
Cash and cash equivalents at the beginning of the financial year 

  14 
  16 
  34 

  25 

(3,004)  
(1,373)  
(14,128)  
(427)  
(967)  
18,536  

(3,482) 
(1,581) 
(45,798) 
(481) 
(2,100) 
541  

(1,363)  

(52,901) 

-  
 -  
21,000  
(18,000)  
(2,007)  

47,042  
(2,207) 
9,732  
(3,000) 
(1,618) 

993  

49,949  

3,240  
8,493  

2,093  
6,400  

Cash and cash equivalents at the end of the financial year 

9 

11,733  

8,493  

The above statement of cash flows should be read in conjunction with the accompanying notes 
31 

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Notes to the Financial Statements
Statement of Financial Position

Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

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 
2022. 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 
Notes to the financial statements 
30 June 2022 

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 2022 of $10.022M (30 June 2021 net 
current  liability  position:  $14.844M).  This  financial  position  needs  to  be  considered  noting  the  following  key 
factors: 

  Current liabilities includes deferred and contingent consideration payable of $14.3M. The estimated cash 
component  of this  consideration  totals  $11.7M.  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 $6M. This liability unwinds to revenue rather than being a 

cash settled liability. 

  The Consolidated Entity can access required capital within its banking facilities to meet it projected forward 

cash flow commitments. 

  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 33. 

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 2022 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. 

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 ('CODMs'). The CODMs 
are responsible for the allocation of resources to operating segments and assessing their performance. Refer 
Note 4 Operating segments. 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 2. Significant accounting policies (continued) 

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, managed IT and security 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 and software 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.  

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. 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 2. Significant accounting policies (continued) 

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. 

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 which is applied at the operating segment level. 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. 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 2. Significant accounting policies (continued) 

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 3 - 4 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. 

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. 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 2. Significant accounting policies (continued) 

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. 

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 

 3 – 5 years 
 2 – 7 years 
 4 – 5 years 
 3 – 7 years 
 1 – 5 years 

*  Plant  and  equipment  disclosed  in  the  financial  year  ended  30  June  2021  included  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. 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 2. Significant accounting policies (continued) 

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. 

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 
Directors’ assessment of the recoverable amount of the cash-generating unit (CGU). 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. 

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  Directors’  assessment  of  the  CGU’s.  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. 

Gains and losses on the disposal of a CGU 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.  

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 2. Significant accounting policies (continued) 

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. 

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 CGU to which the asset belongs. Assets that do not have independent cash flows are 
grouped together to form a CGU. 

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. 

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. 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 2. Significant accounting policies (continued) 

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. 

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. 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 2. Significant accounting policies (continued) 

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. 

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. 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 2. Significant accounting policies (continued) 

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 39 to the financial statements. 

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. 

Disclosure of prior period errors 
In accounting for the acquisition of Nexgen Australia Group Pty Ltd (“Nexgen"), with effective control on 1 April 
2021  (refer  Note  34),  brand  names,  customer  relationships  and  other  intangible  assets  were  separately 
identified, however there was no related deferred tax liability recognised reflecting the assets’ recovery through 
use in the Consolidated Entity’s operations, generating taxable income or capital gain. Accordingly, adjustment 
has currently been made to the impacted comparative balances as summarised below, to reflect the corrections: 

Balance sheet 
(extract) 

Intangible assets (Note 16) 

Deferred tax liability (Note 23) 

30 June 
2021 
$'000 
119,403 

Increase/ 
(Decrease) 
$'000 
5,158 

30 June 
2021 (Restated) 
$'000 
124,561 

       (712) 

 (5,158) 

    (5,870) 

Net Assets 

109,678 

- 

109,678 

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. 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

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. 

Revenue recognition 
The Consolidated Entity’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. 

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 customer. 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  each  CGU  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. 

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Spirit Technology Solutions Limited 
Notes to the financial statements 
30 June 2022 

Note 3. Critical accounting judgements, estimates and assumptions (continued) 

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. 

Allocation of goodwill to divested assets 
As detailed in Note 35, the Consolidated Entity divested a range of non-core assets during the financial year 
ended 30 June 2022. AASB 136 requires that the goodwill that has been allocated to the cash generating unit 
(CGU)  is  included  in  the  determination  of  the  associated  gain  or  loss  on  disposal  of  those  assets.  For  that 
purpose, the standard requires that the amount to be included is measured on the basis of the relative values 
of the assets disposed of and the portion of the CGU retained, unless the entity can demonstrate that some 
other  method  better  reflects the  goodwill  associated  with  the  assets  disposed  of.  The standard  refers to  the 
‘relative  values’  of  the  parts  without  specifying  how  these  are  to  be  calculated.  This  therefore,  requires  the 
application  of  judgment  and  that  judgment  assessment  is  outlined  in  Note  35 for  each  of the  divested  asset 
groups. 

Note 4. Operating segments 

Identification of reportable operating segments 

The Consolidated Entity’s business model has evolved significantly over the last two years as a consequence 
of  an  aggressive  acquisition  path  associated  with  a  realignment  of  the  strategic  direction  and  vision  for  the 
Group. This strategic realignment has seen the divestment of assets no longer considered core to that forward 
strategic  goal  alongside  the  merger  of  individual  business  units  into  a  more  clearly  defined  go-to-market 
divisional structure. 

Up  until  June  2022  (following  the  fixed  wireless  divestment  and  change  in  Board  composition),  the  Chief 
Operating Decision Makers (‘CODM’s’) were focused on revenue product line growth and allocating resources 
to those product lines.  Reporting had been targeted at product sets, customer types (B2B & B2C) and revenue 
derived from the transfer of goods and services over time and at a point in time. Alongside this revenue focus, 
the  Consolidated  Entity  was  still  managing  through  a  series  of  acquisition  earn-out  arrangements  and 
maintaining  separation  at  an  individual  entity  level  to  facilitate  earn-out  reporting.  Consequently,  the 
Consolidated Entity was organised into one operating segment, being the provision of IT&T services. 

During the course of the second half of financial year 2022, the CODM attention shifted from a revenue product 
growth focus to an earnings and profitability focus combined with a further refinement of the long-term strategic 
vision to be one of Australia’s leading providers of secure modern workplaces. That change, combined with the 
completion of a range of earnout structures, collapsing of historic standalone entities into a ‘standard operating 
environment’  and  appointment  of  dedicated  ‘segment  Chief  Executive  Officers’  (responsible  for  financial 
performance), alongside the non-core divestments and restructuring initiatives focused on profitability, saw the 
CODM operating and reporting structure redefined into three operating segments being: 

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Spirit Technology Solutions Limited 
Notes to the financial statements 
30 June 2022 

Note 4. Operating segments (continued) 

  Collaboration  and  Communication  offering  award-winning  voice  solutions,  data  and  office technology  for 

small business; 

  Cyber security offering specialist cyber managed services and industry leading solutions to corporate and 
enterprise customers delivered through a 24/7 Security Operations Centre and professional service teams. 
This  capability  also  enables  Spirit  to  put  cyber  security  at  the  core  of  all  key  market  solutions  provided 
across our segments, improving the resilience and security of all our customers; 

  Managed  Services  (IT&T)  offering  a  comprehensive  range  of  managed  IT  and  professional  services 
including end-user, public cloud, infrastructure and networking, data and voice solutions to SMB and mid-
market customers. 

The CODMs review these segments on an underlying basis down to the underlying (loss)/profit before income 
tax  expense  level.  Underlying  adjustments  are  reported  on  a  consolidated  group  basis  but  attributed  to  the 
segments for disclosure purposes. 

Revenue 

End customer revenue 

Intercompany revenue 

Underlying earnings before interest, taxes, 
depreciation & amortisation* 

Depreciation and amortisation expense 

Finance costs 

Underlying net (loss)/profit before income tax** 

Underlying Adjustments: 

  Share based payments 

  Profit on divestment of consumer & fixed wireless    
  assets 

  Acquisition, divestment & integration costs 

  Restructuring costs 

  Net fair value loss on remeasurement of contingent 
  consideration on business combinations 

  Impairment of non-current assets 

Collaboration & 
Communication 

Cyber  
Security 

$'000 

$'000 

Managed 
Services 
(IT&T) 
$'000 

Corporate 

Total 

$'000 

$'000 

34,982 

30,899 

69,457               -  135,338 

- 

498 

158 

(656) 

- 

34,982 

31,397 

69,615 

(656)  135,338 

9,885 

(1,238) 

(61) 

8,586 

2,432 

(447) 

(26) 

(2,154) 

(2,907)  7,256 

(4,776) 

-  (6,461) 

(103) 

(980)  (1,170) 

1,959 

(7,033) 

(3,887) 

(375) 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

(721) 

(721) 

1,823 

- 

1,823 

- 

(2,040)  (2,040) 

(275) 

(1,138)  (1,413) 

- 

(2,747)  (2,747) 

(48,374) 

- 

- (48,374) 

-  (1,194) 

  Amortisation of customer relationships 

 (1,194) 

(Loss)/profit before income tax benefit 

7,392 

1,959 

(53,859) 

(10,533)   (55,041) 

Income tax benefit 

(Loss) after income tax benefit 

1,875 

   (53,166) 

* 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 
acquisition, divestment & integration costs, net fair value loss on remeasurement of contingent consideration on business 
combinations, restructuring costs, impairment of non-current assets and share-based payments. Underlying EBITDA for the 
year ended 30 June 2022 also excludes gain/(loss) on divestment of consumer and fixed wireless assets.  
**  Underlying  net  (loss)/profit  before  tax  adjusts  Underlying  EBITDA  to  deduct  depreciation  &  amortisation  (excluding 
amortisation of customer relationships) and finance costs. 
*** The Underlying EBITDA segment results include recharges for a range of costs (such as insurance, IT systems and Group 
cyber programmes) that the segments may not have incurred on a standalone basis.

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Spirit Technology Solutions Limited 
Notes to the financial statements 
30 June 2022 

Note 4. Operating segments (continued) 

Total assets 
Total liabilities 

Net assets 

Collaboration & 
Communication 

Cyber  
Security 

$'000 

$'000 

Managed 
Services 
(IT&T) 
$'000 

Corporate 

Total 

$'000 

$'000 

       72,938 
      (11,316) 

     27,186 
        (7,541) 

       17,805 
(19,549) 

 5,582 
(25,687) 

   123,511 

(64,093)  

       61,622 

      19,645 

  (1,744) 

(20,105) 

  59,418 

Comparatives 
As outlined above, the CODMs historically managed the Company as a single operating segment. The provision 
of  comparative  information  at  the  single  operating  segment  for  the  year  ended  30  June  2021  matches  the 
reported  comparatives  contained  within  the  financial  statements.  The  disaggregation  of  these  comparative 
numbers into the revised segments is not available and impractical to generate on a reliable basis. 

Major customers 
During  the  year  ended  30  June  2022  there  are  no  individual  customers  which  accounted  for  5%  or  more  of 
sales. 

Note 5. Revenue 

Sales revenue 

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 and services transferred at a point in time 
Services transferred over time 

Consolidated 

2022 
$'000 

2021 
$'000 

135,338  

102,786 

Consolidated 

2022 
$'000 

2021 
$'000 

39,906  
22,538  
33,207  
32,817  
5,921  
949  

49,959  
17,586  
13,369  
14,300  
4,428  
3,144 

135,338  

102,786 

135,338  

102,786 

74,038  
61,300  

55,127  
47,659  

135,338  

102,786 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 6. Other income 

Government infrastructure grants 
Government subsidies 
Profit on divestment of consumer & fixed wireless assets* 
Profit on sale of other assets and right of use 
Miscellaneous income 
Interest income 

* Refer Note 35 

Note 7. Expenses 

(Loss)/profit before income tax includes the following specific expenses: 
Depreciation 
Leasehold improvements 
Plant and equipment 
Motor vehicles 
Furniture and fixtures 

Total depreciation (refer Note 14) 

Amortisation 
Right-of-use assets 
Customer relationships 
Software and projects 
Intellectual property 

Total amortisation (refer Notes 15 and 16) 

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 

2022 
$'000 

2021 
$'000 

394  
1,078  
1,823  
39  
60  
-  

665  
305 
- 
529  
181  
3  

3,394  

1,683  

Consolidated 

2022 
$'000 

2021 
$'000 

179  
2,832  
113  
85  

47  
3,928 
62  
69  

3,209  

4,106  

1,983  
1,194  
1,128  
141  

1,527  
299  
690  
44  

4,446  

2,560  

7,655  

6,666  

980  
190  

1,170  

471  
137  

608  

3,883  

2,613  

44,040  

28,937  

669  

321  

*The  Consolidated  Entity  has  recognised  a  loss  of  $669,000  in  profit  or  loss  in  respect  of  impairment  of 
receivables for the year ended 30 June 2022 (2021: $321,000), including bad debts expense of $517,000 (2021: 
$221,000). 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 7. Expenses (continued) 

Impairment of non-current assets 
Property, plant and equipment (refer Note 14) 
Right-of-use assets (refer Note 15) 
Intangibles (refer Note 16) 

Note 8. Income tax (benefit)/expense 

Consolidated 

2022 
$'000 

2021 
$'000 

2,214  
357  
45,803  

48,374  

- 
- 
- 

- 

Consolidated 

2022 
$'000 

2021 
$'000 

Numerical reconciliation of income tax (benefit)/expense and tax at the statutory 
rate 
(Loss)/profit before income tax benefit/(expense) 

(55,041)  

1,345 

Tax at the statutory tax rate of 30.0% (30.0% at 30 June 2021) 

(16,512)  

403  

Tax effect amounts which are not deductible/(taxable) in calculating taxable 
income: 

Acquisition related 
Share options and employee shares scheme 
Impairment of goodwill and other non-tax deductible assets 
Impact of change in corporate tax rate 
Other balances and permanent differences 

Income tax (benefit)/expense 

Note 9. Current assets - cash and cash equivalents 

Cash at bank 

824  
216  
13,499  
-  
98  

506  
- 
-   
(99) 
(622)   

(1,875)  

188  

Consolidated 

2022 
$'000 

2021 
$'000 

11,733  

8,493 

48 

73

 
  
  
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 10. Current assets - trade and other receivables 

Trade receivables 
Less: Allowance for expected credit losses 

Other receivables 

Consolidated 

2022 
$'000 

2021 
$'000 

11,870  
(707)  

11,163  
412  

13,270  
(487) 

12,783  
1  

11,575  

12,784 

Allowance for expected credit losses 

The  Consolidated  Entity retains  a  provision  of $707,000  in  respect  of  impairment  of receivables  for the  year 
ended 30 June 2022 (2021: $487,000). 

The ageing of the receivables and allowance for expected credit losses provided for above are as follows: 

1 to 3 months overdue 
4 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 11. Current assets - inventories 

Stock on hand - at cost 
Less: Provision for impairment 

74

49 

Consolidated 

2022 
$'000 

2021 
$'000 

140  
463  
104  

707  

- 
412 
75  

487  

Consolidated 

2022 
$'000 

2021 
$'000 

487  
220  

707  

176  
311  

487  

Consolidated 

2022 
$'000 

2021 
$'000 

4,670  
(389)  

2,801  
(224) 

4,281  

2,577  

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 12. Other assets  

Accrued revenue 
Prepayments 
Vendor loans 
Other assets 

The classification of other assets into current and non-current is set out below: 

Current 
Non-current 

Note 13. Contract assets 

Contract assets 
Accumulated release to profit and loss 

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 
Release to the profit and loss 

Closing balance 

Consolidated 

2022 
$'000 

2021 
$'000 

2,988  
1,475  
150  
257  

3,164  
1,079  
532 
730 

4,870  

5,505  

Consolidated 

2022 
$'000 

2021 
$'000 

4,342  
528  

4,130 
1,375 

4,870  

5,505  

Consolidated 

2022 
$'000 

2021 
$'000 

5,168  
(1,053)  

1,881  
(194) 

4,115  

1,687  

Consolidated 

2022 
$'000 

2021 
$'000 

1,222  
2,893  

143 
1,544 

4,115  

1,687  

Consolidated 

2022 
$'000 

2021 
$'000 

1,687  
3,287  
(859)  

- 
1,881 
(194) 

4,115  

1,687  

50 

75

 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 14. Non-current assets - property, plant and equipment 

Leasehold improvements - at cost 
Less: Accumulated depreciation and impairment 

Plant and equipment at cost 
Less: Accumulated depreciation and impairment 

Motor vehicles - at cost 
Less: Accumulated depreciation 

Furniture & Fixtures at Cost 
Less: Accumulated depreciation 

Work in progress 

Reconciliations 

Consolidated 

2022 
$'000 

2021 
$'000 

813  
(606)  
207  

6,936  
(6,162)  
774  

671  
(456)  
215  

848  
(629)  
219  

599  
(195) 

404  

22,010 
(8,890) 

13,120  

854  
(799) 

55  

820  
(553) 

267  

-  

49  

1,415  

13,895  

Reconciliations of the written down values at the beginning and end of the current and previous financial year 
are set out below: 

Consolidated 

Leasehold 
improvements 

Plant and 
equipment 

  Motor vehicles  

Furniture & 
Fixtures 

Work in 
progress 

Total 

$'000 

$'000 

$'000 

$'000 

$'000 

$'000 

Balance at 1 July 2020 
Additions through business 
combinations (Note 34) 
Transfers to held for sale 
Additions/transfers 
Disposals 
Depreciation expense 

Balance at 30 June 2021 
Adjustments through business 
combinations (Note 34) 
Additions/transfers 
Transfers from held for sale 
Disposals on asset divestment 
(Note 35) 
Disposals - Other 
Depreciation expense 
Impairment expense 

23  

13,489  

62  

239  

8  

13,821 

             415 

1,462 
-              (1,301)  
13              3,410  
(12)  
(3,928)  

-  
(47)  

               55 
-  
-  
-  
(62)  

              79 
-  
18  
-  
(69)  

404  

13,120   

(105) 

27 
217              2,809   
-                  100   

55  

298 
-  
-  

- 
-  
(179)  
(130)  

(19)               

(10,347) 

(2,832)  
(2,084)  

- 
(25)  
(113)  
-  

267  

10 
27  
-  

- 
-  
(85)  
-  

219  

- 
2,011 
-              (1,301) 
41               3,482 
(12) 
(4,106) 

-  
-  

49  

13,895 

- 

230 
(49)              3,004 
-                 100 

- 
-  
-  
-  

         (10,347) 
(44) 
(3,209) 
(2,214) 

-  

1,415 

Balance at 30 June 2022 

207  

774  

215  

76

51 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
 
  
 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
 
 
  
Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 15. Non-current assets - right-of-use assets 

Right-of-use assets 
Less: Accumulated amortisation and impairment 

Consolidated 

2022 
$'000 

2021 
$'000 

6,379  
(3,802)  

6,473  
(2,582) 

2,577  

3,891  

Reconciliations 
Reconciliations of the written down values at the beginning and end of the current and previous financial year are 
set out below: 

Consolidated 

Opening balance 
Net additions through business combinations (Note 34) 
Additions 
Disposals on asset divestment (Note 35) 
Disposals - Other 
Amortisation expense 
Impairment expense 

Note 16. Non-current assets - intangibles 

Goodwill - at cost 

Intellectual property - at cost 
Less: Accumulated amortisation and impairment 

Software 
Less: Accumulated amortisation and impairment 

Brand names - at cost 

Customer relationships 
Less: Accumulated amortisation 

Consolidated 

2022 
$’000 

2021 
$'000 

         1,563 
3,891 
         3,473 
             - 
      1,598 
            416 
        (325)                  - 
        (247)              (34) 
     (1,983)         (1,527) 
        (357)                 - 

2,577 

3,891 

Consolidated 

2022 

$'000 

2021 
(Restated) 
$'000 

63,382  

105,245  

1,412  
(1,412)  
-  

5,635  
(4,712)  
923  

561  
(44) 

517  

5,305  
(2,254) 

3,051  

4,105  

4,105  

11,942  
(1,493)  
10,449  

11,942  
(299) 

11,643  

78,859  

124,561 

52 

77

 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
  
 
 
Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 16. Non-current assets – intangibles (continued) 

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 2020 
Additions through business 
combinations (Note 34) 
Additions 
Amortisation expense 

Balance at 30 June 2021 
Additions through business 
combinations (Note 34)* 
Additions 
Disposals on asset divestment 
(Note 35) 
Disposals - Other 
Amortisation expense 
Impairment expense 

  Goodwill 
(Restated*) 
at cost 
$'000 

  Brand names   Software & 

  Customer 

at cost 
$'000 

projects 
at cost 
$'000 

relationships 
at cost 
$'000 

Intellectual 
property 
at cost 
$'000 

Total 

$'000 

23,974  

81,271 
-  
-  

-  

1,385  

-  

-  

25,359 

4,105 
-  
-  

1,336 
1,020  
(690)  

11,942 
-  
(299)  

- 

98,654 
561           1,581 
(44)  
(1,033) 

105,245  

4,105  

3,051  

11,643  

517  

124,561 

6,286 
-  

(5,093) 
-  
-  
(43,056)  

- 
-  

- 
-  
-  
-  

- 
523  

- 
(2)  
(1,128)  
(1,521)  

- 
-  

- 
850  

6,286 
1,373 

- 
-  
(1,194)  
-  

- 
-  
(141)  
(1,226)  

(5,093) 
(2) 
(2,463) 
(45,803) 

Balance at 30 June 2022 

63,382  

4,105  

923  

10,449  

-  

78,859 

* Refer Note 2 Disclosure of Prior Period Error for a description of the restatement. 

Goodwill, Brand Names & Intangible Assets with Indefinite Lives 

The addition to goodwill during the financial year ended 30 June 2022 of $6.3M was related to measurement 
period adjustments in regard to the acquisition accounting for the Nexgen Australia Group Pty Ltd which was 
acquired  1  April  2021.  As  at  30  June  2021  the  foundation  calculation  for  the  Net  Debt  Working  Capital  and 
baseline EBITDA calculations had not concluded sufficiently to form the basis of completing the calculations of 
deferred and contingent consideration on acquisition. These calculations were completed in the half-year to 31 
December 2021. 

Following the change in segment reporting (as outlined in Note 4) goodwill and brand names, including those 
acquired during the year, are allocated to the segment cash-generating units (CGU). The recoverable amount 
of  each  CGU  is  determined  based  on  a  value-in-use  model which  uses  cash  flow  projections  based  on  the 
financial budget for the 12 months immediately following the reporting date, and cash flows beyond 12 months 
extrapolated through a 5-year outlook. 

The  assumptions  used  for  the  current  reporting  period  may  differ  from  the  assumptions  in  the  past  or  next 
reporting period as internal and external circumstances and expectations change. The Consolidated Entity has 
applied the following assumptions in the 30 June 2022 calculation of value-in-use. 

Operating Segment 

Goodwill & 
Brand Names 

$’000 

Years 1 – 3 
Average 
Revenue 
Annual Growth 
Rate 

Years 4 & 5 
Growth 
Rate 

Terminal 
Growth 
Rate 

Post Tax 
Discount 
Rate 

Collaboration and Communication 

$50,136 

Managed Services (IT&T) 

Nil 

9% 

1% 

Cyber Security 

$17,351 

11% 

10% 

10% 

10% 

3% 

3% 

3% 

12% 

12% 

12% 

78

53 

 
   
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
  
 
  
 
 
  
  
  
  
  
  
 
 
  
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
  
 
  
 
  
 
 
  
  
  
  
  
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 16. Non-current assets – intangibles (continued) 

The  assumption  on  the  years  1-3  average  revenue  annual  growth  rate  for  the  Managed  Services  (IT&T) 
operating  segment  reflects  the  short  to  medium  term  revenue  decline  expectation  as  a  consequence  of  the 
restructuring  of  the  customer  base.  It  is  then  assumed  to  return  to  a  longer-term  normalised  growth  rate. 
Assumptions  for  gross  margins,  other  operating  costs  and  annual  capital  expenditure  are  based  on 
management’s expectations for the future performance and forward strategic plans. 

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 
percentage points and reducing the terminal value growth rate by half.  

Upon applying the value-in-use calculations and sensitivity tests across the asset bases, including goodwill, it 
was determined that the carrying amounts allocated to the Managed Services (IT&T) operating segment exceed 
their recoverable amount giving rise to an impairment expense as at 30 June 2022 of $48.4M (of which $43.1M 
was directly related to goodwill). 

Note 17. 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 

Note 18. Current liabilities - trade and other payables 

Trade payables 
GST payable 
Other payables 

Refer to Note 28 for further information on financial instruments. 

Note 19. Lease liabilities  

Lease liability 

Consolidated 

2022 
$'000 

2021 
$'000 

1,136  
545  
2,334  
71  

675   
775  
1,169   
-   

4,086  

2,619  

Consolidated 

2022 
$'000 

2021 
$'000 

9,450  
562  
6,693  

9,431  
706  
6,005  

16,705  

16,142 

Consolidated 

2022 
$'000 

2021 
$'000 

3,030  

4,020 

54 

79

 
   
  
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
  
 
 
 
 
 
 
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Spirit Technology Solutions Limited 
Notes to the financial statements 
30 June 2022 

Note 19. Lease liabilities (continued) 

The classification of lease liabilities into current and non-current is set out below: 

Current 
Non-current 

Refer to Note 28 for further information on financial instruments. 

Note 20. Provisions 

Annual leave 
Long service leave 
Provision for income tax 
Restructuring 
Lease make good 

The classification of provisions into current and non-current is set out below: 

Current 
Non-current 

Note 21. Current liabilities - deferred consideration 

Deferred consideration 

Refer to Note 34 for further information on deferred consideration. 

80

55 

Consolidated 

2022 
$'000 

2021 
$'000 

1,661  
1,369  

2,004    
2,016  

3,030  

4,020 

Consolidated 

2022 
$'000 

2021 
$'000 

2,377  
1,409  
(31)  
1,138  
200  

1,999  
1,271  
478  
- 
48  

5,093  

3,796  

Consolidated 

2022 
$'000 

2021 
$'000 

4,510  
583  

3,444 
352 

5,093  

3,796 

Consolidated 

2022 
$'000 

2021 
$'000 

2,611  

15,327 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 22. Non-current liabilities - borrowings 

Bank loans 

Refer to Note 28 for further information on financial instruments. 

Total secured liabilities 
The total secured liabilities (current and non-current) are as follows: 

Bank loans 

Assets pledged as security 

Consolidated 

2022 
$'000 

2021 
$'000 

13,000   

10,000 

Consolidated 

2022 
$'000 

2021 
$'000 

13,000   

10,000  

13,000   

10,000  

The  bank  loan  of  $13M (2021:  $10M) has  a  first  ranking  security over the  assets  and  undertakings  of  Spirit 
Technology Solutions Ltd and its wholly owned subsidiaries.  

Note 23. Non-current liabilities - deferred tax 

Deferred tax liability comprises temporary differences attributable to: 

Property, plant and equipment 
Identifiable intangible assets 

Deferred tax liability 

* Refer Note 2 Disclosure of Prior Period Error for a description of the restatement. 

Note 24. Unearned revenue 

Customer contract unearned revenue 
Government infrastructure grants 

Consolidated 

2022 

$'000 

2021 
(Restated*) 
$'000 

386  
5,158  

712  
5,158  

5,544  

5,870  

Consolidated 

2022 
$'000 

2021 
$'000 

6,450  
-  

4,964 
1,514 

6,450  

6,478 

The Government infrastructure grants primarily related to the Horsham and Morwell high speed internet projects. 
This  unearned  revenue  was  released  to  gain/(loss)  on  divestment  of  the  fixed  wireless  assets  to  Maret 
Infrastructure Pty Ltd effective 1 June 2022. Refer Note 35. 

56 

81

 
  
  
 
 
 
 
 
 
 
 
 
 
  
 
 
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 24. Unearned revenue (continued) 

The classification of unearned revenue into current and non-current is set out below: 

Current 
Non-current 

Consolidated 

2022 
$'000 

2021 
$'000 

6,028  
422  

3,655 
2,823 

6,450  

6,478 

Reconciliations 
Reconciliations of the movements at the beginning and end of the current and previous financial year are set 
out below: 

Consolidated 

Balance at 1 July 2020 
Additions through business combinations (Note 34) 
Net other movements 

Balance at 30 June 2021 
Additions on asset divestment (Note 35) 
Disposals on asset divestment (Note 35) 
Net other movements 

Balance at 30 June 2022 

Note 25. Equity - issued capital 

2022 
Shares 

  Customer 
contract 
unearned 
revenue 

Government 
infrastructure 
grants 

Total 

$'000 

$'000 

$'000 

1,236 
4,059 
(331) 

4,964 
720 
- 
766 

6,450 

2,096          3,332 
-          4,059 
(913) 

(582) 

1,514 

6,478 
-             720 
(1,189)         (1,189) 
441 

(325) 

- 

6,450 

2021 
$'000 

Consolidated 
2021 

2022 
$'000 

  Shares 

Ordinary shares - fully paid 

  664,723,579   652,292,046  

114,874   112,689 

82

57 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
  
 
  
 
  
  
  
 
  
 
 
 
 
  
 
  
 
  
 
  
 
  
  
  
 
  
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 25. Equity - issued capital (continued) 

Movements in ordinary share capital 

Details 

  Date 

Shares 

Issue price  

$'000 

Balance 
Issue of shares to the vendor as part consideration in 
relation to the VPD Group acquisition 
Issue of Tranche 1 Placement shares 
Issue of shares to the vendor as part consideration in 
relation to the Ancore acquisition 
Issue of shares to the vendor as part consideration in 
relation to the Beachhead acquisition 
Issue of shares to the vendor as part consideration in 
relation to the Reliance IT acquisition 
Issue of shares in accordance with Share Purchase 
Plan 
Issue of Tranche 2 Placement shares 
Conversion of vested Performance Rights 
Issue of shares to the vendor as part consideration in 
relation to the Intalock acquisition 
Issue of shares to the vendor as part of contingent 
consideration in relation to the Trident acquisition upon 
achievement of earnout target 1 
Issue of placement shares 
Issue of shares to the vendor as part consideration in 
relation to the Nexgen acquisition 
Cost of capital raising 

Balance 
Issue of shares to the vendor as part of the earnout 
consideration in relation to the Trident acquisition 
Issue of shares to the vendor as part of the earnout 
consideration in relation to the Altitude IT acquisition 
Issue of shares to the vendor as part of the earnout 
consideration in relation to the Beachhead acquisition 
Issue of shares to the vendor as part of the earnout 
consideration in relation to the Reliance IT acquisition 
Conversion of vested performance rights 
Conversion of vested performance rights 
Issue of shares to vendor as part of deferred 
consideration in relation to the Nexgen acquisition 

  30 June 2020 

430,909,320  

1 July 2020 
  27 August 2020 

29,000,000 
55,881,401  

$0.250  
$0.320   

1 September 2020 

1,592,988 

$0.360  

1 September 2020 

1,734,888 

$0.360  

1 September 2020 

4,612,204 

$0.360  

18 September 2020 
  22 October 2020 
  22 October 2020 

15,624,581 
1,125,000  
189,320  

$0.320  
$0.320   
$0.000  

3 December 2020 

5,921,053 

$0.415  

27 January 2021 
  8 April 2021 

8 April 2021 

703,366 
72,121,213  

32,876,712 
-  

$0.390  
$0.330   

$0.370  
$0.000  

  30 June 2021 

652,292,046  

9 September 2021 

1,024,218 

$0.245  

9 September 2021 

315,773 

$0.245 

9 September 2021 

1,648,142 

$0.245  

9 September 2021 
 10 September 2021 
 11 January 2022 

1,071,040  
49,338  
103,844  

$0.245  
$0.000  
$0.000  

42,852 

7,250 
17,882 

573 

624 

1,660 

5,000 
360 
- 

2,457 

274 
23,800 

12,164 
(2,207) 

112,689 

251 

77 

404 

262 
- 
- 

31 March 2022 

8,219,178 

$0.145 

1,191 

Balance 

  30 June 2022 

  664,723,579  

114,874 

Movements in unquoted options 

Details 

Balance 

Balance 

 Date 

  Options 

$'000 

 30 June 2021 

18,000,000  

 30 June 2022 

18,000,000  

- 

- 

58 

83

 
 
  
 
  
 
 
 
   
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
   
 
  
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
  
  
 
  
  
 
  
 
 
  
 
 
 
 
 
 
  
 
  
 
 
  
 
 
Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 25. Equity - issued capital (continued) 

Ordinary shares 

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 2021 Annual Report. 

Note 26. Equity - reserves 

Share-based payments reserve 
Capital reserve 

Consolidated 

2022 
$'000 

2021 
$'000 

1,820   
6   

1,181  
6  

1,826   

1,187  

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. 

84

59 

 
 
  
 
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
  
 
 
 
 
Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 26. Equity - reserves (continued) 

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 2020 
Share-based payments expense (Note 40) 

Balance at 30 June 2021 
Share-based payments expense (Note 40) 
Transfers 

Balance at 30 June 2022 

Note 27. Equity - dividends 

Share-
based 
payments 
reserve 
$'000 

Capital 
reserve 
$'000 

Total 
$'000 

567 
620 

1,187 
721 
(82) 

561  
620  

1,181  
721  
(82)  

1,820  

1,826 

6  
-  

6  
-  

6  

There were no dividends paid, recommended or declared during the current or previous financial year. 

Note 28. 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. 

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  the 
Philippines  and  cost  around  $21,000  USD  per  week.  The  Consolidated  Entity  also  sources  security-based 
software products and spends approximately $3.5M USD per annum. Conversion is at the applicable exchange 
rate at the time the transaction is authorised. 

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 $980,000 in interest during the 2022 financial year (2021: $471,000). 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 28. Financial instruments (continued) 

The facility is structured such that a line fee is payable on the facility limit ($32M), a usage fee payable on funds 
drawn and an interest charge based on BBSY plus a margin. 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 for the year ended 30 June 2022 of $449,000 (2021: 
$193,000) over the average balance drawn down during the year ended 30 June 2022 of $22.1M (2021: $6.1M). 
The line fee for the year ended 30 June 2022 was $531,000 (2021: $278,000). 

Consolidated 

Bank loan 

2022 

2021 

  Weighted 
average 
interest 
rate 
% 

  Balance 

$'000 

  Weighted 
average 
interest 
rate 
% 

  Balance 

$'000 

2.03%   

13,000  

3.13%   

10,000 

Net exposure to cash flow interest rate risk 

13,000  

10,000 

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 $13M (2021: $10M), are interest bearing loans. 
On 22 June 2022, the Consolidated Entity executed a facility renewal with its banker for a further term of 3 years 
expiring 1 July 2025. The market rate loan facility limit was permanently increased to $32M. 

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 2022 $707,000 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. 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 28. 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. 

Consolidated - 2022 

Non-derivatives 
Non-interest bearing 
Trade and other payables 
Contingent consideration 
Deferred consideration 

Interest-bearing - variable 
Bank loan 
Lease liability 

Total non-derivatives 

Consolidated - 2021 

Non-derivatives 
Non-interest bearing 
Trade and other payables 
Contingent consideration 
Deferred consideration 

Interest-bearing - variable 
Bank loan 
Lease liability 

Total non-derivatives 

  Weighted 
average 
interest rate 
% 

  1 year or 
less 

  Between 1 
and 2 years 

  Between 2 
and 5 years 

  Over 5 
years 

$'000 

$'000 

$'000 

$'000 

- 
- 
- 

16,705  
11,660  
2,611  

-  

-  

-  
-  
-  

2.03%   
5.27%   

-  
1,661  

-  
1,369  

13,000  
-  

32,637  

1,369  

13,000  

  Weighted 
average 
interest rate 
% 

  1 year or 
less 

  Between 1 
and 2 years 

  Between 2 
and 5 years 

  Over 5 
years 

$'000 

$'000 

$'000 

$'000 

- 
- 
- 

16,142  
2,399  
15,327  

-  
3,603  
-  

3.13%   
5.27%   

-  
2,004  

10,000  
368  

35,872  

13,971  

-  
-  
-  

-  
1,648  

1,648  

  Remaining 
contractual 
maturities 
$'000 

-  
-  
-  

-  
-  

-  

16,705 
11,660 
2,611 

13,000 
3,030 

47,006 

  Remaining 
contractual 
maturities 
$'000 

-  
-  
-  

-  
-  

-  

16,142 
6,002 
15,327 

10,000 
4,020 

51,491 

Fair value of financial instruments 
Unless otherwise stated the carrying amounts of financial instruments reflect their fair value.  

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Spirit Technology Solutions Limited 
Notes to the financial statements 
30 June 2022 

Note 29. Key management personnel disclosures 

Directors 

The following persons were Directors of Spirit Technology Solutions Ltd during the financial year and up to the 
date of the financial statements: 

Mr James Joughin (Non-Executive Chairman) 
Mr Julian Challingsworth (Managing Director and Chief Executive Officer - appointed 11 July 2022) 
Mr Julian Haber (Executive Director - appointed 1 April 2022) & Interim Managing Director (16 May 2022 to 11 
July 2022) 
Mr Sol Lukatsky (Managing Director - resigned 2 July 2022) 
Mr Gregory Ridder (Non-Executive Director) 
Mr Mark Dioguardi (Executive Director - resigned 1 April 2022) 
Ms Michelle Bendschneider – (Non-Executive Director - appointed 1 April 2022) 
Ms Inese Kingsmill (Non-Executive Director - resigned on 30 September 2021) 

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 

2022 
$ 

2021 
$ 

  1,534,883   1,487,669 
112,502 
24,323 
660,183 

175,396  
52,329  
663,068  

  2,425,676   2,284,677 

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Spirit Technology Solutions Limited 
Notes to the financial statements 
30 June 2022 

Note 30. 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 

2022 
$ 

2021 
$ 

172,000  
-  

125,000  
68,225 

25,000 
38,250  
45,350  

24,000 
31,500 
215,416 

280,600  

464,141 

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 advisory and due diligence services 
Corporate advisory and due diligence services 

Note 31. Contingent liabilities 

There were no contingent liabilities at 30 June 2022 and 30 June 2021. 

Note 32. Related party transactions 

Parent entity 

Spirit Technology Solutions Ltd is the parent entity. 

Subsidiaries 

Interests in subsidiaries are set out in Note 36. 

Key management personnel 

Disclosures relating to key management personnel are set out in Note 29 and the remuneration report included 
in the Directors' report. 

Transactions with related parties 

Mr  Julian  Haber,  Executive  Director,  is  also  the  co-founder  of  Intalock  Technologies  Pty  Ltd  (“Intalock”).  As 
outlined in Note 34, Intalock had an earnout structure as part of the acquisition consideration. Subsequent to 
the assessment date of 30 June 2022, the amount of contingent consideration payable where the FY22 EBITDA 
performance target has been exceeded has been estimated to be $3.25M.  

There were no other 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. 

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Spirit Technology Solutions Limited 
Notes to the financial statements 
30 June 2022 

Note 33. Legal parent entity information 

Set out below is the supplementary information about the parent entity. 

Statement of profit or loss and other comprehensive income 

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 26) 
Accumulated losses 

Total equity 

Parent 

2022 
$'000 

2021 
$'000 

(61,830)  

(17,348) 

(61,830)  

(17,348) 

Parent 

2022 
$'000 

2021 
$'000 

1,543  

746  

82,371  

125,020  

1,252  

375 

45,973  

29,616  

114,874  
1,826  
(80,302)  

112,689  
1,187  
(18,472) 

36,398  

95,404  

Guarantees entered into by the parent entity in relation to the debts of its subsidiaries 

The bank loan of $13M 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 2022 and 30 
June 2021. 

Contingent liabilities 
The parent entity had no contingent liabilities as at 30 June 2022 and 30 June 2021. 

Capital commitments - Property, plant and equipment 

The parent entity had no capital commitments for property, plant and equipment as at 30 June 2022 and 30 
June 2021. 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 33. 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 34. Business combinations 

Acquisition of Voice Print Data Group during the previous financial year 

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 became 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 

  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 

i. Consideration transferred 
Acquisition-related costs amounting to $226,000 are not included as part of the consideration for the acquisition 
and were recognised as transaction costs in the 30 June 2021 profit and loss statement. 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 34. Business combinations (continued) 

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 was that this asset would be fully realised. 

iii. Goodwill 
Goodwill  of  $14,338,000  was  primarily  related  to  the  Company’s  growth  expectations  through  customer 
expansion. As outlined in Note 4, following a reassessment of the Consolidated Entity’s operating and reporting 
structure,  the  goodwill  was  reallocated  to  the  Managed  Services  (IT&T)  cash  generating  unit  and  was 
subsequently impaired as part of a review of the carrying value of assets in this segment as at 30 June 2022. 

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 the 12-month periods ended 30 June 2021 (FY21) and 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. In FY21, VPD did not receive any allocations of acquisition costs, corporate overhead, listing or finance 
costs, which were 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. 

In  FY22,  VPD  has  been  merged  into  the  Managed  Services  (IT&T)  reporting  segment  and  accordingly  it  is 
impractical to disclose VPD’s contribution to the Consolidated Entity's FY22 revenue and profit.  

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 34. Business combinations (continued) 

Acquisition of Altitude IT during the previous financial year 

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  as  a  Business  Combination  under  AASB  3.  Altitude  IT  was 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 were recognised as transaction costs in the 30 June 2021 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 was that this asset would be fully realised. 

iii. Goodwill 
Goodwill  of  $1,711,000  was  primarily  related  to  the  Company’s  growth  expectations  through  customer 
expansion. As outlined in Note 4, following a reassessment of the Consolidated Entity’s operating and reporting 
structure,  the  goodwill  was  reallocated  to  the  Managed  Services  (IT&T)  cash  generating  unit  and  was 
subsequently impaired as part of a review of the carrying value of assets in this segment as at 30 June 2022.  

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 34. Business combinations (continued) 

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  paid  in  FY22  where  the  FY21  EBITDA  performance  target  was  exceeded  was 
$276,301 comprising $198,937 in cash and $77,364 in ST1 equity.  

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.  In  FY21,  Altitude  IT’s  employees  had  been  transferred  to  Spirit  Telecom  (Australia)  Pty  Ltd  and  the 
Company did not receive any allocations of acquisition costs, corporate overhead, listing or finance costs which 
were all absorbed by the Consolidated Entity’s core operations and accordingly it was considered impractical to 
disclose Altitude IT's contribution to the Consolidated Entity's profit. 

In FY22, Altitude IT has been merged into the Managed Services (IT&T) reporting segment and accordingly it 
is impractical to disclose Altitude IT's contribution to the Consolidated Entity's FY22 revenue and profit.  

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 34. Business combinations (continued) 

Acquisition of Beachhead Group during the previous financial year 

The Company acquired 100% of Beachhead Group Pty Ltd, with effective control on 1 September 2020. The 
acquisition has been accounted for as a Business Combination under AASB 3. Beachhead Group was 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 were recognised as transaction costs in the 30 June 2021 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 was that this asset would be fully realised. 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 34. Business combinations (continued) 

iii. Goodwill 
Goodwill  of  $3,025,000  was  primarily  related  to  the  Company’s  growth  expectations  through  customer 
expansion. As outlined in Note 4, following a reassessment of the Consolidated Entity’s operating and reporting 
structure,  the  goodwill  was  reallocated  to  the  Managed  Services  (IT&T)  cash  generating  unit  and  was 
subsequently impaired as part of a review of the carrying value of assets in this segment as at 30 June 2022. 

iv. Deferred consideration 
The acquisition of Beachhead Group included a deferred consideration element of $1,091,949 payable by 31 
August 2021.The deferred consideration was settled in the same proportion of cash (65% being $773,164) and 
equity (35% being $318,785) 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 facilitated 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 paid in FY22 where the FY21 EBITDA performance target was exceeded 
was $291,214 comprising $206,204 in cash and $85,010 in ST1 equity.   

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. In FY21, the Beachhead Group’s employees had been transferred to Spirit Telecom (Australia) 
Pty  Ltd  and the  Company  did  not  receive  any  allocations  of  acquisition  costs,  corporate  overhead,  listing  or 
finance  costs  which  were  all  absorbed  by  the  Consolidated  Entity’s  core  operations  and  accordingly  it  was 
considered impractical to disclose Beachhead Group’s contribution to the Consolidated Entity's profit. 

In  FY22,  the  Beachhead  Group  was  merged  into  the  Managed  Services  (IT&T)  reporting  segment  and 
accordingly  it  is  impractical  to  disclose  Beachhead  Group’s  contribution  to  the  Consolidated  Entity's  FY22 
revenue and profit.  

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 34. Business combinations (continued) 

Acquisition of Reliance Technology during the previous financial year 

The  Company  acquired  100%  of  Reliance  Technology  Pty  Ltd  (“Reliance  IT”),  with  effective  control  on  1 
September 2020. The acquisition has been accounted for as a Business Combination under AASB 3. Reliance 
IT was 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 were recognised as transaction costs in the 30 June 2021 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 was that this asset would be fully realised. 

iii. Goodwill  
Goodwill  of  $5,609,000  was  primarily  related  to  the  Company’s  growth  expectations  through  customer 
expansion. As outlined in Note 4, following a reassessment of the Consolidated Entity’s operating and reporting 
structure,  the  goodwill  was  reallocated  to  the  Managed  Services  (IT&T)  cash  generating  unit  and  was 
subsequently impaired as part of a review of the carrying value of assets in this segment as at 30 June 2022. 

72 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 34. 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 facilitated 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  paid  in  FY22  where  the  FY21  EBITDA  performance  target  was  exceeded  was 
$937,161 comprising $674,756 in cash and $262,405 in ST1 equity.   

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. In FY21, the Reliance IT’s employees had been transferred to Spirit Telecom (Australia) Pty Ltd and 
the Company did not receive any allocations of acquisition costs, corporate overhead, listing or finance costs 
which  were  all  absorbed  by  the  Consolidated  Entity’s  core  operations  and  accordingly  it  was  considered 
impractical to disclose Reliance IT's contribution to the Consolidated Entity's profit. 

In FY22, Reliance IT was merged into the Managed Services (IT&T) reporting segment and accordingly it is 
impractical to disclose Reliance IT's contribution to the Consolidated Entity's FY22 revenue and profit.   

98

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 34. Business combinations (continued) 

Acquisition of Intalock Technologies during the previous financial year 

The Company acquired 100% of Intalock Technologies Pty Ltd (“Intalock”), with effective control on 1 December 
2020.  The  acquisition  has  been  accounted  for 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 
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 
(2,194) 
(56) 
(1,200) 
(279) 
(275) 
(45) 
(755) 

1,460 
17,351 
2,450 

21,261 

21,261 
(3,000) 
(3,250) 
(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 were 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 $2,237,000. 
As of the acquisition date, the Company’s best estimate was that this asset would be fully realised. 

74 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 34. Business combinations (continued) 

iii. Goodwill  
Goodwill  of  $17,351,000  was  primarily  related  to  the  Company’s  growth  expectations  through  customer 
expansion. As outlined in Note 4, following a reassessment of the Consolidated Entity’s operating and reporting 
structure, Intalock was separated into its own operating segment (Cyber Security) and goodwill on acquisition 
has been allocated to that segment. 

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.  This amount was settled in full in 
FY22. 

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 was estimated to be $623,000.  The revised estimated amount of contingent consideration 
due and payable where the FY22 target has been exceeded is $3.25M in cash (classified as 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.  In FY21, Intalock did not receive any allocations of acquisition costs, corporate overhead, listing or 
finance  costs  which  were  all  absorbed  by  the  Consolidated  Entity’s  core  operations  and  accordingly  it  was 
considered impractical to disclose Intalock's contribution to the Consolidated Entity's profit. 

In  FY22,  Intalock  has  been  allocated  to  its  own  reporting  segment  (Cyber  Security)  and  accordingly  its 
contribution to the Consolidated Entity’s results as disclosed in Note 4 Operating segments are as follows: 

Revenue 
Underlying earnings before interest, 
taxes, depreciation & amortisation* 
Underlying net profit before income  
Tax* 

* Refer Note 4 for definitions. 

$’000 
31,397 

2,432 

1,959 

100

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 34. Business combinations (continued) 

Acquisition of Nexgen during the previous financial year 

The Company acquired 100% of Nexgen Australia Group Pty Ltd (“Nexgen"), with effective control on 1 April 
2021. Nexgen sells a range of high growth Data, Security & Voice products. The acquisition brings over 5,000 
new  B2B  clients  and  some  one  hundred  new  sales  people  to  Spirit  to  drive  organic  growth,  complementary 
products and scale. 

As disclosed in last year's Annual Report for the financial year ended 30 June 2021 (“FY21”), the value of the 
identifiable net assets of Nexgen had been determined on a provisional basis with the assessment on certain 
assets  and  the  deferred  and  contingent  consideration  amounts  not  being  finalised  when  the  FY21  financial 
statements were issued. Had the assessment been finalised, the FY21 financial statements would have differed 
to those previously reported as follows: 

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 
Deferred tax liability 
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 
797 
382 
1,567 
4,105 
11,942 
1,145 
(2,969) 
(106) 
(167) 
(5,158) 
(886) 
(1,567) 

11,918 
46,031 

57,949 

57,949 
(12,216) 
(8,610) 
(12,164) 

24,959 

i. Consideration transferred  
Acquisition-related costs amounting to $517,000 are not included as part of the consideration for the acquisition 
and were recognised as transaction costs in the 30 June 2021 ($423,000) and 30 June 2022 ($94,000) profit 
and loss statement. 

76 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 34. 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 was that this asset would be fully realised. 

iii. Goodwill  
Goodwill  of  $46,031,000  was  primarily  related  to  the  Company’s  growth  expectations  through  customer 
expansion. As outlined in Note 4, following a reassessment of the Consolidated Entity’s operating and reporting 
structure, Nexgen was separated into its own operating segment (Collaboration & Communication) and goodwill 
on acquisition has been allocated to that segment. 

iv. Deferred consideration 
The  acquisition  of  Nexgen  included  an  initial  deferred  consideration  of  $11,137,000  which  was  revised  to 
$12,216,000 as part of the measurement period adjustments outlined in Note 16. The equity component of the 
deferred  consideration  was  settled  in  shares  of  the  Company  issued  on  31  March  2022  (at  a  fair  value  of 
$1,191,000) and the remaining component settled (or to be settled) in cash (being $11,025,000). As at 30 June 
2022, $2,611,000 remains as a current liability. 

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 was classified as 
non-current.    Subsequent  to  the  assessment  date  of  1  April  2021,  the  amount  of  contingent  consideration 
payable where the FY22 and HY23 EBITDA is likely to exceed the performance target has been amended to 
reflect  new  information  obtained  about  facts  and  circumstances  at  the  acquisition  date  that,  if known,  would 
have  affected  the  measurement  of  the  contingent  consideration.  Accordingly,  the  amended  contingent 
consideration totalling $8,610,000 has been recorded and classified as a current liability at the reporting date. 

As a consequence of the ongoing impact of Covid lockdowns during the early part of FY22, it was agreed with 
the  Nexgen  founders  to  amend the  earnout  measurement  periods  from the  12  months  ended  30  June  2022 
(FY22) and 6 months ended 31 December 2022 (HY23) respectively to the twelve months ended 31 December 
2022  (CY22)  and  6  months  ended  30  June  2023  (H223).  There  was  no  impact  on  deferred  consideration 
amounts noted above. 

Any contingent consideration payable is not capped. 

vi. 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. In FY21 Nexgen did not receive any allocations of acquisition costs, corporate overhead, listing or 
finance  costs  which  were  all  absorbed  by  the  Consolidated  Entity’s  core  operations  and  accordingly  it  was 
considered impractical to disclose Nexgen’s contribution to the Consolidated Entity's profit. 

In  FY22  Nexgen  has  been  allocated  to  its  own  reporting  segment  and  accordingly  its  contribution  to  the 
Consolidated Entity’s results as disclosed in Note 4 Operating segments are as follows: 

Revenue 
Underlying earnings before interest, 
taxes, depreciation & amortisation* 
Underlying net profit before income  
Tax* 

* Refer Note 4 for definitions. 

102

$’000 
34,982 

9,885 

8,586 

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Spirit Technology Solutions Limited 
Notes to the financial statements 
30 June 2022 

Note 35. Asset Divestments 

Divestment of Consumer Assets 

On 29 October 2021, the Company completed the sale of its non-core consumer residential Internet business to 
Melbourne based broadband and telecommunications provider DGtek Pty Ltd (DGtek) for a transaction value of 
$5.1M.  Under  the  sale  agreement,  DGtek  acquired  the  consumer  business  including  the  customer  base  and 
relevant infrastructure assets. 

The divestment is in line with the Company’s strategy to focus on being a leading and fully integrated technology 
provider  of  modern  digital  workplaces  to  the  business  market,  from  SMB  to  corporates.  The  consumer  internet 
business was not critical to future operations and represented less than 2% of the Consolidated Entity’s revenue. 

Cash proceeds on completion 
Contingent consideration 

Gross proceeds on sale 

The fair values of the identifiable net assets disposed: 
Assets held for sale 
Intangible assets 

Plus: divestment related costs 

Profit on divestment 

i. Allocation basis of goodwill on disposal  

  Fair value 
$'000 

4,900 
200 

5,100 

(1,120) 
(1,200) 

(2,320) 
(411) 

(2,731) 

2,369 

The goodwill disposed originally arose from the acquisition of the LinkOne Group of companies on 1 April 2019. 
The goodwill allocated to the divested CGU assets of $1.2M represented the proportion of the consumer assets 
acquired relative to the total fair value of the assets on that acquisition. 

ii. Contingent consideration  

The sale included contingent consideration of $200,000 which is released based on customer migration milestones 
being achieved. 

78 

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Spirit Technology Solutions Limited 
Notes to the financial statements 
30 June 2022 

Note 35. Asset Divestments (continued) 

Divestment of Fixed Wireless Wholesale Assets 

On 1 June 2022, the Company completed the sale of its fixed wireless infrastructure assets to Melbourne based 
Maret  Infrastructure  Pty  Ltd  (“Maret  Group”)  for  $15M  upfront  consideration.  Under  the  sale  agreement,  Maret 
Group acquired the infrastructure assets with Spirit retaining the business customer relationships and revenues. 
The  Maret  Group  will  charge  Spirit  wholesale  services  fees  for  connected  services  under  a  wholesale  services 
agreement  between  the  parties. The  two companies  will  partner  to  develop  and  market  fixed  wireless  products 
using Maret Group’s spectrum assets, its new expanded network and Spirit’s salesforce. This new partnership aims 
to create market-leading fixed wireless solutions. 

Cash proceeds on completion 
Network and NOC “as a service” fee 

Gross proceeds on sale 

The fair values of the identifiable net assets disposed: 
Inventories 
Other assets 
Plant and equipment 
Right-of-use assets 
Intangible assets 
Unearned revenue 
Employee benefits 

Plus: divestment related costs 

Loss on divestment 

i. Allocation basis of goodwill on disposal 

  Fair value 
$'000 

14,989 
(720) 

14,269 

(475) 
(87) 
(10,347) 
(325) 
(3,893) 
1,189 
95 

(13,843) 
(972) 

(14,815) 

(546) 

The  goodwill  disposed  originally  arose  from  the  acquisition  accounting  associated  with  Anttel  Communications 
Group  Pty  Ltd,  Building  Connect  Pty  Ltd,  Wells  Research  Pty  Ltd  and  World  Without  Wires  Pty  Ltd.  The  total 
goodwill  booked  on  those  acquisitions  totalled  $7.8M.  As  outlined  in  Note  3  (Critical  accounting  judgements, 
estimates  and  assumptions)  the  allocation  of  goodwill  on  divested  asset  groups  requires  the  application  of 
judgement. On the basis that the sale structure involved Spirit retaining the business customer relationships and 
revenues it was determined that 50% of the goodwill was related to the infrastructure assets (representing $3.9M) 
and the residual to the forward customer cash flows retained. 

ii. Network and NOC “as a service” fee 

As  part  of  the  associated  Spirit  Wholesale  Services  Agreement  with  the  Maret  Group,  there  is  provision  for  a 
Network  and  Network  Operations  Centre  (“NOC”)  “as  a  service”  fee  which  commences  in  month  13  after  the 
completion date. This fee was provided at a 100% discount for the first 12 months as part of the agreed upfront 
sale price and equates to approximately $60,000 per month. Under AASB 3 Business Combinations this component 
of  the  transaction  price  is  to  be  accounted  for  under  AASB  15  Revenue  from  Contracts  with  Customers  and 
according was allocated to unearned revenue. 

104

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Spirit Technology Solutions Limited 
Notes to the financial statements 
30 June 2022 

Note 35. Asset Divestments (continued) 

iii. Contingent consideration 

The sale agreement includes up to $6M in earn-out payments over two years, subject to revenue targets being 
achieved. The variable consideration is accounted for in accordance with AASB 15 Revenue from Contracts with 
Customers which dictates that the amount can only be recognised to the extent that it is highly probable of being 
earned. As at the reporting date of 30 June 2022, the Company was not in a position to determine the amount with 
the level or certainty required under the accounting standard. 

Note 36. 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 

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 

 Principal place of business / 
 Country of incorporation 

  Ownership interest 
2021 
% 

2022 
% 

 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%  
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.  

Note 37. Events after the reporting period 

No  other  matter  or  circumstance  has  arisen  since  30  June  2022  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. 

80 

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Spirit Technology Solutions Limited 
Notes to the financial statements 
30 June 2022 

Note 38. Reconciliation of (loss)/profit after income tax to net cash from operating activities 

(Loss)/profit after income tax benefit/(expense) for the year 

(53,166)  

1,157  

Consolidated 

2022 
$'000 

2021 
$'000 

Adjustments for: 
Depreciation and amortisation expense 
Impairment of non-current assets 
Net gain on disposal of property, plant and equipment 
Share-based payments 
Acquisition, divestment and integration costs 
Net fair value loss on remeasurement of financial liabilities 
Interest and other finance costs paid 

Change in operating assets and liabilities: 

Decrease/(Increase) in trade and other receivables 
(Increase) in inventories 
Decrease/(Increase) in other assets 
(Increase) in contract assets 
(Increase) in deferred tax assets (net) 
Increase in trade and other payables 
Increase in provisions 
Increase/(Decrease) in unearned revenue 

7,655  
48,374  
(1,862)  
721  
967  
2,747  
190  

          1,089   
(2,179)  
             667   
(2,428)  
(1,793)  
             891   
          1,236   
             501   

6,666   
- 

 (529)   
620   
2,100   
168   
137  

(3,481)   
(827)   
(732) 
(1,687) 

(138)   
1,213   
1,291   
(913)   

Net cash from operating activities 

3,610  

5,045 

106

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 39. Earnings per share 

Weighted average number of ordinary shares used in calculating basic earnings 
per share 

657,644,431 

554,674,861 

Weighted average number of ordinary shares used in calculating diluted earnings 
per share 

657,644,431 

554,674,861 

  Number 

  Number 

(Loss)/profit attributable to the 
owners of Spirit Technology 
Solutions Ltd 

Basic earnings per share 
Diluted earnings per share 

Note 40. Share-based payments 

2022 

Total 

$'000 

2021 

Total 

$'000 

(53,166) 

1,157 

2022 

Total 
Cents 

(8.08) 
(8.08) 

2021 

Total 

Cents 

0.21 
0.21 

During the financial year ended 30 June 2022, 13,000,000 Performance Rights were granted by the Company 
to  key  management  personnel  and  certain  employees  with  a  vesting  period  ending  30  June  2024,  of  which 
6,500,000 Performance Rights have a Relative Total Shareholder Return ("Relative TSR") performance hurdle 
measured against a peer group, and 6,500,000 Performance Rights have an Absolute Total Shareholder Return 
(“Absolute TSR") performance hurdle, based on performance of the Company. 

During the financial year ended 30 June 2022, the AGM approved the modification of the performance hurdle 
for certain performance rights to incorporate an Absolute Total Shareholder Return (TSR) in place of Return on 
Invested Capital (ROIC). As the Absolute TSR is a market-based performance hurdle, the fair value of which is 
lower than determined on the basis of ROIC, in accordance with AASB 2, no amendment to the fair value of 
share-based payments expense is required. 

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. 

82 

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Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 40. Share-based payments (continued) 

Set out below are summaries of options granted under the Spirit Technology Solutions Ltd Long Term Incentive 
Plan: 

2022 
Grant date 

 Expiry date 

  Exercise     Balance at    Granted 
  the start of   
the year 

price 

  Exercised    Expired/     Balance at  
forfeited/    the end of  

 other 

the year 

14/05/2019 
14/05/2019 
14/05/2019 

 01/07/2023 
 01/07/2023 
 01/07/2023 

$0.150    6,000,000  
$0.180    6,000,000  
$0.215    6,000,000  
   18,000,000  

-  
-  
-  
-  

-  
-  
-  
-  

-   6,000,000 
-   6,000,000 
-   6,000,000 
-   18,000,000 

2021 
Grant date 

 Expiry date 

  Exercise     Balance at    Granted 
  the start of   
the year 

price 

  Exercised    Expired/     Balance at  
forfeited/    the end of  

 other 

the year 

14/05/2019 
14/05/2019 
14/05/2019 

 01/07/2023 
 01/07/2023 
 01/07/2023 

$0.150    6,000,000  
$0.180    6,000,000  
$0.215    6,000,000  
   18,000,000  

Weighted average exercise price 

$0.182   

-  
-  
-  
-  

-  

-  
-  
-  
-  

-  

-   6,000,000 
-   6,000,000 
-   6,000,000 
-   18,000,000 

-  

$0.182  

The weighted average remaining contractual life of options outstanding at the end of the financial year was 1 
year (2021: 2 years). 

108

83 

 
 
  
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
  
  
 
  
  
 
 
Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 40. Share-based payments (continued) 

Set out below are summaries of Performance Rights granted under the plan: 

2022 
Grant date 

 Expiry date 

12/09/2018 
18/02/2019 
22/04/2020 
13/10/2020 
11/06/2021 
29/11/2021 
11/03/2022 

 12/09/2021 
 18/02/2023 
 22/04/2023 
 12/11/2023 
 11/06/2024 
 07/04/2025 
 07/04/2025 

2021 
Grant date 

 Expiry date 

12/09/2018 
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 

  Balance at    Granted 
  the start of   
the year 

  Exercised   

 Forfeited    Balance at  
  the end of  
the year 

247,059  
520,000  
653,943  
  2,232,387  
620,685  

-  
-  
-  
-  
-  
-   11,000,000  
-   2,000,000  
  4,274,074   13,000,000  

(49,338)  
(103,844)  
-  
-  
-  
-  
-  
(153,182)  

(197,721)  
- 
(416,156)  
- 
-  
653,943 
-   2,232,387 
-  
620,685 
-   11,000,000 
-   2,000,000 
(613,877)   16,507,015 

  Balance at    Granted 
  the start of   
the year 

  Exercised   

 Forfeited    Balance at  
  the end of  
the year 

247,059  
512,820  
520,000  
653,943  

-  
-  
-  
-  
-   2,232,387  
620,685  
-  
  1,933,822   2,853,072  

-  
(189,320)  
-  
-  
-  
-  
(189,320)  

-  
247,059 
(323,500)  
- 
-  
520,000 
-  
653,943 
-   2,232,387 
-  
620,685 
(323,500)   4,274,074 

The weighted average remaining contractual life of Performance Rights outstanding at the end of the financial 
year was 2.47 years (2021: 1.98 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: 

Grant date 

 Expiry date 

  Share price   Expected    Dividend 
 at grant date  
volatility 

yield 

  Risk-free    Fair value 
  interest rate  at grant date 

29/11/2021 
29/11/2021 
11/03/2022 
11/03/2022 

 07/04/2025 
 07/04/2025 
 07/04/2025 
 07/04/2025 

$0.225  
$0.225  
$0.145  
$0.145  

60%  
60%  
60%  
60%  

- 
- 
- 
- 

0.92%  
0.92%  
1.77%  
1.77%  

$0.0970 
$0.0540 
$0.0720 
$0.0160 

84 

109

 
 
  
 
  
  
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
  
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
  
  
 
 
  
 
 
  
 
  
  
 
 
  
 
 
  
 
  
  
 
 
  
 
  
 
Spirit Technology Solutions Ltd 
Notes to the financial statements 
30 June 2022 

Note 40. Share-based payments (continued) 

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  

Total share-based payments expense reconciliation 

Consolidated 

2022 
$ 

2021 
$ 

396  

325 

721  

396  

224  

620  

110

85 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
  
 
 
  
Spirit Technology Solutions Ltd 
Directors' declaration 
30 June 2022 

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 2022 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 2022 

86 

111

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Independent 
Auditor's Report

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPIRIT TECHNOLOGY SOLUTIONS LTD 

Report on the Financial Report 
Auditor’s Opinion 

We have audited the accompanying financial report of Spirit Technology Solutions Ltd (the Company) and its controlled 
entities (collectively the Group),  which comprises the consolidated statement of financial position as at 30 June 2022, 
the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes 
in  equity,  and  the  consolidated  statement  of  cash  flows  for  the  year  then  ended,  notes  comprising  a  summary  of 
significant accounting policies and other explanatory information, and the Directors’ Declaration of the 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 
financial year. 
In our opinion, the financial report of Spirit Technology Solutions Ltd is in accordance with the Corporations Act 2001, 
including: 

(a)  giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial performance for 

the year ended on that date; and 

(b)  complying with Australian Accounting Standards and the Corporations Regulations 2001. 
Basis for Opinion 

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards 
are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. 
We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 
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 
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.  

Key Audit Matters 

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the 
financial report of the current period. These matters were addressed in the context of our audit of the financial report 
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each 
matter below, our description of how our audit addressed the matter is provided in that context. 

Key audit matter – Impairment of goodwill and 
indefinite life intangibles 

As  at  30  June  2022,  the  carrying  value  of  goodwill  and 
indefinite  life  intangibles  totalled  $67,487,000  (2021: 
$109,350,000),  as  disclosed  in  note  16  of  the  financial 
report. The accounting policy in respect of these assets is 
outlined in note 2 Intangible Assets. 

An  annual  impairment  test  for  goodwill  and  other 
indefinite  life  intangibles  is  required  under  AASB  136 
Impairment  of  Assets.  Management’s  testing  has  been 
flow  model 
performed  using  a  discounted  cash 
(Impairment Model) to estimate the value-in-use of each 
Cash-Generating  Unit  (CGU)  to  which  these  intangible 
assets have been allocated.  

The  evaluation  of  the  recoverable  amount  requires  the 
Group  to  exercise  significant  judgement  in  determining 
key assumptions in respect of each CGU, which include: 

• 

• 

• 

5-year cash flow forecast; 

growth rate and terminal growth factor; and 

discount rate. 

How our audit addressed this matter 

Our procedures included, but were not limited to, assessing 
and challenging: 

• 

• 

• 

• 

• 

the appropriateness of Management’s determination 
of  each  CGU  to  which  goodwill  and  indefinite  life 
intangibles are allocated; 

the  application  of  an  indefinite  useful  life  to  these 
intangible assets; 

the  arithmetic  accuracy  of  the  Impairment  Model 
including  the  calculation  of  the  impairment  expense 
prepared by Management in relation to the Managed 
Services (IT&T) CGU; 

the reasonableness of the financial year 2023 budget 
by  CGU  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; 

continued… 

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 separately owned firms and does not accept any  
responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms. 

87 

113

 
 
 
 
 
 
Key  audit  matter  –  Impairment  of  goodwill  and 
indefinite life intangibles (continued) 

The outcome of the impairment assessment could vary if 
different assumptions were applied.  

Current testing led to the impairment of $43,056,000 of 
the goodwill of the Managed Services (IT&T) CGU. 

The evaluation of the recoverable amount of goodwill and 
is  an  area  of  significant 
indefinite 
Management estimation and judgement, and a Key Audit 
Matter. 

intangibles 

life 

How our audit addressed this matter (continued) 

• 

• 

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; 

•  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 
impairment beyond the level recognised; and 

• 

the  appropriateness  of  the  disclosures  including  those 
relating to sensitivities in assumptions used in note 16. 

Key audit matter – Revenue recognition 

How our audit addressed this matter 

The  Group’s  sales  revenue  amounted  to  $135,338,000 
during  the  year  (2021:  $102,786,000).  Note  2  Revenue 
Recognition describes  the accounting policies  applicable 
to distinct revenue streams in accordance with AASB 15 
Revenue from Contracts with Customers. 

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. 

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: 

-  performance obligations; 

- 

- 
- 

recognition at point of time or over time; 

significant judgements and estimates; and 

the impacts of business combinations. 

reconfirming and assessing the design of controls; 

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: 

- 

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 
the 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; and 

• 

utilising analytical review to assess the reasonableness of 
tested revenue streams. 

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 2022 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. 

114

88 

 
 
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 an auditor’s report that includes our opinion. Reasonable 
assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with 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 
intentional  omissions, 
than  for  one  resulting  from  error,  as  fraud  may 
misrepresentations, or the override of internal control. 

involve  collusion,  forgery, 

  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.  

89 

115

 
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 2022.  

In our opinion, the Remuneration Report of the Company for the year ended 30 June 2022, 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 2022 

Steven Bradby 
Partner 

116

90 

 
 
 
 
 
 
 
 
Additional Shareholder  
Information

The shareholder information set out below was applicable as at 12 September 2022. 

Distribution of equitable securities 

Analysis of number of equitable security holders by size of holding: 

Number 

Number 

of holders 

of 

% 

of 

Number 

Number 

of holders 

of 

% 

of 

Number 

Number 

of holders 

of 

% 

of 

of 
ordinary 
shares 

ordinary 
shares 

ordinary 
shares 

of 
unquoted 
options 

unquoted 
options 

unquoted 
options 

of 
performance 
rights 

performance 
rights 

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 

188 
942 
612 

26,389 
2,805,139 
4,847,071 
1,158  43,203,759 
361  613,841,221 
3,261  664,723,579 

0.00% 
0.42% 
0.73% 
6.50% 
92.35% 
100.00% 

- 
- 
- 
- 
- 
- 
- 
- 
2  18,000,000 
100.00% 
2  18,000,000  100.00% 

- 
- 
- 
- 

- 
- 
- 
- 
- 
- 
- 
- 
5  18,289,748 
5  18,289,748 

Holding less than a 
marketable parcel 

1,358 

4,195,687 

0.63% 

- 

- 

- 

- 

- 

- 
- 
- 
- 
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 
shares 

issued 

Number 
held 

79,244,922 

UBS NOMINEES PTY LTD 
MR PETER DIAMOND & MRS DIANA DIAMOND 
 
68,000,000 
CITICORP NOMINEES PTY LIMITED 
55,054,464 
CRAZY DIAMOND PTY LTD 
39,000,000 
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED 
24,287,211 
HARB HOLDINGS PTY LTD  
20,547,945 
MARQUEE HOLDINGS PTY LTD  
20,547,945 
HURACAN HOLDINGS PTY LTD  
17,996,664 
BRIGGS GROUP CONSULTING PTY LTD  
12,606,789 
WADE TECHNOLOGIES PTY LTD  
12,578,750 
QUANTUM 777 PTY LTD  
10,508,095 
CS FOURTH NOMINEES PTY LIMITED  
8,769,927 
NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT> 
8,235,469 
THE BENTLEY GROUP (AUST) PTY LTD  
7,546,334 
NIKALA HABER  
5,693,092 
SEABIRD INVESTMENTS (WA) PTY LTD  
5,500,000 
BRISPOT NOMINEES PTY LTD  
5,439,253 
PENBURY GRANGE PTY LTD  
5,039,936 
MDJD PTY LTD  
5,000,000 
5,000,000 
CHEMBANK PTY LIMITED  
B & R JAMES INVESTMENTS PTY LIMITED    5,000,000 

11.92 

10.23 
8.28 
5.87 
3.65 
3.09 
3.09 
2.71 
1.90 
1.89 
1.58 
1.32 
1.24 
1.14 
0.86 
0.83 
0.82 
0.76 
0.75 
0.75 
0.75 

Unquoted equity securities 

Unquoted options over ordinary shares on issue 
Performance rights over ordinary shares on issue 

421,596,796 

63.43 

Number 
on issue 

Number 
of holders 

18,000,000 
18,289,748 
18,289,748

2 
5 

119

 
 
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 

issued 

Number 
held 

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 
ELIE AYOUB 

107,000,000 
79,604,094 
52,141,281 
52,141,281 
52,141,281 
38,456,945 

16.10 
11.98 
7.84 
7.84 
7.84 
5.79 

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. 

Corporate Governance Statement 

The  Company’s  2022  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 Thursday, 17 November 
2022. 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 
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 6 October 2022. 

120

Corporate Directory

Auditor
PKF Melbourne Audit & Assurance Pty Ltd

Level 12, 440 Collins Street  

Melbourne, Victoria 3000

Stock exchange listing
Spirit Telecom Limited 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)

Julian Challingsworth (CEO & Managing Director)
Julian Challingsworth (CEO & Managing Director)

Julian Haber (Executive Director)
Julian Haber (Executive Director)

Gregory Ridder (Non-Executive Director)
Gregory Ridder (Non-Executive Director)

Michelle Bendschneider (Non-Executive Director)
Michelle Bendschneider (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) 

122

Annual Report 2022

 
 
  
 
 
 
Thanks for reading.

Annual Report 2022

123

Locations

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
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

Queensland
Level 7, 

60 Edward Street,

Brisbane City

QLD 4000

5 Cribb Street,

Milton

QLD 4064

5 Commercial Dr, 

Ashmore 

QLD 4214

P   1800 007 001  E   Investor@Spirit.com.au    W   Spirit.com.au/Investor-Centre