ASX: ST1
Annual Report
2024
Secure. Sustainable. Scalable.
Table of Contents
A Letter from the Chairman
4
A Letter from the Managing Director and CEO
6
Go-To-Market Update
8
Board of Directors
10
Executive Members
12
Directors' Report
16
Auditor’s Independence Declaration
52
Statement of Profit or Loss and Other Comprehensive Income
54
Statement of Financial Position
56
Statement of Changes in Equity
58
Statement of Cash Flows
60
Notes to the Financial Statements
62
Directors' Declaration
104
Independent Auditor’s Report
106
Additional Shareholder Information
114
Corporate Directory
118
Annual Report 2024
3
Dear Shareholders,
It is a pleasure to present the Spirit Technology Solutions
Annual Report for the financial year ended 30 June 2024
(FY24).
FY24 marked a pivotal period for the Group as we
completed the restructure of our Managed Services
segment, removing complexity and providing clarity of
purpose and focus for that segment, in line with our goal
of becoming one of Australia’s leading providers of modern
and secure digital workplaces.
Despite a disappointing FY24, we expect a substantial
improvement in FY25 as a result of work by the Board and
Management team to steer Spirit towards its goals and
ensure profitability for its shareholders. This is evident in
our strategic restructuring and corporate repositioning,
which are already yielding positive outcomes. Notably,
Spirit in FY24 achieved its strongest Q4 in its history,
demonstrating our solid momentum and laying strong
foundations for growth and profitability in FY25.
With a robust corporate structure in place, we identified
and capitalised on strategic acquisition opportunities
during the financial year and beyond.
In April 2024, we completed the acquisition of Infotrust, a
leading cyber security firm. This move not only made our
Cyber Security division the largest within our Company
but also positioned us at the forefront of the cyber security
industry in Australia.
Closely following the end of the financial year, this was
complemented by the acquisition of Forensic IT, a major
provider of cyber security digital forensic and incident
response solutions. The acquisition not only expands and
deepens the offer provided to our Cyber and Managed
Services customer base, but also strengthens our cyber
capability to enable rapid response to cyber incidents,
which are increasingly impacting companies across
Australia.
We successfully conducted capital raises during the
year to support this acquisition strategy which reinforces
our position as one of Australia’s leading cyber security
companies.
FY24 also saw a number of new additions to the Spirit
Board.
As a result of the Infotrust acquisition, we welcomed
Infotrust co-founders Simon McKay (Execitive Director
of the Cyber Security segment) and Dane Meah (Non-
Executive Director).
We also welcomed two other Non-Executive Directors to
the Board in FY24 - Lynn Warneke and Shan Kanji.
Lynn, who was appointed in October 2023, brings
extensive digital strategy, technology leadership and
cybersecurity experience to Spirit. Shan, who was
appointed in January 2024, has over 20 years’ experience
as a senior business leader with a proven track record
of running scale diversified and complex industrial and
technology businesses in Australia and New Zealand.
In August 2024, Non-Executive Director Greg Ridder
and Executive Director Elie Ayoub stepped down from
the Board, with Elie continuing with the Company in his
executive capacity.
Both Greg and Elie have been instrumental in guiding our
strategy as we have restructured and refocused the Spirit
business and as we continue to work towards our aim of
becoming one of Australia’s leading providers of modern
and secure digital workplaces.
On behalf of the Board, I would like to extend our thanks
to both Greg and Elie for their significant contribution
to Spirit. I wish Greg the best of luck with his future
endeavours, and I look forward to continuing to work with
Elie in his Executive role.
A letter from
The Chairman
Annual Report 2024
4
A Letter from the Chairman
I would like to thank my fellow Board members and the
Spirit management team and employees for their hard
work and dedication over the past 12 months. Despite this
period of transition, our achievements would not have
been possible without their hard work, industry-leading
expertise, and unwavering dedication each day.
As we enter FY25 with a fresh vision and structure, I am
genuinely excited about our potential. We expect to deliver
strong growth in FY25 and beyond with our pipeline of
opportunities expected to grow. With our refined, cyber-
first focus, we are better positioned than ever to become
one of Australia’s leading providers of modern and secure
digital workplaces.
James Joughin
Chairman
Thank you for your continued trust and support during this
transformational period.
Yours sincerely,
Annual Report 2024
5
A letter from
Dear Shareholders,
I am pleased to report that throughout FY24 we made
significant progress towards becoming one of Australia’s
leading providers of secure digital workplaces, while
progressing key strategic initiatives, particularly with
respect to our corporate strategy and structure.
Despite falling short of financial expectations, we closed
the year strongly - achieving the strongest sales quarter in
our history in Q4 and bolstering our Cyber Security division
through the fully funded acquisition of leading cyber
security business, Infotrust. Post the end of the financial
year, this was further complemented via the acquisition
of major provider of cyber security digital forensic and
incident response solutions, Forensic IT in August. We
now operate one of Australia’s leading cyber security
businesses, an achievement I am incredibly proud of.
Managed Services
In June 2024, we successfully concluded a comprehensive
two-year restructuring of our Managed Services business.
This initiative was aimed at setting clear objectives,
reinforcing our core mission, sharpening our strategic
focus, and ultimately enhancing profitability for our
shareholders.
As part of this transformation, we appointed a revitalised
leadership team, unified our operations under the single
Spirit brand, and seamlessly migrated all our customers to
the scalable Microsoft Secure Workplace solution.
During the year, we also launched a new Managed Services
offer for our SME customer base of 7,000 active customers.
The unique offer improves cyber security defences and
workplace productivity for Small to Medium Enterprise
businesses and is a key competitive advantage for Spirit
as this sector has been largely untapped by traditional
managed services providers.
The segment achieved its first profitable month in June
2024 and we expect the positive performance to continue
in FY25.
Cyber Security
In February 2024, we made a significant advancement
in our cyber security capabilities, with the fully funded
acquisition of Sydney-based Infotrust.
The acquisition not only strengthens our position in the
major markets of Sydney and Melbourne and delivers on
our strategy of growth via acquisition but has propelled
our Cyber Security division to the forefront. As a result of
the move, the Cyber Security division is now the largest
revenue generator within our Company and we are now
one of the leading cyber security enterprises in Australia.
We also progressed the integration of Infotrust with
Intalock, with the amalgamation of the brand and
employees completed on 1 July 2024. The integrated
business will enable Spirit to provide the combined cyber
security / managed services capabilities to our 1,500+
target customers.
Importantly, our cyber-first strategy delivered strong
financial outcomes in Q4 FY24.
Intalock recorded its largest ever quarter in terms of Total
Contract Value (TCV) in Q4 FY24 with $19.4 million in sales.
Intalock also achieved a record $7 million in revenue for the
month of June 24, up 55% on the previous corresponding
period (pcp).
Meanwhile, Infotrust achieved its target acquisition EBITDA
of $4.4 million for FY24.
Post the end of the financial year, this cyber-first strategy
was bolstered via our announced acquisition of Forensic
IT – a major Australian provider of cyber security digital
forensic and incident response solutions.
The Managing
Director and CEO
Annual Report 2024
6
A Letter from the Managing Director and CEO
The acquisition is highly complementary to our existing
cyber offering and expands and deepens the offering
provided to Spirit’s Cyber and Managed Services customer
base.
It also delivers on our strategy of providing solutions that
improve organisations’ resilience and responsiveness to
cyber attacks. The acquisition will enable us to significantly
increase work in incident response, providing revenue and
margin accretion opportunities by expanding our cyber
capability to enable rapid response to cyber incidents
which are increasingly affecting companies across
Australia.
Communication and Collaboration
In November 2023, the Communication and Collaboration
division secured a new agreement with Cisco for its Webex
Wholesale offering, a move which expands our product
offering and capability to bring new services to market in
an accelerated fashion.
We also launched a new dealer program, enabling us to
bring advanced solutions to market under a new service
offering.
Financially, the segment’s performance was affected in
H1 by low business confidence but rebounded later in the
financial year with the business recording its best-ever
June sales month in June 2024.
Communication and Collaboration signed $5.4 million of
TCV and secured over 380 new customers, whilst more
than 120 customers signed 5-year renewal contracts.
Financial overview
Group revenue and other income for FY24 was $126.1
million (FY23: $127.3 million) and Group uEBITDA (refer to
Directors' report) was $1.7 million (FY23: $5.2 million).
The Group reported a statutory loss of $10.5 million, down
from a loss of $11.4 million in the pcp.
Outlook
Following a strong finish to FY24 and with a growing
pipeline of business opportunities, Spirit expects to deliver
strong growth in FY25 and beyond.
We are guiding for FY25 revenue of $154 million to $164
million, representing more than 20%-29% growth on FY24
(including acquisitions), with Cyber Security to be the
largest revenue contributor.
Spirit also expects improved profitability with guidance
FY25 uEBITDA of $10.5 million to $11.8 million. This
acknowledges anticipated growth, positive earnings
from all segments alongside the full year earnings
contributions from Infotrust and part earnings contribution
from Forensic IT (expected from 1 October 2024 post
acquisition).
The Group’s strategy of selling combined Cyber Security
and Managed Services is also expected to enable strong
organic growth over a three-year strategic horizon, with
the pipeline of opportunities expected to grow through
FY25.
I would like to thank our Board, Management team and
employees for their hard work and dedication over the
past 12 months as we completed our restructure and
repositioned for growth over the years ahead.
Thanks also to our shareholders for your continued
support. I look forward to updating you on our progress
towards our goal of becoming one of Australia’s leading
providers of modern and secure digital workplaces.
Julian Challingsworth
Managing Director and CEO
Annual Report 2024
7
Annual Report 2024
ASX: ST1
Go-To-Market
Update
With a deep focus on cyber security, we ensure that every aspect of our managed IT, cyber solutions and collaboration services
are fortified against evolving threats, aligning with the highest standards of risk mitigation and compliance.
Our managed IT services encompass end-to-end solutions designed to optimise performance, enhance operational efficiency,
and safeguard critical business functions. From proactive monitoring and IT infrastructure management to rapid incident
response, our services provide a secure digital environment that empowers organisations to thrive.
With cyber security integrated into every solution we provide, we serve as a trusted partner for organisations seeking to balance
innovation with resilience. Backed by industry-leading technology and experienced professionals, and with a proven track
record, we are committed to delivering secure, scalable, and tailored IT solutions that drive long-term value for our customers.
In the domain of collaboration services, we deliver cutting-edge communication tools with a strong security posture, enabling
teams to connect and collaborate efficiently and securely across any platform, from anywhere. Our secure collaboration services
protect sensitive data while driving productivity, ensuring business continuity in an increasingly digital and remote-first world.
Cyber security at the core of our services
Understanding that our customers' success hinges on their ability to operate securely in the digital realm, we have strategically
embedded advanced cyber security practices into the foundation of all our service offerings. From network management
to cloud collaboration tools, our solutions are designed to simultaneously enhance operational efficiency and also safeguard
against an increasingly sophisticated array of cyber threats.
Our approach is holistic—every managed service is fortified with proactive monitoring, threat detection, and rapid incident
response capabilities. This ensures that our customers can focus on their core business objectives, confident in the knowledge
that their technology infrastructure is protected by industry-leading security protocols.
Embedding resilience with security-driven, future-proof IT solutions for Australian
organisations.
We feel much more confident with the Spirit team
helping us meet our digital needs. Our relationship has
now led to a partnership with Infotrust, Spirit’s cyber
security division. Having one group to help manage our
IT and security requirements allows me to sleep better
at night and frees up my time so I can focus on strategic
planning and direction."
Aurelia Metal, Arran Bishop, Head of IT and Cyber Security
Infotrust is a trusted partner to Mission Australia
because they expertly manage the security and integrity
of our data giving us the confidence to continue to
safely and securely improve the services we provide to
Australians in their time of need."
Mission Australia, Peter Smith, Chief Information Officer
Customer Testimonials
Annual Report 2024
9
Annual Report 2024
ASX: ST1
Board of
Directors
James Joughin
Lynn Warneke
Julian Challingsworth
Shan Kanji
Simon McKay
Dane Meah
Chairman
Non-Executive Director
Managing Director
Non-Executive Director
CEO of Infotrust
Non-Executive Director
James Joughin brings over 32 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.
Lynn is an experienced Non-
executive Director and Chair,
with extensive background and
expertise in strategy, digital
services and product development,
customer experience, emerging
technologies, innovation and cyber
security.
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.
Shan has over 20 years’ experience
as a senior business leader with a
proven track record of running scale
diversified and complex industrial
and technology businesses in
Australia and New Zealand. Mr Kanji
also has extensive experience with
start-ups in technology, property
development, manufacturing and
other sectors.
Simon is a seasoned leader in the
cyber security industry with a track
record of success spanning over
two decades. Simon is the co-
founder of two successful Australian
cyber security businesses - Infotrust
(acquired by Spirit effective 1 April
2024) a cyber consulting practice,
and MyCISO, a SaaS management
platform.
Dane is currently the CEO of cyber
security SaaS business MyCISO,
which launched in 2022 and has
quickly scaled to be a leading, and
award winning, security program
management platform. Dane is
also the co-founder of Infotrust
(acquired by Spirit effective 1 April
2024).
Annual Report 2024
11
Annual Report 2024
ASX: ST1
Executive
Members
Julian Challingsworth
Nathan Knox
Zoe Rosenwax
Paul Miller
Managing Director
Chief Operating Officer
Head of People
Chief Financial Officer
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.
Nathan has a wealth of experience
in similar roles at leading ASX100
companies and government
agencies, including Tesserent, NBN
Co, Coles, and Woolworths.
Zoe is an experienced people and
culture leader, with over 11 years'
experience leading the HR function
for some of Australia's leading
businesses.
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.
Simon McKay
CEO of Infotrust
Simon is a seasoned leader in the
cyber security industry with a track
record of success spanning over
two decades. Simon is the co-
founder of two successful Australian
cyber security businesses - Infotrust
(acquired by Spirit effective 1 April
2024) a cyber consulting practice,
and MyCISO, a SaaS management
platform.
Elie Ayoub
Co-CEO Nexgen
Elie co-founded Nexgen in
2009 and has been jointly
responsible for the growth and
direction of the Company. He
has 25 years experience in the
telecommunications industry across
the SME, residential, corporate and
government customer segments.
Annual Report 2024
13
James Harb
Co-CEO Nexgen
Along with Elie, James co-founded
Nexgen in 2009 and has over
20 years’ experience in the telco
industry.
Annual Report 2024
14
Annual Report 2024
ASX: ST1
Directors'
Report
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
The Directors present their report, together with the financial statements, on the Consolidated
Entity (referred to hereafter as the 'Consolidated Entity' or ‘Spirit Group’) 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 2024.
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)
Mr Gregory Ridder (Non-Executive Director – resigned 5 August 2024)
Ms Lynn Warneke (Non-Executive Director – appointed 9 October 2023)
Mr Elie Ayoub (Executive Director – resigned 5 August 2024)
Mr Shan Kanji (Non-Executive Director – appointed 31 January 2024)
Mr Julian Haber (Non-Executive Director – resigned 31 August 2023)
Ms Michelle Bendschneider (Non-Executive Director – resigned 31 August 2023)
Mr Simon McKay (Executive Director – appointed 4 April 2024)
Mr Dane Meah (Non-Executive Director – appointed 4 April 2024)
Principal activities
During the financial year the principal activities of the Spirit Group consisted of the provision of
technology solutions including cyber security solutions, communication and collaboration
services and managed services.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial
year.
Operating and financial review
Consolidated Entity’s operations
Spirit Group remains focused on becoming one of Australia’s leading providers of modern and
secure digital workplaces.
It provides technology services and solutions that enable organisations to:
Strengthen their security posture to match the constantly changing cyber threat landscape.
Remain ahead of the curve and accelerate their digital transformation by adopting secure,
agile technology solutions that can easily adapt to changing business needs and deliver
return on investments.
Annual Report 2024
17
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Review of operations and financial position
During the financial year ended 30 June 2024, Spirit Group added to and strengthened its cyber
capabilities via the acquisition of Sydney-headquartered cyber security company, InfoSurety
Holdings Pty Ltd (trading as “Infotrust”). The acquisition expands Spirit’s presence in the
growing cyber security market and strengthens the Company’s position in the major
geographic markets of Sydney and Melbourne.
The Consolidated Entity’s reporting framework aligns to the following key operating segments
(as outlined in Note 3: Operating Segments of the financial statements):
Communication and Collaboration
Cyber Security
Managed Services
An underlying EBITDA* of $1.66M ($5.15M) resulted in a loss for the Consolidated Entity for the
financial year ended 30 June 2024 (“FY24”) (financial year ended 30 June 2023 (“FY23”)) after
providing for income tax of $10.5M (FY23: loss $11.4M). Total revenue and other income for the
Consolidated Entity for FY24 was $126.1M (FY23: $127.3M). The following table summarises the
key financial metrics for the financial year:
30 June
2024
30 June
2023
Change
$'000
$'000
$'000
Revenue (refer Note 4 to the financial statements)
125,847
127,114
(1,267)
Other income (refer Note 5 to the financial statements)
272
157
115
Revenue and other income
126,119
127,271
(1,152)
Earnings before interest, taxes, depreciation &
amortisation (EBITDA*)
(6,299)
(8,266)
1,967
Share-based payments **
571
942
(371 )
Loss/(profit) on divestment of non-core assets
-
600
(600)
Acquisition & divestment costs **
2,850
200
2,650
Transformation and restructuring costs***
1,999
2,732
(733)
Other normalisation items****
552
901
(349)
Net fair value loss on remeasurement of contingent
consideration on business combinations **
-
8,042
(8,042)
Impairment of non-current assets **
1,991
-
1,991
Underlying EBITDA*
1,664
5,151
(3,487)
(Loss)/profit after income tax benefit/(expense)
(10,547)
(11,389)
842
* EBITDA is a financial measure which is not prescribed by Australian Accounting Standards (‘AAS’) and
represents the profit/(loss) under AAS adjusted for depreciation, amortisation, interest and tax. Underlying
EBITDA (or uEBITDA) is EBITDA adjusted to exclude acquisition and divestment costs, transformation and
restructuring costs, other normalisation items, net fair value loss on remeasurement of contingent
consideration on business combinations, impairment of non-current assets, loss/(profit) on divestment of
non-core assets and share-based payments.
** Refer Statement of profit or loss and other comprehensive income.
Annual Report 2024
18
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
*** Transformation & restructuring costs – refer Note 6 of the financial statements
**** Other normalisation items covers a notional addback for professional services margin loss on customer
retention migrations. This relates to the assessed gross margin forgone on supporting customers to move
from acquisition legacy products that were end of life to new product modern workplace solution offerings
Below is a review of FY24 performance by segment. The Company remains focused on taking
all necessary steps to move all operations back into sustainable profitability.
Cyber Security
Spirit’s Cyber Security segment, Infotrust, provides a comprehensive stack of cyber security
managed services, professional services, advisory, and security software sales, integration and
management through its partnerships with carefully selected software vendors. Infotrust are
relied upon by 600+ customers ranging from large enterprise, government and mid-market.
Cyber security continues to be front of mind for organisations and government, with steady
growth in the overall market providing strong support for continued growth in this segment.
The strongest growth areas include cloud security, application security, data privacy and
security, and integrated risk management. Recently introduced Federal Government policies
on cyber security are expected to provide a strong tailwind for Spirit, with existing and target
customers likely to be subject to strengthened or new legislative obligations.
The Cyber Security segment achieved uEBITDA* for FY24 of $3.3M (FY23 uEBITDA*: $0.96M) on
full year sales revenue of $51.4M (FY23: $33.6M). The result includes the contribution of Infotrust
for the control period, being from the date of effective control (1 April 2024) .
The highly capable, multi site redundant Security Operations Centre (“SOC”) in Brisbane
remains a key differentiator against the limited SOC capabilities provided by other Australian
managed service providers and is now supporting a growing number of leading Australian
organisations. SOC services are sold into the Cyber Security and Managed Services customer
base.
The strategic focus for the forthcoming financial year is to extract the revenue and margin
accretion opportunities as a consequence of the acquisition of Infotrust. Mr Simon McKay,
Infotrust’s co-founder, has been appointed CEO of the Cyber Security segment, and the
integration of teams, processes and systems of the existing Spirit cyber security business and
Infotrust is well progressed. The Infotrust delivery approach is being deployed across Spirit’s
existing cyber security business to increase margins, drive enhanced customer satisfaction and
customer tenure and the benefits of procurement scale are being realised with key cyber
security vendor partners.
The segment has experienced increased success in tendering and winning muti-year delivery
contracts. As announced to the ASX on 16th July 2024, the segment recorded its largest ever
quarter in terms of total contract value with $19.4 million in sales, which included significant
multi-year cyber security managed services deals. Recent contract wins demonstrate the
advantages of combined cyber security and managed service offerings through the delivery of
an integrated managed secure services program.
Annual Report 2024
19
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Communication and Collaboration
Spirit’s Communication and Collaboration segment (trading as “Nexgen”) delivers small and mid-
sized businesses an integrated communication and collaboration solution comprising hardware,
software, installation and configuration, bundled with data and voice connectivity. These
products and services are targeted at small and medium sized businesses with ‘frontline’ staff
who need sophisticated communication management applications combined with collaboration
(including video-conferencing) solutions.
The segment achieved an underlying EBITDA* for FY24 of $6.5M (FY23: $9.5M) on revenue of
$40.1M (FY23: $41.6M).
The drop in segment performance YoY at both a revenue and uEBITDA* level reflects the impact
of rising interest rates throughout the financial year which dampened SME business confidence
alongside margin and cost pressures. The segment continues to invest in new initiatives to
support forward organic growth and address the FY24 challenges, including:
Execution of a new multi-year contract extension with Cisco which underscores Nexgen's
commitment to providing advanced communication and collaboration solutions for small-to-
medium businesses. The renewal of this strategic partnership agreement will underpin
greater pricing and system functionality options for the segment and its customers alongside
providing product based cost input benefits.
Establishing the "Spirit Business Centre", a national dealer network with the goal of
substantially broadening the segment’s sales channel and footprint.
Managed Services
In the Managed Services segment, Spirit delivers a suite of ICT solutions, principally to SMB and
mid-market organisations, which include software, hardware and services that support key
business functions including:
Productivity and communication suites
Network operations centre
Back-up and recovery
Threat and vulnerability management
Cloud migration services
Spirit’s Managed Services include designing, configuring, installing and supporting ICT services and
customer networks. Key strategic partners for Spirit in this segment include Microsoft and Cisco.
The Managed Services division has been a challenging operation over the last few financial years.
The segment has weighed heavily on the Group’s financial performance, and the under-
performance continued into the current financial year. The Board and management have been
focused on stabilising and restructuring this operation, which required more time and investment
than anticipated. As communicated to the ASX on 16th July 2024, the Managed Services segment
achieved its first profitable month in June 2024. While noting the impact of the delayed timeframe
on the full year segment result, the Company’s goal to return the segment to an underlying EBITDA
breakeven exit point by June 2024 was achieved.
Annual Report 2024
20
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
The Managed Services division achieved an uEBITDA* loss for FY24 of $4.55M (FY23 uEBITDA* loss:
$2.1M) on sales revenue of $34.7M (FY23: $52.4M).
A number of initiatives were undertaken throughout FY24 to streamline this segment and to set
the foundation for a return to profitability in FY25, including:
Implementation of ServiceNow, a modern ITSM platform widely used by mid-market and
enterprise customers. This is an advantage when tendering for Managed Services work, and a
significant uplift in customer satisfaction has also been recorded as a result of the ServiceNow
customer support solution.
CRM enhancements to align and optimise the Managed Services and Cyber Security sales
processes.
Consolidation and refocusing on a core service catalogue and with a new focus on providing
managed services to cyber security customers
Rebasing of the Managed Services baseline cost to align with current revenue
Realignment of the sales team with a dual focus on customer satisfaction (to minimise forward
customer churn) and delivering on new customer acquisitions. While sales execution remains
a current risk, the Company expects these changes to drive an increase in revenue and quality
of customers over time.
As outlined above in the Cyber Security segment overview, Spirit is gaining traction in winning
managed secure operations work. The Managed Services segment is critical to being able to win
these contracts, which are expected to contribute to the profitability recovery.
Group disclosures
Cash outflows from operating activities were $4.1M for the year ended 30 June 2024 (2023: cash
outflows $3.7M). This included cash outflows associated with transformation and restructuring
programs of $2.6M (2023: $1.7M). Net cash outflows from investing activities (principally related to
obligations associated with business combination payments and business acquisition and
divestment costs) were $16.1M (2023 outflows: $11.0M). During the financial year, the Company drew
down net debt from its banking facility of $3M in conjunction with a convertible note raise totaling
$5.5M (after costs), alongside undertaking a placement to fund the acquisition of Infotrust totaling
$15.4M (net of transaction costs).
The basic and diluted earnings per share loss for the financial year ended 30 June 2024 was 1.18
cents (2023: loss of 1.67 cents).
The net assets of the Consolidated Entity increased by $19.9M to $73.046M as at 30 June 2024 (30
June 2023: $53.133M). This increase primarily reflects the impact of the Infotrust acquisition.
Annual Report 2024
21
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Prospects for future financial years and business risks
Spirit Group continues its transformation into a profitable modern technology and cyber security
service provider that is known for delivering secure, scalable and sustainable customer outcomes.
Building a scalable and profitable company inherently involves risk. 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. At the time of signing the Directors’ report, the material
business risks that could impede the achievement of the Company’s future operational and
financial success are set out below.
Funding risk
The Company is focused on returning to an operational cashflow positive position alongside
managing residual acquisition fixed consideration obligations. The Company's aim is to manage
settlement of these obligations from its future operating cash flows. That noted, the risk with
respect to such preferred funding is contingent on the Company's performance improvements to
generate positive cashflows sufficient to:
manage working capital obligations;
fund the fixed residual acquisition obligations; and
fund agreed bank debt amortisation payments.
To the extent that the Company is unable to make the necessary performance improvements, it
may require additional equity funding, which may have a dilutionary effect on the Company's
shareholders or it may prevent the growth plans of the Company from being executed.
The Company has material debt funding in place with its banker which is subject to various
covenants. During the financial year the Company renegotiated its funding facility terms in
conjunction with the Company executing the acquisition of Infotrust. The renegotiation of the
facility included changes to the financial covenants (as outlined in note 21 of the financial
statements) and other conditions and undertakings by the Company. As part of the undertakings
provided, the Company is required to make a repayment of $85,000 per month (commencing 1
July 2024) to pay down the facility. The duration of the monthly amortisation requirement will be
reassessed at facility renewal on 1 July 2025.
To the extent that the Company's performance does not meet these revised covenants, there is a
risk that the Company will need to:
(i)
renegotiate the terms of debt with its banker, which may be on less advantageous terms,
(ii)
refinance with another lender, which may be on less advantageous terms, or
(iii)
undertake a capital raising to repay all or part of the debt finance.
The Company completed a Convertible Note Placement as set out in its ASX announcements
dated 6 October 2023 and 24 October 2023, with the funds raised used for acquisition due diligence
and evaluation and legal costs and provision of working capital. The Company has an optional right
of conversion if, at any time prior to 21 September 2026, the Company's shares have traded above
$0.09 per share for a period of at least 21 consecutive trading days. If the note holders do not
exercise their right of conversion, the Company may be at risk of funding the convertible note
redemptions at a future point in time that may require additional equity funding, which may have
a dilutionary effect on the Company's shareholders. That noted, the noteholders can convert at any
time at a share price of $0.045c (within the first 18 months) and when the company’s share price
exceeds the conversation price it infers the holders are in the money.
Annual Report 2024
22
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Cyber and data breach risks
Cyber attacks and data breaches are an inherent risk faced by every organisation. Should this risk
materialise, the financial, operational and/or reputational impacts could have a material adverse
effect on the Company and its prospects, including loss of customers, reduced sales, and reduction
in revenue and profit.
Being a material business risk, cyber requires constant management and risk mitigation. The
Consolidated Entity leverages the internal capability of its Cyber Security division to provide
proactive and reactive solutions and management of any cyber related events that present against
Spirit and its customers.
Sales execution risk
Achievement of the Company's growth strategy is contingent on effective execution of its sales
strategy within the segments’ target markets. Successful execution relies on a range of factors,
including attracting and retaining the right mix of sales talent. A failure to attract and retain
suitable staff could be disruptive to the Company's prospects, including an inability to grow
revenue, an increase in costs and a reduction in profits.
Labour market and inflationary risks
Access to the required human capital within the Australian employment market remains a key
business risk. The Company requires a mix of skilled professionals to execute its business plan, but
faces challenges in sourcing and retaining skilled staff in what is a highly competitive and at times
wage inflationary environment. Failure to attract and retain professional and technical talent could
be disruptive to the Company's business, resulting in increased costs and reduced profits, and
adversely impacting the Company's prospects. Spirit continues to develop strategies to retain its
workforce, and invests in employee retention programs and employer of choice initiatives.
Impact of competitive landscape
The Company competes with a number of other companies that provide comparable ICT services
and its operating performance is influenced by a number of external factors. Disruptors entering
the market with new technologies could threaten existing Company service offerings or make
some redundant. This could impact the Company’s ability to retain existing clients and attract new
clients, adversely impacting its revenues, profitability and prospects.
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 it faces may also increase in the absence of mitigation strategies.
Achievement of the Company’s strategic growth goals will involve an ongoing investment in
people, marketing/branding and system enhancements.
Spirit will continue to pursue accelerated growth through both an organic and inorganic
acquisition strategy. To succeed in that acquisition growth path, the Company needs to identify
and successfully conclude negotiations with the target company which can be challenging in a
competitive market landscape. Acquisitions carry risk. Specifically, they may consume a large
amount of management time and attention during integration, and the acquired company may
fail to meet strategic objectives or achieve expected financial performance (including unrealised
synergies). Spirit may not be able to fully or effectively integrate the operations, products,
technologies and personnel of the acquired company, and failure to do so could result in staff
turnover, loss of customers and increased costs, impacting the Company's profitability and
prospects.
Annual Report 2024
23
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Business environment risk
Changes in business conditions or economic and government settings in Australia or
internationally may impact the fundamentals underpinning the projected growth of the
Company's target markets or its cost structure and profitability. Changes in the level of inflation,
interest rates, government policy (including fiscal, monetary and regulatory policies), consumer
confidence and spending, employment rates and other socioeconomic factors, are outside the
control of the Company and may result in material adverse impacts on its business, operations,
results and prospects.
Technology and partner risk
The Company has strategic partnerships and procurement relationships with a range of
providers of technology products. These form part of the Consolidated Entity’s suite of products
and service offerings deployed in our customers’ environments. Accordingly, any outages or
technology failures attributed to a partner product or solution may have a material impact on
the Company’s customers and rectification may be outside the control of the Company.
Other risks
The above are not intended to constitute a complete list of the risks associated with the
Consolidated Entity. Any of the risks outlined above and other risks not outlined here may in the
future materially adversely affect the Company’s value or financial performance or prospects.
Significant changes in the state of affairs
On 29 September 2023, the Company raised $5 million (before costs) via a two tranche
Convertible Note Placement, with funds raised used for the Infotrust acquisition due diligence,
evaluation and legal costs, integration planning and support costs, and working capital. The
Placement was subsequently increased on 6 October 2023, with the Spirit Board taking an
additional $0.765 million in oversubscriptions, increasing total funds raised to $5.765 million.
During the financial year, and to fund the acquisition of Infotrust and associated costs, the
Company undertook a placement to 263 Finance Pty Ltd, a significant shareholder and an
associate of Non-Executive Director Mr Shan Kanji to raise $16 million at 5.0c per share (being
320 million shares).
The acquisition of Infotrust was completed with effective control commencing 1 April 2024. The
total consideration was $34.6 million, comprising:
$14.0 million in cash on completion;
$14.0 million in Spirit shares at 4.6c per share, totaling 304.3 million shares (Scrip
Consideration); and
$6.6 million in deferred consideration to be paid in cash as follows:
‒ Tranche 1 of $1.5 million on the six-month anniversary of the completion date
‒ Tranche 2 of $1.5 million on the 12-month anniversary of the completion date
‒ Tranche 3 of $3.6 million on the 18-month anniversary of the completion date
The Scrip Consideration is subject to voluntary escrow, with 5% of the Scrip Consideration being
released after each of 3, 6 and 9 months following completion of the acquisition and the
remainder (representing 85%) being released 12 months after completion.
Other than the information disclosed in the review of operations above and herein, there are no
significant changes in the state of affairs that the Consolidated Entity has not disclosed.
Annual Report 2024
24
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Matters subsequent to the end of the financial year
No other matter or circumstance has arisen since 30 June 2024 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. The Company continues to
review acquisitions as part of its growth plan and there may or may not be impacts upon future
state of affairs should a material acquisition be made.
Likely developments and expected results of operations
Refer ‘Entity’s operations’ and ‘Prospects for future financial years and business risks’.
Environmental regulation
The Consolidated Entity is not subject to any significant environmental regulation under
Australian Commonwealth or State law.
Information on Directors
Name:
Mr James Joughin
Title:
Non-Executive Chairman
Qualifications:
Bachelor of Business, CPA, GAICD
Experience and expertise:
James Joughin brings over 32 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
(or
has
held)
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.
Other current Directorships: None
Former Directorships (last 3
years):
MyDeal.com.au Ltd (ASX: MYD) (resigned 23 September 2022)
Bio-Gene Technology Ltd (ASX:BGT) (resigned 22 April 2023)
Special responsibilities:
Member, Audit and Risk Committee
Chair, Nomination and Remuneration Committee (Chair up to 29
May 2024, member from 30 May 2024)
Interests in shares:
5,459,936 fully paid ordinary shares
Interests in options:
Nil
Interests in rights:
Nil
Annual Report 2024
25
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Name:
Mr Julian Challingsworth
Title:
Managing Director and Chief Executive Officer
Qualifications:
MSc, Grad Dip (IT), BBus (Acc), CAANZ, FCPA, GAICD
Experience and expertise:
Julian previously acted as 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.
Other current Directorships: None
Former Directorships (last 3
years):
Tesserent Limited (ASX: TNT) (resigned 23 November 2021)
Interests in shares:
16,410,997 fully paid ordinary shares
Interests in rights:
12,916,667 Performance Rights
Interest in convertible notes: 75,000 Convertible Notes
Interest in convertible notes
options:
833,333 Convertible Note Options, exercisable at $0.09 (9 cents)
each, expiring 21 September 2026
Name:
Mr Gregory Ridder
Title:
Non-Executive Director (resigned 5 August 2024)
Qualifications:
BBus (Acc), Grad Dip (Mktg), GAICD, CPA
Experience and expertise:
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: Chairman, Kogan.com (ASX: KGN)
Former Directorships (last 3
years):
None
Special responsibilities:
Chair, Audit and Risk Committee from 15 July 2020 to 9 July 2024
Member Audit and Risk Committee from 10 July 2024 to 5 August
2024
Annual Report 2024
26
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Member, Nomination and Remuneration Committee from 15 July
2020 to 5 August 2024
Interests in shares:
2,250,000 fully paid ordinary shares
Interests in rights:
Nil
Name:
Ms Lynn Warneke
Title:
Non-Executive Director (appointed 9 October 2023)
Qualifications:
LLM (New Technologies Law), BA (InfoSci), FGIA, FACS, GAICD
Experience and expertise:
Lynn is an experienced Chair and Non-executive Director, and has
extensive background and expertise in strategy, digital services and
product
development,
customer
experience,
emerging
technologies, innovation and cybersecurity. Her industry experience
spans professional services, retail/wholesale, government, tertiary
education and consulting, as well as the technology and startup
sectors.
Lynn’s prior executive and consulting career includes senior roles in
ASX and internationally listed companies, and Chief Operating
Officer, Chief Information Officer and Deputy Chief Digital Officer
positions
in
large
public
organisations,
with
operational
accountability for corporate services, people and culture, finance and
ICT functions. She has also consulted to clients including NAB,
Telstra,
KPMG,
Aēsop,
Coles
and
Transfield
Services
(now
Broadspectrum).
Lynn is currently an industry mentor with Australian startup and
scaleup hub, Stone & Chalk and a member of the ACS AI Ethics
Committee.
Other current Directorships: None
Former Directorships (last 3
years):
None
Special responsibilities:
Member, Nomination and Remuneration Committee from 29
January 2024
Member, Audit and Risk Committee from 29 January 2024 to 9 July
2024
Chair, Audit and Risk Committee from 10 July 2024
Interests in shares:
400,000 fully paid ordinary shares
Interests in rights:
Nil
Annual Report 2024
27
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Name:
Ms Michelle Bendschneider (resigned 31 August 2023)
Title:
Non-Executive Director
Qualifications:
Bachelor of Information Technology and GAICD
Experience and expertise:
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 Senior Executive roles in Technology services
including consulting, professional services, and managed 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.
Other current Directorships: None
Former Directorships (last 3
years):
None
Special responsibilities:
Member, Nomination and Remuneration Committee from 1 April
2022 to 31 August 2023.
Member, Audit and Risk Committee from 1 April 2022 to 31 August
2023
Interests in shares:
N/A
Interests in rights:
N/A
Annual Report 2024
28
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Name:
Mr Elie Ayoub
Title:
Co-CEO Nexgen and Executive Director (resigned 5 August 2024)
Qualifications:
Nil
Experience and expertise:
Elie
is a co-CEO of Nexgen, Spirit’s Communication and
Collaboration business which he co-founded in 2009 and has been
jointly responsible for the growth and direction of the business. Elie
has 25 years’ experience in the telecommunications industry across
the
SME,
residential,
corporate
and
government
customer
segments. Prior to co-founding Nexgen, Elie held roles at Digitel,
One.tel, Macquarie Telecom and Axis Telecom. Elie has broad
experience managing a number of telecommunications functions
including, provisioning, project management, network solutions,
billing, finance, service, sales and marketing. Elie has been
instrumental in building, developing and maintaining Nexgen’s
sales, marketing, HR and operational processes, and in managing
strategic partnerships and vendor relationships.
Other current Directorships: None
Former Directorships (last 3
years):
None
Special responsibilities:
None
Interests in shares:
73,985,171 fully paid ordinary shares
Interests in rights:
Nil
Annual Report 2024
29
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Name:
Mr Julian Haber
Title:
Non-Executive Director (resigned 31 August 2023)
Qualifications:
Nil
Experience and expertise:
Julian is a highly regarded leader in Cyber Security and Information
Technology, having built 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 oversaw 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.
Other current Directorships: N/A
Former Directorships (last 3
years):
N/A
Interests in shares:
N/A
Interests in rights:
N/A
Name:
Mr Shan Kanji
Title:
Non-Executive Director (appointed 31 January 2024)
Qualifications:
B.Com (Accounting), LL.B.
Experience and expertise:
Shan has over 20 years’ experience as a senior business leader with a
proven track record of running scale diversified and complex
industrial and technology businesses in Australia and New Zealand.
Mr Kanji also has extensive experience with start-ups in technology,
property development, manufacturing and other sectors.
He is also a practicing lawyer and the Principal of legal firm Kanji &
Co.
Other current Directorships: Chairman, Atturra Ltd (ASX: ATA)
Former Directorships (last 3
years):
None
Special responsibilities:
Chair, Nomination and Remuneration Committee from 30 May 2024
Interests in shares:
465,437,935 fully paid ordinary shares
Interests in rights:
Nil
Annual Report 2024
30
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Name:
Mr Simon McKay
Title:
CEO of Cyber Security Segment and Executive Director (appointed 4
April 2024)
Qualifications:
Nil
Experience and expertise:
Simon is a seasoned leader in the cyber security industry with a track
record of success spanning over two decades. Simon is the co-
founder of two successful Australian cyber security businesses -
Infotrust (acquired by Spirit effective 1 April 2024) a cyber consulting
practice, and MyCISO, a SaaS management platform. Prior to co-
founding Infotrust, Simon spent over 10 years leading sales teams at
global cyber vendors such as Symantec and MessageLabs, where he
was instrumental in establishing them as the market leader in
Australia. He has collaborated closely with senior business, board and
IT executives from some of Australia’s largest organisations, helping
secure them against the ever-evolving threats of cybercrime.
Other current Directorships: None
Former Directorships (last 3
years):
None
Interests in shares:
152,173,913 fully paid ordinary shares
Interests in rights:
Nil
Name:
Mr Dane Meah
Title:
Non-Executive Director (appointed 4 April 2024)
Qualifications:
Nil
Experience and expertise:
Dane co-founded Infotrust (acquired by Spirit effective 1 April 2024)
in 2014 and during that time Infotrust evolved to develop deep
domain expertise that combines internally developed products,
services and third party technologies that supported their clients to
become secure and more productive.
Prior to co-founding Infotrust, Dane played a key role in
MessageLabs (under the Symantec umbrella) becoming the market
leader in Australia over 7 years.
Dane is currently the CEO of cyber security SaaS business MyCISO,
which launched in 2022 and has quickly scaled to be a leading, and
award winning, security program management platform.
Other current Directorships: None
Former Directorships (last 3
years):
None
Special responsibilities:
Member, Audit and Risk Committee from 30 May 2024
Interests in shares:
152,173,913 fully paid ordinary shares
Interests in rights:
Nil
'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.
Annual Report 2024
31
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Company secretary
Ms Melanie Leydin, BBus (Acc. Corp Law) CA FGIA
Melanie Leydin has over 30 years’ experience in the accounting profession and over 20 years’
experience as a Company Director, including as nominated Company Secretary of ASX listed
entities. She has extensive experience in relation to public company responsibilities, including ASX
and ASIC compliance, control and implementation of corporate governance, statutory financial
reporting, reorganization of Companies, initial public offerings, secondary raisings and shareholder
relations.
Melanie holds a Bachelor of Business majoring in Accounting and Corporate Law. She is a Member
of the Chartered Accountants Australia and New Zealand, a Fellow of the Governance Institute of
Australia and is a Registered Company Auditor. Melanie founded and was principal of a renowned
Australian professional services firm from February 2000. In November 2021 Vistra Group acquired
that business and Melanie is now Vistra Australia's Managing Director.
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 2024, and the number of meetings attended by
each Director were:
Full Board
Nomination and
Remuneration
Committee
Audit and Risk
Committee
Attended
Held
Attended
Held
Attended
Held
Mr James Joughin
13
13
5
5
4
4
Mr Julian Challingsworth
13
13
-
-
-
-
Mr Elie Ayoub
13
13
-
-
-
-
Mr Simon McKay *
3
3
-
-
-
-
Mr Dane Meah *
3
3
-
-
-
-
Mr Shan Kanji **
5
5
1
1
-
-
Ms Lynn Warneke ***
10
10
2
2
3
3
Mr Gregory Ridder
12
13
4
5
4
4
Mr Julian Haber *****
2
2
-
-
-
-
Ms Michelle
Bendschneider ****
2
2
1
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 Simon McKay and Mr Dane Meah were appointed to the Board effective 4 April 2024.
**
Mr Shan Kanji was appointed to the Board effective 31 January 2024.
***
Ms Lynn Warneke was appointed to the Board effective 9 October 2023.
**** Ms Michelle Bendschneider resigned from the Board effective 31 August 2023.
***** Mr Julian Haber resigned from the Board effective 31 August 2023.
Remuneration Report (audited)
The Remuneration Report details the key management personnel (“KMP”) remuneration
arrangements for the Consolidated Entity, in accordance with the requirements of the
Corporations Act 2001 and its Regulations.
KMP are those persons having authority and responsibility for planning, directing and controlling
the activities of the entity, directly or indirectly, including all Directors.
Annual Report 2024
32
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
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 KMP
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.
Annual Report 2024
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Spirit Technology Solutions Ltd
Directors' report
30 June 2024
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.
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. 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.
Annual Report 2024
34
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
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 KMP, and to assist the Company in
ensuring that its remuneration arrangements remain competitive. No remuneration consultants
were engaged for the year ended 30 June 2024. During the previous financial year ended 30 June
2023, the Company engaged a specialist remuneration consultant, SLM Corporate to provide
advice in relation to recommendations regarding the remuneration package of the Managing
Director and CEO, and recommendations in relation to the LTI framework of the Company. The
amount paid for this advice and recommendations during the financial year ended 30 June 2024
amounted to $Nil (2023: $27,500).
The Board was satisfied that the advice received was free from any undue influence by the KMP to
whom the advice may relate, because protocols were observed and complied with regarding any
interaction between SLM Corporate and management, and because all remuneration advice was
provided to the Remuneration and Nomination Committee.
Consolidated Entity performance and link to remuneration
Currently, the Consolidated Entity assesses its performance in relation to 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, Relative Total
Shareholder Return (Relative TSR) and Absolute Total Shareholder Return (Absolute TSR) hurdles.
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 Executive Directors, key employees and other selected personnel 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 24 November 2023 Annual General Meeting
('AGM')
At the 24 November 2023 AGM, 96.55% of the votes received supported the adoption of the
remuneration report for the year ended 30 June 2023. The Company did not receive any specific
feedback at the AGM regarding its remuneration practices.
Annual Report 2024
35
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Details of remuneration
The key management personnel of the Consolidated Entity consisted of the following Directors
and other executives of Spirit Technology Solutions Ltd:
●
James Joughin, Non-Executive Chairman
●
Julian Challingsworth, Managing Director and Chief Executive Officer
●
Simon McKay, CEO of Cyber Security Segment and Executive Director (appointed 4 April 2024)
●
Dane Meah, Non-Executive Director (appointed 4 April 2024)
●
Shan Kanji, Non-Executive Director (appointed 31 January 2024)
●
Lynn Warneke, Non-Executive Director (appointed 9 October 2023)
●
Gregory Ridder, Non-Executive Director (resigned 5 August 2024)
●
Elie Ayoub, Co-CEO Nexgen and Executive Director (resigned 5 August 2024)
●
Nathan Knox, Chief Operating Officer (appointed as a member of key management personnel
effective 15 August 2022)
●
James Harb, Co-CEO Nexgen (appointed as a member of key management personnel effective
1 February 2023)
●
Paul Miller, Chief Financial Officer
●
Julian Haber, Non-Executive Director (resigned 31 August 2023)
●
Michelle Bendschneider, Non-Executive Director (resigned 31 August 2023)
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-
employm
ent
benefits
Long-
term
benefits
Share-
based
payments
Cash
salary
Cash
bonus+
Other
payments
Super-
annuation
Long
service
Equity-
settled
Total
and fees
leave
2024
$
$
$
$
$
$
$
Non-Executive Directors:
James Joughin
116,354
-
-
12,799
-
-
129,153
Gregory Ridder
85,000
-
-
-
-
-
85,000
Shan Kanji*
32,022
-
-
-
-
-
32,022
Lynn Warneke**
49,106
-
-
5,402
-
-
54,508
Dane Meah****
16,246
-
-
1,787
-
-
18,033
Michelle Bendschneider***
11,364
-
-
1,250
-
-
12,614
Julian Haber***
12,500
-
-
-
-
-
12,500
Executive Directors:
Julian Challingsworth
400,000
90,000
-
53,900
1,908
177,300
723,108
Simon McKay****
38,470
-
-
4,232
777
-
43,479
Elie Ayoub
400,000
-
-
41,800
11,826
-
453,626
Other Key Management
Personnel:
Nathan Knox
275,000
25,000
-
33,000
1,249
52,530
386,779
James Harb
400,000
-
-
41,800
14,608
-
456,408
Paul Miller
300,000
37,500
37,125
7,847
62,468
444,940
2,136,062
152,500
-
233,095
38,215
292,298 2,852,170
Annual Report 2024
36
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
*
Mr Shan Kanji was appointed as a Director on 31 January 2024.
**
Ms Lynn Warneke was appointed as a Director on 9 October 2023.
*** Ms Michelle Bendschneider and Mr Julian Haber resigned as Directors on 31 August 2023.
****
+
Mr Dane Meah and Mr Simon McKay were appointed as Directors on 4 April 2024.
The cash bonus payments related to a one-off payment associated with the convertible note raise
Short-term benefits
Post-
employm
ent
benefits
Long-
term
benefits
Share-
based
payments
Cash salary
and fees
Cash
bonus+
Other
payments
Super-
annuation
Long
service
Equity-
settled
Total
leave
2023
$
$
$
$
$
$
$
Non-Executive Directors:
James Joughin
118,181
-
-
12,409
-
-
130,590
Gregory Ridder
85,000
-
-
-
-
-
85,000
Michelle Bendschneider^
68,182
-
33,139
7,159
-
-
108,480
Julian Haber*
37,500
-
-
-
-
-
37,500
Executive Directors:
Julian Challingsworth**
389,487
-
-
40,896
586
108,286
539,255
Julian Haber*
133,632
-
-
9,273
(3,929)
-
138,976
Elie Ayoub***
253,682
-
-
24,981
13,436
-
292,099
Sol Lukatsky****
1,538
-
153,035
15,023
(26,942)
145,937
288,591
Other Key Management
Personnel:
Nathan Knox#
231,074
-
-
24,263
381
25,138
280,856
James Harb##
241,460
-
-
23,770
10,653
-
275,883
Mark Dioguardi###
41,250
-
-
4,331
-
19,028
64,609
Paul Miller+
300,000
50,000
-
36,750
3,057
67,972
457,779
1,900,986
50,000
186,174
198,855
(2,758)
366,361 2,699,618
^
*
Ms Michelle Bendschneider provided strategic consultancy services to the Company and was paid a fee
of $33,139 during the year ended 30 June 2023. This payment is shown in ‘Other Payments’.
Mr Julian Haber was appointed to the Board in an Executive Director capacity effective 1 April 2022. He
moved into a Non-Executive capacity effective 19 November 2022. The remuneration noted above reflects
the apportionment for these two positions.
**
Mr Julian Challingsworth was appointed as Managing Director effective 11 July 2022.
*** Mr Elie Ayoub was appointed as a member of KMP effective, 1 February 2023 and appointed as an
Executive Director on 8 June 2023. The remuneration disclosed represents his remuneration for the
period 1 July 2022 to 30 June 2023. The total remuneration component related to his period as a KMP was
$129,764 and the total remuneration component related to his period as an executive director was $25,118.
**** Mr Sol Lukatsky resigned from the Board on 2 July 2022. The balance shown in ‘Other’ relates to
termination payments. The share-based payments represent the full year expense for the performance
rights that remain on foot.
#
Mr Nathan Knox commenced with the Company on 15 August 2022 and was appointed as a member of
KMP effective from that date.
##
Mr James Harb was appointed as a member of KMP effective, 1 February 2023. The remuneration
disclosed represents his remuneration for the period 1 July 2022 to 30 June 2023. The total remuneration
component related to his period as a KMP was $139,964.
###
Mr Mark Dioguardi ceased as a member of KMP effective 15 August 2022. The remuneration disclosed
represents his remuneration for the period 1 July 2022 to 15 August 2022.
+
Mr Paul Miller was awarded a cash retention bonus in respect of his FY23 remaining tenure, paid in FY23.
Annual Report 2024
37
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Fixed remuneration
At risk - STI
At risk - LTI
Name
2024
2023
2024
2023
2024
2023
Non-Executive Directors:
James Joughin
100%
100%
-
-
-
-
Gregory Ridder
100%
100%
-
-
-
-
Shan Kanji
100%
-
-
-
-
-
Lynn Warneke
100%
-
-
-
-
-
Dane Meah
100%
-
-
-
-
-
Michelle Bendschneider
100%
100%
-
-
-
-
Julian Haber
100%
100%
-
-
-
-
Executive Directors:
Julian Challingsworth
62%
80%
14%
-
24%
20%
Simon McKay
100%
-
-
-
-
-
Julian Haber
100%
100%
-
-
-
-
Elie Ayoub
100%
100%
-
-
-
-
Sol Lukatsky
-
49%
-
-
-
51%
Other Key Management
Personnel:
Nathan Knox
79%
91%
7%
-
14%
9%
James Harb
100%
100%
-
-
-
-
Mark Dioguardi
-
71%
-
-
-
29%
Paul Miller
77%
85%
9%
-
14%
15%
Annual Report 2024
38
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Service agreements
Remuneration and other terms of employment for KMP are formalised in service agreements.
Details of these agreements are as follows:
Name:
Julian Challingsworth
Title:
Managing Director and Chief Executive Officer
Agreement commenced:
11 July 2022
Term of agreement:
No fixed term. Ongoing until terminated by either party with three
months’ written notice.
Details:
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 received 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). In the 2024 financial year, Mr
Challingsworth was issued an LTI in the form of 6,666,667
Performance Rights following shareholder approval, vesting on
satisfaction of performance hurdles, over a performance period
commencing on 1 July 2023 and ending on 30 June 2026, which was
based on 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, and vesting will be contingent on the
achievement of specific performance hurdles.
Mr. Challingsworth has agreed to purchase at least $75,000 each
year in shares. He must ensure that he complies with the terms of
the Securities Trading Policy before doing so.
The Company has also implemented a Loan Funded Share Plan
which was approved by shareholders at the Annual General Meeting
held on 17 November 2022, where Mr. Challingsworth was invited to
obtain a loan from the Company to purchase or reimburse him for
purchases of up to $380,000 worth of shares on 2 separate occasions,
no later than 15 months after the date of shareholder approval.
Annual Report 2024
39
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Name:
Mr Simon McKay
Title:
Chief Executive Officer of the Cyber Security segment and Executive
Director (appointed as an Executive Director on 4 April 2024)
Agreement commenced:
4 April 2024
Term of agreement:
No fixed term. Ongoing until terminated by either party with two
months’ written notice.
Details:
As the CEO of the Cyber Security segment, Mr McKay’s base salary is
$160,000
per
annum
plus
statutory
superannuation
and
discretionary benefits totalling $1,152 per annum.
Mr McKay is also entitled to a maximum short-term incentive
opportunity up to $31,000 plus statutory superannuation.
Name:
Mr Elie Ayoub
Title:
Communication and Collaboration Co Chief Executive Officer and
Executive Director (resigned 5 August 2024)
Agreement commenced:
1 April 2021, terms revised on 1 January 2023, 1 April 2023 and 1 July
2023
Term of agreement:
No fixed term. Ongoing until terminated by either party with three
months’ written notice.
Details:
As co-CEO of Nexgen, Spirit's Communication and Collaboration
Business, Mr Ayoub’s base salary is $380,000 per annum, plus
statutory superannuation and car allowance ($20,000). There is no
contractual short-term incentive or long-term incentive.
Name:
Mr James Harb
Title:
Communication and Collaboration Co Chief Executive Officer
Agreement commenced:
1 April 2021, terms revised on 1 January 2023 and 1 July 2023
Term of agreement:
No fixed term. Ongoing until terminated by either party with three
months’ written notice.
Details:
As co-CEO of Nexgen, Spirit's Communication and Collaboration
business, Mr Harb’s base salary is $380,000 per annum, plus statutory
superannuation and car allowance ($20,000). There is no contractual
short-term incentive or long-term incentive.
Name:
Mr Nathan Knox
Title:
Chief Operating Officer – Spirit Group
Agreement commenced:
15 August 2022, terms revised on 1 November 2022
Term of agreement:
No fixed term. Ongoing until terminated by either party with two
months’ written notice.
Details:
Effective 1 November 2022, fixed remuneration of $275,000 per
annum, plus statutory superannuation. In the 2024 financial year Mr
Knox is entitled to a potential short-term incentive (STI) of up to
$50,000 (excluding superannuation). In the 2024 financial year, Mr
Knox was issued an LTI in the form of 1,900,000 Performance Rights,
vesting on satisfaction of performance hurdles, over a performance
period commencing on 1 July 2023 and ending on 30 June 2026.
Annual Report 2024
40
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Name:
Mr Paul Miller
Title:
Chief Financial Officer
Agreement commenced:
25 November 2019, terms revised on 1 October 2021
Term of agreement:
No fixed term. Ongoing until terminated by either party with three
months written notice.
Details:
Effective 1 October 2021, fixed remuneration of $300,000 per annum,
plus statutory superannuation. In the 2024 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 2024 financial year, Mr Miller was issued an
LTI in the form of 2,000,000 Performance Rights, vesting on
satisfaction of performance hurdles, over a performance period
commencing on 1 July 2023 and ending on 30 June 2026.
Key management personnel have no entitlement to termination payments in the event of removal
for misconduct.
Share-based compensation
Issue of shares
Mr Julian Challingsworth, Managing Director and Chief Executive Officer is party to a Loan Share
Plan that was approved by shareholders on 17 November 2022. Pursuant to the terms of the Plan
he is able to finance the market value acquisition of Spirit shares on the ASX by way of a limited
recourse loan or use the loan to reimburse Spirit share purchases to a value of up to $760,000.
The loan will become repayable if Mr Challingsworth ceases to be an employee of the Company
and in other circumstances set out in the Plan. The loan is limited recourse, meaning that it can be
satisfied in full by selling shares the subject of the loan. If the market value of the shares at that
time is below the amount of the loan, Mr Challingsworth will not be required to pay the difference
in value. To access the shares (for example, if Mr Challingsworth wanted the ability to sell the
shares) he will first have to repay the cash amount of the loan. Escrow may also apply to shares in
excess of the loan amount.
The loan is subject to interest at the 2-year Bank Bill Swap Rate to be determined at the date of
the loan. Interest will be capitalised on the loan amount on a quarterly basis and on repayment will
be added to the amount of the loan.
As at 30 June 2024 the loan amount is $757,000 (including capitalised interest).
There were no other shares issued to Directors and other key management personnel as part of
compensation during the year ended 30 June 2024.
Options
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 2024.
.
Annual Report 2024
41
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Performance Rights
The terms and conditions of each grant of Performance Rights over ordinary shares affecting
remuneration of Directors and other key management personnel in this financial year or future
reporting years are as follows:
Grant date
Vesting date and
exercisable date
Expiry date
Share price
hurdle for
vesting
Fair value
per right
29 November 2021
30 June 2024
7 April 2025
$0.33
$0.0970
29 November 2021
30 June 2024
7 April 2025
$0.00
$0.0540
11 March 2022
30 June 2024
7 April 2025
$0.33
$0.0720
11 March 2022
30 June 2024
7 April 2025
$0.00
$0.0160
11 July 2022
30 June 2025
30 June 2026
$0.00
$0.0519
10 February 2023
30 June 2024
10 February 2026
$0.093
$0.0482
10 February 2023
30 June 2024
10 February 2026
$0.124
$0.0346
10 February 2023
30 June 2024
10 February 2026
$0.155
$0.0245
10 February 2023
30 June 2025
10 February 2026
$0.093
$0.0547
10 February 2023
30 June 2025
10 February 2026
$0.124
$0.0453
10 February 2023
30 June 2025
10 February 2026
$0.155
$0.0376
29 December 2023
30 June 2026
29 December 2026
$0.0675
$0.0522
29 December 2023
30 June 2026
29 December 2026
$0.09
$0.0473
29 December 2023
30 June 2026
29 December 2026
$0.1125
$0.0429
14 June 2024
30 June 2026
14 June 2027
$0.075
$0.0418
14 June 2024
30 June 2026
14 June 2027
$0.0938
$0.0371
14 June 2024
30 June 2026
14 June 2027
$0.1125
$0.0330
Name
Number of
rights
granted
Grant date
Vesting date
and
exercisable
date
Expiry date
Share
price
hurdle for
vesting
Fair value
per right at
grant date
Sol Lukatsky
3,000,000 29 November 2021 30 June 2024
7 April 2025
$0.33
$0.0970
Sol Lukatsky
3,000,000 29 November 2021 30 June 2024
7 April 2025
$0.00
$0.0540
Mark Dioguardi
2,500,000 29 November 2021 30 June 2024
7 April 2025
$0.33
$0.0970
Mark Dioguardi
2,500,000 29 November 2021 30 June 2024
7 April 2025
$0.00
$0.0540
Paul Miller
750,000 11 March 2022
30 June 2024
7 April 2025
$0.33
$0.0720
Paul Miller
750,000 11 March 2022
30 June 2024
7 April 2025
$0.00
$0.0160
Julian
Challingsworth
6,250,000
11 July 2022
30 June 2025
30 June 2026
$0.00
$0.0519
Paul Miller
546,667 10 February 2023
30 June 2025
10 February 2026
$0.093
$0.0547
Paul Miller
546,667 10 February 2023
30 June 2025
10 February 2026
$0.124
$0.0453
Paul Miller
546,666 10 February 2023
30 June 2025
10 February 2026
$0.155
$0.0376
Nathan Knox
519,333 10 February 2023
30 June 2025
10 February 2026
$0.093
$0.0547
Nathan Knox
519,333 10 February 2023
30 June 2025
10 February 2026
$0.124
$0.0453
Nathan Knox
519,334 10 February 2023
30 June 2025
10 February 2026
$0.155
$0.0376
Julian
Challingsworth
2,222,222
29 December 2023
30 June 2026
29 December 2026
$0.0675
$0.0522
Julian
Challingsworth
2,222,222
29 December 2023
30 June 2026
29 December 2026
$0.09
$0.0473
Julian
Challingsworth
2,222,223
29 December 2023
30 June 2026
29 December 2026
$0.1125
$0.0429
Paul Miller
666,666 14 June 2024
30 June 2026
14 June 2027
$0.075
$0.0418
Paul Miller
666,667 14 June 2024
30 June 2026
14 June 2027
$0.0938
$0.0371
Paul Miller
666,667 14 June 2024
30 June 2026
14 June 2027
$0.1125
$0.0330
Nathan Knox
633,333 14 June 2024
30 June 2026
14 June 2027
$0.075
$0.0418
Nathan Knox
633,333 14 June 2024
30 June 2026
14 June 2027
$0.0938
$0.0371
Nathan Knox
633,334 14 June 2024
30 June 2026
14 June 2027
$0.1125
$0.0330
Annual Report 2024
42
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
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 the Performance Rights issued to Julian Challingsworth in
December 2023 are as follows:
Absolute TSR
100% of the Performance Rights vest based on absolute total shareholder return (“Absolute TSR”)
performance of the Company, and service conditions outlined below.
The vesting schedule is set out below:
One-third of the Performance Rights vest when the Company's 30-trading day Volume
Weighted Average Price (VWAP) is equal to or greater than $0.0675 at any time between grant
and 30 June 2026.
One-third of the Performance Rights vest when the Company's 30-trading day Volume
Weighted Average Price (VWAP) is equal to or greater than $0.09 at any time between grant
and 30 June 2026.
One-third of the Performance Rights vest when the Company's 30-trading day Volume
Weighted Average Price (VWAP) is equal to or greater than $0.1125 at any time between grant
and 30 June 2026.
The performance hurdles for the Performance Rights issued in June 2024 are as follows:
Absolute TSR
100% of the Performance Rights vest based on absolute total shareholder return (“Absolute TSR”)
performance of the Company, and service conditions outlined below.
The vesting schedule is set out below:
One-third of the Performance Rights vest when the Company's 30-trading day Volume
Weighted Average Price (VWAP) is equal to or greater than $0.0750 at any time between grant
and 30 June 2026 and the participant remains employed by the Company up until the
achievement of this VWAP hurdle.
One-third of the Performance Rights vest when the Company's 30-trading day Volume
Weighted Average Price (VWAP) is equal to or greater than $0.0938 at any time between grant
and 30 June 2026 and the participant remains employed by the Company up until the
achievement of this VWAP hurdle.
One-third of the Performance Rights vest when the Company's 30-trading day Volume
Weighted Average Price (VWAP) is equal to or greater than $0.1125 at any time between grant
and 30 June 2026 and the participant remains employed by the Company up until the
achievement of this VWAP hurdle.
In addition, for each of the three Tranches above, the following vesting conditions must also be
met:
-
only 50% of the Performance Rights in each tranche will vest if the participant remains
continuously employed with the Company until 31 December 2024 and the Vesting Conditions
for each tranche above have been met. If the participant does not remain continuously
employed with the Company until 31 December 2024, none of the three tranches of
Performance Rights above will be eligible to vest.
Annual Report 2024
43
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
-
the remaining 50% of the Performance Rights in each tranche will only vest if the participant
remains continuously employed with the Company until 30 June 2026 and the Vesting
Conditions for each tranche above have been met.
The performance hurdles for the Performance Rights issued in February 2023 are as follows:
Absolute TSR
100% of the Performance Rights vest based on absolute total shareholder return (“Absolute TSR”)
performance of the Company, and service conditions outlined below.
The vesting schedule is set out below:
One-third of the Performance Rights vest when the Company's 30-trading day Volume
Weighted Average Price (VWAP) is equal to or greater than $0.0930 at any time between grant
and 30 June 2025.
One-third of the Performance Rights vest when the Company's 30-trading day Volume
Weighted Average Price (VWAP) is equal to or greater than $0.1240 at any time between grant
and 30 June 2025.
One-third of the Performance Rights vest when the Company's 30-trading day Volume
Weighted Average Price (VWAP) is equal to or greater than $0.1550 at any time between grant
and 30 June 2025.
The vesting conditions above are also subject to the following conditions. For each of the three
Tranches above, 50% of the Performance Rights in each tranche will only vest if the participant
remains employed with the Company until 31 December 2023 and the vesting conditions for each
tranche above have been met, with the remaining 50% of the Performance Rights in each tranche,
subject to remaining employeed with the Company until 31 December 2024 and the vesting
conditions for each tranche above being met.
The performance hurdles for the Performance Rights issued to Julian Challingsworth in July
2022, are as follows:
Relative TSR
100% of the Performance Rights are subject to a Relative TSR performance hurdle and will be
eligible to vest and become exercisable into Shares, assuming the relevant performance hurdles
are met at the end of the Performance Period.
The vesting schedule is 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 Date compared to the VWAP of the Shares
in the one month preceding the commencement of the Performance Period (which commenced
on 1 July 2022), will be used in calculating TSR over the Performance Date. The TSR incorporates
capital returns as well as dividends notionally reinvested and is considered the most appropriate
means of measuring the Company’s performance.
Annual Report 2024
44
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
The performance hurdles for Performance Rights issued 29 November 2021 and 11 March 2022
are based on the Company’s TSR performance:
(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.
Annual Report 2024
45
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
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 terms of previously issued Performance Rights were changed to remove the Return on
Invested Capital (ROIC) vesting condition and replaced 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 Executive
Directors and other KMP as part of compensation during the year ended 30 June 2024 are set out
below:
Number of Number of Number of Number of
rights
rights
rights
rights
granted
granted
vested
vested
during the
during the during the during the
year
year
year
year
Name
2024
2023
2024
2023
Julian Challingsworth
6,666,667
6,250,000
-
-
Nathan Knox
1,900,000
1,558,000
-
-
Paul Miller
2,000,000
1,640,000
-
-
Additional information
The earnings of the Consolidated Entity for the five years to 30 June 2024 are summarised below:
2024
2023
2022
2021
2020
$'000
$'000
$'000
$'000
$'000
Revenue and other income
126,119
127,271
138,732
104,469
34,874
Net (loss)/profit before tax
(13,438)
(13,919)
(55,041)
1,345
(2,043)
Net (loss)/profit after tax
(10,547)
(11,389)
(53,166)
1,157
(1,515)
Share price
$0.041
$0.050
$0.053
$0.26
$0.24
Annual Report 2024
46
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Additional disclosures relating to key management personnel (KMP)
Shareholding
The number of shares in the Company held during the financial year by each Director of the
Company and other members of KMP of the Consolidated Entity, including their personally related
parties, is set out below:
Balance at
the start of
the year
Balance on
the date of
becoming a
KMP
Additions
Disposals /
Other
Balance at
the end of
the year
Ordinary shares
James Joughin
5,459,936
-
-
-
5,459,936
Julian Challingsworth
11,646,891
-
4,764,106
-
16,410,997
Simon McKay
-
152,173,913
-
-
152,173,913
Dane Meah
-
152,173,913
-
-
152,173,913
Shan Kanji
- 145,437,935
320,000,000
-
465,437,935
Lynn Warneke*
-
-
400,000
-
400,000
Julian Haber**
5,693,092
-
-
(5,693,092)
-
Gregory Ridder
2,250,000
-
-
-
2,250,000
Michelle Bendschneider**
465,000
-
-
(465,000)
-
Elie Ayoub
73,985,171
-
-
-
73,985,171
James Harb
70,560,862
-
-
-
70,560,862
Nathan Knox
-
-
-
-
-
Paul Miller
196,127
-
-
-
196,127
170,257,079 449,785,761
325,164,106
(6,158,092)
939,048,854
*
Ms Lynn Warneke was appointed to the Board effective 9 October 2023. Upon appointment, Ms
Warneke had no shareholding in the Company.
**
Mr Julian Haber and Ms Michelle Bendschneider resigned from the Board on 31 August 2023. The
balance disclosed in the “Disposals/other” column represents their shareholding on the date of
resignation.
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:
Balance at
Granted
Vested/
Expired/ Balance at
the start of
exercised
forfeited/ the end of
the year
other
the year
Performance Rights over ordinary shares
Julian Challingsworth
6,250,000
6,666,667
-
-
12,916,667
Nathan Knox
1,558,000
1,900,000
-
-
3,458,000
Paul Miller
3,613,417
2,000,000
-
(473,417)
5,140,000
11,421,417
10,566,667
-
(473,417)
21,514,667
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.
Annual Report 2024
47
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
Grant date
Expiry date
Issue price of
shares
Number
under
option
25 July 2024
24 July 2029
$0.0375
26,666,664
26,666,664
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
Expiry date
Number
under
rights
29 November 2021
7 April 2025
4,513,686
11 March 2022
7 April 2025
1,694,799
11 July 2022
30 June 2026
6,250,000
10 February 2023
10 February 2026
11,252,000
29 December 2023
29 December 2026
6,666,667
14 June 2024
14 June 2027
17,805,000
48,182,152
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 2024 and up to the date of this report.
Shares issued on the exercise of Performance Rights
The were no ordinary shares of Spirit Technology Solutions Ltd issued on exercise of performance
rights during the year ended 30 June 2024 and up to the date of this report.
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.
Annual Report 2024
48
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
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.
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.
Annual Report 2024
49
Spirit Technology Solutions Ltd
Directors' report
30 June 2024
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
23 August 2024
Annual Report 2024
50
Annual Report 2024
ASX: ST1
Auditor’s
Independence
Declaration
PKF Melbourne Audit & Assurance Pty Ltd is a member of PKF Global, the network of member firms of PKF International Limited, each of which is a separately owned
legal entity and does not accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm(s). Liability limited by a
scheme approved under Professional Standards Legislation.
PKF Melbourne Audit & Assurance Pty Ltd
ABN 75 600 749 184
Level 15, 500 Bourke Street
Melbourne, Victoria 3000
T: +61 3 9679 2222
F: +61 3 9679 2288
info@pkf.com.au
pkf.com.au
AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF SPIRIT TECHNOLOGY SOLUTIONS LTD
In relation to our audit of the financial report of Spirit Technology Solutions Ltd for year ended 30 June 2024, 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 in relation to the audit.
This declaration is made in respect of Spirit Technology Solutions Ltd and the entities it controlled during the
year.
PKF
Kaitlynn Brady
Melbourne, 23 August 2024
Partner
Annual Report 2024
53
Annual Report 2024
ASX: ST1
Statement of
Profit or Loss
and Other
Comprehensive
Income
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
37
Spirit Technology Solutions Ltd
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2024
Consolidated
Note
2024
2023
$'000
$'000
Revenue
4
125,847
127,114
Other income
5
272
157
Cost of sales
(69,719)
(65,594)
Expenses
Employee benefits expense
6
(44,517)
(44,849)
Share-based payments
39
(571)
(942)
Administration and corporate expenses
(8,354)
(10,449)
Selling
(994)
(993)
Marketing
(1,351)
(1,694)
Acquisition and divestment costs
(2,850)
(200)
Transformation and restructuring costs
6
(1,999)
(2,732)
Net fair value loss on remeasurement of financial liabilities
-
(8,042)
Impairment of non-current assets
6
(1,991)
-
Depreciation and amortisation expense
6
(4,258)
(4,073)
Finance costs
6
(2,953)
(1,622)
Loss before income tax benefit
(13,438)
(13,919)
Income tax benefit
7
2,891
2,530
Loss after income tax benefit for the year attributable to the
owners of Spirit Technology Solutions Ltd
(10,547)
(11,389)
Other comprehensive income for the year, net of tax
-
-
Total comprehensive loss for the year attributable to the
owners of Spirit Technology Solutions Ltd
(10,547)
(11,389)
Cents
Cents
Earnings per share for loss attributable to the owners of Spirit
Technology Solutions Ltd
Basic loss per share
38
(1.18)
(1.67)
Diluted loss per share
38
(1.18)
(1.67)
Annual Report 2024
55
Annual Report 2024
ASX: ST1
Statement
of Financial
Position
The above statement of financial position should be read in conjunction with the accompanying notes
38
Spirit Technology Solutions Ltd
Statement of financial position
As at 30 June 2024
Consolidated
Note
2024
2023
Assets
$'000
$'000
Current assets
Cash and cash equivalents
8
8,869
7,024
Trade and other receivables
9
17,273
8,463
Inventories
10
2,303
2,789
Contract cost assets
12
2,470
2,595
Other assets
11
7,682
4,718
Total current assets
38,597
25,589
Non-current assets
Contract cost assets
12
3,252
3,492
Property, plant and equipment
13
722
1,003
Right-of-use assets
14
2,856
4,429
Intangible assets
15
116,093
77,589
Deferred tax
16
7,432
5,118
Other assets
11
2,464
1,960
Total non-current assets
132,819
93,591
Total assets
171,416
119,180
Liabilities
Current liabilities
Trade and other payables
17
30,489
15,329
Lease liabilities
18
1,077
1,771
Provisions
19
4,913
3,944
Unearned revenue
24
7,857
3,132
Borrowings
21
1,020
5,000
Deferred consideration
20
7,037
4,089
Total current liabilities
52,393
33,265
Non-current liabilities
Borrowings
21
26,980
20,000
Convertible notes
22
4,934
-
Lease liabilities
18
1,809
2,673
Deferred tax
23
6,839
4,200
Provisions
19
1,044
2,005
Unearned revenue
24
721
467
Deferred consideration
20
3,650
3,437
Total non-current liabilities
45,977
32,782
Total liabilities
98,370
66,047
Net assets
73,046
53,133
Equity
Issued capital
25
149,682
119,411
Reserves
26
568
2,393
Accumulated losses
(77,204)
(68,671)
Total equity
73,046
53,133
Annual Report 2024
57
Annual Report 2024
ASX: ST1
Statement of
Changes in
Equity
The above statement of changes in equity should be read in conjunction with the accompanying notes
39
Spirit Technology Solutions Ltd
Statement of changes in equity
For the year ended 30 June 2024
Issued
capital
Reserves Accumulated
losses
Total equity
Consolidated
$'000
$'000
$'000
$'000
Balance at 1 July 2023
119,411
2,393
(68,671) 53,133
Loss after income tax benefit for the year
-
-
(10,547)
(10,547)
Other comprehensive income for the year, net of
tax
-
-
-
-
Total comprehensive income for the year
-
-
(10,547)
(10,547)
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction costs
(Note 25)
15,440
-
-
15,440
Convertible notes issued (Note 22)
567
-
-
567
Conversion of convertible notes into ordinary
shares (Note 22)
264
-
-
264
Share-based payments (Note 39)
-
189
-
189
Issue of shares to vendor as part consideration in
relation to the Infotrust acquisition (Note 34)
14,000
-
-
14,000
Transfers from reserves to accumulated losses
-
(2,014)
2,014
-
Balance at 30 June 2024
149,682
568
(77,204)
73,046
Issued
capital
Reserves Accumulated
losses
Total equity
Consolidated
$'000
$'000
$'000
$'000
Balance at 1 July 2022
114,874
1,826
(57,282)
59,418
Loss after income tax benefit for the year
-
-
(11,389)
(11,389)
Other comprehensive income for the year, net of
tax
-
-
-
-
Total comprehensive income for the year
-
-
(11,389)
(11,389)
Transactions with owners in their capacity as
owners:
Share-based payments (Note 39)
-
567
-
567
Issue of shares to vendor as earnout
consideration in relation to the Nexgen
acquisition (Note 25)
4,537
-
-
4,537
Balance at 30 June 2023
119,411
2,393
(68,671)
53,133
Annual Report 2024
59
Annual Report 2024
ASX: ST1
Statement of
Cash Flows
The above statement of cash flows should be read in conjunction with the accompanying notes
40
Spirit Technology Solutions Ltd
Statement of cash flows
For the year ended 30 June 2024
Consolidated
Note
2024
2023
$'000
$'000
Cash flows from operating activities
Receipts from customers (inclusive of GST)
133,264
136,810
Government grants received
5
35
45
Payments to suppliers and employees (inclusive of GST)
(132,005)
(137,226)
Transformation and restructuring costs
(2,577)
(1,708)
Loan funded share plan
39
(382)
(375)
Deposits refunded
2
175
Interest received
5
72
42
Interest and other finance costs paid
6
(2,535)
(1,493)
Net cash used in operating activities
37
(4,126)
(3,730)
Cash flows from investing activities
Payments for property, plant and equipment
13
(260)
(374)
Payments for intangibles
15
(314)
(324)
Cash payments to acquire businesses, net of cash acquired
34
(12,739)
(10,350)
Acquired income tax liabilities (paid)/refunded
(39)
186
Acquisition and divestment costs
(2,850)
(200)
Proceeds from disposal of assets and right of use
66
37
Net cash used in investing activities
(16,136)
(11,025)
Cash flows from financing activities
Proceeds from issue of shares
25
16,000
-
Share issue transaction costs
25
(560)
-
Net proceeds from convertible notes
22
5,539
-
Proceeds from borrowings
21
3,000
12,000
Repayment of lease liabilities
(1,872)
(1,954)
Net cash from financing activities
22,107
10,046
Net increase/(decrease) in cash and cash equivalents
1,845
(4,709)
Cash and cash equivalents at the beginning of the financial year
7,024
11,733
Cash and cash equivalents at the end of the financial year
8
8,869
7,024
Annual Report 2024
61
Annual Report 2024
ASX: ST1
Notes to the
Financial
Statements
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
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
23 August 2024. The Directors have the power to amend and reissue the financial statements.
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, except for
certain financial instruments.
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 2024 and the results of
all subsidiaries for the year then ended.
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. There were no material impacts following the
adoption of these standards.
Going concern
The Directors have, at the time of approving the financial statements, a reasonable expectation
that the Consolidated Entity has adequate resources and strategic initiatives in place 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 2024 of $13.796M (30 June
2023 net current liability position: $7.676M). This financial position needs to be considered noting
the following key factors:
Annual Report 2024
63
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 1. General information (continued)
Current liabilities include unearned revenue of $7.9M. This liability unwinds to revenue rather
than being a cash settled liability.
During the financial year the Company renegotiated its funding facility terms and entered into
a revised Facility Amendment Deed which covered changes to the financial covenants and
other conditions and undertakings by the Company. As part of the undertakings provided, the
Company is required to make a repayment of $85,000 per month (commencing 1 July 2024)
to pay down the facility over time. The duration of the monthly amortisation requirement will
be reassessed at facility renewal on 1 July 2025.
The acquisition of InfoSurety Holdings Pty Ltd (as outlined in Note 34) is expected to contribute
positive earnings before interest, tax and depreciation and amortisation. It is anticipated that
those earnings will be sufficient to cover the majority, if not all, of the deferred consideration
obligations as they arise for that acquisition over the next 18 months.
The Consolidated Entity continues to rationalise its operations with the primary objective of
returning to positive cash flows from its operations. To achieve this there has been ongoing
acceleration of initiatives within the Managed Services business segment to move that
division’s earnings to a positive position. This target was achieved in the month of June 2024.
That noted, residual measures to ensure sustained momentum and forward growth will
require capital to implement, alongside management of residual deferred consideration
obligations. Accordingly, the Company continues to manage funding risks which includes
regular communication with its financier and assessing other sources of finance in whole or
in part.
The Consolidated Entity has a portfolio of assets which it considers has significant value when
benchmarked against similar observed traded assets in the market. Those assets can be
leveraged as required to support ongoing liquidity and debt requirements noting the
timeframes that would be involved in divestment.
The Consolidated Entity remains confident that it also has the ability to request additional
support from existing shareholders if financial assistance is required.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian
Securities and Investments Commission, relating to ‘rounding-off’. Amounts in this report have
been rounded off in accordance with that Corporations Instrument to the nearest ’000 dollars, or
in certain cases, the nearest dollar.
Annual Report 2024
64
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 2. 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.
Revenue recognition
Refer Note 4 for detail.
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.
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 15. The recoverable amounts
of each cash generating unit (“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. Refer Note 15.
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. Noting that the Consolidated Entity has incurred losses in the
current and previous financial years, the expectation is that future taxable earnings will be
generated sufficient to utilise the deferred tax assets.
Convertible notes
Refer Note 22 for detail.
Annual Report 2024
65
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 3. Operating segments
Identification of reportable operating segments
The Chief Operating Decision Makers (‘CODM’s) manage the Consolidated Entity’s operations
across three operating segments as outlined below. Each of those operating segments has a
dedicated ‘segment Chief Executive Officer’ responsible for financial performance and asset
allocation decisions within that segment.
Communication and Collaboration offering award-winning voice solutions, managed service
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 customers;
Managed Services 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.
Year ended 30 June 2024
Communication
and
Collaboration
Cyber
Security
Managed
Services
Corporate
Total
$’000
$’000
$’000
$’000
$’000
Revenue
End customer revenue
40,143
51,042
34,662 -
125,847
Intercompany revenue
-
331
44
(375)
-
40,143
51,373
34,706
(375)
125,847
Underlying earnings before interest, taxes,
depreciation & amortisation*
6,518
3,301
(4,550)
(3,605)
1,664
Depreciation and amortisation expense
(1,313)
(474)
(980)
-
(2,767)
Finance costs (net of interest income)
(54)
(19)
(103)
(2,705)
(2,881)
Underlying net profit/(loss) before income
tax**
5,151
2,808
(5,633)
(6,310)
(3,984)
Underlying Adjustments:
Share based payments
-
-
-
(571)
(571)
Acquisition & divestment costs
-
(31)
-
(2,819)
(2,850)
Transformation & restructuring costs***
(360)
(840)
(987)
188
(1,999)
Other normalisation items****
-
-
(552)
-
(552)
Impairment of non-current assets
-
-
(1,991)
-
(1,991)
Amortisation of customer relationships
(1,194)
(297)
-
-
(1,491)
(Loss)/profit before income tax benefit
3,597
1,640
(9,163)
(9,512)
(13,438)
Income tax benefit
2,891
(Loss) after income tax benefit
(10,547)
Annual Report 2024
66
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 3. Operating segments (continued)
* EBITDA is a financial measure which is not prescribed by Australian Accounting Standards (‘AAS’) and
represents the profit/(loss) under AAS adjusted for depreciation, amortisation, interest and tax. Underlying
EBITDA is EBITDA adjusted to exclude share-based payments, gain/(loss) on divestment of non-core assets,
acquisition and divestment costs, transformation and restructuring costs, other normalisation items, net fair
value loss on remeasurement of contingent consideration on business combinations and impairment of non-
current assets.
** Underlying net profit/(loss) before income tax benefit/(expense) (“uNPBT”) is a financial measure which is not
prescribed by Australian Accounting Standards (‘AAS’) and adjusts underlying EBITDA* to deduct depreciation
and amortisation (excluding amortisation of customer relationships) and finance costs (net of interest revenue).
The Directors consider that these measures are useful in gaining an understanding of the performance of the
entity, consistent with internal reporting.
*** Transformation & restructuring costs – refer note 6
**** Other normalisation items covers a notional addback for professional services margin loss on customer
retention migrations ($0.55M). This relates to the assessed gross margin forgone on supporting customers to
move from acquisition legacy products that were end of life to new product MWS offerings.
30 June 2024
Communication
and
Collaboration
Cyber
Security
Managed
Services
Corporate
Total
$’000
$’000
$’000
$’000
$’000
Total assets
12,655
26,775
6,539
125,447
171,416
Total liabilities
(6,473)
(25,794)
(10,998)
(55,105)
(98,370)
Net assets
6,182
981
(4,459)
70,342
73,046
Year ended 30 June 2023
Communication
and
Collaboration
Cyber
Security
Managed
Services
Corporate
Total
$’000
$’000
$’000
$’000
$’000
Revenue
End customer revenue
41,588
33,192
52,334
-
127,114
Intercompany revenue
-
416
37
(453)
-
41,588
33,608
52,371
(453) 127,114
Underlying earnings before interest, taxes,
depreciation & amortisation*
9,474
963
(2,141)
(3,145)
5,151
Depreciation and amortisation expense
(1,436)
(387)
(1,056)
- (2,879)
Finance costs (net of interest income)
(42)
19
(64)
(1,493)
(1,580)
Underlying net profit/(loss) before income
tax**
7,996
595
(3,261)
(4,638)
692
Underlying Adjustments:
Share based payments
-
-
-
(942)
(942)
Loss on divestment
-
-
(600)
-
(600)
Acquisition and divestment costs
-
-
(104)
(96)
(200)
Transformation & restructuring costs
-
(103)
(2,529)
(100)
(2,732)
Other normalisation items
-
-
(901)
-
(901)
Net fair value loss on remeasurement of
contingent consideration on business
combinations
-
-
-
(8,042) (8,042)
Amortisation of customer relationships
(1,194)
-
-
-
(1,194)
(Loss)/profit before income tax benefit
6,802
492
(7,395)
(13,818)
(13,919)
Income tax benefit
2,530
(Loss) after income tax benefit
(11,389)
Annual Report 2024
67
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 3. Operating segments (continued)
* & ** Refer above footnotes.
30 June 2023
Communication and
Collaboration
Cyber
Security
Managed
Services
Corporate
Total
$’000
$’000
$’000
$’000
$’000
Total assets
13,046
12,840
10,709
82,585
119,180
Total liabilities
(6,623)
(11,391)
(12,034)
(35,999)
(66,047)
Net assets
6,423
1,449
(1,325)
46,586
53,133
Major customers
During the year ended 30 June 2024 there are no individual customers which accounted for 5% or
more of sales.
Note 4. Revenue
Consolidated
2024
2023
$’000
$’000
Sales revenue
125,847
127,114
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Major product lines
Security services
51,944
34,138
Managed modern communications
52,219
58,732
Managed infrastructure
18,708
27,655
Cloud services
2,260
4,668
Other
716
1,921
125,847
127,114
Geographical regions
Australia
125,847
127,114
Timing of revenue recognition
Goods and services transferred at a point in time
75,537
69,852
Services transferred over time
50,310
57,262
125,847
127,114
Critical judgements in recognising revenue
The Consolidated Entity provides a range of services combined with hardware and software
licenses. The application of AASB 15 Revenue from Contracts with Customers requires an
assessment of whether the entity is acting as a principal or agent in the transactions we undertake.
In May 2022, the IFRS Interpretations Committee (IFRIC) issued a final agenda decision on
‘Principal versus Agent: Software Reseller (IFRS 15)’ about whether a reseller of software licenses is
acting as principal or agent. The IFRIC observed that the conclusion as to whether the reseller is a
principal or agent depends on the specific facts and circumstances, including the terms and
conditions of the relevant contracts. This agenda decision supplemented the judgment required
under AASB 15. The Consolidated Entity, on balance and based on the application of the criteria to
its business model, is satisfied that it acts as principal in respect of its sales.
Annual Report 2024
68
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 4. Revenue (continued)
Specifically, management remains satisfied that it demonstrates control of the licenses before they
are transferred to the customers. This conclusion was arrived at on the basis that:
-
the Consolidated Entity has primary responsibility for fulfilling the order from the customer,
which includes obligations in relation to layered managed services delivered alongside
provision of licenses;
-
the Consolidated Entity holds inventory risk with respect to unaccepted or cancelled licenses;
-
the Consolidated Entity has discretion in establishing prices.
On this basis, the Consolidated Entity remains the principal with respect to software license
arrangements as it controls the specified good or service before that good or service is transferred
to a customer. The revenue recorded for goods is the gross amount billed.
Material accounting policies
The Consolidated Entity’s revenue from customer contracts is 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 transaction date.
Services transferred over time
Internet access, equipment rentals, line rentals, managed IT and security services are recognised
over 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.
Goods and services transferred at a point in time
Call charges, professional services, time and materials billings, hardware and software sales and
set-up charges are recognised in the period in which the services or goods are delivered. Where
professional services are bundled with sales of hardware and software (‘products’), the sale of the
products is a separate performance obligation, and the transaction price is allocated to the
products and the professional services based on a relative stand-alone prices basis.
Note 5. Other income
Consolidated
2024
2023
$’000
$’000
Government infrastructure grants
35
35
Government subsidies
-
10
Profit on sale of other assets and right of use
70
28
Miscellaneous income
95
42
Interest income
72
42
272
157
Annual Report 2024
69
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 6. Expenses
Consolidated
2024
2023
$’000
$’000
Loss before income tax includes the following specific expenses:
Depreciation
Leasehold improvements
37
170
Plant and equipment
330
404
Motor vehicles
105
109
Furniture and fixtures
112
94
Total depreciation (refer Note 13)
584
777
Amortisation
Right-of-use assets
1,714
1,702
Customer relationships
1,491
1,194
Software and projects
469
400
Total amortisation (refer Notes 14 and 15)
3,674
3,296
Total depreciation and amortisation
4,258
4,073
Finance costs
Borrowings
2,761
1,493
Finance leases
192
129
Finance costs expensed
2,953
1,622
Employee benefits expense excluding superannuation
41,741
43,582
Employee benefits included in other disclosures
Acquisition integration expenses *
(198)
-
Loss/(Gain) on divestment of business assets
-
(110)
Redundancy expense **
(444)
(1,704)
System reengineering expense **
(408)
(419)
Product IP development expense
-
(427)
40,691
40,922
* Included within acquisition and divestment costs. Refer
Statement of profit or loss and other comprehensive income.
** Included within transformation and restructuring costs.
Refer Statement of profit or loss and other comprehensive income.
Superannuation expense
Defined contribution superannuation expense
3,826
3,927
44,517
44,849
Impairment of receivables
Bad and doubtful debts expense*
594
869
*The Consolidated Entity has recognised a loss of $594,000 in
profit or loss in respect of impairment of receivables for the
year ended 30 June 2024 (2023: $869,000), including bad
debts expense of $326,000 (2023: $602,000).
Annual Report 2024
70
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 6. Expenses (continued)
Consolidated
2024
2023
$’000
$’000
Transformation and restructuring costs
Employee redundancy expense
444
1,704
System reengineering expense
1,402
601
Product IP development expense
-
427
Other
153
-
1,999
2,732
Loss on sale of business assets
Loss on divestment of selected data centre and network assets
-
600
Impairment of non-current assets
Contract cost assets (refer Note 12)
1,991
-
Note 7. Income tax (benefit)/expense
Consolidated
2024
2023
$’000
$’000
Numerical reconciliation of income tax (benefit)/expense & tax at the
statutory rate
(Loss) before income tax benefit/(expense)
(13,438)
(13,919)
Tax at the statutory tax rate of 30.0% (30.0% at 30 June 2023)
(4,031)
(4,176)
Tax effect amounts which are not deductible/(taxable) in calculating
taxable income:
Acquisition related
508
2,423
Share options and employee share scheme
171
283
Impairment of non-tax deductible assets
599
-
Other differences
(138)
(1,060)
Income tax (benefit)/expense
(2,891)
(2,530)
Note 8. Current assets – cash and cash equivalents
Consolidated
2024
2023
$’000
$’000
Cash at bank
8,869
7,024
Annual Report 2024
71
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 9. Current assets – trade and other receivables
Consolidated
2024
2023
$’000
$’000
Trade receivables
18,163
9,121
Less: Allowance for expected credit losses
(901)
(759)
17,262
8,362
Other receivables
11
101
17,273
8,463
The ageing of trade receivables are as follows:
Consolidated
2024
2023
$’000
$’000
Current
9,775
5,955
1 to 30 days overdue
4,780
1,790
31 to 60 days overdue
1,099
275
61 to 90 days overdue
826
319
Over 90 days overdue
1,683
782
18,163
9,121
Allowance for expected credit losses
The Consolidated Entity retains a provision of $901,000 in respect of impairment of receivables for
the year ended 30 June 2024 (2023: $759,000).
The ageing of the receivables and allowance for expected credit losses provided for above are as
follows:
Consolidated
2024
2023
$’000
$’000
Current
40
-
1 to 30 days overdue
99
26
31 to 60 days overdue
39
100
61 to 90 days overdue
116
39
Over 90 days overdue
607
594
901
759
Movements in the allowance for expected credit losses are as follows:
Consolidated
2024
2023
$’000
$’000
Opening balance
759
707
Additions and releases
142
52
Closing balance
901
759
Annual Report 2024
72
Spirit Technology Solutions Limited
Notes to the financial statements
30 June 2024
Note 10. Current assets – inventories
Consolidated
2024
2023
$’000
$’000
Stock on hand – at cost
3,193
3,359
Less: Provision for impairment
(890)
(570)
2,303
2,789
Note 11. Other assets
Consolidated
2024
2023
$’000
$’000
Accrued revenue
8,526
5,358
Prepayments
1,208
1,000
Employee loans
1
4
Vendor loans
4
4
Other assets
407
312
10,146
6,678
Note 12. Contract cost assets
Consolidated
2024
2023
$’000
$’000
Contract cost assets
11,753 9,345
Accumulated release to profit and loss
(6,031)
(3,258)
5,722 6,087
Reconciliation of the written down values at the beginning and end of
the current and previous financial year are set out below:
Consolidated
2024
2023
$’000
$’000
Opening balance
6,087 4,426
Adjustments through business combinations (Note 34)
978 -
Additions
3,296 3,806
Amortisation to the profit and loss
(2,648)
(2,145)
Impairment
(1,991)
-
Closing balance
5,722 6,087
* As outlined Note 3, the impairment related to the Managed Services segment and arose as a
consequence of the losses incurred during the year ended 30 June 2024
Annual Report 2024
73
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 12. Contract cost assets (continued)
Material accounting policies
The contract cost 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.
Note 13. Non-current assets – property, plant and equipment
Consolidated
2024
2023
$’000
$’000
Leasehold improvements – at cost
255
813
Less: Accumulated depreciation and impairment
(255)
(776)
-
37
Plant and equipment – at cost
3,459
6,943
Less: Accumulated depreciation and impairment
(2,932)
(6,313)
527
630
Motor vehicles – at cost
339
533
Less: Accumulated depreciation
(298)
(427)
41
106
Furniture & Fixtures – at Cost
531
936
Less: Accumulated depreciation
(377)
(706)
154
230
722
1,003
Reconciliations
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
Total
$’000
$’000
$’000
$’000
$’000
Balance at 30 June 2022
207
774
215
219
1,415
Additions
-
267
2
105 374
Disposals
-
(7)
(2)
-
(9)
Depreciation expense
(170)
(404)
(109)
(94)
(777)
Balance at 30 June 2023
37
630
106
230
1,003
Additions through business
combinations (Note 34)
-
59
-
-
59
Additions
-
184
40
36
260
Disposals
-
(16)
-
- (16)
Depreciation expense
(37)
(330)
(105)
(112)
(584)
Balance at 30 June 2024
-
527
41
154
722
Annual Report 2024
74
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 13. Non-current assets – property, plant and equipment (continued)
Material accounting policies
All classes of fixed assets are stated at historical cost.
Depreciation is calculated on a straight-line basis to write off the net cost of each class of fixed
assets over their expected useful lives as follows:
Leasehold improvements
3 – 5 years
Plant and equipment
2 – 7 years
Motor vehicles
4 – 5 years
Furniture and fixtures
3 – 7 years
Note 14. Non-current assets – right-of-use assets
Consolidated
2024
2023
$’000
$’000
Right-of-use assets
5,482
7,188
Less: Accumulated amortisation and impairment
(2,626)
(2,759)
2,856
4,429
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous
financial year are set out below:
Consolidated
2024
2023
Consolidated
$’000
$’000
Opening balance
4,429
2,577
Additions
159
3,612
Disposals
(18)
(58)
Amortisation expense
(1,714)
(1,702)
2,856
4,429
Material accounting policies
The right-of-use asset is measured at cost
Right-of-use assets are depreciated on a straight-line basis over 1 – 5 years.
Annual Report 2024
75
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 15. Non-current assets – intangibles assets
Consolidated
2024
2023
$’000
$’000
Goodwill – at cost
92,811
63,382
Intellectual property – at cost
-
1,412
Less: Accumulated amortisation and impairment
-
(1,412)
-
-
Software – at cost
943
6,007
Less: Accumulated amortisation and impairment
(251)
(5,160)
692
847
Brand names – at cost
4,105
4,105
Customer relationships – at cost
22,663
11,942
Less: Accumulated amortisation
(4,178)
(2,687)
18,485
9,255
116,093
77,589
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous
financial year are set out below:
Goodwill
Brand
names
Software &
projects
Customer
relationships
Total
at cost
at cost
at cost
at cost
Consolidated
$’000
$’000
$’000
$’000
$’000
Balance at 30 June 2022
63,382
4,105
923
10,449
78,859
Additions
-
-
324
-
324
Disposals
-
-
-
-
-
Amortisation expense
-
-
(400)
(1,194)
(1,594)
Balance at 30 June 2023
63,382
4,105
847
9,255
77,589
Additions through business
combinations (Note 34)
29,429
-
-
10,721
40,150
Additions
-
-
314
-
314
Disposals
-
-
-
-
-
Amortisation expense
-
-
(469)
(1,491)
(1,960)
Balance at 30 June 2024
92,811
4,105
692
18,485
116,093
Goodwill, brand names and intangible assets with indefinite lives
Goodwill and brand names, including those acquired during the year, are allocated to the segment
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 2024 calculation of
value-in-use.
Annual Report 2024
76
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 15. Non-current assets – intangibles (continued)
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
Communication and
Collaboration
50,136
8%
10%
3%
13.1%
Cyber Security
46,780
9%
10%
3%
13.1%
Sensitivity analysis on the key assumptions employed in the value-in-use calculations has been
performed by management. The sensitivities applied were decreasing key sales lines 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.
Material accounting policies
Finite life intangible assets are measured at cost.
Customer relationships
Customer relationships acquired in a business combination are amortised on a straight-line basis
over 7-10 years.
Software
Software is amortised on a straight-line basis over 3-5 years.
Note 16. Non-current assets – deferred tax
Consolidated
2024
2023
$’000
$’000
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Employee benefits
1,482
1,173
Expenses deductible in future periods
440
359
Other provisions/accruals
1,568
1,500
Right of Use Assets
158
147
Property Plant & Equipment
519
274
Tax losses
3,265
1,665
Deferred tax asset
7,432
5,118
Annual Report 2024
77
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 17. Current liabilities – trade and other payables
Consolidated
2024
2023
$’000
$’000
Trade payables
16,325
9,901
GST payable
835
495
Vendor loans
3,000
-
Other payables and accrued expenses
10,329
4,933
30,489
15,329
Trade payables are unsecured and are usually paid within 30 days of recognition.
Refer Note 34 for further information on the Vendor loan.
Refer to Note 28 for further information on financial instruments.
Note 18. Lease liabilities
Consolidated
2024
2023
$’000
$’000
Lease liability
2,886
4,444
The leases relate to office premises (with a term ranging between 2 – 7 years) and motor vehicles
(which are all on 4 year lease terms). The majority of leased premises have an option renewal
clause. Refer to Note 28 for further information on financial instruments, maturity profiles and cash
flows on leases.
Note 19. Provisions
Consolidated
2024
2023
$’000
$’000
Annual leave
1,987
1,960
Long service leave
1,492
1,395
Provision for income tax
463
-
Restructuring
447
1,024
Lease make good
495
497
Other provisions
1,073
1,073
5,957
5,949
Annual Report 2024
78
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 19. Provisions (continued)
Reconciliations
Reconciliations of the movement in values at the beginning and end of the current and previous financial
year are set out below:
Annual
leave
Long
service
leave
Provision
for
income
tax
Restructure Lease
make
good
Other
provisions
Total
Consolidated
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Balance at 30 June 2022
2,377
1,409
(31)
1,138
200
1,073
6,166
Additional provisions
recognised during the year
2,318
131
-
1,024
297
- 3,770
Credited to profit or loss
-
-
(155)
-
-
-
(155)
Refunds/(Payments)
during the year
(2,735)
(145)
186
(1,138)
-
-
(3,832)
Balance at 30 June 2023
1,960
1,395
-
1,024
497
1,073
5,949
Additions through
business combinations
(Note 34)
218
106
502
-
-
-
826
Additional provisions
recognised during the year
2,281
212
-
432
21
-
2,946
(Payments) during the year
(2,472)
(221)
(39)
(1,009)
(23)
-
(3,764)
Balance at 30 June 2024
1,987
1,492
463
447
495
1,073
5,957
Note 20. Current liabilities – deferred consideration
Consolidated
2024
2023
$’000
$’000
Deferred consideration
10,687
7,526
The component of deferred consideration that relates to the Nexgen acquisition is $4.04M. The
acquisition of Nexgen included a contingent consideration element by way of an earn-out
structure based on performance targets for the 18 months ended 30 June 2023. The Company and
the founders finalized these arrangements in their entirety in February 2023. Accordingly, the
nature of the balance has been reclassified from being contingent to being deferred.
The component of deferred consideration relating to the acquisition of InfoSurety Holdings Pty Ltd
is $6.65M. Refer to Note 34 for further information.
Annual Report 2024
79
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 21. Borrowings
Consolidated
2024
2023
$’000
$’000
Bank loans
28,000
25,000
Refer to Note 28 for further information on financial instruments, including the loan repayment
maturity profile.
Assets pledged as security
The bank loan of $28M (2023: $25M) has a first ranking security over the assets and undertakings
of Spirit Technology Solutions Ltd and its wholly owned subsidiaries.
During the financial year the Company drew down an additional $3M under the facility,
renegotiated its funding facility terms and entered into a revised Facility Amendment Deed which
covered changes to the financial covenants and other conditions and undertakings by the
Company. As part of the undertakings provided, the Company is required to make a repayment of
$85,000 per month (commencing 1 July 2024) to pay down the facility over time. The duration of
the monthly amortisation requirement will be reassessed at facility renewal on 1 July 2025.
The Company’s loan facility is subject to compliance with the following financial covenants during
the financial year ended 30 June 2024 and 30 June 2025:
Minimum Group EBITDA contribution for the quarter ended 30 June 2024.
Net Leverage Ratio (NLR): expressed as a ratio of (A) the aggregate outstanding
accommodation of the Group (as defined within the facility documents) less the aggregate
amount of cash held by the group as at the Calculation Date; and (B) the Group EBITDA (as
defined within the facility documents). For the remaining term of the facility the Calculation
Date means 30 September, 31 December, 31 March and 30 June of each financial year. The NLR
must at the calculation date be less than or equal to the agreed ratio for that calculation date
(which is stepped down over the next 18 months).
Minimum Net Worth (MNW): expressed as Total Assets less Total Liabilities. The MNW is
assessed on a quarterly basis commencing 30 June 2024 and must at the calculation date be
equal to or more than the agreed benchmark for that calculation date.
In accordance with the provisions of the covenants and undertakings, non-compliance can trigger
a Review Event of the facility which is generally a standing right under normal commercial loan
facilities. Such review events may include a requirement to pay down in part or in whole the loan
facility and other conditions as agreed with the funder.
Annual Report 2024
80
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 21. Borrowings (continued)
Material accounting policies
The Consolidated Entity has elected to early adopt AASB 2022-6 Amendments to Australian
Accounting Standards – Non-current Liabilities with Covenants, in conjunction with, AASB 2020-1
Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-
current. The amendments within AASB 2022-6, build upon the amendments contained within
AASB 2020-1 and consequently, we describe the effect of these amendments at a combined level.
This adoption amends AASB 101 and improves the disclosure of liabilities arising from loan
arrangements in our financial statements. By adopting these amendments early, the Company
aims to enhance the information provided to our stakeholders regarding our loan arrangements
and their classification as either current or non-current. This early adoption allows the Company to
benefit from the clarity and guidance provided by AASB 2022-6 and AASB 2020-1, ensuring
transparent and comprehensive reporting of our financial position. We believe that early adoption
of these standards will result in more meaningful financial statements for our stakeholders.
Note 22. Convertible notes
Consolidated
2024
2023
$'000
$'000
The convertible notes are presented in the statement
of financial position as follows:
Proceeds from issue of convertible notes (net of raising costs)
5,539
-
Liability component at the date of issue
(4,972)
-
Equity component at the date of issue
567
-
Classification of liability component at the end of the period:
Current
-
-
Non-current
4,934
-
4,934
-
Liability component at the beginning of the period
-
-
Net proceeds from issue of convertible notes during the period
5,539
-
Equity component at the date of issue
(567)
-
Payments for convertible notes redeemed
-
-
Interest expense for the period calculated at the effective interest rate
375
-
Finance costs paid
(149)
-
Conversion of convertible notes into ordinary shares
(264)
-
Liability component at the end of the period
4,934
-
Annual Report 2024
81
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 22. Convertible notes (continued)
During the financial year Spirit issued convertible notes with a face value of $5,765,000 and a
nominal interest rate of 8% and incurred transaction costs of $225,600. The notes are convertible
at any time by the holder but if converted within the first 18 months the conversion price is
AUD0.045 (after this time the conversion price is AUD0.09). In addition, the holder receives one
conversion option per two notes converted if the notes are converted within the first twelve
months (the conversion options have a fixed exercise price of $0.09). Spirit also has an early
redemption right. Whilst this is a call option, a put option was also granted to the holder, which by
design is in the money. These rights are not closely related; however, the put option is not a present
obligation as it first requires action by Spirit and the delivery of shares in accordance with the
already established terms and conditions for conversion. As such, there is no derivative which
needs to be recognised.
Spirit has assessed that these notes meet the fixed-for-fixed condition under AASB 132 and
therefore contains an underlying host liability (which will be accounted for at amortised cost using
the effective interest method) with an initial value of $4,972,000 and equity component including
an equity derivative of $567,000. The fair value of the host financial instrument was determined
based on discounting the cash flows using an interest rate for a comparable financial liability
without the conversion features at an effective interest rate of 13.54% (in arriving at this rate the
Company considered previous commercial borrowings and discount rates used to estimate the
cost of capital).
Whilst the number of shares to be delivered changes (including the conversion options) over the
life of the contract these are predetermined at the inception of the contract and the events are
mutually exclusive (each event on its own results in a fixed amount of shares being delivered and
meeting the equity classification). In addition, the change in conversion terms represents a
passage over time adjustment.
There is currently diversity in practice with regard to how to apply the fixed-for-fixed condition
under AASB 132. The IASB has recently issued an exposure draft proposing amendments to clarify
the requirements and underlying principles in IAS 32 for classifying financial instruments. Were
these notes to be assessed as not meeting the fixed-for-fixed condition under AASB 132 then a
derivative liability would have resulted from that analysis which would have been required to be
accounted for at fair value through the profit and loss.
Material accounting policies
The component of the convertible notes that exhibits characteristics of a liability is recognised as
a liability in the statement of financial position, net of transaction costs. On issue of the convertible
notes, the fair value of the liability component is determined using a market rate for an equivalent
non-convertible bond and this amount is carried on the amortised cost basis until extinguished on
conversion or redemption. The increase in the liability due to passage of time is recognised as a
finance cost. The remainder of the proceeds are allocated to the conversion option that is
recognised and included in statement of changes in equity as an option premium on convertible
notes, net of transaction costs. The carrying amount of the conversion option is not remeasured in
the subsequent years. The corresponding interest on convertible notes is expensed to profit or loss.
Annual Report 2024
82
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 23. Non-current liabilities - deferred tax
Consolidated
2024
2023
$'000
$'000
Deferred tax liability comprises temporary differences attributable to:
Property, plant and equipment
62
84
Identifiable intangible assets
6,777
4,116
Deferred tax liability
6,839
4,200
Note 24. Unearned revenue
Consolidated
2024
2023
$'000
$'000
Customer contract unearned revenue
8,578
3,599
Reconciliations
Reconciliations of the movements at the beginning and end of the current and previous financial
year are set out below:
Consolidated
$'000
Balance at 30 June 2022
6,450
Net other movements
(2,851)
Balance at 30 June 2023
3,599
Additions through business combinations (Note 34)
3,619
Net other movements
1,360
Balance at 30 June 2024
8,578
Note 25. Equity – issued capital
Consolidated
2024
2023
2024
2023
Shares
Shares
$'000
$'000
Ordinary shares - fully paid
1,366,619,196 735,604,704
149,682
119,411
Annual Report 2024
83
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 25. Equity – issued capital (continued)
Movements in ordinary share capital
Details
Date
Shares
Issue
price
$'000
Balance
30 June 2022
664,723,579
114,874
Issue of shares to vendor as earnout
consideration in relation to the Nexgen
acquisition
31 March 2023
70,881,125
$0.064
4,537
Balance
30 June 2023
735,604,704
119,411
Movements
Convertible notes issued
16 October 2023
-
-
117
Convertible notes issued
11 December 2023
-
-
473
Convertible note raising cost
-
-
(23)
Conversion of convertible notes into
ordinary shares
24 October 2023
1,333,333
$0.041
54
Conversion of convertible notes into
ordinary shares
8 February 2024
5,333,333
$0.039
210
Issue of placement shares
28 March 2024
320,000,000
$0.050
16,000
Cost of capital raising
28 March 2024
(560)
Issue of shares to vendor as part
consideration in relation to the InfoSurety
acquisition
3 April 2024
304,347,826
$0.046
14,000
Balance
30 June 2024
1,366,619,196
149,682
Movements in unquoted options
Details
Date
Options
$'000
Balance
30 June 2023
18,000,000
-
Balance
30 June 2024
-
-
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.
Annual Report 2024
84
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 25. Equity - issued capital (continued)
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 prioritises
meeting these 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 2023 Annual Report.
Note 26. Equity – reserves
Consolidated
2024
2023
$'000
$'000
Share-based payments reserve
562
2,387
Capital reserve
6
6
568
2,393
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and Executive
Directors as part of their remuneration, and other parties as part of their compensation for services.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out
below:
Capital
reserve
Share-
based
payments
reserve
Total
Consolidated
$'000
$'000
$'000
Balance at 30 June 2022
6
1,820
1,826
Share-based payments expense (Note 39)
-
567
567
Balance at 30 June 2023
6
2,387
2,393
Share-based payments expense (Note 39)
-
189
189
Transfers from reserves to accumulated losses
-
(2,014)
(2,014)
Balance at 30 June 2024
6
562
568
Annual Report 2024
85
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 27. Equity – dividends
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, Technology and
Finance teams are located in the Philippines and components of that cost base is invoiced in USD.
The Consolidated Entity also spends approximately $15.5M USD per annum sourcing security-
based software products. Conversion is at the applicable exchange rate at the time the transaction
Is authorised or at an agreed exchange rate that is fixed at the time of sales order acceptance by
the customer using an appropriate hedging product (on a case-by-case basis).
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 $2,310,000 in interest and fees
during the 2024 financial year (2023: $1,493,000).
The facility is structured such that a line fee is payable on the facility limit ($28M), a usage fee
payable on funds drawn and an interest charge based on the Bank Bill Swap rate (“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 2024 of $1,716,000
(2023: $945,000) over the average balance drawn down during the year ended 30 June 2024 of
$27.9M (2023: $18.2M). The line fee for the year ended 30 June 2024 was $554,000 (2023: $517,000).
Annual Report 2024
86
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 28. Financial instruments (continued)
2024
2023
Weighted
average
interest
rate
Balance Weighted
average
interest
rate
Balance
Consolidated
%
$’000
%
$’000
Bank loan
6.15%
28,000
5.18%
25,000
Net exposure to cash flow interest rate risk
28,000
25,000
An analysis by remaining contractual maturities is shown in ‘liquidity and interest rate risk
management’ below.
Refer Note 21.
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. The credit loss model takes into consideration the industry
dynamics and exposures of the customer base and varies by segment given the varying customer
profiles within each segment.
With regards to debtors, amounts older than 60 days owing are reviewed and where appropriate
taken up as a provision for doubtful debts. This process is completed monthly. As at 30 June 2024
$901,000 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 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
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, available
borrowing facilities or pursuing other forms of liquidity support by continuously monitoring actual
and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Annual Report 2024
87
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
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. With the exception of lease liabilities the financial instrument components below
match their carrying amount as shown in the statement of financial position.
Less than 6
months
6 -12
months
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
Remaining
contractual
maturities
Consolidated – 2024
$’000
$’000
$’000
$’000
$’000
$’000
Non-derivatives
Non-interest bearing
Trade and other payables
30,489
-
-
-
-
30,489
Deferred consideration
3,700
3,337
3,650
-
-
10,687
Interest-bearing – variable
Bank loan* +
510
510
1,020
4,080
21,880
28,000
Convertible notes
-
-
-
4,934
-
4,934
Lease liability** #
657
537
835
1,131
-
3,160
Total non-derivatives
35,356
4,384
5,505
10,145
21,880
77,270
* Weighted average interest rate of 6.15%
** Weighted average interest rate of 5.43%
# The lease liability disclosures include both principal and interest cash flows and therefore these totals differ
from their carrying amount in the statement of financial position.
Less than 6
months
6 -12
months
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
Remaining
contractual
maturities
Consolidated – 2023
$’000
$’000
$’000
$’000
$’000
$’000
Non-derivatives
Non-interest bearing
Trade and other payables
15,329
-
-
-
-
15,329
Deferred consideration
1,882
2,207
3,437
-
-
7,526
Interest-bearing – variable
Bank loan*
-
-
5,000
20,000
-
25,000
Lease liability** #
958
915
1,194
1,663
302
5,032
Total non-derivatives
18,169
3,122
9,631
21,663
302
52,887
* Weighted average interest rate of 5.18%
** Weighted average interest rate of 5.27%
# The lease liability disclosures include both principal and interest cash flows and therefore these totals differ
from their carrying amount in the statement of financial position.
Fair value of financial instruments
Unless otherwise stated the carrying amounts of financial instruments reflect their fair value.
Annual Report 2024
88
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
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)
Mr Gregory Ridder (Non-Executive Director – resigned 5 August 2024)
Ms Lynn Warneke (Non-Executive Director – appointed 9 October 2023)
Mr Elie Ayoub (Executive Director – resigned 5 August 2024)
Mr Shan Kanji (Non-Executive Director – appointed 31 January 2024)
Mr Simon McKay (Executive Director – appointed 4 April 2024)
Mr Dane Meah (Non-Executive Director – appointed 4 April 2024)
Mr Julian Haber (Non-Executive Director – resigned 31 August 2023)
Ms Michelle Bendschneider (Non-Executive Director – resigned 31 August 2023)
Other key management personnel
The following persons 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:
Mr James Harb (Communication and Collaboration Co Chief Executive
Officer)
Mr Nathan Knox (Chief Operating Officer – Spirit Group)
Mr 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:
Consolidated
2024
2023
$
$
Short-term employee benefits
2,288,562
2,137,160
Post-employment benefits
233,095
198,855
Long-term benefits
38,215
(2,758)
Share-based payments
292,298
366,361
2,852,170 2,699,618
Annual Report 2024
89
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
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
2024
2023
$
$
Audit and assurance services – PKF Melbourne Audit & Assurance Pty
Ltd
Audit or review of the financial statements
200,000
180,000
Assurance related services in respect of earnout accounting
-
20,000
Other services – PKF Melbourne
Tax compliance services
31,750
32,750
Tax advisory and due diligence services
9,750
-
Corporate advisory and due diligence services
-
7,000
241,500
239,750
Note 31. Contingent liabilities
There were no contingent liabilities at 30 June 2024 and 30 June 2023.
Note 32. Related party transactions
Parent entity
Spirit Technology Solutions Ltd is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in Note 35.
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 Simon McKay, Executive Director (appointed 4 April 2024), and Mr Dane Meah, Non-Executive
Director (appointed 4 April 2024), were the co-founders of InfoSurety Holdings Pty Ltd (trading as
“Infotrust”). Details of the acquisition are outlined in Note 34. The acquisition included a deferred
consideration element of $6.65M to be paid 100% in cash (being $1.5M on the 6-month anniversary
of the completion date; $1.5M on the 12-month anniversary of the completion date and $3.65M on
the 18-month anniversary of the completion date).
The Share Purchase Agreement provides for a Completion Statement process to determine a
Completion Adjustment amount (which incorporates the Completion Net Debt and Completion
Working Capital). The Completion Adjustment totalled $5.495M and is reflected as a vendor loan
as at the date of acquisition. $2.5M was paid prior to 30 June 2024 and the residual balance owing
of $3M as at 30 June 2024 (as reflected in Note 17 Trade and other payables) is classified as a current
liability as at the reporting date.
Annual Report 2024
90
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 32. Related party transactions (continued)
Mr McKay and Mr Meah are also co-founders of MyCISO. MyCISO offers a security platform that
guides an organisation to assess, improve and manage their security program, alongside
developing a cyber-aware culture. Infotrust and other members of the Spirit Group act as resellers
of this security product. During the period from date of Infotrust acquisition (1 April 2024) to
reporting date (30 June 2024) the Consolidated Entity has procured $586,000 from MyCISO. The
Consolidated Entity also sub leases a premises in Sydney from MyCISO. The monthly rent is
presently $6,968 (exc. GST). The lease has a termination date of 31 May 2025 unless extended by
mutual agreement.
Mr Elie Ayoub, Executive Director, and Mr James Harb, Communication and Collaboration Co CEO,
were the co-founders of Nexgen Australia Group Pty Ltd (“Nexgen”). The acquisition of Nexgen
included a contingent consideration element by way of an earn-out structure based on
performance targets for the 18 months ended 30 June 2023. The Company and the founders
finalized these arrangements in their entirety in February 2023. As at 30 June 2023 a cash
component of $6.7M remained to be settled 100% in cash. During the financial year ended 30 June
2024 $2.7M was paid and the remainder of $4M is classified as a current liability as at the reporting
date.
The Consolidated Entity rents a premises in Sydney that is owned by Mr Elie Ayoub and Mr James
Harb. The monthly rent is presently $27,392 (exc. GST) plus associated outgoings. The lease is
currently rolling month to month and is in the process of being renewed.
Mr Julian Haber, Non-Executive Director (resigned 31 August 2023), was the co-founder of Intalock
(Spirit) Cyber Security Pty Ltd (“Intalock”). 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. The earnout consideration was to be settled 100% in cash.
During the year ended 30 June 2024, $0.789M was settled representing the remaining acquisition
consideration element owing.
During the financial year, the Company undertook a capital raise placement to fund the Infotrust
acquisition and associated costs. The placement was made to 263 Finance Pty Ltd, being a
significant shareholder and an associate of Non-Executive Director Shan Kanji (appointed 31
January 2024) and raised $16 million at 5.0c per share (being 320 million shares). Refer Note 25.
During the financial year Spirit issued convertible notes with a face value of $5.765M and a nominal
interest rate of 8% as outlined in Note 22. Mr Julian Challingsworth, Managing Director and Chief
Executive Officer, is a convertible note holder having subscribed for notes with a face value of
$75,000 and has been paid interest of $3,337 for the period from 11 December 2023 to 30 June 2024.
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
As noted above, the Company has a Vendor loan payable to Mr Simon, McKay Executive Director,
and Mr Dane Meah, Non-Executive Director (being co-founders of Infotrust) totaling $3M as at 30
June 2024 (as reflected in Note 17 Trade and other payables) and is classified as a current liability
as at the reporting date.
Annual Report 2024
91
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 32. Related party transactions (continued)
Mr Julian Challingsworth, Managing Director and Chief Executive Officer, is party to a Loan Share
Plan that was approved by shareholders on 17 November 2022. Pursuant to the terms of the Plan
he is able to finance the market value acquisition of Spirit shares on the ASX by way of a limited
recourse loan or use the loan to reimburse Spirit share purchases to a value of up to $760,000.
The loan will become repayable if Mr Challingsworth ceases to be an employee of the Company
and in other circumstances set out in the Plan. The loan is limited recourse, meaning that it can be
satisfied in full by selling shares the subject of the loan. If the market value of the shares at that
time is below the amount of the loan, Mr Challingsworth will not be required to pay the difference
in value. To access the shares (for example, if Mr Challingsworth wanted the ability to sell the
shares) he will first have to repay the cash amount of the loan. Escrow may also apply to shares in
excess of the loan amount.
The loan is subject to interest at the 2-year BBSY to be determined at the date of the loan. Interest
will be capitalised on the loan amount on a quarterly basis and on repayment will be added to the
amount of the loan.
As at 30 June 2024 the loan amount is $757,000 (including capitalised interest). There were no
other loans to or from related parties at the current and previous reporting date.
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
Parent
2024
2023
$’000
$’000
Profit/(Loss) after income tax
(495)
621
Total comprehensive income
(495)
621
Statement of financial position
Total current assets
980
945
Total assets
119,824
82,450
Total current liabilities
9,002
740
Total liabilities
47,736
40,327
Equity
Issued capital
149,682
119,411
Reserves (Note 26)
568
2,393
Accumulated losses
(78,162)
(79,681)
Total equity
72,088
42,123
Annual Report 2024
92
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 33. Legal parent entity information (continued)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The bank loan facility of $28M 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
2024 and 30 June 2023.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2024 and 30 June 2023.
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June
2024 and 30 June 2023.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Consolidated Entity
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 InfoSurety during the current financial years
The Company acquired 100% of InfoSurety Holdings Pty Ltd (trading as “Infotrust”) with effective
control on 1 April 2024. The acquisition has been accounted for as a Business Combination under
AASB 3 on a provisional basis. Infotrust is a fast growing and profitable cyber security business that
provides a range of cyber security services via strategy, solution design, project management,
implementation, change management, training and premium support via its CISO Services
Retainer, which allows companies to leverage the support of an entire cyber security team.
Annual Report 2024
93
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 34. Business combinations (continued)
The fair values of the identifiable net assets acquired are detailed below:
Fair value
$’000
Cash and cash equivalents
7,245
Trade and other receivables
5,354
Accrued revenue
692
Prepayments
721
Deposits
113
Contract cost assets
978
Plant and equipment
59
Intangible assets (Customer Relationships)
10,721
Trade and other payables
(6,910)
GST payables
(596)
Vendor loans
(5,495)
Unearned revenue
(3,619)
Provision for income tax
(502)
Employee entitlements
(324)
Deferred tax liability
(3,216)
Net assets acquired
5,221
Goodwill
29,429
Acquisition-date fair value of the total consideration transferred
34,650
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
34,650
Less: deferred consideration (remaining to be settled)
(6,650)
Less: shares issued by Company as part of consideration
(14,000)
Net cash used
14,000
i. Consideration transferred
Acquisition-related costs amounting to $1.965M 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 $5.354M. As of the acquisition date, the Company’s best estimate was that this asset would
be fully realised.
iii. Goodwill
Goodwill of $29.429M was primarily related to the Company’s growth expectations through
customer expansion. As outlined in Note 3, Infotrust forms part of the Cyber Security segment
and goodwill on acquisition has been allocated to that segment.
Annual Report 2024
94
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 34. Business combinations (continued)
iv. Completion and deferred consideration
The acquisition of Infotrust included a deferred consideration component of $6.65M to be paid
100% in cash (being $1.5M on the 6-month anniversary of the completion date; $1.5M on the 12-
month anniversary of the completion date and $3.65M on the 18-month anniversary of the
completion date).
The Share Purchase Agreement provides for a Completion Statement process to determine a
Completion Adjustment amount (which incorporates the Completion Net Debt and
Completion Working Capital). The Completion Adjustment totalled $5.495M and is reflected as
a vendor loan as at the date of acquisition. $2.5M was paid prior to 30 June 2024 and the residual
balance owing of $3M as at 30 June 2024 (as reflected in Note 17 Trade and other payables) is
classified as a current liability as at the reporting date.
v. Contribution to the Consolidated Entity’s results
Infotrust’s contribution to the Consolidated Entity’s results as disclosed in Note 3 Operating
segments are as follows:
FY24
$’000
Revenue
9,317
Underlying earnings before interest,
taxes, depreciation & amortisation*
1,738
Contribution to consolidated
(loss)/profit before income tax
1,421
* Refer Note 3 for definitions.
Annual Report 2024
95
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 35. Interests in subsidiaries
Name
Country of
incorporation
Ownership Interest
2024
%
2023
%
Spirit Technology Services Pty Ltd
Australia
100%
100%
Phone Name Marketing Australia Pty Ltd
Australia
100%
100%
World Without Wires Pty Ltd
Australia
100%
100%
Anttel Communications Group Pty Ltd
Australia
100%
100%
Ignite Broadband Pty Ltd*
Australia
100%
100%
LinkOne Pty Ltd*
Australia
100%
100%
Wells Research Pty Ltd**
Australia
100%
100%
Building Connect Pty Ltd*
Australia
100%
100%
Bigscreensound Pty Ltd, trading as Arinda IT
Australia
100%
100%
Phoenix Austec Group Pty Ltd*
Australia
100%
100%
Trident Computer Services Pty Ltd
Australia
100%
100%
Neptune Managed Services Pty Ltd*
Australia
100%
100%
VPDA Group Holdings Limited
Australia
100%
100%
Voice Print and Data Australia Pty Ltd
Australia
100%
100%
Live Call Pty Ltd*
Australia
100%
100%
Now IT Solutions Pty Ltd
Australia
100%
100%
Ancore Pty Ltd, trading as Altitude IT**
Australia
100%
100%
Beachhead Group Pty Ltd
Australia
100%
100%
Reliance Technology Pty Ltd
Australia
100%
100%
Intalock (Spirit) Cyber Security Pty Ltd
Australia
100%
100%
Nexgen Capital Pty Ltd
Australia
100%
100%
Nexgen Investment Group Pty Ltd
Australia
100%
100%
Business Telecom Australia Pty Ltd
Australia
100%
100%
Spirit Business Centre Pty Ltd
Australia
100%
-
Spirit Capital Pty Ltd
Australia
100%
-
Spirit Cyber Security Pty Ltd
Australia
100%
-
InfoSurety Holdings Pty Ltd
Australia
100%
-
InfoSurety Pty Ltd
Australia
100%
-
InfoSurety Services Pty Ltd
Australia
100%
-
ST1 People Pty Ltd
Australia
100%
-
ST1 Corporate Pty Ltd
Australia
100%
-
For the purposes of this note the parent entity has been deemed as the legal parent entity Spirit
Technology Solutions Ltd.
* Deregistered 7 July 2024
** Deregistered 17 July 2024
Note 36. Events after the reporting period
No matter or circumstance has arisen since 30 June 2024 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.
Annual Report 2024
96
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 37. Reconciliation of loss after income tax to net cash (used in)/from operating
activities
Consolidated
2024
2023
$'000
$'000
Loss after income tax benefit/(expense) for the year
(10,547)
(11,389)
Adjustments for:
Depreciation and amortisation expense
4,258 4,073
Net loss/(gain) on disposal of property, plant and equipment
(49) 268
Share-based payments
189
567
Acquisition and divestment costs
2,850
(200)
Net fair value loss on remeasurement of financial liabilities
- 8,042
Finance lease interest costs paid
192 129
Change in operating assets and liabilities:
(Increase)/Decrease in trade and other receivables
(3,456)
3,112
Decrease in inventories
486 1,492
(Increase) in other assets
(1,942)
(2,277)
Decrease/(Increase) in contract assets
1,343
(1,503)
(Increase) in deferred tax assets (net)
(2,891)
(2,376)
Increase/(Decrease) in trade and other payables
4,654
(303)
Increase in convertible note interest accrued
226 -
(Decrease) in provisions
(799)
(514)
Increase/(Decrease) in unearned revenue
1,360
(2,851)
Net cash used in operating activities
(4,126)
(3,730)
Note 38. Earnings per share
Number Number
Weighted average number of ordinary shares used in calculating basic
earnings per share
895,685,642
682,589,506
Weighted average number of ordinary shares used in calculating diluted
earnings per share
895,685,642
682,589,506
2024
2023
Total
Total
$'000
$'000
Loss attributable to the owners of
Spirit Technology Solutions Ltd
(10,547)
(11,389)
2024
2023
Total
Total
Cents
Cents
Basic loss per share
(1.18)
(1.67)
Diluted loss per share
(1.18)
(1.67)
Annual Report 2024
97
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 39. Share-based payments
During the financial year ended 30 June 2024, 6,666,667 Performance Rights were granted by the
Company to Mr Julian Challingsworth (Managing Director and Chief Executive Officer) with a
vesting period ending 30 June 2026. 100% of the Performance Rights vest based on absolute total
shareholder return (“Absolute TSR”) performance of the Company, and the vesting schedule set
out below:
One-third of the Performance Rights vest when the Company's 30-trading day Volume
Weighted Average Price (VWAP) is equal to or greater than $0.0675 at any time between grant
and 30 June 2026.
One-third of the Performance Rights vest when the Company's 30-trading day Volume
Weighted Average Price (VWAP) is equal to or greater than $0.09 at any time between grant
and 30 June 2026.
One-third of the Performance Rights vest when the Company's 30-trading day Volume
Weighted Average Price (VWAP) is equal to or greater than $0.1125 at any time between grant
and 30 June 2026.
During the financial year ended 30 June 2024, 17,805,000 Performance Rights were granted by the
Company to key management personnel and certain employees with a vesting period ending 30
June 2026. 100% of the Performance Rights vest based on absolute total shareholder return
(“Absolute TSR”) performance of the Company, and the vesting schedule set out below:
One-third of the Performance Rights vest when the Company's 30-trading day Volume
Weighted Average Price (VWAP) is equal to or greater than $0.0750 at any time between grant
and 30 June 2026 and the participant remains employed by the Company up until the
achievement of this VWAP hurdle.
One-third of the Performance Rights vest when the Company's 30-trading day Volume
Weighted Average Price (VWAP) is equal to or greater than $0.0938 at any time between grant
and 30 June 2026 and the participant remains employed by the Company up until the
achievement of this VWAP hurdle.
One-third of the Performance Rights vest when the Company's 30-trading day Volume
Weighted Average Price (VWAP) is equal to or greater than $0.1125 at any time between grant
and 30 June 2026 and the participant remains employed by the Company up until the
achievement of this VWAP hurdle.
In addition, for each of the three tranches above, the following vesting conditions must also be
met:
-
only 50% of the Performance Rights in each tranche will vest if the participant remains
continuously employed with the Company until 31 December 2024 and the Vesting Conditions
for each tranche above have been met. If the participant does not remain continuously
employed with the Company until 31 December 2024, none of the three tranches of
Performance Rights above will be eligible to vest.
-
the remaining 50% of the Performance Rights in each tranche will only vest if the participant
remains continuously employed with the Company until 30 June 2026 and the Vesting
Conditions for each tranche above have been met.
Performance Rights granted carry no dividend or voting rights.
Annual Report 2024
98
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 39. Share-based payments (continued)
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.
Set out below are summaries of options granted under the Spirit Technology Solutions Ltd Long
Term Incentive Plan:
2024 Grant
date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted Exercised
Expired /
forfeited /
other
Balance at
the end of
the year
14/05/2019
01/07/2023
$0.150
6,000,000
-
-
6,000,000
-
14/05/2019
01/07/2023
$0.180
6,000,000
-
-
6,000,000
-
14/05/2019
01/07/2023
$0.215
6,000,000
-
-
6,000,000
-
18,000,000
-
-
18,000,000
-
2023 Grant
date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised Expired /
forfeited
/ other
Balance at
the end of
the year
14/05/2019
01/07/2023
$0.150
6,000,000
-
-
-
6,000,000
14/05/2019
01/07/2023
$0.180
6,000,000
-
-
-
6,000,000
14/05/2019
01/07/2023
$0.215
6,000,000
-
-
-
6,000,000
18,000,000
-
-
-
18,000,000
Weighted average exercise price
$0.182
-
-
$0.182
$-
The weighted average remaining contractual life of options outstanding at the end of the financial
year was Nil (2023: Nil).
Set out below are summaries of Performance Rights granted under the plan:
2024 Grant date
Expiry date
Balance at
the start
of the year
Granted
Exercised
Forfeited Balance at
the end of
the year
22/04/2020
30/06/2024
326,972
-
-
(326,972)
-
13/10/2020
12/11/2023
1,605,312
-
-
(1,605,312)
-
11/06/2021
11/06/2024
534,378
-
-
(534,378)
-
29/11/2021
07/04/2025
4,513,686
-
-
-
4,513,686
11/03/2022
07/04/2025
1,694,799
-
-
-
1,694,799
11/07/2022
30/06/2026
6,250,000
-
-
-
6,250,000
10/02/2023
10/02/2026
11,847,000
-
-
(595,000)
11,252,000
29/12/2023
29/12/2026
-
6,666,667
-
-
6,666,667
14/06/2024
14/06/2027
- 17,805,000
-
-
17,805,000
26,772,147
24,471,667
-
(3,061,662)
48,182,152
Annual Report 2024
99
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2024
Note 39. Share-based payments (continued)
2023 Grant date
Expiry date
Balance at
the start
of the year
Granted
Exercised
Forfeited Balance at
the end of
the year
22/04/2020
30/06/2024
653,943
-
-
(326,971)
326,972
13/10/2020
12/11/2023
2,232,387
-
-
(627,075)
1,605,312
11/06/2021
11/06/2024
620,685
-
-
(86,307)
534,378
29/11/2021
07/04/2025
11,000,000
-
- (6,486,314)
4,513,686
11/03/2022
07/04/2025
2,000,000
-
-
(305,201)
1,694,799
11/07/2022
30/06/2026
-
6,250,000
-
- 6,250,000
10/02/2023
10/02/2026
-
11,847,000
-
- 11,847,000
16,507,015 18,097,000
-
(7,831,868) 26,772,147
The weighted average remaining contractual life of Performance Rights outstanding at the end of
the financial year was 2.1 years (2023: 1.19 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 at
grant date
Expected
volatility
Dividend
yield
Risk-free
interest
rate
Fair value
at grant
date
29 December 2023 29 December 2026
$0.080
72%
-
3.68%
$0.0522
29 December 2023 29 December 2026
$0.080
72%
-
3.68%
$0.0473
29 December 2023 29 December 2026
$0.080
72%
-
3.68%
$0.0429
14 June 2024
14 June 2027
$0.042
75%
-
3.65%
$0.0418
14 June 2024
14 June 2027
$0.042
75%
-
3.65%
$0.0371
14 June 2024
14 June 2027
$0.042
75%
-
3.65%
$0.0330
Consolidated
2024
2023
$
$
Share-based payments expense reconciliation
Issue of share options to Directors and employees under incentive option
scheme
-
1
Issue of Performance Rights to Directors and employees under
Performance Rights plan
189
566
189
567
Loan Share Plan
382
375
Total share-based payments expense reconciliation
571
942
Material accounting policies
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.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is
independently determined using a Black-Scholes option pricing model
Annual Report 2024
100
Spirit Technology Solutions Ltd
Consolidated Entity’s Disclosure Statement
30 June 2024
Name
Type of Entity
Trustee of a trust,
partner in a
partnership or
participant in
joint venture
% of Share
Capital Held
Country of
incorporation
Australian
resident or
foreign
resident (for
tax purposes)
Spirit Technology Solutions Ltd
Body Corporate
n/a
100
Australia
Australian
Spirit Technology Services Pty Ltd
Body Corporate
n/a
100
Australia
Australian
Phone Name Marketing Australia Pty Ltd Body Corporate
n/a
100
Australia
Australian
World Without Wires Pty Ltd
Body Corporate
n/a
100
Australia
Australian
Anttel Communications Group Pty Ltd
Body Corporate
n/a
100
Australia
Australian
Ignite Broadband Pty Ltd*
Body Corporate
n/a
100
Australia
Australian
LinkOne Pty Ltd*
Body Corporate
n/a
100
Australia
Australian
Wells Research Pty Ltd**
Body Corporate
n/a
100
Australia
Australian
Building Connect Pty Ltd*
Body Corporate
n/a
100
Australia
Australian
Bigscreensound Pty Ltd, trading as
Arinda IT
Body Corporate
n/a
100
Australia
Australian
Phoenix Austec Group Pty Ltd*
Body Corporate
n/a
100
Australia
Australian
Trident Computer Services Pty Ltd
Body Corporate
n/a
100
Australia
Australian
Neptune Managed Services Pty Ltd*
Body Corporate
n/a
100
Australia
Australian
VPDA Group Holdings Limited
Body Corporate
n/a
100
Australia
Australian
Voice Print and Data Australia Pty Ltd
Body Corporate
n/a
100
Australia
Australian
Live Call Pty Ltd*
Body Corporate
n/a
100
Australia
Australian
Now IT Solutions Pty Ltd
Body Corporate
n/a
100
Australia
Australian
Ancore Pty Ltd, trading as Altitude IT**
Body Corporate
n/a
100
Australia
Australian
Beachhead Group Pty Ltd
Body Corporate
n/a
100
Australia
Australian
Reliance Technology Pty Ltd
Body Corporate
n/a
100
Australia
Australian
Intalock (Spirit) Cyber Security Pty Ltd
Body Corporate
n/a
100
Australia
Australian
Spirit Cyber Security Pty Ltd
Body Corporate
n/a
100
Australia
Australian
Annual Report 2024
101
Spirit Technology Solutions Ltd
Consolidated Entity’s Disclosure Statement
30 June 2024
Name
Type of Entity
Trustee of a trust,
partner in a
partnership or
participant in
joint venture
% of Share
Capital Held
Country of
incorporation
Australian
resident or
foreign
resident (for
tax purposes)
Nexgen Capital Pty Ltd
Body Corporate
n/a
100
Australia
Australian
Nexgen Investment Group Pty Ltd
Body Corporate
n/a
100
Australia
Australian
Business Telecom Australia Pty Ltd
Body Corporate
n/a
100
Australia
Australian
Spirit Business Centre Pty Ltd
Body Corporate
n/a
100
Australia
Australian
Spirit Capital Pty Ltd
Body Corporate
n/a
100
Australia
Australian
InfoSurety Holdings Pty Ltd
Body Corporate
n/a
100
Australia
Australian
InfoSurety Pty Ltd
Body Corporate
n/a
100
Australia
Australian
InfoSurety Services Pty Ltd
Body Corporate
n/a
100
Australia
Australian
ST1 People Pty Ltd
Body Corporate
n/a
100
Australia
Australian
ST1 Corporate Pty Ltd
Body Corporate
n/a
100
Australia
Australian
For the purposes of this note the parent entity has been deemed as the legal parent entity Spirit Technology Solutions Ltd.
* Deregistered 7 July 2024
** Deregistered 17 July 2024
Annual Report 2024
102
Annual Report 2024
ASX: ST1
Directors'
Declaration
Spirit Technology Solutions Ltd
Directors' declaration
30 June 2024
In the Directors' opinion:
●
the attached financial statements and notes comply with the Corporations Act 2001, the
Australian 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 1
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 2024 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; and
●
the Consolidated Entity’s disclosure statement is true and correct.
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
23 August 2024
Annual Report 2024
105
Annual Report 2024
ASX: ST1
Independent
Auditor’s
Report
PKF Melbourne Audit & Assurance Pty Ltd is a member of PKF Global, the network of member firms of PKF International Limited, each of which is a
separately owned legal entity and does not accept any responsibility or liability for the actions or inactions of any individual member or correspondent
firm(s). Liability limited by a scheme approved under Professional Standards Legislation.
PKF Melbourne Audit & Assurance Pty Ltd
ABN 75 600 749 184
Level 15, 500 Bourke Street
Melbourne, Victoria 3000
T: +61 3 9679 2222
F: +61 3 9679 2288
info@pkf.com.au
pkf.com.au
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 2024, 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 to the financial statements, including material
accounting policy information, the consolidated entity disclosure statement, and the Directors’
Declaration of the Company and the consolidated entity (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 accompanying financial report of the Group 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 2024 and of its financial
performance for the year then 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.
Annual Report 2024
107
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 year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but 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
How our audit addressed this matter
Accounting for business combinations
As described in Note 34, during the year the
Group completed the acquisition of 100% of
the share capital in InfoSurety Holdings Pty
Ltd (InfoTrust).
The total consideration for the InfoTrust
acquisition is $34.6m, comprising $14m cash
on completion, $14m in shares (at 4.6 cents
per share, totaling 304.3 million shares) and
the
balance
of
$6.6m
in
deferred
consideration, which is payable in cash, over
the next 6 to 18 months.
Management utilised the services of an
expert to assist with preparation of the
completion statements and the purchase
price allocation in relation to the acquisition.
Under AASB 3 Business Combinations, the
Group is to apply fair value accounting for all
aspects of the acquisition, whereby the
difference
between
the
fair
value
of
consideration
and
the
fair
value
of
identifiable
assets
acquired
(including
identifiable intangibles), net of the fair value
of liabilities assumed, is treated as goodwill.
We considered accounting for business
combinations to be a Key Audit Matter due to
the significant judgements applied in the
accounting
for
the
fair
value
of
the
consideration and the fair value of the
identifiable assets acquired in accordance
with Australian Accounting Standards.
Our procedures included, but were not limited to,
the following:
•
evaluating the Group’s accounting treatment
against the requirements of AASB 3, key
transaction
agreements,
and
our
understanding
of
the
acquisition
and
respective industry.
•
assessing
the
methodology
applied
to
recognise the fair value of identifiable assets
acquired and liabilities assumed.
•
validating inputs of the components of the
business combination to underlying support
including settlement contract.
•
assessing Management’s determination of the
point at which control was gained of InfoTrust.
•
assessing the provisional allocation of the
purchase price for the entity acquired to the
identifiable assets acquired – including any
intangibles other than goodwill – and liabilities
assumed.
•
reviewing the accounting entries associated
with the business combination.
•
reviewing the related financial statement
disclosures for the acquisition for consistency
with the relevant financial reporting standards.
.
Annual Report 2024
108
Key audit matter
How our audit addressed this matter
Valuation
of
goodwill
and
indefinite
life
intangible assets
As disclosed in note 15, at 30 June 2024 the
carrying value of goodwill and indefinite life
intangibles totaled $96.9m (2023: $67.5m). The
accounting policy in respect of these assets is
outlined in note 15 Intangible Assets.
An annual impairment test for goodwill and
other indefinite life intangibles is required under
AASB 136 Impairment of Assets.
Management’s impairment assessment has
been performed using a discounted cash flow
model (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;
•
discount rate.
We considered the valuation of goodwill and
indefinite life intangible assets to be a Key Audit
Matter
due
to
their
significance
to
the
consolidated statement of financial position
and the significant judgements involved in
estimating discounted future cash flows.
Our procedures included, but were not limited
to, assessing and challenging:
•
the
appropriateness
of
Management’s
determination of distinct CGUs to which
goodwill and indefinite life intangibles are
allocated.
•
the application of an indefinite useful life to
these intangible assets.
•
the reasonableness of the FY2025 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 FY2025
budget.
•
the determination of the discount rate
applied in the Impairment Model and
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.
•
our sensitivity testing to understand the
impact of changing key assumptions with
respect to each distinct CGUs recoverable
amount.
•
the reasonableness of terminal growth rate
assumption in use.
•
the appropriateness of the disclosures as
set out in note 15.
Annual Report 2024
109
Key audit matter
How our audit addressed this matter
Revenue recognition
The Group’s operating revenue amounted to
$125.8m for the financial year ended 30 June
2024 (2023: $127.1m). Note 4 Revenue describes
the accounting policies applicable to distinct
revenue streams in accordance with AASB 15
Revenue from Contracts with Customers.
We considered revenue recognition to be a Key
Audit Matter due to the significance of the
balance to the financial report and the varied
timing of revenue recognition relative to the
different revenue streams 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
Group accounting policies underpinning the
revenue recognition processes, focusing on
key areas of risk in respect of Management’s
determination of:
o
identification and timing of
performance obligations;
o
principal versus agent considerations;
o
significant judgements and estimates;
o
the impacts of business combinations.
•
performing walkthrough of controls in
operation across the Group and assessing
the
adequacy
of
the
various
control
environments in place throughout the year.
•
performing a detailed analytical review over
the
Group's
operating
revenue
and
associated cost of sales, comparing actual
results to expectations based on our
understanding of the nature of each
segment and key customer relationships.
•
testing the consistency of the operation of
processes
to
recognise
revenue
and
associated costs of sale to ensure they
conform with accounting standards and
Group accounting policies.
•
performing cut off procedures to assess the
accuracy and completeness of deferred
revenue at the reporting date.
•
reviewing
the
appropriateness
of
disclosures regarding revenue recognition
and related balances.
Annual Report 2024
110
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 2024 but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report.
In connection with our audit of the financial report, our responsibility is to read the other information
and in doing so, we consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Directors for the Financial Report
The Directors of the Company are responsible for the preparation of:
a) the financial report (other than the consolidated entity disclosure statement) that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 ; and
b) the consolidated entity disclosure statement that is true and correct in accordance with the
Corporations Act 2001, and for such internal control as the Directors determine is necessary to enable
the preparation of:
i.
the financial report (other than the consolidated entity disclosure statement) that gives a true
and fair view and is free from material misstatement, whether due to fraud or error; and
ii.
the consolidated entity disclosure statement that is true and correct and is free of
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the ability of the Group 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 has 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 the 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, individually or in aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
Annual Report 2024
111
Auditor’s Responsibilities for the Audit of the Financial Report (Cont’d)
As part of an audit in accordance with Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
•
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.
Annual Report 2024
112
Auditor’s Responsibilities for the Audit of the Financial Report (Cont’d)
We also provide the Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with the Directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Auditor’s Opinion
We have audited the Remuneration Report included in the Directors’ Report for the year ended 30 June
2024. In our opinion, the Remuneration Report of the Company for the year ended 30 June 2024,
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
Kaitlynn Brady
Melbourne, 23 August 2024
Partner
Annual Report 2024
113
Annual Report 2024
ASX: ST1
Additional
Shareholder
Information
Spirit Technology Solutions Ltd
Shareholder information
30 June 2024
The shareholder information set out below was applicable as at 23 September 2024.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Number of
holders of
ordinary shares
Number of
ordinary shares
% of ordinary
shares
Number of
holders of
unlisted
options,
exercisable at
$0.09, expiring 21
Sep 26
Number of
unlisted
options,
exercisable at
$0.09, expiring 21
Sep 26
% of unlisted
options,
exercisable at
$0.09, expiring
21 Sep 26
1 - 1,000
190
22,545
0.00
-
-
-
1,001 - 5,000
675
1,953,130
0.11
-
-
-
5,001 - 10,000
458
3,635,799
0.20
-
-
-
10,001 - 100,000
853
31,636,433
1.71
-
-
-
100,001 - and over
342
1,807,406,721
97.98
9
52,944,445
100.00
2,518
1,844,654,628
100.00
9
52,944,445
100.00
Holding less than a
marketable parcel
1,181
4,200,668
0.23
-
-
-
Number of
holders of
unlisted options,
exercisable at
$0.0375, expiring
24 Jul 29
Number pf
unlisted options,
exercisable
at $0.0375,
expiring
24 Jul 29
% of unlisted
options,
exercisable at
$0.0375, expiring
24 Jul 29
Number of
holders of
convertible notes
Number of
convertible notes
% of
convertible
notes
1 - 1,000
-
-
-
-
-
-
1,001 - 5,000
-
-
-
-
-
-
5,001 - 10,000
-
-
-
-
-
-
10,001 - 100,000
-
-
-
-
-
-
100,001 - and over
7
26,666,664
100.00
2
1,000,000
100.00
7
26,666,664
100.00
2
1,000,000
100.00
Holding less than a
marketable parcel
-
-
-
-
-
-
Number of
holders of
performance
rights
Number of
performance rights
% of
performance
rights
1 - 1,000
-
-
-
1,001 - 5,000
-
-
-
5,001 - 10,000
-
-
-
10,001 - 100,000
-
-
-
100,001 - and over
26
48,182,152
100.00
26
48,182,152
100.00
Holding less than a
marketable parcel
-
-
-
Annual Report 2024
115
Spirit Technology Solutions Ltd
Shareholder information
30 June 2024
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
Number held
% of total
Shares issued
263 FINANCE PTY LTD
664,494,881
36.02
MEAH FAMILY HOLDINGS PTY LTD
171,041,837
9.27
MCKAY FAMILY HOLDINGS PTY LTD
154,060,705
8.35
UBS NOMINEES PTY LTD
131,890,881
7.15
MR PETER DIAMOND & MRS DIANA DIAMOND
85,000,000
4.61
G & N LORD SUPERANNUATION PTY LTD
68,596,284
3.72
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
57,827,941
3.13
MARQUEE HOLDINGS PTY LTD
55,988,507
3.04
HARB HOLDINGS PTY LTD
35,440,563
1.92
HARB HOLDINGS PTY LTD
20,547,945
1.11
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
18,135,917
0.98
HURACAN HOLDINGS PTY LTD
17,996,664
0.98
QUANTUM 777 PTY LTD
15,394,887
0.83
BRIGGS GROUP CONSULTING PTY LTD
12,606,789
0.68
EMPRESIO CAPITAL PTY LTD
12,223,561
0.66
MR JULIAN GORDON CHALLINGSWORTH
10,896,341
0.59
PENBURY GRANGE PTY LTD
6,816,779
0.37
CMLC PTY LTD
6,790,867
0.37
MR MATTHEW GREEN & MRS NATALIE GREEN
6,723,631
0.36
CHEMBANK PTY LIMITED
6,200,000
0.34
1,558,674,980
84.50
Unquoted equity securities
Number on
issue
Number of
holders
Options over ordinary shares issued, exercisable at $0.09 each, expiring 21 September 2026
52,944,445
9
Options over ordinary shares issued, exercisable at $0.0375 each, expiring 24 July 2029
26,666,664
7
Performance rights over ordinary shares issued
48,182,152
26
Convertible notes
1,000,000
2
The following persons hold 20% or more of unquoted equity securities:
Class
Number held
FLANNIGAN HOLDINGS PTY LTD
Convertible notes
500,000
MCADAM FAMILY HOLDINGS PTY LIMITED
Convertible notes
500,000
G & N LORD SUPERANNUATION PTY LTD
Options over ordinary shares issued, exercisable at $0.09 each,
expiring 21 September 2026
33,333,334
Substantial holders
Substantial holders in the Company, as disclosed in substantial holding notices given to the Company, are set
out below:
Ordinary shares
Number held
% of total
shares Issued*
263 Finance Pty Ltd
581,105,314
36.07
Mr Simon McKay; McKay Family Holdings Pty Ltd
152,173,913
9.44
Mr Dane Meah; Meah Family Holdings Pty Ltd
152,173,913
9.44
Thorney Opportunities Ltd / Thorney Technologies Ltd / TIGA Trading Pty Ltd
84,362,373
5.24
*Indicative relevant interest in shares based on number of voting securities recorded as at the date of their
last substantial shareholder notice lodged with ASX.
Annual Report 2024
116
Spirit Technology Solutions Ltd
Shareholder information
30 June 2024
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
All issued shares carry voting rights on a one-for-one basis.
Unquoted options
There are no voting rights attached to the unquoted options.
Performance Rights
There are no voting rights attached to the performance rights.
Convertible notes
All noteholders are entitled to vote at a Noteholder meeting on a one-for-one basis.
There are no other classes of equity securities.
Securities subject to voluntary escrow
Class
Expiry date
Number of shares
Ordinary fully paid shares
3 October 2024
15,217,392
Ordinary fully paid shares
3 January 2025
15,217,392
Ordinary fully paid shares
3 April 2025
258,695,650
Share buy-back
There is no current on-market share buy-back.
Corporate Governance Statement
The Company’s 2024 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 Wednesday, 20
November 2024. 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 9 October 2024.
Annual Report 2024
117
Directors
Auditor
Mr James Joughin (Non-Executive Chairman)
Mr Julian Challingsworth (Managing Director & CEO)
Ms Lynn Warneke (Non-Executive Director)
Mr Shan Kanji (Non-Executive Director)
Mr Simon McKay (Executive Director)
Mr Dane Meah (Non-Executive Director)
PKF Melbourne Audit & Assurance Pty Ltd
Level 15, 500 Bourke Street
Melbourne, Victoria 3000
Stock exchange listing
Spirit Technology Solutions Ltd securities are listed on
the Australian Securities Exchange
(ASX code: ST1)
ACN 089 224 402
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)
Website
spirit.com.au
Annual Report 2024
118
Corporate Directory
Thanks for reading.
Annual Report 2024
119
Secure. Sustainable. Scalable.
E investor@spirit.com.au P 1300 007 001 W spirit.com.au/Investor-Hub