ANNUAL REPORT FY18
SUPERLOOP LIMITED | ABN 96 169 263 094
superloop.com
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
2
FY18
ANNUAL REPORT
TABLE OF CONTENTS
Letter from the Chairman
Report from the Chief Executive Officer
FY18 Highlights / Business Overview
Directors’ Report
Auditor’s Independence Declaration
Financial Report
Notes to the Consolidated Financial Report
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
ANNUAL REPORT FY18
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SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Letter from the Chairman
On behalf of the Board of Directors of Superloop Limited, it is my pleasure to present our Annual Report for
the 12 months ended 30 June 2018 (FY18).
We are very proud of the many achievements delivered by the team over the last 12 months. We have set the
aspiration for Superloop to become “the most trusted enabler of connectivity and managed services in Asia
Pacific” and we feel that the foundations needed to deliver on that dream are really coming together.
In FY18, the Company delivered its first positive full year Net Profit after Tax, and positive gross profit in all
regions, before allocation of corporate overheads. Operationally, the team made great progress in delivering
on our growth plans:
• Continued to expand our network through capacity upgrades and the construction of Superloop’s new
“Red” Australian national backbone;
• Made significant progress with the development of the INDIGO subsea telecommunications cable systems
with cable laying operations now underway;
• Acquired NuSkope (October 2017), a leading fixed wireless Internet Service Provider, adding a portfolio
of strategic assets to the Group, including wireless network infrastructure and sophisticated service
qualification tools and customer database; and
• Acquired GX2 Holdings (November 2017), a leading provider of managed connectivity services for major
hotels, student accommodation sites and schools, accelerating our existing community broadband campus
solutions.
The Group continued to grow the business organically by expanding Superloop’s physical and active networks
in Australia, Singapore and Hong Kong. We have made significant progress in each region to meet the demand
for our services and set the network up for future growth.
These achievements reflect the dedication and commitment of our incredible team, and on behalf of the Board
I would like to thank all of Superloop’s team for the effort they’ve put in over the past 12 months.
On behalf of everyone at Superloop, I would like to express our gratitude to Bevan Slattery, the founder of the
Company. Bevan stepped down from his role as Chief Executive Officer on 30 June 2018 but will continue as an
executive director, focusing on M&A and leading the Company’s continuing innovative approach to technology
and systems. Bevan’s passion and tireless work over the past 5 years have led the Company to where it is today
and we are fortunate to retain his exceptional skillset and expertise in this new capacity.
We were also delighted to appoint Drew Kelton as the Company’s new Chief Executive Officer. Drew
is a respected executive with 25 years of leadership experience and significant understanding of ICT and
telecommunications infrastructure. His experience integrating acquisitions, developing new income streams,
and driving technological change and disruption, will help drive Superloop through its next growth phase.
Before I close, I would like to thank all the staff of Superloop for another year of relentless delivery, and you,
our shareholders, for your ongoing support of your Company. I hope to speak to many of you at our Annual
General Meeting on 23 November 2018.
With platform expansion for future growth well underway, Superloop is well-positioned to benefit from
continued data growth and the increasing demand for data centres and connectivity services across Australia,
Singapore and Hong Kong. We look forward to delivering on this potential for our team members, customers
and shareholders.
Michael Malone
Chairman
Superloop Limited
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ANNUAL REPORT FY18
5
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Report from the Chief Executive Officer
I am delighted and honoured to be writing my first report to you as Superloop’s Chief Executive Officer.
The year ended 30 June 2018 (FY18) was another year of exceptional growth for Superloop, and a testament
to the leadership and vision of Bevan Slattery who continues with the Company in his new role as Executive
Director.
Over FY18, Superloop grew revenue, earnings, profit and cashflow. This growth was underpinned by the
Company’s expansion strategy, that saw organic growth matched with strategic acquisitions to deliver on our
operational plan and strategic priorities.
Over FY18, we achieved many major milestones:
• Grew revenue from ordinary activities by 109.3% to $125.2 million
• Grew underlying EBITDA by 240% to $30.6 million; with Australia, Singapore and Hong Kong networks all
delivering positive EBITDA (before allocation of corporate overheads)
• Generated a reported Net Profit after Tax (NPAT) of $7.1 million; $8.3 million turnaround from FY17
• Established Superloop’s retail internet service provider
• Expanded physical and active networks in each market
•
Increased network, technology and product coverage through acquisitions of NuSkope and GX2 Technology
• Achieved significant progress with the development of the INDIGO subsea telecommunications cable
systems connecting Singapore, Jakarta, Perth and Sydney.
Over FY18, substantial progress was made expanding our network in Australia and overseas. We announced,
and commenced construction of, the new “Red” Australian national backbone to connect nbn’s 121 Points of
Interconnect, covering all capital cities and most major cities and towns across Australia (excluding Hobart
and Launceston). We entered into long-term capacity arrangements with carriers in Singapore and Hong Kong,
further supporting our growth strategy in Asia. To expand international capacity, we also reached a long-term
agreement with Southern Cross. As at 30 June 2018, Superloop’s network covered 671km of optic fibre and
over 310 strategic sites across Australia, Singapore and Hong Kong.
The INDIGO subsea cable systems, connecting Singapore, Jakarta, Perth and Sydney, is progressing well with
several key operational milestones achieved in FY18. Lay operations from Christmas Island towards Perth and
from Singapore towards Christmas Island have commenced and are expected to be complete by December
2018. Subject to prevailing weather conditions, we could see the project completed ahead of schedule by the
end of this financial year.
The two strategically compelling acquisitions completed over the past 12 months provide Superloop with
assets that support our growth vision and further accelerate our time to market.
In October 2017, Superloop completed the acquisition of leading fixed wireless Internet Service Provider,
NuSkope. The acquisition expanded Superloop’s network and assets in South Australia, enhancing the existing
fixed wireless infrastructure, offering synergies through network cost savings and allowing further utilisation
of capacity accessed through the long-term agreement with Vocus. From 13 October 2017 through to 30 June
2018, NuSkope contributed revenue of $6.7 million and EBITDA of $3.5 million.
The acquisition of GX2 in November 2017 allows Superloop to support and accelerate our community broadband
platform internationally while leveraging GX2’s comprehensive software platform at our existing campus
locations. In addition, it provides the opportunity to develop new leading-edge offerings in combination with
Superloop’s Asian network. From 17 November 2017 through to 30 June 2018, GX2 contributed revenue of $7.1
million from installation, ongoing management fees and hardware sales, and EBITDA of $1.2 million.
To further strengthen our executive and strategic firepower to drive Superloop’s next growth phase and
deliver on our vision of becoming “the most trusted enabler of connectivity and managed services in Asia
Pacific”, I am pleased to welcome five new members to the executive team that have extensive and relevant
senior experience within the telecommunications industry:
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ANNUAL REPORT FY18
• Louise Bolger as General Counsel and Company Secretary, formerly non-executive director
• Ashleigh Loughnan as Head of People & Culture
• David Thorn as Group General Manager, Sales
•
Jon Tidd as Group Chief Financial Officer
• David Thomas as Chief Commercial Officer.
Superloop has a very strong platform in place and I am excited by what the future holds for us. We are already
seeing the benefits of our investment flow through to the bottom line and I only see this accelerate in the years
to come.
The INDIGO cable system, once complete, will position Superloop for substantial growth in the years ahead as
we will be able to offer our customers a fully meshed pan-Asian network. In the domestic market, one of the
most exciting opportunities for us is the industry changing disruption that nbn will create. We are working
very hard to be ready for the transition that will impact most businesses and residents in Australia over the
next two years.
FY18 was a successful year of growth, achieving the Company’s first full year net profit after tax. I would like to
congratulate the Board, management team, and everyone at Superloop for their great performance over the
year and I look forward to being a part of our continued success in FY19 and beyond.
I would also like to thank you, our shareholders, for your continued support and look forward to meeting you
at the Company’s upcoming AGM.
Drew Kelton
Chief Executive Officer
Superloop Limited
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SAN JOSE
LOS ANGELES
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
JAPAN
HONG KONG
SINGAPORE
BRISBANE
PERTH
ADELAIDE
MELBOURNE
SYDNEY
CANBERRA
HOBART
AUCKLAND
Asia Pacific Fibre Network
Current
FY19
INDIGO West (Completion FY19)
INDIGO Central (Completion FY19)
Hong Kong
Singapore
Australia
30 June 2018
30 June 2017
30 June 2018
30 June 2017
30 June 2018
30 June 2017
239km
Fibre
28
Strategic
sites
221km
Fibre
17
Strategic
sites
190km
Fibre
57
Strategic
sites
176km
Fibre
48
Strategic
sites
242km
Fibre
225+
Strategic
sites
217km
Fibre
200+
Strategic
sites
310+
Connected Strategic Sites
As of 30 June 2018
16.5%
From 30 June 2017
184km
June 2015
378km
June 2016
614km
June 2017
671km
June 2018
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Superloop Owned Optic Fibre
Build Progression
9.2%
From 30 June 2017
FY18 Highlights
ANNUAL REPORT FY18
Revenue(1)
Underlying EBITDA(2)
NPAT
$125.2m $30.6m
109.3%
$21.6m
$7.1m
$8.3m
(1)
(2)
Includes other income
After adjusting for transaction costs of $0.6m and integration costs of $0.9m
240%
Underlying EBITDA
Growth on FY17
$30.6m
$9.0m
($3.5m)
FY15
($6.2m)
FY16
FY17
FY18
Network Expansion Continued
Expanded metropolitan and international capacity with HK and USA capacity upgrades
Announced and commenced construction of Superloop’s new ‘Red’ Australian national backbone
Increased network, technology and product coverage through acquisition of NuSkope
(contribution from Oct 2017) and GX2 Technology (GX2) (contribution from November 2017)
Platforms for future growth underway
Establishment of Superloop’s retail internet service provider, SuperBB, and the acquisition of
10,000 fixed line broadband subscribers to kickstart the group’s position in the retail nbn
marketplace
Completion NBN Co B2B systems creating direct integration between NBN and Superloop 360
portal
INDIGO subsea cable system progressing in line with schedule
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SUPERLOOP LIMITED AND CONTROLLED ENTITIES
We’re building a new network
in Australia that will redefine
what is possible.
We’re delivering a new 10/100Gbps national backbone connecting all capital cities and most major
cities and towns across Australia. This will form part of Superloop’s fully automated provisioning
platform, Superloop PEX. With this extensive national coverage comes national sales opportunities
at both enterprise and wholesale level.
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ANNUAL REPORT FY18
Directors’
Report
11
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Directors’ Report
The Directors present their report on the consolidated
entity (referred to hereafter as ‘Superloop’ or ‘the Group’)
consisting of Superloop Limited and the entities it controlled
at the end of, or during, the year ended 30 June 2018.
DIRECTORS
The following persons were directors of the Group during
the year:
• Michael Malone (Chairman)
• Bevan Slattery
• Greg Baynton
• Louise Bolger
• Richard (Tony) Clark
• Vivian Stewart
• Jason Ashton
• Matthew Hollis
PRINCIPAL ACTIVITIES
Superloop’s vision is to be the most trusted enabler of
connectivity and managed services in Asia Pacific.
The principal activities of the Group includes:
• The construction and operation of
independent
telecommunications
the
Asia Pacific region including the provision of complete
high-performance network solutions for wholesale,
enterprise and channel customers;
infrastructure
throughout
• The operation of an advanced, large scale fixed wireless
broadband network;
• The provision of cloud and managed IT services for
corporate customers;
• Cyber safety and security services;
• The management and delivery of broadband
solutions for campus environments including student
accommodation, hotels and schools; and
• Residential broadband services via fixed wireless or
fixed line nbn services.
REVIEW OF OPERATIONS
the year,
During
further
transformation with the acquisitions of NuSkope and GX2
Technology and the ongoing integration of BigAir Group,
acquired in December 2016.
the Group experienced
and long-term agreement with Southern Cross to expand
international capacity.
Significant construction progress for the development
of the INDIGO subsea telecommunications cable systems
connecting Singapore, Jakarta, Perth and Sydney will
provide strategic international capacity and the basis of
connectivity between Superloop’s metropolitan networks.
Superloop has established the platform for the delivery of
scalable services across the Asia Pacific region.
Specifically, during the year, Superloop:
•
Increased
sustainable earnings through sales activities;
revenue base
recurring
for ongoing
• Completed long term strategic sales arrangements for
each network;
• Expanded physical and active networks in each market
including the roll out of an Australian national backbone
connecting all of the nbn’s 121 Points of Interconnect
(excluding Hobart and Launceston);
• Continued the ongoing integration of networks, services
and systems associated with acquired businesses;
• Progressed the development of the INDIGO subsea
telecommunications cable systems;
• Expanded the Group’s Singapore and Hong Kong
metropolitan networks through construction, adding
strategic sites and buildings to each network and by
signing long term capacity arrangements with carriers
in each country;
• Expanded the Group’s international capacity through a
long term agreement with Southern Cross;
• Completed the acquisition of NuSkope Pty Ltd and
associated entities;
• Completed the acquisition of GX2 Holdings Pty Ltd;
• Established Superloop’s retail internet service provider,
Superbb, and acquired 10,000 fixed line broadband
subscribers; and
• Developed the nbn co Business to Business interface
allowing wholesale customers to access the nbn
platform via the Superloop 360 portal.
NuSkope adds a portfolio of strategic assets including
wireless network infrastructure and sophisticated service
qualification tools and customer database.
GX2 Holdings accelerates the Group’s existing community
broadband campus solution and brings technology, software
and systems with significant value for the combined Group.
Superloop continued the expansion of physical and active
networks in each market with the progression of roll out
of an Australian national backbone, long-term capacity
arrangements with carriers in Singapore and Hong Kong,
FINANCIAL AND OPERATING PERFORMANCE
The Group achieved its first positive full year Net Profit
after Tax, with a $7.1 million after-tax profit generated in
FY18 (compared to a loss of $1.2 million in FY17). During the
year, the Group recognised tax credits for temporary timing
differences associated with acquisitions which had not been
previously recognised. Net profit before tax was positive
$4.2 million (compared to a loss of $5.7 million in FY17).
Also included in the result was non-cash amortisation for
acquired customer relationships and brand names of $5.5
million and non-cash share-based payments of $0.4 million.
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ANNUAL REPORT FY18
interest, tax,
The Group generated earnings before
depreciation and amortisation (EBITDA) of $29.1 million.
Adjusting for costs associated with the acquisitions of
NuSkope and GX2 Holdings, as well as integration costs,
results in underlying EBITDA of $30.6 million.
Revenue from continuing operations grew $65.4 million
compared to the previous corresponding period, including
$6.7 million from NuSkope Pty Ltd for the period from 13
October 2017 and $7.1 million from GX2 Holdings Pty Ltd
which was acquired on 17 November 2017.
The Group’s Superloop operating segment, which includes
the Superloop fibre infrastructure and high performance
network solution businesses, as well as SubPartners and
the wholesale and enterprise fixed wireless business,
contributed revenue of $61.2 million.
The Superloop+ segment, which includes the cloud and
managed services business and cyber safety business,
contributed revenue of $36.6 million.
The Superbb operating segment, which includes NuSkope,
GX2, campus broadband solutions and fixed line residential
nbn services, contributed revenue of $26.7 million.
On a geographic basis, the Australian component of the
Superloop operating segment, contributed revenue of
$47.2 million, an increase of $21.5 million over the previous
corresponding period. Singapore contributed revenue of
$7.2 million, an increase of $3.3 million over the previous
corresponding period. Hong Kong contributed $6.8 million
in revenue, an increase of $5.8 million over the previous
corresponding period.
Operating expenses for the period were $96.1 million and
include $1.5 million of one-off costs associated with the
acquisitions of NuSkope and GX2. Employee costs were
$29.9 million reflecting the significant increase in staff
through acquisitions.
At 30 June 2018, the Group held $15.4 million in cash and
cash equivalents and available debt facility headroom of
$14.7 million, providing funding flexibility for committed
projects.
invested $46.6 million
The Group
in network assets
(excluding acquisitions) in the year, and at 30 June 2018
held property, plant and equipment of $182.1 million.
At 30 June 2018, the Group held intangible assets of $280.5
million including rights to access (via Indefeasible Rights
to Use (IRU) agreements) network capacity in Australia,
Singapore and Hong Kong as well as intangible assets
arising from business combinations. Cash flows from
operations contributed $37.9 million.
BUSINESS STRATEGIES AND PROSPECTS FOR FUTURE
FINANCIAL YEARS
Superloop’s networks are strategically positioned to
capitalise on market dynamics, driven by strong data
growth, growth in data centre demand and the need for
connectivity services with a focus on the Asia Pacific region.
The Group’s operating networks in Australia, Singapore
and Hong Kong uniquely positions Superloop as a true Pan
Asian telecommunications network owner and operator.
Network coverage across the Asia Pacific region, combined
with the INDIGO subsea cable system currently being
constructed, along with a standardised and scalable suite
of connectivity solutions and managed services will provide
trusted and reliable services to a broad range of customer
segments.
Superloop intends to continue to invest in connectivity
solutions and managed products and services in markets
where the Board and management believe the demand for
services will deliver an attractive return for Shareholders.
MATERIAL BUSINESS RISKS
The material business risks faced by the Group that are
likely to have an effect on its financial prospects include:
Competition and disruption – Superloop prides itself on
being an industry disruptor, but new technologies have
reduced barriers to entry and opened up opportunities for
new entrants with different operating models. Failure to
appropriately respond to these increasingly competitive
market conditions could result in a decline in the revenue
and margin of our products and services and ultimately
our forecasted earnings and asset positions. Superloop
attempts to mitigate this risk by the following key activities:
• Considering emerging technologies and competitive
environment as part of it strategic planning and review
processes;
• Selecting and deploying technologies with future
developments and growth in mind; and
• Periodically reviewing its customer offerings in the
context of the market and customer needs.
Regulatory risk – Regulatory or policy changes may directly
impact our strategy and business model as well as increase
complexity and the cost of doing business, particularly in
markets where the Government has significant investment
in telecommunications assets. Furthermore, Superloop
requires certain licences to operate in its various jurisdictions
and any modifications or cancellation of any of these
licences may impact its ability to operate in that jurisdiction.
Superloop attempts to mitigate this risk through:
• Monitoring and
impact assessment of regulatory
developments, engaging where necessary with the
relevant regulatory bodies, and monitoring its own
compliance with existing regulations
• Proactively develop and maintain relationships and
seek to influence outcomes through engagement with
relevant regulatory stakeholders and policy makers
though our membership to key industry groups.
Business resilience – A significant network, systems failure or
interruption could cause both tangible and intangible losses
of shareholder value for Superloop through its inability to
honour customer contracts, resultant customer churn and
reputational damage. Superloop’s key risk mitigations
regarding business resilience related risks include:
13
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Directors’ Report
• Designing and investing in the network to provide in-
built resilience;
adequately controlled through the generation of operating
cash flows, negotiation and maintenance of lines of credit at
favourable rates and access to other forms of capital.
•
•
Implementing advanced security measures to both
prevent and monitor for cyber security threats;
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Implementation of sophisticated monitoring tools to
provide early warning of any developing issues;
• Formalising our approach to business resilience which
includes the ongoing development of a formal business
continuity framework to complement existing disaster
recovery plans;
• Provision in customer contracts protecting Superloop
from claims in relation failure to provide contracted
services due to specific events outside of Superloop’s
control; and
• Maintenance of business interruption insurance.
Data governance – Superloop considers the protection
of customer, employee and third party data as critically
important. However, the recent evolution of the regulatory
environment and heightened community awareness of
the issue following a number of high profile and highly
publicised breaches, the management of data represents a
key legal and reputational risk for Superloop that if realised
could impact shareholder value. To mitigate this risk,
Superloop has:
• Developed a Privacy Policy and appointed a designated
There were no other significant changes in the state of
affairs of Superloop other than those listed in the Review of
Operations above.
MATTERS SUBSEQUENT TO THE END OF FINANCIAL
YEAR
There are no matters or circumstances that occurred
subsequent to the end of the financial year that has
significantly affected, or may significantly affect, the
operations of the consolidated entity, the results of those
operations, or the state of affairs of the consolidated entity
in future financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF
OPERATIONS
The continued growth in transmission and storage of data
should underpin a likely demand for services provided by
the Company across the Asia Pacific region.
The Board continues to evaluate further investment in
expansion opportunities in the region, based on underlying
market dynamics and demand for connectivity and
managed services.
Privacy Officer;
DIVIDENDS
• Undertaken audits to understand and classify the data
it holds and to qualify the exposure to this risk;
• Restricted access to company premises, systems,
network devices and
implemented strict change
control measures and anti-virus software and firewall
protections; and
• Developed mandatory training in relation to data
security and privacy awareness for its employees
including development of a policies and procedures to
guide staff in the management of privacy related issues.
integration – The various acquisitions
Post merger
Superloop has made have not only expanded its offering,
but also offer further value creation through synergies.
A key risk in realising this value is the success of the
post acquisition integration of systems and processes. In
recognition of this, Superloop implements an integration
plan to ensure maximum value from the acquisitions are
realised.
Funding – The continued growth of Superloop’s business
relies on the acquisition, development and ongoing
maintenance of telecommunications and IT infrastructure.
A final dividend of $0.005 per share, fully franked, was paid
in respect of the 2017 financial year. No dividend has been
declared in respect of the 2018 financial year.
ENVIRONMENTAL REGULATION
The Group is not subject to any significant environmental
laws.
INDEMNIFICATION OF OFFICERS
The Group has entered into standard deeds of indemnity and
insurance with the Directors. Pursuant to those deeds, the
Group has undertaken, consistent with the Corporations Act
2001, to indemnify each Director in certain circumstances
and to maintain directors and officers insurance cover in
favor of the Director for seven years after the Director has
ceased to be a Director.
During the year, the Group paid premiums of $327,793
(2017: $156,956) to insure the directors and officers of the
Group against a liability incurred as a director or officer, to
the extent permitted by the Corporations Act 2001.
NON-AUDIT SERVICES
Superloop requires sufficient access to capital to fund
this expenditure. Failure to obtain capital on favourable
terms may hinder Superloop’s ability to expand and pursue
growth opportunities. There is no assurance that additional
funds will be available in the future and/or be secured on
reasonable commercial terms. Superloop believes the risk is
The Group may decide to employ the auditor (Deloitte) on
assignments additional to their statutory audit duties where
the auditor’s expertise and experience with the Group are
important. Details of the amounts paid during the year to the
Group’s external auditor, Deloitte Australia, for non-audit
services are set out in Note 26 to the financial statements.
14
The Board of Directors has considered the position and, in
accordance with advice received from the Audit and Risk
Management Committee, is satisfied that the provision of the
non-audit services is compatible with the general standard
of independence for auditors imposed by the Corporations
Act 2001. The directors are satisfied that the provision of
non-audit services by the auditor, as set out below, did not
compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
• All non-audit services have been reviewed by the Audit
and Risk Management Committee to ensure they do not
impact the impartiality and objectivity of the auditor;
• None of the services undermine the general principles
relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants.
PROCEEDINGS ON BEHALF OF THE GROUP
No person has applied to the Court under section 237 of
the Corporations Act 2001 for leave to bring proceedings
on behalf of the Group, or to intervene in any proceedings
to which the Group is a party, for the purpose of taking
responsibility on behalf of the Group for all or part of those
proceedings.
No proceedings have been brought or intervened in on
behalf of the Group with leave of the Court under section
237 of the Corporations Act 2001.
ROUNDING OF AMOUNTS
The Group is of a kind referred to in the Australian Securities
and Investments Commission Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191, dated
24 March 2016 and issued pursuant to section 341(1) of the
Corporations Act 2001. In accordance with that Instrument,
amounts in the Directors’ Report and the financial report
have been rounded to 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 on page 40.
ANNUAL REPORT FY18
15
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Information on Directors
MICHAEL MALONE
Independent Non-Executive Chairman
BEVAN SLATTERY
Executive Director
Appointed Non-executive Director: 27 April 2015
Appointed Chairman: 22 June 2017
Appointed: 28 April 2014
Chief Executive Officer: 23 February 2016 to 30 June 2018
Experience and expertise
Michael Malone is the former CEO of iiNet Limited, having
founded the company in 1993. During his tenure, iiNet became
the second largest broadband DSL ISP in Australia.
Experience and expertise
Bevan Slattery is the founder and an Executive Director of
Superloop. He served as Executive Chairman until June 2017
and Chief Executive Officer until 30 June 2018.
In 2009, Michael was CEO of the Year in the Australian Telecom
Awards and National Customer Service CEO of the Year in
the CSIA’s Australian Service Excellence Awards. Michael was
named a finalist for WA Citizen of the Year and in 2011, he won
the Ernst & Young Entrepreneur of the Year Award.
In April 2016, Michael was appointed to the Board of NBN Co
Limited.
Michael holds a Bachelor of Science (Mathematics) and a
Postgraduate Diploma in Education from UWA. He is a Fellow
of the Australian Computing Society, a Fellow of the Australian
Institute of Company Directors and a Fellow of the Australian
Institute of Management.
Other current directorships of listed entities
Seven West Media Limited (ASX: SWM) - appointed 24 June
2015
SpeedCast Ltd (ASX: SDA) – appointed 14 July 2014
Dreamscape Networks Limited (ASX: DN8) - appointed 16
September 2016
Former Directorships of listed entities in last 3 years
Nil
Special responsibilities
> Chairman
> Member of the Audit Committee
> Member of the Risk Management Committee
Interests in shares and options
636,293 fully paid ordinary shares
16
Bevan has a background in building successful Australian IT
and telecommunications companies and an earlier career in
administration in local and state government.
Prior to establishing Superloop, Bevan founded Megaport
in 2013 with the aim of becoming a global leader in the fast
growing elastic interconnection services market. The Company
successfully listed on the ASX in December 2015.
In 2010, Bevan founded NEXTDC, with a vision to become
Australia’s largest independent data centre provider. As the
founding CEO of NEXTDC, Bevan oversaw its listing on the
ASX, overall design of its initial facilities and their development.
In 2002, Bevan co-founded PIPE Networks which grew to
become Australia’s largest Internet Exchange and Australia’s
third largest metropolitan fibre network provider with over
1,500km of fibre in 5 cities connecting 80 data centres, 250
Telstra exchanges and over 1000 buildings. In 2009, PIPE
Networks completed construction of Pipe Pacific Cable 1
(PPC-1), a $200 million submarine cable system linking Sydney
to Guam. PIPE Networks was sold to TPG for an enterprise
value of $420 million in May 2010.
Bevan holds a Bachelor of Business (Accountancy) and has
been awarded an honorary Master of Business Administration
from Central Queensland University
Other current directorships of listed entities
Bevan is a director of Megaport Limited (ASX: MP1) - appointed
27 July 2015
Former Directorships of listed entities in last 3 years
Nil
Special responsibilities
Nil
Interests in shares and options
61,169,389 fully paid ordinary shares
ANNUAL REPORT FY18
GREG BAYNTON
Independent Non-Executive Director
LOUISE BOLGER
Independent Non-Executive Director
Appointed: 28 April 2014
Appointed: 27 April 2015
Experience and expertise
Louise Bolger is an experienced in-house telecommunications,
media and technology lawyer and company secretary.
Louise commenced her career in private legal practice be-
fore continuing on to in-house roles which included acting as
General Counsel and Company Secretary for ASX listed com-
panies EML Payments Limited, Southern Cross Media Group
Limited and PIPE Networks Limited.
Louise holds a Bachelor of Laws (Hons), a Bachelor of Arts
(Modern Asian Studies) from Griffith University and a Bach-
elor of Education Studies from the University of Queensland.
She is a member of the Australian Institute of Company Di-
rectors and a Fellow of the Governance Institute of Australia.
Other current directorships of listed entities
Nil
Former Directorships of listed entities in last 3 years
Nil
Special responsibilities
> Chair of the Remuneration and Nomination Committee
Interests in shares and options
69,563 fully paid ordinary shares
Experience and expertise
Greg Baynton is the founder and Managing Director of Orbit
Capital, an investment and advisory company and holder of
an Australian Financial Services Licence. He has a background
in investment banking, infrastructure investment, and new
projects and has experience in IPOs and other capital raisings,
mergers and acquisitions, investor relations and corporate
governance.
He has considerable experience as a director of ASX-listed
companies. Among those, Greg is a former Director of Asia
Pacific Data Centre Limited, NEXTDC and of PIPE Networks.
Greg is also a director of State Gas Limited.
Greg holds a Master of Business Administration (QUT), a
Master of Economic Studies (UQ), a Postgraduate Diploma
in Applied Finance & Investment (SIA), and a Bachelor of
Business (Accountancy). He has completed a Certificate
course in Risk Management and Corporate Governance and is
a Fellow of the Governance Institute of Australia.
Other current directorships of listed entities
NOVONIX Limited (ASX: GRA) – appointed 5 April 2012
State Gas Limited (ASX: GAS) - appointed 7 June 2017
intelliHR Holdings Limited (ASX: IHR) - appointed 16 December
2016
Former Directorships of listed entities in last 3 years
Asia Pacific Data Centre Group Limited (ASX: AJD) – resigned
4 February 2015
Special responsibilities
> Chair of the Audit Committee
> Member of the Risk Management Committee
> Member of the Remuneration and Nomination Committee
Interests in shares and options
812,331 fully paid ordinary shares
17
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Information on Directors
RICHARD ANTHONY (TONY) CLARK
Independent Non-Executive Director
VIVIAN STEWART
Independent Non-Executive Director
Appointed: 23 December 2015
Appointed: 21 December 2016
Experience and expertise
Tony is an Emmy Award-winning Cinematographer as well
as co-founder and Managing Director of Rising Sun Pictures
(RSP) and Cospective, and co-founder of CINENET Systems
Pty Ltd.
Tony has a wealth of industry knowledge and experience in
digital media. His credits as a VFX Supervisor for RSP include
Alfonso Cuarón’s Gravity, Pirates of the Caribbean: On Stranger
Tides, The Sorcerer’s Apprentice, The Last Mimzy, The Core
and Harry Potter & the Goblet of Fire.
Tony is a 2010 recipient of an Academy Award for Scientific &
Technical Achievement as creator of the remote collaboration
tool cineSync. His deep understanding of digital film became
the foundation for the technology spin-off Rising Sun Research
(now Cospective).
Tony has served as a board member on the South Australian
Film Corporation, is currently on the board of Ausfilm and is
an active member of both AMPAS, the Academy of Motion
Picture Arts, and Sciences and the Visual Effects Society. He
is a Graduate of the Australian Institute of Company Directors.
Other current directorships of listed entities
Nil
Former Directorships of listed entities in last 3 years
Nil
Special responsibilities
Nil
Interests in shares and options
399,741 fully paid ordinary shares
Experience and expertise
Vivian Stewart served on the BigAir Board from June 2008
and was its Chairman at the time of BigAir’s acquisition by
Superloop in December 2016.
Vivian is the COO of Bigtincan Holdings Limited - an ASX-
listed SaaS provider of enterprise software with operations in
North America, Europe, Asia and Australia.
He has extensive background in the IT&T industry, venture
capital and corporate advisory services. He co-founded
ISP Magna Data, venture firm Tinshed, corporate advisory
firm Callafin and angel investment group Sydney Angels.
He has spent 10 years as an independent corporate advisor
specialising in sale, merger and acquisition transactions and
related capital strategy for public and private companies.
He serves on the management committee of Sydney Angels,
the investment committee of the Sydney Angels Sidecar Fund.
Vivian has a Bachelor of Arts (Honours) from The University
of Sydney and an eMBA from the Australian Graduate School
of Management. He is a Graduate and Fellow of the Australian
Institute of Company Directors
Other current directorships of listed entities
Nil
Former Directorships of listed entities in last 3 years
BigAir Group Limited - June 2008 to December 2016
Special responsibilities
> Chair of the Risk Management Committee
> Member of the Audit Committee
> Member of the Remuneration and Nomination Committee
Interests in shares and options
577,738 fully paid ordinary shares
18
ANNUAL REPORT FY18
JASON ASHTON
Executive Director
MATTHEW HOLLIS
Executive Director
Appointed: 21 December 2016
Appointed: 1 March 2017
Experience and expertise
Jason Ashton is an Executive Director of Superloop and was
the co-founder and Chief Executive Officer of BigAir Group
Limited prior to its acquisition by Superloop in December 2016.
He will step down from his executive position in September
2018.
Jason was previously Managing Director of business ISP
Magna Data which he co-founded in 1993 and subsequently
sold in 1999.
Experience and expertise
Matthew Hollis is Superloop’s Group GM Sales and Marketing.
He will step down from his executive position in September
2018.
Prior to joining Superloop, Matt was the Director of Corporate
& Wholesale at Vocus Communications for over 6 years. Prior
to joining Vocus, Matt served in various sales and corporate
roles with Pipe Networks and other ISPs and System Integra-
tors.
Jason has extensive experience with high speed microwave
and fixed wireless access networks and is a regular speaker at
industry conferences.
Matt is a member of the Australian Institute of Company Di-
rectors and has attended the Company Directors course.
Jason has a Bachelor of Science from the University of Sydney
and a Master of Commerce from the University of NSW.
Other current directorships of listed entities
Nil
Former Directorships of listed entities in last 3 years
BigAir Group Limited: 2002 to December 2016
Special responsibilities
Nil
Interests in shares and options
1,347,447 fully paid ordinary shares
Other current directorships of listed entities
Nil
Former Directorships of listed entities in last 3 years
Nil
Special responsibilities
Nil
Interests in shares and options
30,408 fully paid ordinary shares
336,094 share options
19
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Company Secretary
PAUL JOBBINS
Company Secretary
The company secretary at the end of the financial year was
Paul Jobbins.
Paul is Superloop’s Group Chief Financial Officer and has
responsibility for corporate functions including Finance and
Investor Relations.
Paul has previously worked in senior executive roles with
several ASX listed companies including NEXTDC Limited,
Reverse Corp Limited and Sunshine Gas Limited.
Paul holds a Bachelor of Business (Accountancy) from QUT,
a Graduate Diploma in Applied Finance and Investment from
Finsia, a Master of Applied Finance from Macquarie University,
is a Chartered Accountant and a graduate of the Australian
Institute of Company Directors.
20
ANNUAL REPORT FY18
MEETINGS OF DIRECTORS
The number of meetings of the Group’s Board of Directors and of each board committee held during the year, and the
number of meetings attended by each Director are as follows:
Michael Malone
Bevan Slattery
Greg Baynton
Louise Bolger
Tony Clark
Vivian Stewart
Jason Ashton
Matthew Hollis
Meeting of Committees
Meetings of
Directors
Audit and Risk
Management
Remuneration
and Nomination
A
8
11
11
11
11
10
11
10
B
11
11
11
11
11
11
11
11
A
4
N/A
4
N/A
N/A
4
N/A
N/A
B
4
N/A
4
N/A
N/A
4
N/A
N/A
A
N/A
N/A
4
4
N/A
4
N/A
N/A
B
N/A
N/A
4
4
N/A
4
N/A
N/A
A = Number of meetings attended
B = Number of meetings held during the time the Director held office or was a member of the committee during the year
N/A = Not applicable. Not a member of the relevant committee
The Board established the Risk Management Committee in June 2018.
21
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
“Over the next 2 years almost every business and resident in Australia
will need to churn some or all of their telecommunication services over
to an NBN or equivalent service. This is the biggest disruption to the
market since deregulation and we intend to be ready, willing and able
to service them through this transition.”
Drew Kelton
CEO - Superloop
22
Melbourne, Australia
Remuneration
Report
Message from the Chair of the Remuneration and Nomination Committee
Persons Covered by this Report
Overview of Remuneration Governance Framework
Director Remuneration
Executive Remuneration
Loans to Key Management Personnel
Employment Terms for Key Management Personnel
Remuneration for FY18
Performance Outcomes for FY18
Summary of Shares Held by Key Management Personnel
Summary of Options Held by Key Management Personnel
Summary of Rights Held by Key Management Personnel
Shares Under Option or Performance Rights
Other Transactions with Key Management Personnel
ANNUAL REPORT FY18
24
25
26
26
26
29
29
32
34
37
38
38
38
39
23
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Director’s Report
Remuneration Report
MESSAGE FROM THE CHAIR OF THE REMUNERATION AND NOMINATION COMMITTEE
Dear Shareholders,
We are pleased to present Superloop’s Remuneration Report for 2018, for which we seek your support.
Superloop’s updated vision, “to be the most trusted enabler of connectivity and managed services in Asia Pacific”, is
designed to support the creation of long term shareholder value. Throughout the 2018 financial year, the Company
underwent significant transformation in pursuit of this vision with growth in revenue, earnings and assets, and
number of customers and employees.
In FY18 Superloop achieved a number of key performance milestones:
• Year on year revenue growth of 109%, to $125.2 million;
• Year on year growth in reported EBITDA of 536%, to $29.1 million; and
• Net profit after tax of $7.1 million.
The acquisitions of NuSkope in October 2017 and GX2 Technology in November 2017 saw the size of the Group
increase to over 415 employees by 30 June 2018.
The Company has been able to recruit high calibre candidates over the past year including recent appointees CEO,
Drew Kelton, Ashleigh Loughnan as Group Head of People and Culture and David Thomas as Chief Commercial
Officer. We also remain conscious that it is critical to the success of the organisation that it is able to continue to
attract and retain appropriate people to lead the Company through its next phase of growth.
The role of the Remuneration and Nomination Committee is to assist the Board, and make recommendations on
remuneration, related policies and practices including the remuneration of senior management and Non-executive
Directors. A key principle by which the Committee operates is to ensure that the remuneration framework is
transparent, competitive and reasonable.
The Committee oversees the development and implementation of a remuneration policy and remuneration structure
that ensures there is a direct link between remuneration and performance, both Company and individual, that is
ultimately aligned to shareholder interest.
The Committee continues to undertake reviews of best practice remuneration frameworks and considers structures
implemented in organisations of a similar size and in similar industries. Given the rapid growth of the Group since
listing on the ASX in 2015, the Board will conduct a further review of its remuneration framework in FY19 to ensure
an ongoing alignment and a clearer link between meeting short and long term operational and financial targets and
the generation of long-term shareholder value.
We welcome your feedback on the ongoing development of our remuneration practices and reporting. We thank
you for your continued support and hope that you find this report useful.
Yours sincerely,
Louise Bolger
Chair, Remuneration and Nomination Committee
Superloop Limited
24
ANNUAL REPORT FY18
REMUNERATION REPORT - AUDITED
The Remuneration Report, which forms part of the Directors’ Report, sets out the remuneration arrangements for the
Directors and other Key Management Personnel of Superloop for the year ended 30 June 2018 (FY18), and is prepared in
accordance with section 300A of the Corporations Act 2001 (Corporations Act). The information in this report has been
audited as required by section 308(3C) of the Corporations Act.
1. THE PERSONS COVERED BY THIS REPORT
Key Management Personnel (“KMP”) include the Directors of the Group and Senior Executives. The term “Senior Executives” refers
to the Chief Executive Officer and those executives with responsibility for planning, directing and controlling the activities of the
Group, either directly or indirectly.
NON-EXECUTIVE DIRECTORS
NAME
Michael Malone
Greg Baynton
Louise Bolger
Tony Clark
Vivian Stewart
SENIOR EXECUTIVES
NAME
Bevan Slattery
Matthew Hollis
Jason Ashton
Paul Jobbins
Ryan Crouch
POSITION
Independent Non-Executive Chairman
Member of the Audit and Risk Management Committee
Independent Non-Executive Director
Chair of the Audit and Risk Management Committee
Member of the Remuneration and Nomination Committee
Independent Non-Executive Director
Chair of the Remuneration and Nomination Committee
Independent Non-Executive Director
Independent Non-Executive Director
Member of the Audit and Risk Management Committee
Member of the Remuneration and Nomination Committee
POSITION
Chief Executive Officer (CEO) until 30 June 2018
(Executive Director from 1 July 2018)
Executive Director
Group GM Sales and Marketing
Executive Director
GM Cloud and Managed Services
Group Chief Financial Officer
Company Secretary
Chief Operating Officer - Networks
Matthew Whitlock
Chief Operating Officer - Infrastructure
Alex West
Group Chief Operating Officer (appointed 18 June 2018)
(Head of Transformation and Integration until 18 June 2018)
Except as noted above or elsewhere in this report, the named persons held their position for the whole financial year.
CHANGES SINCE THE END OF THE REPORTING PERIOD
• Drew Kelton commenced as Chief Executive Officer from 1 July 2018.
•
•
In July 2018, Matthew Hollis and Jason Ashton announced their intention to step down from their executive roles.
From 1 July 2018, Matthew Whitlock and Ryan Crouch will report to Group Chief Operating Officer, Alex West, and, for the
purposes of reporting, will no longer be considered Key Management Personnel.
• On 15 August 2018, David Thomas was appointed Chief Commercial Officer.
25
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Director’s Report
Remuneration Report
2. OVERVIEW OF REMUNERATION
GOVERNANCE FRAMEWORK
and where relevant are
contributions.
inclusive of superannuation
2.1 REMUNERATION AND NOMINATION COMMITTEE
CHARTER
The role of the Remuneration and Nomination Committee
(“the Committee”) is to review and make recommendations
to the Board on matters relating to:
•
Board and Senior Executive succession planning;
• Non-executive Director fees and the aggregate fee
•
•
•
•
•
remuneration
pool;
The Company’s remuneration policy and procedures
and other relevant policies including recruitment,
retention and termination policies;
Senior Executive
including the Company’s equity-based incentives;
The annual assessment of Board and Senior Executive
performance;
The assessment of the Board’s skills, size and
composition;
The Group’s reporting and disclosure practices in
relation to the remuneration of Directors and Senior
Executives; and
arrangements,
• Market practices and trends on remuneration matters.
information regarding the Committee’s role,
Further
responsibilities and membership can be found in the
Committee’s Charter, which forms part of the Corporate
Governance Charter, a copy of which is available on
Superloop’s website at www.superloop.com/investor.
2.2 SECURITIES TRADING POLICY
A Securities Trading Policy (“Trading Policy”) has been
adopted by the Board to provide guidance to Directors,
employees of Superloop, and other parties who may
have access to price sensitive information and who may
be contemplating dealing in Superloop’s securities or
the securities of entities with whom Superloop may have
dealings.
The Trading Policy is designed to ensure that any trading
in Superloop’s securities is in accordance with the law and
accordingly it prohibits all Directors and Senior Executives
from engaging in hedging arrangements, dealing in
derivatives or entering into similar arrangements. Any
non-compliance with the Trading Policy will be regarded
as an act of serious misconduct.
The Trading Policy is available on Superloop’s website at
www.superloop.com/investor.
3. DIRECTOR REMUNERATION
3.1 DIRECTOR REMUNERATION POLICY
Superloop’s Director remuneration policy is to provide
fair remuneration that is sufficient to attract and retain
Non-executive Directors with appropriate experience,
knowledge, skills and judgment.
The Directors determine the total amount paid to each
Director as remuneration for their services. Under the
Listing Rules, the total amount paid to all Non-executive
Directors must not exceed in any financial year the amount
fixed in a general meeting of Superloop. This amount is
currently $750,000. Non-executive Directors fees include
base fees and fees for membership of board committees,
26
Non-executive Directors may be paid such additional or
special remuneration where a Director performs extra
work or services which are not conducted in their capacity
as a Director of Superloop.
Fees paid to Non-executive Directors in FY18 were
$400,000 (FY17 $322,375).
There are no retirement benefit schemes for Directors
other than statutory superannuation contributions.
3.2 NON-EXECUTIVE DIRECTOR FEES
The current base Director fees per annum, including
statutory superannuation, are:
Chairman
•
$110,000
• Non-executive Director $60,000
•
Committee member $10,000 (per committee)
To preserve independence, Non-executive Directors do
not receive incentive or performance based remuneration.
Non-executive Directors are entitled to be reimbursed for
travel and other expenses incurred while carrying out
their duties as a Director.
4. EXECUTIVE REMUNERATION
4.1 SENIOR EXECUTIVE REMUNERATION POLICY
is
Superloop’s Senior Executive remuneration policy
designed to be transparent, competitive and reasonable
while strengthening the alignment between performance
related remuneration and shareholder returns. Its goal is
to ensure the Group can attract and retain key talent while
being linked to the achievement of the Group’s strategic
and business objectives.
The policy includes at-risk short term and long term
incentives with direct links between remuneration and
performance (both Company and individual) that is
ultimately aligned to shareholder interest.
Senior Executive remuneration packages consist of three
key components:
•
•
•
Fixed remuneration being base salary inclusive of
superannuation, non-monetary benefits and any
applicable fringe benefits tax;
Short term incentives that provide a reward for
performance against annual performance targets;
and
Long term incentives that provide a securities-based
reward for performance against indicators of long-
term shareholder value creation, usually over a three
year period.
The following considerations are taken into account when
formulating Senior Executive remuneration packages:
•
•
Fixed remuneration is set with reference to the median
of relevant market practice;
Financial targets on which incentives are based are
suitably challenging, and must meet a budget and
business plan to exceed market expectations and
guidance at the time they are set; and
ANNUAL REPORT FY18
•
development, operating efficiency and customer
revenue.
Chief Operating Officer - Infrastructure, Matthew
Whitlock, was awarded $22,831 based on achieving
specific short term infrastructure objectives.
• Group Chief Operating Officer, Alex West, was
awarded $50,000 as a contractual sign on bonus.
After year end, short term incentives were awarded in
line with the short term incentive policy set out above, as
follows:
•
•
The Chief Executive Officer for the period to 30
June 2018, Bevan Slattery, was awarded $200,000
representing 80% of his target short term incentive
based on achieving Group EBITDA target (60%) and
achieving half of his operational targets (20%). Mr
Slattery has declined to accept the award.
Executive Director, Jason Ashton, was awarded
$52,920 representing 80% of his target short term
incentive for the 2018 financial year of $66,149.
•
• Group Chief Financial Officer, Paul Jobbins, was
awarded $52,560 representing 80% of his target short
term incentive for the 2018 financial year of $65,700.
Chief Operating Officer - Networks, Ryan Crouch,
was awarded $40,000 representing 80% of his target
short term incentive for the 2018 financial year of
$50,000. Mr Crouch was awarded a further $20,000
in relation to his performance for the 2018 financial
year.
Chief Operating Officer - Infrastructure, Matthew
Whitlock, was awarded $40,000 representing 80% of
his target short term incentive for the 2018 financial
year of $50,000. Mr Whitlock was awarded a further
$20,000 in relation to his performance for the 2018
financial year.
•
• Group Chief Operating Officer, Alex West, was
awarded $48,000 representing 80% of his target
short term incentive for the 2018 financial year of
$60,000.
For further detail refer to Section 8 below.
4.3 LONG TERM INCENTIVE (LTI) POLICY AND
PROCEDURE
The purpose of the LTI policy is to align Senior Executive
rewards with sustainable growth in shareholder value
over time. It also acts as a retention mechanism for key
executives.
Further, the policy acts to establish a method by which
eligible employees can participate in the future growth
and profitability of the Company.
•
Remuneration will be managed within a range so as
to allow for the recognition of individual differences
such as the calibre of the executive and competency
with which they fulfil a role.
4.2 SHORT TERM INCENTIVE (STI) POLICY AND
PROCEDURE
The STI policy provides incentives for Senior Executives to
achieve the Group’s strategic objectives by delivering or
exceeding annual performance targets.
Measurement period and award
The measurement period
annual
performance targets is the financial year to 30 June, with
an assessment of performance to be conducted following
the end of the measurement period upon finalisation of
the full year audited results.
achieving
for
Short term incentives will be paid in cash following a
successful assessment.
The CEO can earn up to 50% of his annual fixed
remuneration in short term incentives. Other Senior
Executives have a target award of 20% but can earn up
to 30% of their annual fixed remuneration for a superior
outcome.
Performance metrics and weightings
The performance metrics for the CEO include:
•
• Operational performance (40%)
Financial performance: Group EBITDA (60%)
The performance metrics for other executives include:
•
Financial performance: Group EBITDA (40%)
• Operational performance (30%)
•
Specific individual performance incentives linked to
specific strategic projects or objectives (30%).
term
incentive structure
The short
is considered
appropriate during the Company’s current phase of
growth. Senior Executives are motivated to generate
operating profits and cash flow while meeting required
outcomes in service delivery and operating efficiency and
delivering on strategic projects which will generate long
term shareholder value.
The policy also allows for incentives to be paid for
achieving specific strategic objectives or for specific
outstanding performance.
Cessation of employment
If a Senior Executive’s employment terminates prior to the
end of the measurement period, all entitlements will be
forfeited unless otherwise determined by the Board.
Short term incentive outcomes for FY18
During the year, short term incentives were awarded as
follows:
Shareholders have approved the Company’s two LTI plans
being the Employee Rights Plan and the Executive Option
Plan.
•
•
Executive Director Matthew Hollis was awarded
$140,000 as quarterly sales commission based on
achieving specific group sales targets. Refer section
6.2 below.
Chief Operating Officer - Networks, Ryan Crouch,
was awarded $150,000 based on achieving specific
strategic objectives in relation to active network
deployment and integration which drives product
The Company’s Securities Trading Policy prohibits
executives from entering into transactions which limit
the economic risk related to equity-based remuneration
schemes without written clearance.
Measurement period and award
The measurement period for long term incentives is three
financial years, unless the Board determines otherwise.
27
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Director’s Report
Remuneration Report
The policy intends for grants to be issued annually with
overlapping cycles.
Incentives will be issued in the form of options or
performance rights, subject to shareholder approval for
Executive Directors. Where shareholder approval is not
received for the issue of options to Directors, incentives
will be awarded in cash.
The CEO will be issued long term incentives in the form
of 3,000,000 options which vest in equal tranches over 3
years with exercise prices of $2.00, $2.50 and $3.00 for
each respective tranche. The minimum vesting period for
the options is two years.
Other Senior Executives can be awarded LTIs of up to 20%
of their annual fixed remuneration.
Performance metrics and weightings
The long term performance metrics for the CEO include:
•
Financial performance: Annual achievement of yearly
revenue, EBITDA and earnings per share targets.
• Operational performance: Long
term strategic
objectives determined by the Board to support the
long term growth of the Company.
The performance metrics for other Senior Executives are
aligned to the CEO’s performance metrics.
long
term
incentive structure
The
is considered
appropriate as it aligns Senior Executives with generating
long term shareholder value and acts as an inducement
to retain executives. Earnings per share targets over the
measurement period are considered appropriate as they
reflect returns to shareholders. Operational performance
objectives relate to the establishment of sustainable
recurring revenue and earnings.
The achievement of long term objectives is subject to the
satisfaction of the Board as assessed and declared on an
annual basis.
Cessation of employment
If a Senior Executive’s employment terminates prior to the
end of the measurement period, all entitlements will be
forfeited unless otherwise determined by the Board.
Employee Rights Plan
At the 2015 Annual General Meeting held on 24 November
2015, shareholders approved an Employee Rights Plan.
The Directors are empowered to operate the Employee
Rights Plan (“Plan”) and grant Performance Rights to
Eligible Participants in accordance with the Listing Rules
and on the terms and conditions summarised in the Plan.
The Board may offer any number of Performance Rights
to an Eligible Participant on the terms the Board decides,
subject to the Plan rules and any applicable law or the
Listing Rules. An Offer is required to set out details such
as the total number of Performance Rights being offered,
the vesting date and vesting conditions, any disposal
restrictions, and other terms attached to the Performance
Rights.
will be issued Superloop Shares, unless the Company
decides to provide a cash payment in lieu of Superloop
Shares. A Participant does not have the right to participate
in dividends on Superloop Shares until Superloop Shares
are issued after vesting of the Performance Rights. A
Participant does not have the right to vote in respect of a
Performance Right.
The Company shall not grant Performance Rights if the
number of shares to be issued on exercise of the Rights
exceeds 5% of the issued shares at the time the offer is
made.
At 30 June 2018, 101,903 Performance Rights were on issue.
Executive Option Plan
At a General Meeting of shareholders held on 21 June
2016, shareholders approved an Executive Option Plan.
The Executive Option Plan is open for participation
by Directors, executives and senior management. The
Directors of Superloop believe an Executive Option Plan
is an important part of a comprehensive remuneration
strategy. The grant of options to participants under the
Executive Option Plan further aligns the interests of the
Company’s senior management and shareholders and
helps preserve the Company’s cash funds.
The Directors are empowered to operate the Executive
Option Plan and grant options to Eligible Participants in
accordance with the Listing Rules and on the terms and
conditions set out in the Executive Option Plan. The
Board has an absolute discretion to determine appropriate
procedures for the administration of the Executive Option
Plan and resolve questions of fact or interpretation and
formulate special terms and conditions in addition to
those set out in the plan.
All options are to be offered to Participants for no
consideration. The offer must be in writing and specify,
amongst other things, the number of options for which the
Participants may accept, the year within which the options
may be exercised and any conditions to be satisfied before
exercise, the option expiry date (as determined by the
Board) and the exercise year for the options.
The options shall lapse upon the earlier of the date
specified by the Board or events contained in the Executive
Option Plan rules, including termination of employment or
resignation, redundancy, death or disablement.
The Company shall not grant options if the number of
shares to be issued on exercise of the options exceeds 5%
of the issued shares at the time the offer is made.
During the year to 30 June 2018, 336,094 options were
issued under the Executive Option Plan and at the date of
this report there were 336,094 options on issue.
Long term incentive outcomes for FY18
During the year, long term incentives awarded either
during the year or previous years had the following
outcomes:
A Participant is not required to pay for the grant of any
Performance Rights or the issue of Superloop Shares on
vesting. Once the Performance Rights vest, the Participant
• On 11 August 2017, Mr Hollis was issued 336,094
options with an exercise price of $2.50 vesting over
2 years under the Executive Option Plan and in
28
•
accordance with his Employment Agreement. The
value of the options was $250,000.
•
• Group Chief Financial Officer, Paul Jobbins, had
Performance Rights vest over the period with a value
of $41,513.
Chief Operating Officer - Networks, Ryan Crouch, had
Performance Rights vest over the period with a value
of $6,518.
Chief Operating Officer - Infrastructure, Matthew
Whitlock, had Performance Rights vest over the period
with a value of $7,163, including 10,110 Performance
Rights issued on 29 June 2018 and due to vest on 15
September 2018.
•
5. LOANS TO KEY MANAGEMENT PERSONNEL
Certain key management personnel were eligible to
participate in a loan scheme provided by a related party to
enable them to acquire shares as part of a private capital
raising undertaken by the Group in FY15, prior to listing
on the Australian Securities Exchange (“ASX”). The terms
and conditions of the loan agreement are commercial
in nature, including a market based interest rate. Under
the terms and conditions of the loan agreement, if an
employee resigns or leaves the Group before the end of
the original loan term, the loan plus any accrued interest
is repayable immediately. The loans are unsecured. The
Group does not guarantee or have any obligations with
respect to the loan agreement between the employee and
the related party. At 30 June 2018, Matthew Whitlock
owed $80,000 to the related party.
6. EMPLOYMENT TERMS FOR KEY
MANAGEMENT PERSONNEL
6.1 DIRECTORS
On appointment to the Board, all Non-executive Directors
enter into agreements with the Company in the form of a
letter of appointment. The agreements summarise the key
terms of engagement including compensation relevant to
the office of director.
Each appointment has no initial term, has no notice period
and is not subject to any termination benefits.
Subject to ASX Listing Rules, Directors must retire from
office at the conclusion of the third annual general meeting
after the Director was last elected and will be eligible for
re-election at that annual general meeting. Upon cessation
of a Director’s appointment, the Director will be paid his or
her Director’s fees on a pro-rata basis, to the extent that
they are unpaid, up to the date of cessation.
6.2 EXECUTIVE DIRECTORS
Chief executive officer (until 30 June 2018)
During the reporting period Bevan Slattery, the founder
of the Company, was the Chief Executive Officer (CEO) of
the Group. Mr Slattery stepped down as CEO on 30 June
2018 and Drew Kelton assumed the role from 1 July 2018.
Refer Section 6.3.
ANNUAL REPORT FY18
•
•
•
Fixed salary of $500,000, including superannuation;
Short term incentives of up to $250,000 per annum in
the form of an annual cash bonus based on achieving
yearly objectives including budgeted EBITDA targets
and operational targets as approved by the Board
from time to time; and
Long term incentives of up to $250,000 per annum
over 3 years based on achieving yearly objectives
including annual budget and earnings per share
targets and other long term strategic objectives
determined by the Board to support the long term
growth of the Company.
The Employment Agreement stipulates a notice period
of six months, a restraint period of twelve months and
payments on termination equal to one month’s salary
including superannuation for each month during the
restraint period.
From 1 July 2018, as an Executive Director, Mr Slattery
will receive Director fees in accordance with section 3.2
above.
Group GM Sales & Marketing
Matthew Hollis was appointed as an Executive Director on
1 March 2017 and is the Group GM Sales and Marketing. Mr
Hollis resigned from his executive role with the Group on 2
July 2018. Mr Hollis will remain as a Director of the Company
after the expiry of his notice period in September 2018.
Under his Employment Agreement Mr Hollis’ remuneration
package consists of:
•
•
Fixed salary of $350,000 including superannuation;
Short term incentives of up to $100,000 per annum in
the form of an annual discretionary cash bonus; and
• Quarterly sales commissions based on meeting sales
targets.
The Employment Agreement stipulates a notice period
of three months, a restraint period of six months and
payments on termination equal to one month’s salary
including superannuation for each month during the
restraint period.
On 11 August 2017, Mr Hollis was issued 336,094 options
with an exercise price of $2.50 vesting over 2 years under
the Executive Option Plan and in accordance with his
Employment Agreement. The value of the options was
$250,000.
On 17 November 2017, shareholders approved the issue
of 94,413 options to Mr Hollis under the Executive Option
Plan and in accordance with the Executive Employment
Agreement with a value of $70,000. At the date of this
report, these options have not yet been issued.
GM Cloud & Managed Services
Jason Ashton was appointed as an Executive Director
on 21 December 2016 and is the GM Cloud and Managed
Services. Mr Ashton has a service agreement in place with
no fixed term and a notice period of three months. His
remuneration package includes a fixed salary of $330,747
including superannuation.
Mr Slattery’s Employment Agreement with the Company
provided that his remuneration package for FY18 consisted
of:
On 17 November 2017, shareholders approved the issue of
89,219 options to Mr Ashton under the Executive Option
Plan and in accordance with the Executive Employment
29
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Director’s Report
Remuneration Report
Agreement with a value of $66,149. At the date of this
report, these options have not yet been issued.
In July 2018, Mr Ashton announced his intention to step
down from his executive role.
6.3 SENIOR EXECUTIVES
•
Chief Executive Officer (1 July 2018 onwards)
Mr Drew Kelton assumed the role of Chief Executive Officer
effective 1 July 2018. Mr Kelton’s Employment Agreement
with the Company provides that his remuneration package
for FY19 consists of:
•
•
Fixed salary of $500,000 including superannuation;
Short term incentives of up to $250,000 per annum in
the form of an annual cash bonus based on achieving
yearly objectives including budgeted EBITDA targets
and operational targets as approved by the Board
from time to time; and
Long term incentives in the form of 3,000,000
options which vest in equal tranches over 3 years
based on achieving yearly objectives including annual
EBITDA, revenue and earnings per share targets and
other long term strategic objectives determined by
the Board to support the long term growth of the
Company. The minimum vesting period for the options
is 2 years provided the Board is of the opinion that the
Executive is eligible to receive the options and has
met the yearly objectives for the applicable tranches.
At the date of this report, these options have not yet
been issued.
The Employment Agreement stipulates a notice period of
three month’s within the first 12 months and six months
thereafter, a restraint period of six months and payments
on termination equal to one month’s salary including
superannuation for each month during the restraint period.
Other Senior Executives
Remuneration and other terms of employment for
other Senior Executives are formalised in employment
agreements. Key terms of those employment agreements
are as follows:
Name
Contract
Duration
Notice
Period
Termination
Payments(1)
Paul Jobbins
No fixed term
3 Months
3 Months
Alex West
No fixed term
3 Months
3 Months
David Thomas
No fixed term
3 Months
3 Months
Ryan Crouch
No fixed term
3 Months
3 Months
Matthew Whitlock
No fixed term
3 Months
3 Months
(1)
Base salary payable if the Company terminates the
executive without notice or without cause.
30
ANNUAL REPORT FY18
“My goal is to build a highly profitable and scalable business with a
more focused product set that leverages our infrastructure and pushes
our software and automation advantage.”
Drew Kelton
CEO - Superloop
31
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Director’s Report
Remuneration Report
7. REMUNERATION FOR FY18
The tables below outline the remuneration received by Key Management Personnel (“KMP”) during the year.
This information is disclosed in accordance with the Corporations Act 2001 and the Australian Accounting Standards.
DIRECTORS
Fees and remuneration received by the Directors
Short-term employee benefits
Post
employment
benefits
Long-term
employee
benefits
Salary/
Fees
STI
Other
benefits
Total
Super-
annuation
LTI
$
$
$
$
Long
Service
Leave
$
Total
Remunera-
tion Package
$
% of TRP
linked to
performance
%
$
EXECUTIVE DIRECTORS
Bevan Slattery(1)
2018
475,000
2017
178,082
$
-
-
-
475,000
25,000
315,135
493,217
16,918
28,695
18,174
-
-
-
-
-
-
4,606
2,672
2018
302,055
52,920
2017
160,321
30,984
2018
325,000
140,000
-
-
-
354,975
191,305
2017
106,547
2018
-
2017
202,470
465,000
25,000
198,756
250,000
356,547
10,122
-
-
-
-
-
64,280
266,750
17,669
8,030
500,000
510,135
388,276
212,151
688,756
366,669
-
0.00%
0.00%
13.63%
14.60%
49.18%
0.00%
-
292,449
2.75%
Jason Ashton(2)
Matthew Hollis(3)
Daniel Abrahams(4)
NON - EXECUTIVE DIRECTORS
Michael Malone
Louise Bolger(5)
Greg Baynton
Tony Clark
Vivian Stewart(6)
2018
110,000
2017
70,000
2018
2017
63,927
63,927
2018
80,000
2017
80,000
2018
2017
54,795
54,795
2018
73,060
2017
38,699
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
110,000
70,000
63,927
63,927
80,000
80,000
54,795
54,795
73,060
38,699
-
-
6,073
6,073
-
-
5,205
5,205
6,940
3,676
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
110,000
70,000
70,000
70,000
80,000
80,000
60,000
60,000
80,000
42,375
-
-
-
-
-
-
-
-
-
-
19.81%
2.29%
TOTAL - 2018
2018
1,483,837
192,920
1,676,757
96,913
198,756
4,606
1,977,032
TOTAL - 2017
2017
954,841
30,984
629,415
1,615,240
77,837
8,030
2,672
1,703,779
Other benefits includes the value of options issued to Mr Slattery which vested during the 2017 financial year.
Mr Ashton was appointed on 21 December 2016.
Mr Hollis was appointed on 1 March 2017.
Mr Abrahams resigned as an Executive Director on 18 November 2016 but continued to serve as a senior
executive as Chief Infrastructure Officer until 28 February 2017. The information above includes remuneration
until cessation of employment on 28 February 2017. Mr Abrahams received termination benefits of $64,280,
shown above in Other benefits.
During the year, Ms Bolger provided legal consulting services to the Company not conducted in her capacity
as a Non-executive Director.
Mr Stewart was appointed on 21 December 2016.
(1)
(2)
(3)
(4)
(5)
(6)
32
ANNUAL REPORT FY18
SENIOR EXECUTIVES
Fees and remuneration received by the Senior Executives;
Short-term employee benefits
Post
employment
benefits
Long-term
employee
benefits
Salary/
Fees
STI
Other
Total
Super-
annuation
LTI
$
$
$
$
$
$
Long
Service
Leave
$
Total
Remunera-
tion Package
$
% of TRP
linked to
performance
%
SENIOR EXECUTIVES
Paul Jobbins
Ryan Crouch
Matt Whitlock(1)
Alex West
2018
303,506
52,560
2017
245,420
75,000
2018
228,312
210,000
2017
182,650
-
2018
240,241
82,831
2017
194,489
70,000
2018
257,578
98,000
2017
FORMER SENIOR EXECUTIVES
Steven Bond(2)
Matthew Gregg(3)
2018
2017
2018
2017
-
-
153,774
-
167,431
-
-
-
-
-
TOTAL - 2018
2018
1,029,637
443,391
TOTAL - 2017
2017
943,764
145,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
356,066
320,420
438,312
182,650
24,978
41,513
19,580
82,153
-
-
422,557
422,153
21,352
6,518
22,457
488,639
17,350
12,749
3,044
215,793
323,072
25,083
7,163
264,489
18,475
12,749
355,578
23,488
-
-
-
-
-
-
-
153,774
12.896
8,341
-
-
-
-
-
-
-
-
-
-
355,318
295,713
379,066
-
-
22.26%
37.23%
44.31%
5.91%
25.33%
27.98%
25.85%
-
-
175,011
4.77%
-
-
167,431
15,906
11,110
2,790
197,237
5.63%
1,473,028
94,901
55,194
22,457
1,645,580
1,088,764
84,207
127,102
5,834
1,305,907
30.30%
20.84%
(1)
(2)
(3)
Mr Whitlock commenced employment with Superloop on 10 April 2015 as Chief Operating Officer. From
12 April 2016 until 28 February 2017 he reported to Chief Infrastructure Officer, Mr Daniel Abrahams, and was
not considered Key Management Personnel for that period. The information above includes remuneration for
each financial year as if he was considered Key Management Personnel for the whole period.
Mr Bond commenced employment as General Manager, Sales and Marketing on 30 May 2016 and was
considered Key Management Personnel until 1 March 2017 when he reported to Matthew Hollis.
Following an internal management reorganisation on 16 May 2017, Mr Gregg, General Manager, Customer
Experience, reported to Ryan Crouch and for the purposes of this report was no longer considered
Key Management Personnel.
33
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Director’s Report
Remuneration Report
8. PERFORMANCE OUTCOMES FOR FY18
The following table outlines the performance of the Company over the 2018 financial year and the previous periods
since the company was incorporated. Since listing on the Australian Securities Exchange with an initial share price of
$1.00 in June 2015, Superloop Limited’s share price has risen to $2.52 at 30 June 2018.
Year ended 30 June
Net Profit / (loss)
Dividends paid or declared
Share price at the start of the year
Share price at the end of the year
2018
2017
2016
2015*
$7,123,028
($1,239,792)
($7,164,110)
($1,193,442)
-
$2.56
$2.52
$0.005
$2.35
$2.56
-
$1.94
$2.35
-
$1.00
$1.94
*2015 includes the period from 28 April 2014 to 30 June 2015. The share price at the start of the 2015 period refers to the issue price of
shares in the Company’s Initial Public Offering in June 2015.
The 2018 financial year was the Company’s third full financial year since listing and a year when the Company
underwent further significant transformation. Throughout the year, the strategic objectives for the Group related to the
expansion of core infrastructure assets, the continued development of operating systems, the addition of capability in
people, products, systems and software, and the integration of acquired business.
Key achievements included:
•
•
•
Increasing recurring revenue base for ongoing sustainable earnings through sales activities;
Completion of long term strategic sales arrangements for each network;
Expansion of physical and active networks in each market including the roll out of an Australian national backbone
connecting all of the nbn’s 121 Points of Interconnect, excluding Hobart and Launceston;
• Ongoing integration of networks, services and systems associated with acquired businesses;
•
Progression of the development of the INDIGO subsea telecommunications cable systems which will provide
strategic international capacity and the basis of connectivity between Superloop’s metropolitan networks;
Expansion of the Group’s Singapore and Hong Kong metropolitan networks through long term capacity
arrangements with carriers in those countries;
Expansion of the Group’s international capacity through a long term agreement with Southern Cross;
The acquisition of NuSkope Pty Ltd and associated entities which adds a portfolio of strategic assets including
wireless network infrastructure and sophisticated service qualification tools and customer database;
The acquisition of GX2 Holdings Pty Ltd which accelerates the Group’s existing community broadband campus
solution and brings technology, software and systems with significant value for the combined Group;
Establishment of Superloop’s retail internet service provider, Superbb, and the acquisition of 10,000 fixed line
broadband subscribers to kickstart the Group’s position in the retail nbn marketplace; and
•
•
•
•
•
• Developed the nbn co Business to Business interface allowing wholesale customers to access the nbn platform via
the Superloop 360 portal.
The incentive arrangements in place throughout the year were aligned to the achievement of these strategic objectives.
The future strategic objectives for the Group continue to relate to the expansion of core infrastructure assets in
Singapore, Hong Kong and Australia and the utilisation of these networks by generating sales to key industry segments
of financial services, digital media and telecommunications providers. The integration of networks and systems of
acquired businesses is also considered strategically important. Achieving these objectives will deliver an increasing
return on the Group’s investment. The Company’s remuneration framework will support these performance outcomes
for future financial years, leading to the continued creation of shareholder value.
After year end, short term incentives were awarded as follows in accordance with the short term incentive policy in
place during the year (refer section 4.2):
•
The Chief Executive Officer for the period to 30 June 2018, Bevan Slattery, was awarded $200,000 representing
80% of his target short term incentive based on achieving Group EBITDA target (60%) and achieving half of his
operational targets (20%). Mr Slattery has declined to accept the award.
Executive Director, Jason Ashton, was awarded $52,920 representing 80% of his target short term incentive for the
2018 financial year of $66,149.
•
• Group Chief Financial Officer, Paul Jobbins, was awarded $52,560 representing 80% of his target short term
incentive for the 2018 financial year of $65,700.
34
ANNUAL REPORT FY18
•
•
Chief Operating Officer - Networks, Ryan Crouch, was awarded $40,000 representing 80% of his target short
term incentive for the 2018 financial year of $50,000. Mr Crouch was awarded a further $20,000 in relation to his
performance for the 2018 financial year.
Chief Operating Officer - Infrastructure, Matthew Whitlock, was awarded $40,000 representing 80% of his target
short term incentive for the 2018 financial year of $50,000. Mr Whitlock was awarded a further $20,000 in relation
to his performance for the 2018 financial year.
• Group Chief Operating Officer, Alex West, was awarded $48,000 representing 80% of his target short term
incentive for the 2018 financial year of $60,000.
In addition to the incentive arrangements described above for Executive Directors (refer section 6.2), and the short
term incentive policy in place (refer section 4.2) the following short term incentives arrangements were in place:
Name
Grant date
Performance
criteria
Contribution to
Strategic objectives
Measurement
Form of
incentive
Amount
Percentage
of grant
paid
Alex
West
24 July
2017
Ryan
Crouch
9 May
2018
Matthew
Whitlock
1 January
2018
Integration of
networks optimises
performance and
drives operational
cost savings
Integration of
networks optimises
performance,
improves customer
satisfaction and
drives operational
cost savings
Expansion of
revenue generating
asset base
Completion of
integration of
BigAir wireless
and backhaul
network
Deployment
and renewal of
active network
and network
integration
Expansion of
Singapore and
Hong Kong
networks
including
addition of new
strategic sites
Successful
integration of
networks
Cash
bonus
$100,000
0%
Ongoing
Successful
integration of
networks
Cash
bonus
$150,000
100%
Successful
provisioning of
strategic sites for
customer access
Cash
bonus
$22,831
100%
Group Chief Operating Officer, Alex West, was also awarded $50,000 as a contractual sign on bonus.
There have been no alterations to any of the terms or conditions of the grants since grant date.
In addition to the incentive arrangements described above for Executive Director Mr Hollis (refer section 6.2) and Mr
Kelton (refer section 6.3), and the short term incentive policy in place (refer section 4.2), there are no further specific
short term incentive arrangements in place for senior executives for the 2019 financial year.
35
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Director’s Report
Remuneration Report
During the year, Performance Rights were issued to senior executives in accordance with the Employee Rights Plan. The
Performance Rights outlined in the table below are considered long term incentive arrangements provided as part of
the senior executive’s remuneration for the 2018 financial year and beyond:
Name
Date of issue
Number of
rights
granted /
to be issued
Number of
rights vested
Issue
price of
shares
($)
Fair value
of right
at grant
date ($)
Vesting date
Expiry date
of rights
Paul Jobbins
Ryan Crouch
13 July 2016
13 July 2016
13 July 2016
13 July 2016
13 July 2016
13 July 2016
13 July 2016
Matthew Whitlock
13 July 2016
13 July 2016
29 June 2018
4,150
4,149
13,228
13,227
13,228
4,150
4,149
4,150
4,149
10,110
4,150
2.57
-
-
13,228
2.52
-
-
-
-
4,150
2.57
-
-
4,150
2.57
-
-
-
-
2.44
2.44
2.44
2.44
2.44
2.44
2.44
2.44
2.44
2.52
15 September 2017
15 September 2017
15 September 2018
15 September 2018
15 April 2018
15 April 2018
15 April 2019
15 April 2019
15 April 2020
15 April 2020
15 September 2017
15 September 2017
15 September 2018
15 September 2018
15 September 2017
15 September 2017
15 September 2018
15 September 2018
15 September 2018
15 September 2018
36
ANNUAL REPORT 2018
9. SUMMARY OF SHARES HELD BY KEY MANAGEMENT PERSONNEL
The table below outlines the movement in shareholdings by Key Management Personnel during the year:
Opening
balance
1 July 2017
Balance at
date of
appointment
Received as
part of
remuneration
Additions
Disposals
Other
movements(1)
Closing
balance
30 June 2018
Directors
Michael Malone
632,894
Bevan Slattery(1)
60,007,894
Greg Baynton
Louise Bolger
Tony Clark
Jason Ashton
Vivian Stewart
Matthew Hollis
Snr. Executives
Paul Jobbins
Ryan Crouch
Matt Whitlock
812,331
66,165
396,343
1,347,447
577,738
27,010
22,122
506,727
110,530
TOTAL
64,507,201
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,398
1,161,495
-
3,398
3,398
-
-
3,398
17,378
4,150
4,150
-
-
-
25,678
1,175,087
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
636,292
61,169,389
812,331
69,563
399,741
1,347,447
577,738
30,408
39,500
510,877
114,680
65,707,966
(1)
On 11 August 2017, 1,161,495 shares were issued to Mr Slattery as partial consideration for the acquisition of
SubPartners Pty Ltd.
The Company’s Securities Trading Policy is designed to ensure that any trading in Superloop’s securities is in
accordance with the law and accordingly it prohibits all Directors and Senior Executives from engaging in hedging
arrangements, dealing in derivatives or entering into similar arrangements.
37
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Director’s Report
Remuneration Report
10. SUMMARY OF OPTIONS HELD BY KEY MANAGEMENT PERSONNEL
The table below outlines the movement in options held by Key Management Personnel during the year:
Opening
balance
1 July 2017
Received as
part of
remuneration
Exercised
Other
movements
Closing
balance
30 June 2018
Vested and
exercisable
Vested
during the
year
Directors
Bevan Slattery
395,898
-
Matthew Hollis
-
336,094
TOTAL
395,898
336,094
-
-
-
(395,898)
-
-
-
336,094
168,047
(395,898)
336,094
168,047
-
168,047
168,047
11. SUMMARY OF RIGHTS HELD BY KEY MANAGEMENT PERSONNEL
The table below outlines the movement in Performance Rights by Key Management Personnel during the year:
Opening
balance
1 July 2017
Received as
part of
remuneration
Vested and
converted to
shares
Closing
balance
30 June 2018
Vested
during the
year
Executives
Paul Jobbins
Ryan Crouch
Matthew Whitlock
TOTAL
47,982
8,299
8,299
64,580
-
-
10,110
10,110
(17,378)
(4,150)
(4,150)
(25,678)
30,604
4,149
14,259
49,012
17,378
4,150
4,150
25,678
12. SHARES UNDER OPTION OR PERFORMANCE RIGHTS
Details of unissued shares or interest under Option at the date of this report are:
Date of
issue
11 August 2017
11 August 2017
Number of shares
under option
Class of
shares
Exercise price of
option
Vesting
date
Expiry date of
options
168,047
168,047
Ordinary
Ordinary
$2.50
$2.50
1 March 2018
1 March 2020
1 March 2019
1 March 2020
395,898 Options expired during the year. At the date of this report there were 336,094 Options on issue.
The Options are subject to the terms and conditions as set out in the Executive Option Plan. The holders of these
Options do not have the right, by virtue of the Option, to participate in any share issue or interest issue of the company.
Performance Rights are subject to the terms and conditions as set out in the Employee Rights Plan. The holders of
the Rights are not entitled, by virtue of the Performance Right, to participate in any share issue or interest issue of the
company. Each Performance Right entitles the holder, upon vesting, to be issued one Ordinary share. The participant
must be an eligible employee on the vesting date to for the rights to vest.
38
ANNUAL REPORT FY18
Details of unissued shares or interest under Performance Rights at the date of this report are:
Date of
issue
13 July 2016
13 July 2016
13 July 2016
28 February 2017
12 July 2017
29 June 2018
Number of rights
granted / to be
issued
Class of
shares
Issue price of
shares
Vesting
date
Expiry date
of options
60,152
13,227
13,228
4,149
1,037
10,110
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
-
-
-
-
-
-
15 September 2018 15 September 2018
15 April 2019
15 April 2019
15 April 2020
15 April 2020
15 September 2018 15 September 2018
15 September 2018 15 September 2018
15 September 2018 15 September 2018
84,825 Performance Rights vested and 6,222 lapsed during the year to 30 June 2018.
At the date of this report there were 101,903 Performance Rights on issue.
Performance Rights are subject to the terms and conditions as set out in the Employee Rights Plan. The holders of
the Rights are not entitled, by virtue of the Performance Right, to participate in any share issue or interest issue of the
company. Each Performance Right entitles the holder, upon vesting, to be issued one Ordinary share. The participant
must be an eligible employee on the vesting date to for the rights to vest.
13. OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
There were no other transactions with Key Management Personnel not otherwise disclosed in the report.
This report is made in accordance with a resolution of the Board of Directors, in accordance with section 298(2) of the
Corporations Act 2001.
On behalf of the Directors
Bevan Slattery
Chief Executive Officer
20 August 2018
39
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Auditor’s Independence Declaration
40
ANNUAL REPORT FY18
Financial
Report
These financial statements are the consolidated financial statements of the consolidated entity consisting of
Superloop Limited (ABN 96 169 263 094) and its controlled entities.
Superloop Limited is a company limited by shares, incorporated and domiciled in Australia. The financial
statements are presented in the Australian currency.
Superloop’s registered office and principal place of business is Level 17, 333 Ann Street, Brisbane QLD 4000.
A description of the nature of the consolidated entity’s operations and its principal activities is included in
the Directors’ Report on page 11, which is not part of these financial statements.
The financial statements were authorised for issue by the Directors on 20 August 2018. The Directors have
the power to amend and reissue the financial statements.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Report
42
43
44
45
46
41
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Financial Report
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2018
RESULTS FROM CONTINUING OPERATIONS
Revenue
5
125,171,014
59,805,182
Note
30 June 2018
$
30 June 2017
$
Direct costs
Employee benefits expense
Share based payments expense
Professional fees
Marketing costs
Administrative and other expenses
Total expenses
(51,140,358)
(29,857,685)
(374,711)
(4,019,957)
(1,886,855)
(8,785,585)
(28,026,161)
(13,951,104)
(851,604)
(6,301,485)
(1,056,867)
(5,045,361)
(96,065,151)
(55,232,582)
Earnings before interest-paid, tax, depreciation, amortisation and
foreign exchange gains/losses (EBITDA)
29,105,863
4,572,600
Depreciation and amortisation expense
Interest expense
Foreign exchange gains / (losses)
Share of associate’s profit / (loss)
Profit / (loss) before income tax
Income tax benefit
Profit / (loss) for the year after tax from continuing operations
Other Comprehensive income, net of income tax
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising from translation of foreign operations
Net fair value gain / (loss) on hedging transactions entered into the
cash flow hedge reserve
Total Other Comprehensive Income, net of income tax
6
7
12
8
(22,084,593)
(1,852,246)
(818,142)
(135,884)
4,214,998
2,908,030
7,123,028
(9,012,643)
(1,235,735)
12,534
-
(5,663,244)
4,423,452
(1,239,792)
4,072,644
(5,122,485)
891,603
4,964,247
(820,329)
(5,942,814)
Total Comprehensive Profit / (Loss) for the year
12,087,275
(7,182,606)
Profit / (Loss) for the year attributable to:
> Owners of Superloop Limited
Total comprehensive profit / (loss) for the year
Attributable to:
> Owners of Superloop Limited
Profit / (Loss) per share for profit /(loss) attributable to the
ordinary equity holders of the Group:
Basic profit / (loss) per share
Diluted profit / (loss) per share
The notes following the financial statements form part of the financial report.
42
7,123,028
(1,239,792)
12,087,275
(7,182,606)
Note
Cents
Cents
33
33
3.19
3.18
(0.69)
(0.69)
Consolidated Statement of Financial Position
As at 30 June 2018
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Current tax asset
Other current assets
Total current assets
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Other non-current assets
Investment in associate
Deferred tax assets
Total non-current assets
TOTAL ASSETS
LIABILITES
CURRENT LIABILITES
Trade and other payables
Provisions
Deferred revenue
Interest-bearing borrowings
Total current liabilities
NON-CURRENT LIABILITES
Provisions
Deferred revenue
Interest-bearing borrowings
Deferred tax liabilites
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Other equity
Accumulated losses
TOTAL EQUITY
ANNUAL REPORT FY18
Note
30 June 2018
$
30 June 2017(1)
$
9
10
11
13
14
11
12
15
16
18
19
17
18
19
17
20
21
22
23
15,437,051
11,119,906
1,517,986
7,112,809
35,187,752
182,126,670
280,573,689
3,827,845
9,505,377
954,585
476,988,166
512,175,918
7,104,685
10,549,796
2,898,701
3,150,135
23,703,317
141,204,305
239,805,429
289,714
-
1,943,363
383,242,811
406,946,128
32,232,897
2,813,209
6,463,308
-
26,738,825
1,916,767
1,957,882
31,563
41,509,414
30,645,037
2,549,270
8,514,946
62,778,773
7,529,847
81,372,836
122,882,250
389,293,668
395,910,987
233,831
(3,327,034)
(3,524,116)
2,617,708
474,691
29,632,910
10,103,513
42,828,822
73,473,859
333,472,269
351,290,163
(4,893,516)
(3,327,034)
(9,597,344)
389,293,668
333,472,269
(1)
Comparative information has been adjusted retrospectively to reflect the fair value adjustments as disclosed in
Note 37.
43
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Financial Report
Consolidated Statement of Changes in Equity
For the year ended 30 June 2018
Note
Contributed
equity
$
Reserves
$
Other
equity(i)
$
Accumulated
losses
$
Total equity
$
Balance at 1 July 2017
Profit for the year
Other comprehensive
income for the year
Total comprehensive
profit for the year
Dividends paid
Share based payments
Issue of ordinary share
capital
Share issue costs
351,290,163
-
(4,893,516)
-
(3,327,034)
-
(9,597,344)
7,123,028
333,472,269
7,123,028
-
-
-
-
4,964,247
4,964,247
-
163,100
45,297,554
(676,730)
-
-
-
-
-
-
-
-
-
4,964,247
7,123,028
(1,049,800)
-
-
-
12,087,275
(1,049,800)
163,100
45,297,554
(676,730)
Balance at 30 June 2018
395,910,987
233,831
(3,327,034)
(3,524,116)
389,293,668
Note
Contributed
equity
$
Reserves
$
Other
equity(i)
$
Accumulated
losses
$
Total equity
$
Balance at 1 July 2016
Loss for the year
Other comprehensive
income for the year
Total comprehensive loss
for the year
Share based payments
Issue of ordinary share
capital
Share issue costs
131,186,364
-
235,031
-
(3,327,034)
-
(8,357,552)
(1,239,792)
119,736,809
(1,239,792)
-
-
-
(5,942,814)
(5,942,814)
814,267
222,301,981
(2,198,182)
-
-
-
-
-
-
-
-
(5,942,814)
(1,239,792)
-
(7,182,606)
814,267
-
-
222,301,981
(2,198,182)
Balance at 30 June 2017
351,290,163
(4,893,516)
(3,327,034)
(9,597,344)
333,472,269
(i)
Refer to Note 1(C) (ii)
The notes following the financial statements form part of the financial report.
44
Consolidated Statement of Cash Flows
For the year ended 30 June 2018
OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Income taxes received / (paid)
Net cash inflow from operating activities
INVESTING ACTIVITIES
Interest received
Payments for property, plant and equipment
Payments for intangible assets
Net cash outflow on acquisition of subsidiaries
Net cash outflow on investment in associate
Deferred consideration payments
Transaction costs associated with the acquisition of subsidiaries
Net cash inflow / (outflow) from investing activities
FINANCING ACTIVITIES
Proceeds from issues of shares
Transaction costs paid in relation to issue of shares
Dividends paid
Proceeds from borrowings (net of fees)
Repayment of borrowings
Interest paid
Net cash inflow from financing activities
Net increase/(decrease) in cash and cash equivalents held
Cash and cash equivalents at the beginning of the year
Foreign exchange movement in cash
Cash and cash equivalents at the end of the year
ANNUAL REPORT FY18
Note
30 June 2018
$
30 June 2017
$
134,598,632
(98,289,377)
1,631,714
37,940,969
33,548
(44,082,519)
(23,416,001)
(12,355,104)
(10,128,737)
(1,542,075)
(330,239)
(91,821,127)
34,999,999
(1,112,589)
(1,049,800)
65,229,698
(32,724,761)
(2,294,835)
63,047,712
9,167,554
7,104,685
(835,188)
15,437,051
57,875,152
(53,509,527)
302,149
4,667,774
514,669
(52,620,433)
(16,240,413)
(43,663,892)
-
-
(4,376,289)
(116,386,358)
77,830,239
(2,154,647)
-
29,632,910
(30,055,019)
(1,235,735)
74,017,748
(37,700,836)
45,854,135
(1,048,614)
7,104,685
30
9
9
The notes following the financial statements form part of the financial report.
45
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
Summary of significant accounting policies
Application of new and revised accounting standards
Critical accounting estimates and judgements
Segment information
Revenue
Interest expense
Foreign exchange gains
Income tax expense
Cash, cash equivalents and term deposits
Trade and other receivables
Other assets
Investment in associate
Property, plant and equipment
Intangible assets
Deferred tax assets
Trade and other payables
Interest-bearing loans and borrowings
Provisions
Deferred revenue
Deferred tax liabilities
Contributed equity
Reserves
Accumulated losses
Dividends
Key management personnel disclosures
Remuneration of auditors
Operating lease arrangements
Commitments and contingencies
Related party transactions
Reconciliation of loss after income tax to net cash flow from operating activities
Non-cash transactions
Financial risk management
Earnings per share
Subsidiaries
Events occurring after the reporting period
Parent entity financial information
Controlled entities acquired or disposed
47
53
54
55
59
59
59
60
60
61
62
63
63
64
66
66
67
67
68
68
68
70
70
70
71
71
72
73
73
75
75
75
78
79
80
80
81
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
46
Notes to the Consolidated Financial Report
ANNUAL REPORT FY18
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
The principal accounting policies adopted
the
preparation of these consolidated financial statements
are set out below. These policies have been consistently
applied to all years presented, unless otherwise stated.
The financial statements are for the consolidated entity
consisting of Superloop Limited and its subsidiaries.
Superloop Limited is a public company limited by shares,
incorporated and domiciled in Australia.
in
(A) REPORTING YEAR AND COMPARATIVE
INFORMATION
These financial statements cover the period 1 July 2017
to 30 June 2018. The prior year covers the period 1 July
2016 to 30 June 2017. Comparative information has,
where necessary and immaterial, been reclassified to be
consistent with current year disclosures.
(B) 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 and the Corporations Act
2001. Superloop Limited is a for-profit entity for the
purpose of preparing the financial statements.
(i) Compliance with IFRS
The consolidated financial statements of the Superloop
Group also comply with International Financial Reporting
International
issued by
Standards (‘IFRS’) as
Accounting Standards Board (‘IASB’).
the
(ii) New and amended standards adopted by the Group
The Superloop Group 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. None of the new, revised or amended standards
had a material impact on in the current period or any prior
period.
(iii) Early adoption of standards
The Group has not elected to apply any pronouncements
before their operative date in the financial year beginning
1 July 2017.
(iv) Historical cost convention
These financial statements have been prepared under the
historical cost convention.
(v) Critical accounting estimates
The preparation of financial statements requires the use
of certain critical accounting estimates. It also requires
management to exercise its judgement in the process
of applying the Group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to
the financial statements are disclosed in Note 3.
(vi) Going concern
The consolidated financial statements have been prepared
on a going concern basis. At 30 June 2018, current liabilities
exceeded current assets by $6.3 million, principally due
to one off liabilities associated with acquisitions made by
Superloop.
Based on forecast profitability, positive operating cash
flows and available funding capacity under the Group’s
debt facilities, the directors are of the opinion that
no material uncertainties exist in relation to events or
conditions which cast doubt on the Group’s ability to
continue as a going concern.
(C) PRINCIPLE OF CONSOLIDATION
(i) Subsidiaries
Subsidiaries are all entities (including structured entities)
over which the Group has control. The group controls
an entity when the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and
has the ability to affect those returns through its power
to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred
to the Group. They are deconsolidated from the date that
control ceases. The acquisition method of accounting is
used to account for business combinations by the Group.
Intercompany transactions, balances and unrealised
gains on transactions between group companies are
eliminated. Unrealised losses are also eliminated unless
the transaction provides evidence of an impairment of the
transferred asset. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency
with the policies adopted by the Group.
(ii) Business combinations under common control
A business combination involving entities or businesses
under common control is a business combination in which
all of the combining entities or businesses are ultimately
controlled by the same party or parties both before and
after the business combination, and that the control is not
transitory.
Where an entity within the Group acquires an entity under
common control, the acquirer consolidates the carrying
values of the acquired entity’s assets and liabilities from
the date of acquisition. No fair value adjustments are made
to the acquired entity’s assets and liabilities at the date of
acquisition. The consolidated financial statements of the
Superloop Group include the acquired entity’s income
and expenses from the date of acquisition onwards. Any
difference between the fair value of the consideration
paid / transferred by the acquirer and the net assets /
(liabilities) of the acquired entity are taken to the common
control reserve within other equity.
This other equity relates to transactions during the period
ended 30 June 2015 to form the Group.
(iii) Investment in associate
An associate is an entity over which the Group has
significant influence. The Group’s investments in its
associate are accounted for using the equity method.
Under the equity method, the investment in an associate
is initially recognised at cost. The carrying amount of
the investment is adjusted to recognise changes in the
Group’s share of net assets of the associate since the
acquisition.
The Consolidated Statement of Profit or Loss and Other
Comprehensive Income reflects the Group’s share of the
results of the associate. Unrealised gains and losses
47
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
resulting from transactions between the Group and the
associate are eliminated to the extent of the interest in the
associate.
The financial statements of the associate are prepared for
the same reporting period as the Group. When necessary,
adjustments are made to bring the accounting policies in
line with those of the Group.
Upon loss of significant influence over the associate, the
Group measures and recognises any retained investment
at its fair value. Any difference between the carrying
amount of the associate upon loss of significant influence
and the fair value of the retained investment and proceeds
from disposal is recognised in profit or loss.
(D) SEGMENT REPORTING
Operating segments are reported in a manner consistent
with the operations of the Group and the internal reporting
provided to the chief operating decision maker. During the
year, the Group’s operating segments have been expanded
to include Superloop (formerly Connectivity), Superloop+
(formerly Managed Services) and Superbb (broadband
services for subscribers or end users).
(E) REVENUE RECOGNITION
Revenue is measured at the fair value of the consideration
received or receivable. Amounts disclosed as revenue are
net of returns, trade allowances, rebates and amounts
collected on behalf of third parties.
The Group recognises revenue when the amount of
revenue can be reliably measured, it is probable that
future economic benefits will flow to the entity and
specific criteria have been met for each of the activities
as described below. The Group bases its estimates on
historical results, taking into consideration the type of
customer, the type of transaction and the specifics of
each arrangement.
Revenue is recognised for the major business activities as
follows:
(i) Customer revenue
Revenue on services is recognised when the service has
been provided, the amount of revenue can be measured
reliably and it is probable that the economic benefits
associated with the transaction will flow to the Group.
Revenue from long term capacity arrangements and
construction contracts, is recognised in line with the
delivery of the service, based on the stage of completion.
Upfront discounts provided to customers are amortised
over the life of the customer contract.
is no direct
Installation fees charged where there
expenditure
for the establishment of services are
brought to account as revenue over the effective life of
the customer contracts. Installation fees charged as a
recovery of direct operational expenditure are brought to
account as revenue as the service is performed.
Revenue from the sale of goods (hardware or software) is
recognised when the Group has transferred to the buyer
the significant risks and rewards of ownership, generally
when the customer has taken undisputed delivery of the
48
goods.
Revenue from the sale of goods with no significant service
obligation is recognised on delivery.
(ii) Other Revenue
Interest income
Interest income is recognised using the effective interest
method. When a receivable is impaired, the Group reduces
the carrying amount to its recoverable amount, being
the estimated future cash flow discounted at the original
effective interest rate of the instrument, and continues
unwinding the discount as
Interest
income on impaired loans is recognised using the original
effective interest rate.
income.
interest
Research & Development Tax Offset
The Group applies AASB 120 Accounting for Government
Grants and Disclosure of Government Assistance in
accounting for the Research & Development (R&D) Tax
Offset, whereby a credit is recognised in profit before
tax over the periods necessary to match the benefit
of the credit with the costs for which it is intended to
compensate. Such periods will depend on whether the
R&D costs are capitalised or expensed as incurred. Where
R&D costs are capitalised, the government grant income
is deferred and recognised over the same period that such
costs are amortised.
(F) CASH AND CASH EQUIVALENTS
For the purpose of presentation in the Consolidated
Statement of Cash Flows, cash and cash equivalents
includes cash on hand, deposits held at call with financial
institutions and term deposits with original maturities of
three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant
risk of changes in value. Bank overdrafts, if applicable,
are shown within borrowings in current liabilities in
the Consolidated Statement of Financial Position.
(G) TRADE RECEIVABLES
Trade receivables are recognised initially at fair value
and subsequently measured at amortised cost using the
effective interest method, less provision for impairment.
Trade receivables are generally due for settlement within
30 days. They are presented as current assets unless
collection is not expected for more than 12 months after
the reporting date.
Collectability of trade receivables is reviewed on an
ongoing basis. Debts which are known to be uncollectible
are written off by reducing the carrying amount directly.
An allowance account (provision for impairment of trade
receivables) is used when there is objective evidence
that the Group will not be able to collect all amounts
due according to the original terms of the receivables.
Significant financial difficulties of the debtor, probability
that the debtor will enter bankruptcy or financial
reorganisation, and default or delinquency in payments
(more than 90 days overdue) are considered indicators
that the trade receivable is impaired. The amount of the
impairment allowance is the difference between the asset’s
carrying amount and the present value of estimated future
cash flows, discounted at the original effective interest
rate. Cash flows relating to short-term receivables are not
discounted if the effect of discounting is immaterial.
ANNUAL REPORT FY18
The amount of the impairment loss is recognised in the
Consolidated Statement of Profit or Loss and Other
Comprehensive Income within administrative expenses.
When a trade receivable for which an
impairment
allowance had been recognised becomes uncollectible in
a subsequent year, it is written off against the allowance
account. Subsequent recoveries of amounts previously
written off are credited against other administrative
expenses in the Consolidated Statement of Profit or Loss
and Other Comprehensive Income.
(H) CONSUMPTION TAXES
Revenues, expenses and assets are recognised net of the
amount of associated consumption tax per jurisdiction,
unless the consumption based tax
is not
recoverable from the taxation authority. In this case it is
recognised as part of the cost of acquisition of the asset
or as part of the expense.
incurred
Receivables and payables are stated inclusive of the
amount of consumption based tax receivable or payable.
The net amount of the consumption based tax recoverable
from, or payable to, the taxation authority is included
with other receivables or payables in the consolidated
statement of financial position. Cash flows are presented
on a gross basis. The consumption based tax components
of cash flows arising from investing or financing activities
which are recoverable from, or payable to the taxation
authority, are presented as operating cash flows.
(I) INCOME TAX
The income tax expense or revenue for the year is the tax
payable on the current year’s taxable income based on the
applicable income tax rate in each jurisdiction, adjusted by
changes in deferred tax assets and liabilities attributable
to temporary differences and to unused tax losses. The
current income tax charge is calculated on the basis of
the tax laws enacted or substantively enacted at the end
of the reporting year in each jurisdiction. Management
periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is
subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid
to the tax authorities.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in
the financial statements. However, deferred tax liabilities
are not recognised if they arise from the initial recognition
of goodwill. Deferred income tax is also not accounted for
if it arises from initial recognition of an asset or liability in
a transaction other than a business combination that at
the time of the transaction affects neither accounting nor
taxable profit or loss. Deferred income tax is determined
using tax rates (and laws) that have been enacted or
substantially enacted by the end of the reporting year and
are expected to apply when the related deferred income
tax asset is realised or the deferred income tax liability is
settled.
Deferred tax relating to items recognised outside profit or
loss is recognised outside profit or loss. Deferred tax items
are recognised in correlation to the underlying transaction
either in OCI or directly in equity. Deferred tax assets are
recognised for deductible temporary differences and
unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary
differences and losses.
Deferred tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate
to the same taxation authority. Current tax assets and
tax liabilities are offset where the Group has a legally
enforceable right to offset and intends either to settle on
a net basis, or to realise the asset and settle the liability
simultaneously.
Current and deferred tax is recognised in the Consolidated
Statement of Profit or Loss and Other Comprehensive
Income, except to the extent that it relates to items
recognised in other comprehensive income or directly
in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
(J) INVESTMENTS AND OTHER FINANCIAL ASSETS
Loans and receivables
Classification
Loans and receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted
in an active market. They are included in current assets,
except for those with maturities greater than 12 months
after the reporting year which are classified as non-current
assets. Loans and receivables are included in trade and
other receivables (Note 10) in the Consolidated Statement
of Financial Position.
Measurement
At initial recognition, the Group measures a financial asset
at its fair value plus, in the case of a financial asset not at
fair value through the Consolidated Statement of Profit
or Loss and Other Comprehensive Income, transaction
costs that are directly attributable to the acquisition of the
financial asset. Loans and receivables are subsequently
carried at amortised cost using the effective interest
method.
Impairment
The Group assesses at the end of each reporting year
whether there is objective evidence that a financial asset
or group of financial assets is impaired. A financial asset
or a group of financial assets is impaired and impairment
losses are incurred only if there is objective evidence
of impairment as a result of one or more events that
occurred after the initial recognition of the asset (a ‘loss
event’) and that loss event (or events) has an impact on
the estimated future cash flows of the financial asset or
group of financial assets that can be reliably estimated.
Assets carried at amortised cost
For loans and receivables, the amount of the loss is
measured as the difference between the asset’s carrying
amount and the present value of estimated future cash
flows (excluding future credit losses that have not been
incurred) discounted at the financial asset’s original
effective interest rate. The carrying amount of the asset
is reduced and the amount of the loss is recognised in
the Consolidated Statement of Profit or Loss and Other
Comprehensive Income.
If, in a subsequent period, the amount of the impairment
49
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
loss decreases and the decrease can be related objectively
to an event occurring after the impairment was recognised
(such as an improvement in the debtor’s credit rating), the
reversal of the previously recognised impairment loss is
recognised in the Consolidated Statement of Profit or Loss
and Other Comprehensive Income. Impairment testing of
trade receivables is described in Note 1(G).
(K) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at historical cost
less depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits
associated with the item will flow to the Group and the
cost of the item can be measured reliably. The carrying
amount of any component accounted for as a separate
asset is derecognised when replaced. All other repairs and
maintenance are charged to the Consolidated Statement
of Profit or Loss and Other Comprehensive Income during
the reporting year in which they are incurred.
Depreciation on other assets is calculated using the
straight-line method to allocate their cost, net of their
residual values, over their estimated useful lives or, in the
case of leasehold improvements and certain leased plant
and equipment, the lease term (if shorter) as follows:
Category
Network assets
Communications assets
Other assets
Leasehold improvements
Useful Life
15-40 Years
3-5 Years
3-10 Years
3-10 Years
The assets’ residual values and useful lives are reviewed,
and adjusted if appropriate, at the end of each reporting
period.
An asset’s carrying amount is written down immediately
to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount. Gains
and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in
the Consolidated Statement of Profit or Loss and Other
Comprehensive Income.
(M) INTANGIBLE ASSETS
The useful lives of intangible assets are assessed to be
either finite or indefinite. Intangible assets with finite
useful lives are amortised over the useful lives:
Category
Rights and licenses
Software
Customer acquisition costs
Useful Life
3-15 Years
3-5 Years
3-8 Years
Customer relationships brands & trademarks
4-10 Years
Intangible assets with finite useful lives are assessed
for impairment whenever there is an indication that the
intangible asset may be impaired The useful life and the
amortisation method for an intangible asset with a finite
useful life are reviewed at least at each financial year end.
Changes in the expected useful life or the expected pattern
of consumption of future economic benefits embodied in
the asset are accounted for by changing the useful life or
method, as appropriate, which is a change in accounting
estimate.
Intangible assets with indefinite useful lives are tested
for impairment annually, either individually or at the cash
generating unit level. Such intangibles are not amortised.
The useful life of an intangible asset with an indefinite
useful life is reviewed each reporting year to determine
whether the indefinite useful life assessment continues to
be supportable. If not, the change in useful life assessment
from indefinite to finite is accounted for as a change in
an accounting estimate and is thus accounted for on a
prospective basis.
Indefeasible Rights to Use (‘IRUs’)
IRUs of capacity are recognised as intangible assets and
are amortised on a straight-line basis over the remaining
life of the contracts.
Goodwill
Goodwill acquired in a business combination is initially
measured at cost of the business combination being
the excess of the consideration transferred over the fair
value of the Group’s net identifiable assets acquired
and liabilities assumed. Goodwill has an indefinite useful
life and as such, is not amortised. The carrying value is
assessed at each reporting date against the value of the
cash generating units to which it is assigned.
(L) ASSETS IN THE COURSE OF CONSTRUCTION
Assets in the course of construction are shown at historical
cost. Historical cost
includes directly attributable
expenditure on telecommunications infrastructure which
at reporting date, has not yet been finalised and/or ready
for use. Assets in the course of construction are not
depreciated.
Software
On the acquisition of a company, internally developed
software and systems are valued and brought to
account as intangible assets and valued at its amortised
replacement cost or discounted future earnings. Software
is amortised on a straight-line basis over the period of its
expected benefit.
Assets in the course of construction are transferred to
property, plant and equipment upon successful testing
and commissioning.
Spectrum Licenses
Spectrum licence assets acquired as part of a business
50
ANNUAL REPORT FY18
combination are measured at their fair value at the date of
acquisition. The amortisation of spectrum licence assets
is calculated on a straight-line basis over the expected
useful life of the asset based on the current renewal dates
of each licence.
Customer acquisition costs
Direct customer acquisition costs in relation to customer
contracts are recognised as an asset where it is probable
that the future economic benefits arising as a result
of the costs incurred will flow to the Group. Customer
acquisition costs recognised as an asset are amortised
from the inception of the contract over the lesser of the
period of the contract and the period during which the
future economic benefits are expected to be obtained,
and reviewed for impairment at the end of the financial
year. Customer acquisition costs not recognised as an
asset are expensed as incurred.
Other intangibles
Other intangibles are amortised on a straight-line basis
over the period of their expected benefit.
(N) LEASES
Leases of property, plant and equipment where the Group,
as lessee, has substantially all the risks and rewards of
ownership are classified as finance leases. Finance leases
are capitalised at the lease’s inception at the fair value
of the leased property or, if lower, the present value of
the minimum lease payments. The corresponding rental
obligations, net of finance charges, are included in other
short-term and long-term payables. Each lease payment
is allocated between the liability and finance cost. The
finance cost is charged to the profit or loss over the
lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each
period. The property, plant and equipment acquired under
finance leases is depreciated over the asset’s useful life or
over the shorter of the asset’s useful life and the lease
term if there is no reasonable certainty that the Group will
obtain ownership at the end of the lease term.
Leases in which a significant portion of the risks and
rewards of ownership are not transferred to the Group as
lessee are classified as operating leases. Payments made
under operating leases (net of any incentives received
from the lessor) are charged to profit or loss on a straight-
line basis over the period of the lease.
(O) IMPAIRMENT OF ASSETS
Intangible assets that have an indefinite useful life are
not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes
in circumstances indicate that they might be impaired.
Other assets are tested for impairment whenever events
or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs
to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash inflows which
are largely independent of the cash inflows from other
assets or groups of assets (cash-generating units). With
the exception of goodwill, all assets are subsequently
loss
indications that an
reassessed for
impairment
previously recognised may no longer exist. An impairment
charge is reversed if the cash-generating unit’s recoverable
amount exceeds its carrying amount.
(P) TRADE AND OTHER PAYABLES
These amounts represent liabilities for goods and services
provided to the Group prior to the end of financial year
which are unpaid. The amounts are unsecured and are
usually paid within 30 days of recognition. Trade and
other payables are presented as current liabilities unless
payment is not due within 12 months from the reporting
date. They are recognised initially at their fair value and
subsequently measured at amortised cost using the
effective interest method.
(Q) BORROWINGS
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption
amount is recognised in the Consolidated Statement of
Profit or Loss and Other Comprehensive Income over
the year of the borrowings using the effective interest
method. Fees paid on the establishment of loan facilities
are recognised as transaction costs of the loan to the
extent that it is probable that some or all of the facility will
be drawn down. In this case, the fee is deferred until the
draw down occurs. To the extent there is no evidence that
it is probable that some or all of the facility will be drawn
down, the fee is capitalised as a prepayment for liquidity
services and amortised over the year of the facility to
which it relates.
(R) EMPLOYEE BENEFITS
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary
benefits and annual leave expected to be settled within
12 months after the end of each reporting year in which
the employees render the related service are recognised
in respect of employees’ services up to the end of the
reporting year and are measured at the amounts expected
to be paid when the liabilities are settled. The liability
for annual leave is recognised in provision for employee
benefits.
(ii) Other long-term employee benefit obligations
The liability for long service leave and annual leave which
is not expected to be settled within 12 months after the end
of the reporting year in which the employees render the
related service is recognised in the provision for employee
benefits and measured as the present value of expected
future payments to be made in respect of services provided
by employees up to the end of the reporting year using
the projected unit credit method. Consideration is given
to expected future wage and salary levels, experience of
employee departures and periods of service. Expected
future payments are discounted using market yields at the
end of the reporting year on high quality corporate bonds
with terms to maturity and currency that match, as closely
as possible, the estimated future cash outflows.
(iii) Retirement benefit obligations
Except
for the statutory superannuation guarantee
charge, the Group does not have any other retirement
benefit obligations.
51
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
(Rounding in Financial/Directors’ Reports) Instrument
2016/191, dated 24 March 2016 and issued pursuant
to section 341(1) of the Corporations Act 2001. In
accordance with that Instrument, amounts in the financial
statements have been rounded to the nearest dollar.
(X) HEDGING
Hedging of risk exposure can be carried out using
derivatives or physical
instruments. Derivatives are
initially recognised at fair value at the date the derivative
contract is entered into and are subsequently remeasured
to their fair value at the end of each reporting period.
The resulting gain or loss is recognised in profit or loss
immediately unless the derivative is designated and
effective as a hedging instrument, in which event the
timing of the recognition in profit or loss depends on the
nature of the hedge relationship.
(Y) HEDGE ACCOUNTING
Superloop designates certain hedging instruments as
either fair value hedges or cash flow hedges. Hedges of
foreign exchange risk on firm commitments are accounted
for as cash flow hedges.
(i) Cash flow hedge
The effective portion of changes in the fair value of
financial instruments that are designated and qualify as
cash flow hedges is recognised in other comprehensive
income and accumulated under the heading of cash flow
hedging reserve. The gain or loss relating to the ineffective
portion is recognised immediately in profit or loss, and is
included in the ‘other gains and losses’ line item.
(ii) Fair value hedge
Changes in the fair value of financial instruments that
are designated and qualify as fair value hedges are
recognised in profit or loss immediately, together with any
changes in the fair value of the hedged asset or liability
that are attributable to the hedged risk. The change in
the fair value of the hedging instrument and the change
in the hedged item attributable to the hedged risk are
recognised in profit or loss in the line item relating to the
hedged item.
(Z) PARENT ENTITY FINANCIAL INFORMATION
The financial information for the parent entity, Superloop
Limited, disclosed in Note 36 has been prepared on the
same basis as the consolidated financial statements.
(iv) Share-based payments
Equity-settled share-based payments to employees and
others providing similar services are measured at the fair
value of the equity instruments at the grant date. This fair
value is expensed on a straight-line basis over the vesting
period with a corresponding increase in equity.
(S) BORROWINGS COSTS
Borrowing costs incurred for the construction of any
qualifying asset are capitalised during the year of time
that is required to complete and prepare the asset for its
intended use or sale. Other borrowing costs are expensed.
(T) CONTRIBUTED EQUITY
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction, net of tax, from
the proceeds.
(U) FOREIGN EXCHANGE
The financial statements are presented in Australian
dollars, which is the Group’s presentation currency.
Foreign Currency Transactions
Foreign currency transactions are translated into the
functional currency of the entity using the exchange
rates prevailing at the date of the transactions.
Foreign Operations
The assets and
liabilities of foreign operations are
translated into the presentation currency (Australian
dollars) using the exchange rates as at the reporting date.
The revenues and expenses of the foreign operations are
translated into the presentation currency using the average
exchange rates, which approximate the rate at the date of
the transaction. All resulting foreign exchange differences
are recognised in other comprehensive income through
the foreign currency reserve in equity.
(V) EARNINGS PER SHARE
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
•
the profit / (loss) attributable to owners of the Group,
excluding any costs of servicing equity other than
ordinary shares
by the weighted average number of ordinary shares
outstanding during the financial period, adjusted for
bonus elements in ordinary shares issued during the
year (Note 33).
•
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into
account:
•
•
the after income tax effect of interest and other
financing costs associated with dilutive potential
ordinary shares, and
the weighted average number of additional ordinary
shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary shares.
(W) ROUNDING OF AMOUNTS
The Company is of a kind referred to in the Australian
Securities and Investments Commission Corporations
52
ANNUAL REPORT FY18
2. APPLICATION OF NEW AND REVISED
ACCOUNTING STANDARDS
Certain new accounting standards, amendments and
interpretations to existing standards have been published
but are not yet effective and have not been early adopted
by the Group. The Group’s assessment of the impact of
these new standards, amendments and interpretations are
provided below.
AASB 9 FINANCIAL INSTRUMENTS
This standard addresses the classification, measurement
and derecognition of financial assets and financial
liabilities. The standard replaces all previous versions
of AASB 9 and
introduces new classification and
measurement models for financial assets. New simpler
hedge accounting requirements are intended to more
closely align the accounting treatment with the risk
management activities of entities along with requirements
for financial assets and amendments to the classification
and measurement for certain debt instruments. In relation
to the impairment of financial assets requirements under
AASB 9, the new standard requires an ‘expected credit
loss’ model as opposed to an incurred credit loss model.
This standard is applicable to annual reporting periods
beginning on or after 1 January 2018. The Group will adopt
AASB 9 from 1 July 2018 and will not restate comparative
information as permitted by the Standard.
The assessment of the requirements of this standard on
the Group has indicated there will not be a significant
impact on application, in particular:
•
•
Classification and measurement - the Group does
not expect any impact on the Statement of Financial
Position or equity on applying the classification and
measurement requirements of AASB 9. Financial
assets currently held at fair value will continue to be
measured at fair value. Trade and other receivables
are held to collect contractual cash flows and are
solely payments for principal and interest. These
receivables will be measured at amortised cost.
Impairment - under AASB 9, expected credit losses
on financial assets are to be recorded either on a
12-month or lifetime basis. The Group will apply the
simplified approach and record lifetime expected
losses on all eligible financial assets. It is expected
that the revised methodology for calculation of
impairment will not have a significant impact on the
financial statements; and
• Hedge accounting - the Group’s existing hedges
are currently considered effective relationships and
it is expected they will qualify as continuing hedge
relationships under AASB 9. There will be additional
disclosures in relation to hedge accounting required
under this new standard.
AASB 15 REVENUE FROM CONTRACTS WITH
CUSTOMERS
AASB 15 establishes a single comprehensive model for
entities to use in accounting for revenue arising from
contracts with customers. The core principle of AASB 15
is that an entity should recognise revenue to depict the
transfer of promised goods or services to customers in
an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods
or services. Specifically, the Standard introduces a 5-step
approach to revenue recognition:
•
•
•
•
•
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the
contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the
performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity
satisfies a performance obligation
Under AASB 15, an entity recognises revenue when
(or as) a performance obligation is satisfied, i.e. when
‘control’ of the goods or services underlying the particular
performance obligation is transferred to the customer.
This standard is applicable to annual reporting periods
beginning on or after 1 January 2018 and accordingly will
apply to the Group from 1 July 2018. The Group will adopt
AASB 15 using the modified retrospective approach and
will not restate comparative information as permitted by
the Standard.
The assessment performed to date on the Group’s revenue
streams has identified that the largest impact will be on
revenue relating to long term capacity arrangements.
Under the Group’s current accounting policy, revenue
from long term capacity arrangements is recognised in
line with the delivery of the services, based on the stage
of completion. This has historically resulted in larger
proportion of the revenue being recognised during
the early stages of the contract in line with the work
performed.
On application of AASB 15, revenue will continue to be
recognised over time based on the delivery of the service
to the customer. However, where the upfront activities
required to deliver the contract do not transfer control of
an asset to the customer, the costs will be recognised as a
contract fulfillment asset, which will be amortised over the
contract period. Revenue will be recognised evenly over
the term of the contract.
The Group is still assessing whether there is a significant
financing component in relation to the long term capacity
arrangements. If a significant financing component is
identified this will result in revenue being adjusted up for
the effect of the time value of money and the recognition
of an associated interest expense.
Based on the current assessment, no further significant
changes to revenue recognition on other services and
activities are expected.
The Group has estimated the cumulative effect on initial
application of AASB 15 to be a pre tax reduction to
opening retained earnings of approximately $9.0 million,
which will be recognised at 1 July 2018.
AASB 16 LEASES
This standard will replace AASB 117 Leases and is
applicable to annual reporting periods beginning on or
53
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
1 January 2019.
after
This standard provides a
comprehensive model for the identification of lease
financial
arrangements and their treatment
statements of both lessees and lessors. This standard
introduces three main changes:
in the
•
Enhanced guidance on identifying whether a contract
contains a lease;
• A completely new
leases accounting model for
lessees that requires lessees to recognise all leases
on balance sheet, except for short-term leases and
leases of low value assets; and
Enhanced disclosures.
•
Leases currently classified as operating leases will be
capitalised in the Consolidated Statement of Financial
Position with a liability corresponding to future lease
payments also recognised. Straight-line operating lease
expense recognition will be replaced with a depreciation
charge for the leased asset and an interest expense on the
recognised lease liability.
This standard will apply to the Group from 1 July 2019
and impact the financial statements for the financial year
ending 30 June 2020. The full assessment of the impact
on the Group is ongoing, however the following impacts
are expected:
•
•
•
•
the total assets and liabilities on the balance sheet will
increase with a decrease in total net assets, due to the
reduction of the capitalised asset being on a straight
line basis whilst the liability reduces by the principal
amount of repayments. Net current assets will show
a decrease due to an element of the liability being
disclosed as a current liability;
the straight-line operating lease expense will be
replaced with a depreciation charge for the right-of-
use assets and interest expense on lease liabilities;
interest expenses will increase due to the unwinding
of the effective interest rate implicit in the lease.
Interest expense will be greater earlier in a leases
life due to the higher principal value causing profit
variability over the course of a lease life. This effect
may be partially mitigated due to a number of leases
held in the Group at different stages of their terms;
and
repayment of the principal portion of all lease liabilities
will be classified as financing activities.
The Group has estimated the application of AASB 16
will result in a increase to earnings before interest, tax
depreciation, amortisation and foreign exchange gains/
losses (EBITDA) and a decrease to profit before tax (PBT).
There are no other new standards and interpretations
that are not yet effective and that are expected to have
a material impact on the Group’s consolidated financial
statements in the current or future reporting periods.
3. CRITICAL ACCOUNTING ESTIMATES AND
JUDGEMENT
The preparation of the Group’s consolidated financial
statements requires management to make estimates,
judgements and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities,
54
and the accompany disclosures. These estimates and
judgements are continually evaluated against historical
experience and other factors, including expectations of
future events that may have a financial impact on the
Group and that are believed to be reasonable under the
circumstances. In the process of applying the Group’s
accounting policies, management has made the following
involved a higher
estimates and
degree of judgement or complexity, and which have the
most significant effect on the amounts recognised in the
consolidated financial statements.
judgements, which
is
for acquisitions
Business combinations
Accounting
inherently complex,
requiring a number of judgements and estimates to be
made. In accounting for business combinations, the
Group has made a number of judgements in relation to
identification of fair values attributable to separately
identifiable assets and
including
intangible assets such as customer relationships, software
and brand name and trademarks identified, refer to Note
37. The determination of fair values requires the use of
valuation techniques based on assumptions including
revenue growth, cash flows, margins, customer attrition
rates and weighted-average cost of capital. Additional
judgement and estimates have been applied in estimating
the useful lives of intangible assets and tangible assets
acquired refer to Note 1(M).
liabilities acquired
For the acquisition of BigAir, NuSkope and GX2, the
Group has commissioned an
independent valuation
expert to assist in the determination of the methodology
and calculation of the attributed fair values to identified
intangible assets. The acquisition accounting for both
BigAir and SubPartners are now final at the balance sheet
date, with the excess purchase consideration over the fair
value of identified assets and liabilities acquired in both
acquisitions recognised as goodwill.
Goodwill and other indefinite life intangible assets
In assessing impairment of goodwill and other indefinite
life intangible assets, in accordance with accounting
policy outlined in Note 1(O), management estimates the
recoverable amount of each asset, cash-generating or
group of cash generating assets based on the greater of
“Value in Use” or “Fair value less costs to sell”. Value in use
is assessed through a discounted cash flow analysis which
includes significant estimates and the use of assumptions,
including growth rates, estimated future cash flows and
estimated discount rates based on the current cost of
capital, refer to Note 14.
Revenue recognition
The Group undertakes long term capacity contracts
which span a number of reporting periods. Revenue from
these long term capacity arrangements and construction
contracts, is recognised in line with the delivery of the
service, based on the stage of completion. Determining
the stage of completion in relation to the delivery of long
term capacity arrangements requires the application of
judgement due to the complexity and specific nature of
the customer arrangements and estimation of future costs
of completing the contract and the expected outcome of
the contract. The assumptions made in the estimates are
based on the information available to management at the
reporting date, however future changes or additional
information may mean that management revises estimates
of the revenue recognition pattern in future years. A
change in the estimated stage of completion could
have a significant impact on the timing of the revenue
recognition. Refer to Note 1(E) for further information on
revenue recognition.
Useful life of assets
The economic life of property, plant and equipment, which
includes network infrastructure is a critical accounting
estimate, with the ranges outlined in Note 1(K). The useful
economic life is the Board’s and management’s best
estimate based on historical experiences and industry
knowledge. The Group reviews the estimated useful lives
of property, plant and equipment including network
infrastructure at the end of each annual reporting period.
Should the actual lives of these component parts be
significantly different this would impact the depreciation
charge recognised.
Income taxes
The Group is subject to income taxes in each jurisdiction
that it operates. Estimation is required in determining
the provision for income taxes as there are certain
transactions and calculations undertaken during the
ordinary course of business for which the ultimate tax
determination is uncertain. The Group estimates its tax
liabilities based on the Group’s understanding of the
tax law. Where the final tax outcome of these matters is
different from the amounts that were initially recorded,
such differences will impact the current and deferred
income tax assets and liabilities in the year.
Refer to Note 15, for judgement made in relation to
deferred tax assets.
4. SEGMENT INFORMATION
(A) DESCRIPTION OF SEGMENTS
Superloop is a trusted enabler of connectivity and
managed services in Asia Pacific. During the year, the
principal activities of the Group included:
i) the development and operation of
independent
connectivity infrastructure and services throughout the
Asia Pacific region for wholesale and enterprise customers
including fibre optic cable, international submarine cables
and fixed wireless networks (Superloop),
ii) the provision of outsourced cloud and managed
services, cyber security and cyber safety (Superloop+),
and
iii) the provision of broadband services for individual end
users including retail fixed wireless and fixed line internet
services and connectivity services for hotels, student
accommodation sites and schools (Superbb).
During the year, the Group acquired NuSkope Pty Ltd and
associated entities on 13 October 2017 and GX2 Holdings
Pty Ltd on 17 November 2017. These businesses expand
the provision of the Group’s broadband services with their
contribution to earnings included in the Superbb segment.
includes earnings from BigAir Community
Superbb
Broadband services which were included in the Managed
Services segment for the 30 June 2017 financial year.
ANNUAL REPORT FY18
The operations of the Group are reported in these
segments to Superloop’s executive management team
(chief operating decision makers). Items not specifically
related to an
individual segment are classified as
Corporate, refer below for details of material items. The
accounting policies of the segments are the same as the
Group (refer to Note 1).
Comparative information has been restated to align with
the current operating segments.
55
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
(B) SEGMENT INFORMATION PROVIDED TO MANAGEMENT
The segment information provided to management for the reportable segments is as follows:
Operating Segments
30 June 2018
Revenue from ordinary activities
Direct costs
Employee benefits expense
Other expenses
EBITDA
Depreciation and amortisation
Finance expenses
Share of loss of associate
Foreign exchange gains / (losses)
Profit / (loss) before income tax
Superloop(1)
(Prev.
Connectivity)
$
Superloop +
(Prev. Managed
Services)
$
Superbb(2)
$
Corporate(3)
$
Total
$
61,239,652
36,582,691
26,652,242
(18,867,821)
(20,209,610)
(12,405,824)
(14,360,388)
(6,978,889)
21,032,554
(15,302,342)
-
-
2,375,772
8,105,984
(6,046,479)
(2,938,479)
7,388,123
(3,019,402)
(267)
-
(505)
(7,558,099)
(3,673,099)
3,015,220
(3,762,849)
(13)
-
(2,043)
696,429
342,897
125,171,014
(51,140,358)
(2,267,430)
(30,232,396)
(1,101,930)
(14,692,397)
(2,330,034)
-
(1,851,966)
(135,884)
(3,191,366)
29,105,863
(22,084,593)
(1,852,246)
(135,884)
(818,142)
4,214,998
4,367,949
(749,685)
(7,509,250)
(1)
(2)
(3)
Superloop includes earnings associated with the development of the INDIGO subsea cable system
Superbb includes earnings and assets from BigAir Community Broadband previously disclosed in the Managed
Services segment. Also included in the segment is earnings and assets from NuSkope and GX2 Technology
for part of the year from acquisition. Amortisation includes non-cash amortisation associated with intangibles
recognised on acquisition.
Corporate includes inter-segment eliminations and unallocated earnings.
Inter-segment revenues are eliminated on consolidation.
30 June 2018
Non-current assets
Property, plant and equipment
Intangible assets
Superloop(1)
(Prev.
Connectivity)
$
Superloop +
(Prev. Managed
Services)
$
Superbb(2)
$
Corporate(3)
$
Total
$
166,029,042
183,347,418
349,376,460
9,417,718
52,663,616
62,081,334
6,679,910
44,562,655
51,242,565
-
-
-
182,126,670
280,573,689
462,700,359
The carrying amount of non-current assets excludes other non-current assets and deferred tax assets.
56
ANNUAL REPORT FY18
Analysis of Superloop
Operating Segment
Australia
$
Singapore
$
Hong Kong
$
Sub-Total
$
30 June 2018
Revenue from ordinary activities
Direct costs
Employee benefits expense
Other expenses
EBITDA
Depreciation and amortisation
Finance expenses
Foreign exchange gains / (losses)
Profit / (loss) before income tax
47,190,022
(14,130,746)
(12,871,246)
(5,873,782)
14,314,248
(10,869,433)
-
(328,565)
3,116,250
7,211,465
(1,497,801)
(730,694)
(579,513)
4,403,457
(1,856,891)
-
664,441
3,211,007
6,838,165
(3,239,274)
(758,448)
(525,594)
2,314,849
(2,576,018)
-
2,039,896
1,778,727
61,239,652
(18,867,821)
(14,360,388)
(6,978,889)
21,032,554
(15,302,342)
-
2,375,772
8,105,984
Australia
$
Singapore
$
Hong Kong
$
Total
$
30 June 2018
Non-current assets
Property, plant and equipment
Intangible assets
61,367,699
172,984,904
234,352,603
46,511,256
1,811,611
48,322,867
58,150,087
8,550,903
66,700,990
166,029,042
183,347,418
349,376,460
The carrying amount of non-current assets excludes other non-current assets and deferred tax assets.
Operating Segments
30 June 2017(4)
Revenue from ordinary activities
Direct costs
Employee benefits expense
Other expenses
EBITDA
Depreciation and amortisation
Finance expenses
Foreign exchange gains / (losses)
Profit / (loss) before income tax
Superloop(1)
(Prev.
Connectivity)
$
Superloop +
(Prev. Managed
Services)
$
Superbb(2)
$
Corporate(3)
$
Total
$
30,624,037
(8,674,146)
(7,408,734)
(4,838,720)
9,702,437
(5,576,639)
-
(11,894)
4,113,904
21,786,453
(12,707,991)
(3,919,393)
(1,615,703)
3,543,366
(1,253,369)
(14,483)
36,739
6,892,982
(6,481,916)
(401,427)
(177,138)
(167,499)
(510,805)
(338)
-
501,710
(162,108)
59,805,182
(28,026,161)
(3,073,154)
(14,802,708)
(5,772,152)
(12,403,713)
(8,505,704)
(1,671,830)
(1,220,914)
(12,311)
4,572,600
(9,012,643)
(1,235,735)
12,539
2,312,253
(678,642)
(11,410,759)
(5,663,244)
(1)
(2)
(3)
(4)
Superloop includes earnings associated with the development of the INDIGO subsea cable system
Superbb includes earnings and assets from BigAir Community Broadband previously disclosed in the Managed
Services segment
Corporate includes inter-segment eliminations and unallocated earnings.
Comparative information has been adjusted retrospectively to reflect the fair value adjustments as disclosed in
Note 37.
57
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
Superloop(1)
(Prev.
Connectivity)
$
Superloop +
(Prev. Managed
Services)
$
Superbb(2)
$
Corporate(3)
30 June 2017(4)
Non-current assets
Property, plant and equipment
Intangible assets
124,169,290
163,031,881
287,201,171
11,957,765
54,104,566
66,062,331
5,077,250
22,668,982
27,746,232
Total
$
141,204,305
239,805,429
381,009,734
$
-
-
-
The carrying amount of non-current assets excludes other non-current assets and deferred tax assets.
Analysis of Superloop
Operating Segment
Australia
$
Singapore
$
Hong Kong
$
Sub-Total
$
30 June 2017(4)
Revenue from ordinary activities
Direct costs
Employee benefits expense
Other expenses
EBITDA
Depreciation and amortisation
Finance expenses
Foreign exchange gains / (losses)
Profit / (loss) before income tax
25,650,624
(6,337,488)
(5,680,680)
(3,939,776)
9,692,680
(3,467,513)
-
84,946
6,310,113
3,927,094
(1,149,093)
(892,472)
(413,118)
1,472,411
(1,550,328)
-
(12,478)
(90,395)
1,046,319
(1,187,565)
(835,582)
(485,826)
(1,462,654)
(558,798)
-
(84,362)
(2,105,814)
30,624,037
(8,674,146)
(7,408,734)
(4,838,720)
9,702,437
(5,576,639)
-
(11,894)
4,113,904
30 June 2017(4)
Non-current assets
Property, plant and equipment
Intangible assets
Australia
$
Singapore
$
Hong Kong
$
Corporate
$
26,131,627
162,874,195
189,005,822
42,724,899
157,686
42,882,585
55,312,764
-
55,312,764
124,169,290
163,031,881
287,201,171
The carrying amount of non-current assets excludes other non-current assets and deferred tax assets.
(1)
(2)
Services segment
(3)
(4)
Superloop includes earnings associated with the development of the INDIGO subsea cable system
Superbb includes earnings and assets from Community Broadband previously disclosed in the Managed
Corporate includes inter-segment eliminations and unallocated earnings.
Comparative information has been adjusted retrospectively to reflect the fair value adjustments as disclosed in
Note 37.
58
5. REVENUE
Revenue from ordinary activities
Customer revenue
Other revenue
Interest income
Other income
Total revenue
6. INTEREST EXPENSE
Interest on borrowings
Total interest expense
ANNUAL REPORT FY18
30 June 2018
$
30 June 2017
$
122,503,525
58,457,284
33,549
2,633,940
125,171,014
514,669
833,229
59,805,182
Note
(A)
30 June 2018
$
30 June 2017
$
(1,852,246)
(1,852,246)
(1,235,735)
(1,235,735)
(A) INTEREST ON BORROWINGS
The Group incurs interest on the drawn amount of its debt facility (refer to Note 17).
7. FOREIGN EXCHANGE GAINS / (LOSSES)
Foreign exchange gains / (losses)
Total foreign exchange gains / (losses)
Note
(A)
30 June 2018
$
30 June 2017
$
(818,142)
(818,142)
12,534
12,534
(A) FOREIGN EXCHANGE GAINS
Foreign exchange gains / (losses) for the year arose as a result of unfavourable exchange rate movements in the ordinary
course of business.
59
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
8. INCOME TAX EXPENSE
(a) Income tax recognised in profit or loss
Current tax
Deferred tax
In respect of the current year
In respect of prior years (i)
Total deferred tax
Total income tax benefit
(b) The income tax expense / (benefit) for the year can be reconciled to the
accounting profit as follows:
Profit / (loss) from continuing operations before income tax expense
Tax expense / (credit) at the Australian tax rate of 30%
Effect of income that is exempt from taxation @ 30%
Non-deductible acquisition costs
Non-deductible research and development expenditure
Non-deductible entertainment expenses
Non-deductible share based payments
Equity accounting loss on investment
Adjustments to opening deferred tax balances (i)
Effect of different tax rates of subsidiaries operating in other jurisdictions
Other
Deferred tax credits in respect of temporary differences and unused tax losses not
recognised in prior years
Income tax expense / (benefit)
30 June 2018
$
30 June 2017
$
1,393,710
-
(129,319)
(4,172,421)
(1,311,441)
(3,112,011)
(4,301,740)
(4,423,452)
(2,908,030)
(4,423,452)
4,214,998
(5,663,244)
1,264,499
-
22,382
-
31,945
112,413
40,765
(4,172,421)
(295,341)
87,728
(1,698,973)
(200,361)
-
112,814
16,591
255,481
-
-
203,007
-
-
(3,112,011)
(2,908,030)
(4,423,452)
(i)
Adjustments in relation to finalisation of prior years tax positions and impact of acquisitions into the tax
consolidated group.
The tax rate used for the 2018 and 2017 reconciliations above is the corporate tax rate of 30% payable by Australian
corporate entities on taxable profits under Australian tax law.
9. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Deposits
Total cash and cash equivalents
60
30 June 2018
$
30 June 2017
$
8,392,641
7,044,410
15,437,051
6,523,424
581,261
7,104,685
ANNUAL REPORT FY18
10. TRADE AND OTHER RECEIVABLES
30 June 2018
Trade receivables
Provision for doubtful debts
Net trade receivables
Consumption tax receivable
Other receivables
Total
Note
Current
$
Non-Current
$
Total
$
(A)
(B)
(C)
11,297,626
(335,400)
10,962,226
90,781
66,899
11,119,906
-
-
-
-
-
-
11,297,626
(335,400)
10,962,226
90,781
66,899
11,119,906
Note
Current
$
Non-Current
$
Total
$
30 June 2017
Trade receivables
Provision for doubtful debts
Net trade receivables
Consumption tax receivable
(C)
Other receivables
Total
10,542,024
(183,285)
10,358,739
106,486
84,571
10,549,796
-
-
-
-
-
-
10,542,024
(183,285)
10,358,739
106,486
84,571
10,549,796
(A) PAST DUE BUT NOT IMPAIRED
Trade receivables disclosed above include amounts (see below for aged analysis) that are past due at the end of the
reporting period for which the Group has not recognised an allowance for doubtful debts because there has not been a
significant change in credit quality and the amounts are still considered recoverable.
Age of Trade Receivables that are past due but not impaired
60-90 days
90 days plus
Total past due but not impaired
30 June 2018
$
30 June 2017
$
535,926
1,465,150
2,001,076
2,046,804
591,239
2,638,043
61
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
(B) IMPAIRED TRADE RECEIVABLES
As at 30 June 2018, the Group had trade receivables with an initial carrying value of $335,400 (2017: $183,285) which
were impaired and fully provided for.
Age of Impaired Trade Receivables
0-60 days
60-90 days
90 days plus
Total past due but not impaired
Movement in Provision for Impairment
Balance at beginning of the year
Impairment losses recognised on receivables
Balance from acquisition
Balance at end of the year
30 June 2018
$
30 June 2017
$
-
128,000
207,400
335,400
85,484
48,248
49,553
183,285
30 June 2018
$
30 June 2017
$
183,285
24,115
128,000
335,400
20,990
20,651
141,644
183,285
(C) CONSUMPTION TAX RECEIVABLES
These amounts generally arise from consumption tax paid by the Group in the respective tax jurisdictions in which the
Group operates and where a consumption tax exists. Ordinarily these amounts are offset against the consumption tax
collected by the Group as part of its sales and the net amount remitted to the local tax authorities, however where
the amount of consumption tax paid by the Group per jurisdiction is greater than the amount collected from sales to
customers in that jurisdiction, a receivable is raised.
11. OTHER ASSETS
Current
Prepayments
Other current assets
Other current financial assets
Total other assets – current
Non-current
Other non-current assets
Installation costs
Total other assets – non-current
62
30 June 2018
$
30 June 2017
$
3,262,069
3,762,593
88,147
7,112,809
396,280
3,431,565
3,827,845
2,311,019
620,376
218,740
3,150,135
289,714
-
289,714
ANNUAL REPORT FY18
12. INVESTMENT IN ASSOCIATE
Investment in associate
(A)
9,505,377
-
Note
30 June 2018
$
30 June 2017
$
(A)
At 30 June 2018, the Group has a minority interest of 16.8% in Fiber Sense Pty Ltd, a start up company based
in Australia, which is developing fibre protection technology. The remaining shareholders of the associate are unrelated
parties. The Group’s interest is equity accounted for in the consolidated financial statements. Although the Group holds
less than 20% of the equity shares of the associate, the Group exercises significant influence by virtue of its protected
right to appoint one director to the board of the associate. Superloop held one of the two director positions during the
year.
The following table illustrates the summarised financial information of the Group’s investment in the associate:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Group’s carrying amount of investment
Revenue
Cost of sales
Operating expenses
Finance costs
Loss before tax
Income tax benefit
Loss for the year
Total comprehensive income for the year
Group’s share of loss for the year
The associate had no contingent liabilities or capital commitments at 30 June 2018.
13. PROPERTY, PLANT AND EQUIPMENT
Carrying amounts of:
Assets in the course of construction
Network assets
Communication assets
Other assets
Total
1,568,148
9,027,715
240,870
1,600,851
8,754,142
9,505,377
78,170
(5,117)
(1,451,932)
(21,374)
(1,400,253)
386,480
(1,013,773)
(1,013,773)
(135,884)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30 June 2018
$
30 June 2017(1)
$
31,550,680
114,619,555
34,921,510
1,034,925
6,596,821
100,435,100
33,160,125
1,012,259
182,126,670
141,204,305
(1)
Comparative information has been adjusted retrospectively to reflect the fair value adjustments as disclosed in
Note 37.
63
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
Assets in the
course of
construction
$
Network
assets
Communication
assets
$
$
Other
assets
$
Total(1)
27,047,827
47,228,062
40,185,296
-
1,164,222
4,537,080
308,592
102,658
68,705,937
51,867,800
1,192,865
-
(68,871,933)
521,840
(3,405,173)
66,714,507
29,393,919
(1,272,515)
2,091,524
890,439
(2,456)
65,902
31,999,063
(4,680,144)
-
6,596,821
30,908,106
104,016,470
9,149,237
35,914,230
5,275,166
1,365,135
1,292,067
147,892,656
46,624,576
-
-
(5,954,247)
-
1,569,069
4,128,793
5,569,924
78,577
316,273
167,557
284
68,050
1,736,626
4,207,654
-
Cost or Valuation:
Balance at 30 June 2016
Additions
Additions through business
combinations (Note 37)
Movement in foreign exchange
Transfer
Balance at 30 June 2017
Additions
Additions through business
combinations (Note 37)
Movement in foreign exchange
Transfer
Balance at 30 June 2018
31,550,680
122,864,424
43,153,315
2,893,093
200,461,512
Accumulated depreciation:
Balance at 30 June 2016
Depreciation charge
Movement in foreign exchange
Balance at 30 June 2017
Depreciation charge
Disposals
Movement in foreign exchange
Balance at 30 June 2018
-
-
-
-
-
-
-
-
(1,656,277)
(1,947,198)
22,105
(3,581,370)
(4,406,300)
57,547
(314,746)
(92,571)
(2,664,726)
3,191
(2,754,106)
(5,452,726)
-
(106,352)
(246,659)
135
(1,855,200)
(4,858,583)
25,431
(352,876)
(1,501,304)
-
(6,688,352)
(11,360,330)
57,547
(24,973)
(3,988)
(343,707)
(8,244,869)
(8,231,805)
(1,858,168)
(18,334,842)
Carrying value – 2018
Carrying value – 2017
31,550,680
114,619,555
6,596,821
100,435,100
34,921,510
33,160,125
1,034,925
1,012,259
182,126,670
141,204,305
Assets in the course of construction:
Included in property, plant and equipment at 30 June 2018 was an amount of $31,550,680 (2017: $6,596,821) relating to
expenditure for network assets in the course of construction.
14. INTANGIBLE ASSETS
Carrying amounts of:
Assets in the course of construction
Rights and licences
Software
Customer acquisition costs
Customer relationships, brands and trademarks
Goodwill
Total intangible assets
30 June 2018
$
30 June 2017(1)
$
3,754,801
39,917,602
6,438,789
1,158,711
51,079,718
178,224,068
280,573,689
3,112,593
19,884,686
1,740,532
534,054
46,762,933
167,770,631
239,805,429
Comparative information has been adjusted retrospectively to reflect the fair value adjustments as disclosed in
Note 37.
(1)
64
ANNUAL REPORT FY18
Movements
Assets
being
developed
$
Rights and
licences
Software
$
$
Customer
Acquisition
costs
$
Customer
brand and
trademarks
$
Goodwill
Total(1)
$
$
Cost or Valuation:
Balance at 30 June 2016
Additions through business
combinations (Note 37)
Transfer
Other additions
Movement in foreign
exchange
Balance at 30 June 2017
Additions through business
23,820
4,567,149
1,811,776
-
581,000
6,025,442
13,009,187
2,592,000
-
560,662
48,678,112
161,745,189
216,688,556
3,112,593
(23,820)
-
13,610,000
23,820
636,788
-
(10,184)
-
-
-
-
-
697,271
-
-
-
-
-
14,944,059
(10,184)
3,112,593
20,758,965
2,472,384
560,662
49,956,383
167,770,631
244,631,618
combinations (Note 37)
-
-
5,250,470
529,922
7,799,627
10,453,437
24,033,456
Other additions
Movement in foreign
exchange
642,208
21,779,951
824,855
1,441,559
2,058,424
-
8,728
94
-
-
-
-
26,746,997
8,822
Balance at 30 June 2018
3,754,801
42,547,644
8,547,803
2,532,143
59,814,434
178,224,068
295,420,893
Accumulated amortisation:
Balance at 30 June 2016
Amortisation charge
Movement in foreign
exchange
Balance at 30 June 2017
Amortisation charge
Movement in foreign
exchange
Balance at 30 June 2018
-
-
-
-
-
-
-
(381,405)
(493,332)
(234,819)
(497,033)
-
(26,607)
(29,754)
(3,163,696)
457
-
-
-
(874,280)
(1,754,598)
(731,852)
(1,377,162)
(26,607)
(1,346,825)
(3,193,450)
(5,541,266)
(1,164)
-
-
-
(2,630,042)
(2,109,014)
(1,373,432)
(8,734,716)
-
-
-
-
-
-
-
(645,978)
(4,180,668)
457
(4,826,189)
(10,019,851)
(1,164)
(14,847,204)
Carrying value – 2018
3,754,801
39,917,602
6,438,789
1,158,711
51,079,718
178,224,068
280,573,689
Carrying value – 2017
3,112,593
19,884,685
1,740,532
534,055
46,762,933
167,770,631
239,805,429
Software development:
Included in Intangible assets at 30 June 2018 was an amount of $642,208 (2017: nil) relating to expenditure for the
development of software which is not yet available for use.
Goodwill has been allocated for impairment testing purposes to the following cash-generating units and groups of cash-
generating units:
Superloop (formerly Connectivity)
Superloop+ (formerly Managed Services)
SuperBB
Total goodwill
30 June 2018
$
104,854,742
43,254,660
30,114,666
178,224,068
(1)
Comparative information has been adjusted retrospectively to reflect the fair value adjustments as disclosed in
Note 37.
65
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
An impairment loss is recognised for the amount by which the carrying amount of the cash-generating units exceeds
their recoverable amount. The recoverable amount for the cash-generating units is determined based on a value in use
calculation which is based on the present value of future forecast cash earnings, as measured by earnings before interest
expense, taxes, depreciation and amortisation (EBITDA).
The forecast earnings are based on the financial year ending 30 June 2019 budget approved by the Board with the
earnings beyond the budget period extrapolated over 5 years using annual growth rates for each cash generating unit
based on historical earnings growth, current and forecast trading conditions and business plans. A long term perpetual
growth rate of 2.5% is applied beyond the forecast period. A pre-tax discount rate of 12% has been assumed, representing
the long term average and includes a risk-premium given the stage in the business cycle of the Group’s business.
The Board has reviewed and is comfortable with management’s assumptions about growth rates for each cash generating
unit, which for certain cash generating units are expected to grow from a low starting point. Assumptions include growth
rates for revenue on the INDIGO subsea cable systems, which is expected to be operational in the first half of calendar
year 2019, and assumptions about wholesale and retail opportunities in the nbn fixed line market.
For each cash-generating unit, impairment testing has indicated that the carrying amount will not exceed the recoverable
amount, therefore no impairment loss on goodwill has been identified.
Management has reviewed sensitivities on the key assumptions on which the recoverable amounts are based and believes
that changes would not cause the cash-generating units’ carrying amounts to exceed their recoverable amounts.
The sensitivities applied were to reduce the long term perpetual growth rate from 2.5% to 1.5%, increase the pre-tax
discount rate from 12% to 13% . These sensitivity tests did not result in the cash-generating units’ carrying amounts
exceeding their recoverable amounts.
15. DEFERRED TAX ASSETS
Deferred tax assets attributable to:
Employee benefits
Exchange differences on foreign operations
Cashflow hedges
Expenses deductible in future periods
Tax credits from tax losses
Future deduction of share issue costs
Note
30 June 2018
$
30 June 2017(1)
1,593,279
-
-
2,057,358
9,785,300
965,911
14,401,848
(13,447,263)
-
$
937,542
541,287
351,569
4,170,021
4,446,117
-
10,446,536
(8,503,173)
-
Total deferred tax assets
Set-off of deferred tax liabilities pursuant to set-off provisions
20
Deferred tax assets not recognised
Deferred tax assets recognised in the statement of financial position
954,585
1,943,363
Deferred tax assets are recognised where it is considered probable that they will be recovered in the future, and, as such,
are subjective.
(1)
Comparative information has been adjusted retrospectively to reflect the fair value adjustments as disclosed in
Note 37.
16. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Accrued expenses
Other current financial payables
Deferred consideration
Total trade and other payables
66
30 June 2018
$
30 June 2017
$
12,401,800
6,839,246
6,847,308
428,638
5,715,905
8,682,709
9,191,635
4,049,716
1,390,638
3,424,127
32,232,897
26,738,825
ANNUAL REPORT FY18
17. INTEREST-BEARING LOANS AND BORROWINGS
The Company had debt outstanding as at 30 June 2018 of $63,805,021 (30 June 2017: $31,331,563).
The Company has an $80.0 million three year revolving facility with ANZ maturing on 30 December 2019. The facility
can be used for working capital, capital expenditure and permitted acquisitions and is available to be drawn in multiple
currencies.
Bank guarantees to the value of $1,523,790 have been issued under the facility.
In June 2018, the Company entered into a $9.5 million three year fixed rate instalment payment agreement with an
equipment vendor to provide funding for network equipment. It is expected that $6.9 million of the facility will be utilised
during the 2019 financial year. At 30 June 2018, no amounts had been drawn under the agreement.
Current
Finance lease
Revolving debt facility drawn
Total current interest-bearing loans and borrowings
Non-current
Revolving debt facility drawn (net of transaction costs)
Total non-current interest-bearing loans and borrowings
Total interest-bearing loans and borrowings
Total revolving debt facility limit
Less bank guarantees issued under the facility
Less amounts drawn (before transaction costs)
Revolving debt facility available
Instalment payment facility available
Note
30 June 2018
$
30 June 2017
$
(A)
(B)
-
-
-
31,563
-
31,563
62,778,773
62,778,773
29,632,910
29,632,910
62,778,773
80,000,000
(1,523,790)
(63,805,021)
14,671,189
9,500,000
29,664,473
80,000,000
(1,515,398)
(31,300,000)
47,184,602
-
30 June 2017
$
Financing
cashflows
Amortisation of
transaction costs
30 June 2018
$
Revolving debt facility
Total interest-bearing loans and borrowings
29,632,910
29,632,910
32,504,937
32,504,937
640,926
640,926
62,778,773
62,778,773
(A) The finance lease was acquired through the acquisition of BigAir Group (refer Note 37).
(B) The drawn debt amount is recognised net of transaction costs which are amortised over the term of the facility using
the effective interest rate method.
18. PROVISIONS
Current – employee benefits
Non-current – employee benefits
Total provisions
30 June 2018
$
30 June 2017
$
2,813,209
2,549,270
5,362,479
1,916,767
2,617,708
4,534,475
The provision for employee benefits represents accrued annual leave and long service leave entitlements.
67
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
19. DEFERRED REVENUE
Deferred revenue
Deferred installation fees
Total deferred revenue
Current
Non-current
Total deferred revenue
20. DEFERRED TAX LIABILITIES
Deferred tax liabilities attributable to:
Prepayments
Deferred revenue
Customer acquisition and equipment installations costs
Property, plant and equipment and intangible assets
Cashflow hedges
Total deferred tax liabilities
Set-off of deferred tax liabilities pursuant to set-off provisions (Note 15)
Deferred tax liabilities recognised in the statement of financial position
30 June 2018
$
30 June 2017
$
11,456,049
3,522,205
14,978,254
6,463,308
8,514,946
14,978,254
2,302,986
129,587
2,432,573
1,957,882
474,691
2,432,573
30 June 2018
$
30 June 2017(1)
$
-
1,699,077
1,351,180
17,896,307
30,546
20,977,110
(13,447,263)
7,529,847
-
661,792
-
17,944,894
-
18,606,686
(8,503,173)
10,103,513
(1)
Comparative information has been adjusted retrospectively to reflect the fair value adjustments as disclosed in
Note 37.
21. CONTRIBUTED EQUITY
(A) SHARE CAPITAL
Note
30 June 2018
Number of
Shares
30 June 2017
Number of
Shares
30 June 2018
30 June 2017
$
$
Fully paid ordinary shares
(C)
228,499,450
208,795,883
401,705,683
356,408,128
Total share capital
Less: Issue costs
Contributed equity
228,499,450
208,795,883
401,705,683
(5,794,696)
356,408,128
(5,117,965)
228,499,450
208,795,883
395,910,987
351,290,163
68
ANNUAL REPORT FY18
(B) MOVEMENTS IN ORDINARY SHARE CAPITAL
Date
Details
Number of
Shares
Issue Price
$
Value
$
30-Jun-16
19-Jul-16
Balance
Entitlement offer (retail component)
19-Sep-16
Share placement
21-Dec-16
Partial consideration for acquisition of BigAir Group
Limited(i)
21-Feb-17
Vesting of performance rights(i)
4-Apr-17
Partial consideration for acquisition of SubPartners Pty
Ltd(i)
26-Apr-17
Vesting of performance rights(i)
30-Jun-17
11-Aug-17
Balance
Partial consideration for acquisition of SubPartners Pty
Ltd(i)
2-Oct-17
Share placement
13-Oct-17
Partial consideration for acquisition of NuSkope Pty Ltd
and associated entities(i)
20-Oct-17
Share Purchase Plan
2-Nov-17
Vesting of performance rights(i)
17-Nov-17
Partial consideration for acquisition of GX2 Holdings Pty
Ltd(i)
29-Jun-18
Vesting of performance rights(i)
30-Jun-18
Balance
128,243,301
6,109,637
21,666,667
52,470,602
2,075
290,374
13,227
208,795,883
1,161,495
8,888,889
1,221,110
6,666,666
71,597
1,680,672
13,228
228,499,540
2.10
3.00
2.74
2.44
2.29
2.44
2.56
2.25
2.37
2.25
2.49
2.51
2.52
134,106,147
12,830,238
65,000,001
143,769,449
5,063
664,956
32,274
356,408,128
2,973,427
20,000,000
2,894,031
14,999,999
178,277
4,218,487
33,334
401,705,683
(i)
These share issues were non-cash transactions (refer to Note 31).
(C) ORDINARY SHARES
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group in proportion
to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a
meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the Group does not have a limited amount of authorised capital
(D) DIVIDEND REINVESTMENT PLAN
The Group does not have a dividend reinvestment plan in place.
(E) CAPITAL MANAGEMENT
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that
it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital. In future, the Directors may pursue other funding options such as other
debt, sale and leaseback of assets, additional equity and various other funding mechanisms as appropriate in order
to undertake its projects and deliver optimum shareholders’ return. The Group intends to maintain a gearing ratio
appropriate for a company of its size and stage of development.
Total borrowings
Less: cash and cash equivalents
Net debt / (surplus cash)
Total equity
Gearing ratio
Note
17
30 June 2018
$
30 June 2017
$
62,778,773
15,437,051
47,341,722
29,664,473
7,104,685
22,559,788
389,293,668
333,472,269
12.2%
6.8%
69
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
The Group manages its capital structure by reviewing its gearing ratio to ensure it maintains an appropriate level of
gearing. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total interest bearing
financial liabilities and derivative financial instruments, less cash and cash equivalents. Total capital is calculated as
equity, as shown in the statement of financial position.
22. RESERVES
Cash flow hedge reserve(1)
Share based payments
Foreign currency translation reserves(2)
Total reserves
30 June 2018
$
30 June 2017
$
71,274
977,367
(814,810)
233,831
(820,329)
814,267
(4,887,454)
(4,893,516)
(1)
(2)
The cash flow hedge reserve represents the cumulative effective portion of gains or losses arising from changes
in fair value of hedging instruments entered into as cash flow hedges. The cumulative gain or loss arising from
changes in fair value of the hedging instruments that are recognised and accumulated in the cash flow hedge
reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss, or is
included in the carrying value of a fixed asset where the purpose of the hedge was to minimise the exposure
on a contractual commitment to acquire or construct a fixed asset.
The assets and liabilities of foreign operations are translated into the presentation currency (Australian dollars)
using the exchange rates as at the reporting date. The revenues and expenses of the foreign operations are
translated into the presentation currency using average exchange rates, which approximate the rate at the date
of the transaction. All resulting foreign exchange differences are recognised in other comprehensive income
through the foreign currency translation reserve.
23. ACCUMULATED LOSSES
Opening balance
Profit / (loss) for the year
Dividends paid
Total accumulated losses
24. DIVIDENDS
30 June 2018
$
30 June 2017
$
(9,597,344)
7,123,028
(1,049,800)
(3,524,116)
(8,357,552)
(1,239,792)
-
(9,597,344)
A fully franked dividend of $0.005 per share was paid in September 2017 for the year ended 30 June 2017.
70
ANNUAL REPORT FY18
25. KEY MANAGEMENT PERSONNEL DISCLOSURES
(A) KEY MANAGEMENT PERSONNEL COMPENSATION
Short term employee benefits
Post employment benefits
Long term employee benefits
Share based payments
Total key management personnel compensation
30 June 2018
$
30 June 2017
$
3,149,785
191,814
27,063
253,950
3,622,612
2,388,869
162,044
8,506
450,267
3,009,686
Detailed remuneration disclosures are provided in the Remuneration Report.
(B) SHARE BASED PAYMENTS
During the year, key management personnel and other employees of the Group participated in long term incentive
schemes.
Expense arising from equity-settled share based payments
Total expense arising from share based payment transactions
374,710
374,710
851,604
851,604
There were no cancellations or modifications to the awards during the year.
(C) LOANS TO KEY MANAGEMENT PERSONNEL
Key management personnel were eligible to participate in a loan scheme provided by a related party to enable them to
acquire shares as part of a private capital raising undertaken by the Group prior to listing on the Australian Securities
Exchange in 2015. The terms and conditions of the loan scheme are considered arm’s length. The Group does not
guarantee or have any obligations with respect to the loan agreements between employees and the related party.
Details of the loan terms and conditions are provided in the Remuneration Report.
(D) OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
There were no other transactions with key management personnel during the year not otherwise disclosed in the report
in Note 29.
26. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its
related practices and non-related audit firms:
(A) DELOITTE TOUCHE TOHMATSU
Parent Entity Auditor
(i) Audit, review of financial statements
(ii) Audit, review of subsidiary statutory reports
Network Firm of the Parent Entity Auditor
(iii) Audit of subsidiary statutory reports and regulatory compliance
(iv) Other services in relation to the Group:
Tax Services
Risk Management framework support
Other
Total Remuneration of Deloitte Touche Tohmatsu
30 June 2018
$
30 June 2017
$
298,000
10,000
170,000
20,000
41,800
40,800
23,000
36,750
28,000
437,550
-
-
-
230,800
71
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
The Group may decide to employ the auditor (Deloitte) on assignments additional to their statutory audit duties where
the auditor’s expertise and experience with the Group are important. Details of the amounts paid or payable to the
auditor for audit and non-audit services provided during the year are set out above.
The Board of Directors has considered the position and, in accordance with advice received from the Audit Committee,
is satisfied that the provision of the non-audit services is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by
the auditor, as set out above, did not compromise the auditor independence requirements of the Corporations Act 2001
for the following reasons:
•
•
all non-audit services have been reviewed by the Audit Committee to ensure they do not impact the impartiality
and objectivity of the auditor;
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants.
(B) RELATED PRACTICES OF DELOITTE TOUCHE TOHMATSU
The following fees were paid for services provided by Deloitte Corporate Finance Pty Ltd, a related practice of Deloitte.
Investigating accountant’s report for the BigAir Group Limited Scheme booklet
Total remuneration of Deloitte related practices
-
-
85,000
85,000
30 June 2018
$
30 June 2017
$
(C) NON-DELOITTE AUDIT FIRMS
Superloop Limited did not engage with any other non-Deloitte audit firms.
27. OPERATING LEASE ARRANGEMENTS
Operating leases relate to the leasing of premises including offices, roof tops and towers. The Group has entered lease
terms of up to four years in length. The Group has the option, under some of its leases, to lease the assets for additional
terms.
Payments recognised as an expense under operating leases are as follows:
30 June 2018
$
30 June 2017
$
5,248,661
5,248,661
2,916,748
2,916,748
30 June 2018
$
30 June 2017
$
4,156,724
6,020,222
226,787
10,403,733
2,570,795
4,633,609
194,997
7,399,401
Minimum lease payments
Total operating lease arrangements
Non-cancellable operating lease rentals are payable as follows:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
Total non-cancellable operating lease commitments
72
ANNUAL REPORT FY18
28. COMMITMENTS AND CONTINGENCIES
(A) CAPITAL COMMITMENTS
Capital expenditure contracted for at the end of each reporting year but not recognised as liabilities is as follows:
Property, plant and equipment
Total capital commitments
30 June 2018
$
30 June 2017
$
31,148,036
31,148,036
41,385,683
41,385,683
Capital commitments relate to contractual commitments associated with network expansion to the value of $16.3
million and US$16.2 million in relation to submarine cable construction. A new three year debt facility, provided by a
vendor of network equipment, will fund approximately $6.9 million of the committed expenditure.
Non-cancellable operating lease commitments are disclosed in Note 27 to the financial statements.
(B) CONTINGENT ASSETS
The Group did not have any contingent assets during the year or as at the date of this report.
(C) CONTINGENT LIABILITIES
The Group did not have any contingent liabilities during the year or as at the date of this report.
29. RELATED PARTY TRANSACTIONS
All related party sales transactions are reviewed by the Group GM Sales unless the Group GM Sales is the related party
then the review is completed by Chief Financial Officer (CFO). In the unlikely event that both the Group GM Sales and
the CFO are related parties then a non-related employee at Group GM level or higher is selected as the reviewer. Once
the review is completed it is documented and a report is prepared and provided to the Chairman and the Chair of the
Audit Committee.
This review is to be conducted in a timely manner to provide the Chairman or the Chair of the Audit Committee time to
request more information, dispute or veto the proposed transaction. Ideal timing is during final contracting and prior
to sign off so a finalised version of the deal can be reviewed and counter signing by Superloop can be held pending the
review.
The following is a summary of the transactions with related parties.
SHARED SERVICES AGREEMENT
The Group has entered into a shared services agreement with Capital B Pty Ltd (Capital B), a company controlled by
the Founder. Under the agreement, Capital B provides certain services to the Group (e.g. administrative and information
technology services) and the Group provides to Capital B the right for Capital B to occupy a portion of the Group’s
premises at Level 17, 333 Ann Street, Brisbane. The services, and the right to occupy the premises, are provided on arm’s
length terms. Either party may terminate the agreement for convenience on 60 days’ written notice.
CUSTOMER AGREEMENT WITH MEGAPORT
Superloop has entered into customer agreements for the provision of connectivity services with Megaport Limited and
its operating subsidiaries (Megaport). The Founder and significant shareholder of Superloop is also the Founder and
significant shareholder of Megaport. Under the agreements, the customer (Megaport) issues a service order form to
the Superloop operating entity (as applicable) which sets out the nature of and the applicable fees for the connectivity
services provided. The agreements are on the same terms as other agreements between Superloop and unrelated
customers and the fees in each service order form are at competitive market rates.
AGREEMENT WITH LOUISE BOLGER AND ASSOCIATES
Superloop has entered into an agreement for the provision of legal services from Louise Bolger and Associates Pty Ltd.
Non-executive Director, Ms Louise Bolger, is a director of Louise Bolger and Associates and has significant influence over
the business. The agreement is on an arm’s length basis.
CUSTOMER AGREEMENT WITH RISING SUN PICTURES
Superloop has entered into a customer agreement for the provision of connectivity services to Rising Sun Pictures. Non-
executive Director, Mr Tony Clark, is Managing Director of Rising Sun Pictures and has significant influence over the
business. The agreement is on an arm’s length basis.
73
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
APX PARTNERS PTY LTD
The Founder and significant shareholder of Superloop is also the Founder and shareholder of APX Partners Pty Ltd. APX
Partners are a party to the Joint Build Agreement with SubPartners Pty Ltd and other counterparties for the construction
of the INDIGO West and INDIGO Central submarine cable systems.
TRANSACTION WITH ASSOCIATE
Superloop has entered into a customer agreement with an associate for the provision of long term capacity. The agreement
is on the same terms as other agreements between Superloop and unrelated customers and the fees in each service order
form are at competitive market rates. Superloop holds a 16.8% minority interest in the associate. Remaining shareholders
of the associate are unrelated parties. Refer to Note 12.
LOANS TO KEY MANAGEMENT PERSONNEL
Certain key management personnel were eligible to participate in a loan scheme provided by a related party to enable
them to acquire shares as part of a private capital raising undertaken by the Group prior to listing on the Australian
Securities Exchange in 2015.
AMOUNTS PAYABLE TO RELATED PARTIES
Amounts payable to related parties include amounts paid to settle liabilities assumed as part of the SubPartners
acquisition.
PROVISION OF SERVICES TO / FROM RELATED PARTIES
Sales of goods / services
Revenue earned from related parties
Amounts paid to related Parties
Provision of services to Superloop
Investment in associate
Payments to related parties for provision of shared services and rent
Balance outstanding at year end
Receivables
Trade and other payables
30 June 2018
$
30 June 2017
$
4,700,358
3,847,606
443,007
10,123,282
5,659,926
16,226,215
1,320,862
687,551
625,413
-
-
625,413
2,234,805
6,341,951
74
ANNUAL REPORT FY18
30. RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH FLOW FROM OPERATING
ACTIVITIES
Loss for the year after income tax
Adjustments for:
Depreciation and amortisation
Doubtful debts expense
Share based payments expense
Interest income
Interest expense
Foreign exchange gain / (losses)
Transaction costs associated with the acquisition of subsidiaries
Change in operating assets and liabilities
(Increase) / decrease in trade debtors
(Increase) / decrease in prepayments and other receivables
(Decrease) / increase in trade creditors and other payables
(Decrease) / increase in accruals
(Decrease) / increase in deferred revenue
(Decrease) / increase in provisions
(Decrease) / increase in finance lease liabilities
(Decrease) / increase in tax related balances
Net cash from operating activities
31. NON-CASH TRANSACTIONS
30 June 2018
$
30 June 2017
$
7,123,028
(1,239,792)
22,084,591
160,163
374,709
(33,548)
2,469,066
(818,143)
1,542,075
302,611
(3,866,186)
(5,963,930)
1,756,833
12,545,681
980,119
(31,563)
(684,537)
37,940,969
9,012,643
183,285
851,604
(514,669)
1,235,735
(12,534)
4,376,289
(1,880,667)
(2,098,380)
(2,482,140)
419,834
465,306
1,606,832
31,563
(5,287,135)
4,667,774
During the year, the Group entered into the following non-cash investing and financing activities which are not reflected
in the consolidated statement of cash flows:
On 13 October 2017, the Group acquired NuSkope Pty Ltd. The acquisition included non-cash consideration of $2.9
million in Superloop Limited shares issued at $2.37 per share.
On 17 November 2017, the Group acquired GX2 Holdings Pty Ltd. The acquisition included non-cash consideration of
$4.2 million in Superloop Limited shares issued at $2.51 per share.
The Group acquired SubPartners Pty Ltd in April 2017. The acquisition included non-cash consideration of $3.3 million
in Superloop Limited shares issued at $2.255 per share. 290,374 shares were issued in the prior year and 1,161,495
shares were issued during the current year.
Refer to Note 37 for additional information on these transactions.
In the prior year, in December 2016, acquired BigAir Group Limited. The acquisition included non-cash consideration of
$143.8 million in Superloop Limited shares issued at $2.74 per share.
32. FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risk (including interest rate risk and price risk),
credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the Group.
75
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
The Group holds the following financial instruments
Financial assets
Cash and cash equivalents
Short term deposits
Trade and other receivables
Other current financial assets
Other non-current assets
Total financial assets
Financial liabilities
Trade and other payables
Finance lease
Interest-bearing borrowings
Total financial liabilities
30 June 2018
$
30 June 2017
$
8,392,641
7,044,410
11,297,626
-
396,280
27,130,957
32,232,897
-
63,805,021
96,037,918
6,523,424
581,261
10,542,024
218,740
298,714
18,164,163
26,738,825
31,563
31,300,000
58,070,388
(A) MARKET RISK
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market prices. Market risk comprises three types of risk: foreign exchange risk, price risk and interest rate risk.
(i) Foreign exchange risk
Superloop is exposed to exchange rate movements, in particular movements in the A$/US$ rate, A$/S$, A$/HK$ and S$/
US$. Because a proportion of Superloop’s payments for inventory and construction work are made or are expected to
be made in foreign currency, primarily US dollars, movements in exchange rates impact on the amount paid for assets,
inventory and construction work. Also, because a proportion of Superloop’s revenues and profits are earned in Singapore
and Hong Kong, movements in exchange rates impact on the translation of account balances in Superloop’s Singapore
and Hong Kong operations. Therefore, movements in exchange rates, particularly the A$/US$ rate, the A$/S$, A$/HK$
and the S$/US$ rate, may have an impact on Superloop’s financial position and performance.
The Group has reduced the potential impact of exchange rate movements in contracted foreign currency obligations
through the use of derivative foreign exchange contracts.
The Group also has a multi-currency debt facility (refer (C)), which allows the Group to draw funds in a range of different
currencies, providing the Group with another method to manage the potential adverse impacts of changes in exchange
rate movements.
(ii) Price risk
The Group is not exposed to any equity securities price risk or commodity price risk.
(iii) Cash flow and fair value interest rate risk
Interest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instrument will
fluctuate due to changes in market interest rates.
The Group’s main interest rate risk arises from its cash at bank, term deposits (refer Note 9), and the Group’s interest-
bearing liabilities. The Group has reduced the level of potential exposure to a movement in interest rates via the use of
a derivative interest rate swap. The interest rate swap has the economic effect of converting borrowings from floating
rates to fixed rates.
(iv) Sensitivity
At 30 June 2018, if interest rates had increased by 100 basis points or decreased by 100 basis points from the year end
rates, and the cash balances remain constant for the year along with all other variables, profit before tax for the year
would be impacted $452,788 higher / $452,788 lower.
(B) CREDIT RISK
Credit risk arises from cash and cash equivalents, trade receivables, other receivables and loans receivable.
(i) Cash and cash equivalents
Deposits are placed with Australian banks.
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external
credit ratings (if available) or to historical information about counterparty default rates:
76
Cash at Bank and Short Term Deposits
AA rated
A+ rated
BBB+ rated
Total
ANNUAL REPORT FY18
30 June 2018
$
30 June 2017
$
15,437,051
7,104,685
-
-
-
-
15,437,051
7,104,685
In determining the credit quality of the financial assets, Superloop has used the long term rating from Standard & Poor’s
in July 2018.
(ii) Trade receivables
Customer credit risk is managed by performing a credit assessment of customers. The Group’s standard payment terms
are 30 days, but the Group may agree to longer payment terms. The Group does not require collateral in respect of
financial assets. Outstanding customer receivables are monitored regularly.
The Group aims to minimise concentration of credit risk by undertaking transactions with a large number of customers.
In addition, receivable balances are monitored on an ongoing basis with the intention that the Group’s exposure to bad
debts is minimised. As at 30 June 2018, the Group had $11.3 million customer trade receivables (refer Note 10).
(C) LIQUIDITY RISK
Superloop’s business is capital intensive in nature, and the continued growth of the Company relies on the acquisition
and development of new telecommunications infrastructure and ongoing maintenance of existing telecommunications
infrastructure. Superloop requires sufficient access to debt and equity capital to fund this expenditure.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability
of funding through an adequate amount of committed credit facilities to meet obligations when due. Failure to obtain
capital on favorable terms may hinder Superloop’s ability to expand and pursue growth opportunities, which may
reduce competitiveness and have an adverse effect on the financial performance, position and growth prospects of the
Company.
In December 2016, the Group entered into a $80.0 million three year revolving debt facility with the ANZ Bank. The
facility can be used for working capital, capital expenditure and permitted acquisitions and is available to be drawn in
multiple currencies. During the year, the Group was in compliance with the debt covenant requirements of the facility.
As at 30 June 2018, the Group had cash at bank and short term deposits of $15.4 million, and available funding of $14.7
million through its debt facility. The Group believes this, together with cash flows from operations, is sufficient capital
to complete its committed capital expenditure program and fund its working capital requirements.
Contractual maturities of
financial liabilities
Within 12
months
Between 1
and 5 years
Over 5
years
2018
Trade payables
Interest-bearing borrowings
Total non-derivatives
2017
Trade payables
Interest-bearing borrowings
Total non-derivatives
$
32,232,897
-
32,232,897
$
-
63,805,021
63,805,021
26,738,825
-
31,563
31,300,000
26,770,388
31,300,000
$
-
-
-
-
-
-
Total
contractual
cash flows
$
Carrying
amount
$
32,232,897
63,805,021
96,037,918
32,232,897
63,805,021
96,037,918
26,738,825
31,331,563
26,738,825
31,331,563
58,070,388
58,070,388
77
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
The Group has reduced the level of potential exposure to a movement in interest rates via the use of a derivative
interest rate swap. The interest rate swap has the economic effect of converting borrowings from floating rates to fixed
rates. The notional value of the derivative contract was $17.5 million at year end.
The Group has reduced the potential impact of exchange rate movements in contractual foreign currency obligations
through the use of derivative foreign exchange contracts. A USD participating forward exchange contract consisting of
forward exchange contracts and AUD/USD put options with a total notional value of US$4.5 million has been entered
into to reduce the potential impact of exchange rate movements in contractual obligations in relation to submarine
cable construction.
(D) FAIR VALUE MEASUREMENT
(i) Trade and other receivables
Due to the short term nature of the trade and other receivables, their carrying amount is assumed to be the same as their
fair value.
(ii) Trade and other payables
Due to the short term nature of the trade and other payables, their carrying amount is assumed to be the same as their
fair value.
33. EARNINGS PER SHARE
(A) EARNINGS PER SHARE
30 June 2018
Cents
30 June 2017
Cents
Total basic earnings per share attributable to the ordinary equity holders of the Group
3.19
(0.69)
(B) DILUTED EARNINGS PER SHARE
30 June 2018
Cents
30 June 2017
Cents
Total diluted earnings per share attributable to the ordinary equity holders of the Group
3.18
(0.69)
(C) RECONCILIATIONS OF EARNINGS USED IN CALCULATING EARNINGS PER SHARE
Basic Earnings Per Share
Profit / (loss) attributable to the ordinary equity holders of the Group used in
calculating basic losses per share
30 June 2018
Cents
30 June 2017
Cents
7,123,028
(1,239,792)
Diluted Earnings Per Share
Profit / (loss) from continuing operations attributable to the ordinary equity holders of
7,123,028
(1,239,792)
the Group
(D) WEIGHTED AVERAGE NUMBER OF SHARES USED AS THE DENOMINATOR
30 June 2018
Number of
Shares
30 June 2017
Number of
Shares
Weighted average number of ordinary shares used as the denominator in calculating
222,997,402
178,422,870
basic earnings per share
Effects of dilution from:
> Performance rights
> Share options
130,825
562,075
190,092
612,405
Weighted average number of ordinary shares and potential ordinary shares used as
223,690,303
179,225,367
the denominator in calculating diluted earnings per share
78
34. SUBSIDIARIES
Name of Entity
Superloop (Australia) Pty Ltd(1)
Superloop (Singapore) Pte Ltd
Superloop (Hong Kong) Limited
Superloop (Japan) K.K.
APEXN Pty Ltd(1)
CINENET Systems Pty Ltd(1)
ACN 614 507 247 Pty Ltd(1)
BigAir Group Pty Ltd(1)
Clever Communications Pty Ltd(1)
Clever Communications Operations Pty Ltd(1)
Saise Pty Ltd(1)
Access Providers Group Pty Ltd(1)
Activ Australia Pty Ltd(1)
BigAir Universe Broadband Pty Ltd(1)
BigAir Community Broadband Pty Ltd(1)
Allegro Networks Pty Ltd(1)
Radiocorp Pty Ltd(1)
Link Innovations Pty Ltd(1)
Intelligent IP Communications Pty Ltd(1)
BigAir Cloud Managed Services Pty Ltd(1)
Unistar Enterprises Pty Ltd(1)
Oriel Technologies Pty Ltd(1)
Integrated Data Labs Pty Ltd(1)
Applaud IT Pty Ltd(1)
Everywhere Internet Holdings Pty Ltd(1)
Everywhere Internet Systems Pty Ltd(1)
CyberHound Pty Ltd(1)
SubPartners Pty Ltd(1)
SubPartners Pte Ltd
APX West Limited
RA Wi-fi Pty Ltd(1)
RA ADSL Pty Ltd(1)
Nuskope(1)
GX2 Holdings Pty Ltd(1)
GX2 Technology Pty Ltd(1)
My Gossip Pty Ltd(1)
GX2 Communications Pty Ltd(1)
GX2 Technology Ltd
Global Gossip LLC
GX2 Technology Pte Ltd
GX2 Technology Limited
Superloop (Operations) Pty Ltd(1)
Superloop (Services) Pty Ltd(1)
Superloop (Software) Pty Ltd(1)
ANNUAL REPORT FY18
Country of
incorporation
Class of
shares
30 June 2018
%
30 June 2017
%
Australia
Singapore
Hong Kong
Japan
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Bermuda
Australia
Australia
Australia
Australia
Australia
Australia
Australia
UK
USA
Fiji
NZ
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
79
(1)
These wholly-owned subsidiaries are members of the Australian tax-consolidated group.
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
35. EVENTS OCCURRING AFTER THE REPORTING PERIOD
There are no matters or circumstances that occurred subsequent to the end of the financial year that has significantly
affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the
state of affairs of the consolidated entity in future financial years.
36. PARENT ENTITY FINANCIAL INFORMATION
The accounting policies of the parent entity, which have been applied in determining the financial information shown
below, are the same as those applied in the consolidated financial statements, except as set out below. Refer to note 1
for a summary of the significant accounting policies relating to the Group.
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Contributed equity
Dividends paid
Reserves
Accumulated losses
Total equity
Loss for the year
Total comprehensive loss for the period
30 June 2018
$
30 June 2017
$
9,680,826
468,623,419
7,099,275
391,955,409
478,304,245
399,054,684
8,559,698
82,831,845
91,391,543
19,821,904
32,351,742
52,173,646
395,910,987
(1,049,800)
1,048,640
(8,997,125)
386,912,702
351,290,163
-
814,267
(5,223,392)
346,881,038
(3,773,733)
(3,539,360)
(3,857,664)
(2,674,837)
(A) GUARANTEES ENTERED INTO BY THE PARENT ENTITY IN RELATION TO THE DEBTS OF ITS SUBSIDIARIES
As at 30 June 2018, Superloop Limited had issued a parent company guarantee in relation to the obligations of
SubPartners Pty Ltd in accordance with a supply agreement for the construction of INDIGO West and INDIGO Central
submarine cable systems.
(B) CONTINGENT LIABILITIES OF SUPERLOOP LIMITED (PARENT ENTITY)
As a 30 June 2018, Superloop Limited did not have any contingent liabilities.
80
ANNUAL REPORT FY18
37. CONTROLLED ENTITIES ACQUIRED OR DISPOSED
During the year Superloop Limited acquired the following entities:
NuSkope Pty Ltd and associated entities
Gx2 Holdings Pty Ltd
13 October 2017
17 November 2017
If the entities had been acquired at 1 July 2017, the Group would have generated total revenue of $131.7 million and
underlying EBITDA of $32.0 million for the period ended 30 June 2018, after adjusting for transaction and integration
costs and based on unaudited financial information for the period prior to the date of each acquisition.
Goodwill arose in the acquisitions of NuSkope Pty Ltd and Gx2 Holdings Pty Ltd because the consideration paid for the
respective subsidiaries included amounts in relation to the benefit of expected synergies, revenue growth, enhanced
capability, future market development and the assembled workforces of each group. These benefits are not recognised
separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.
NuSkope Pty Ltd and associated entities (‘NuSkope’)
On 13 October 2017, Superloop Limited acquired 100% of NuSkope Pty Ltd and associated entities for a total estimated
consideration of $12.9 million, paid as $7.0 million in cash and $2.9 million in Superloop Limited shares with further $3.0
million deferred consideration payable in 2 instalments in cash. Deferred consideration will represent 33.3% of NuSkope’s
earnings before interest, tax, depreciation and amortisation (EBITDA) for the 2018 financial year and 66.7% of EBITDA for
the 2019 financial year, calculated in accordance with the operations of NuSkope prior to completion.
The acquisition of NuSkope delivers Superloop a portfolio of strategic assets including wireless network infrastructure,
a sophisticated network coverage service qualification tool and a valuable CRM database. Goodwill of $4.7 million
represents the residual value of the purchase price over the provisional fair value of the identifiable assets and liabilities
shown below. The acquired businesses contributed revenues of $6.7 million during the period from acquisition and
adjusted EBITDA of $3.5 million.
At 30 June 2018, the Company is continuing to receive the information required to assess the fair values of the assets
and liabilities acquired. Accordingly the values identified below are provisional as at the reporting date. Details of the
acquisition are:
a) Identifiable assets acquired and liabilities assumed
Cash
Provisional Fair Value ($)
242,319
Receivables
Property, plant and equipment
Other assets
Brand name and trademarks
Customer relationships
Other identifiable intangible assets
Payables
Provisions and other liabilities
Deferred tax liabilities
Net identifiable assets acquired
b) Consideration transferred
Cash paid
Shares issued
Deferred consideration(1)
Total consideration
135,548
1,411,529
2,118,312
150,000
3,846,000
2,489,000
(718,509)
(240,947)
(1,707,096)
7,726,156
7,000,000
2,894,031
3,000,000
12,894,031
(1)
Estimated deferred consideration is dependent on EBITDA earned by NuSkope in the 2018 and 2019 financial
years and is calculated in accordance with the operations of NuSkope prior to completion. The maximum
amount payable is unlimited. $3.0 million has been recognised based on a probability weighted estimate of
earnings.
81
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
c) Goodwill on acquisition
Consideration
Less net identifiable assets acquired
Goodwill on acquisition
d) Net cash outflow on acquisition
Consideration paid in cash
Less cash and cash equivalent balances acquired
Net cash outflow on acquisition
12,894,031
(7,726,156)
5,167,875
7,000,000
(242,319)
6,757,681
GX2 Holdings Pty Ltd (‘GX2’)
On 17 November 2017, Superloop Limited acquired 100% of GX2 Holdings Pty Ltd for a total consideration of $12.2
million, paid as $6.0 million in cash, $4.2 million in Superloop Limited shares and deferred consideration of $2.0 million
payable in cash in instalments in the 2 year period from completion.
The strategic acquisition of GX2 accelerates Superloop’s existing community broadband campus solution offering to a
broader customer base in Australia and overseas with technology, software and systems that will add significant value
to the combined group. Goodwill of $11.5 million represents the residual value of the purchase price over the provisional
fair value of the identifiable assets and liabilities shown below. The acquired business contributed revenues of $7.1
million during the period from acquisition and EBITDA of $1.2 million.
At 30 June 2018, the Company is continuing to receive the information required to assess the fair values of the assets
and liabilities acquired. Accordingly the values identified below are provisional as at the reporting date. Details of the
acquisition are:
a) Identifiable assets acquired and liabilities assumed
Cash
Provisional Fair Value ($)
402,577
Receivables
Property, plant and equipment
Other assets
Brand name and trademarks
Customer relationships
Other identifiable intangible assets
Payables
Deferred revenue
Provisions and other liabilities
Deferred tax liabilities
Net identifiable assets acquired
b) Consideration transferred
Cash paid
Shares issued
Deferred consideration
Total consideration
c) Goodwill on acquisition
Consideration
Less net identifiable assets acquired
Goodwill on acquisition
d) Net cash outflow on acquisition
Consideration paid in cash
Less cash and cash equivalent balances acquired
Net cash outflow on acquisition
82
904,993
281,176
2,052,769
150,000
3,802,000
3,050,000
(845,339)
(1,024,950)
(395,915)
(1,444,406)
6,932,905
6,000,000
4,218,487
2,000,000
12,218,487
12,218,487
(6,932,905)
5,285,582
6,000,000
(402,577)
5,597,423
ANNUAL REPORT FY18
SubPartners Pty Ltd
On 4 April 2017, Superloop Limited acquired 100% of SubPartners Pty Ltd for a total consideration of $3.3 million, to be
paid in Superloop Limited shares issued at $2.255 per share. At 30 June 2017, the fair value of the assets acquired and
liabilities assumed were recognised on a provisional basis. During the period, the fair value of assets acquired and the
liabilities has been finalised and the effect of the financial statements has been summarised below. The goodwill of $7.1
million represents the residual value of the purchase price over the fair value of the identifiable assets and liabilities.
a) Identifiable assets acquired and
liabilities assumed
Provisional fair value
at 30 June 2017
Fair value
adjustments
Cash
Property, plant and equipment
Other assets
Deferred tax asset
Payables
Related party payables
Accruals and provisions
Deferred tax liabilities
Net identifiable assets acquired
b) Consideration transferred
Cash paid
Shares
Deferred consideration
Total consideration
c) Goodwill on acquisition
Consideration
Add net identifiable liabilities acquired
Goodwill on acquisition
d) Net cash outflow on acquisition
Consideration paid in cash
Cash and cash equivalent balances acquired
Net cash inflow on acquisition
$
6,020
691,843
22,623
-
(84,290)
(6,364,640)
(797,129)
-
(6,525,573)
-
664,956
2,659,824
3,324,780
3,324,780
6,525,573
9,850,353
-
6,020
6,020
$
-
-
3,112,593
2,955,106
-
-
-
(933,778)
5,133,921
-
-
-
-
-
(5,133,921)
(5,133,921)
-
-
-
Final fair value
at 30 June 2018(1)
$
6,020
691,843
3,135,216
2,955,106
(84,290)
(6,364,640)
(797,129)
(933,778)
(1,391,652)
-
664,956
2,659,824
3,324,780
3,324,780
1,391,652
4,716,432
-
6,020
6,020
(1)
The 30 June 2017 comparative information shown in the Statement of Financial Position and the relevant notes
have been revised to recognise final fair values.
83
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
BigAir Group Limited
On 21 December 2016, Superloop Limited acquired 100% of BigAir Group Limited for a total consideration of $189.6
million, paid as $45.8 million in cash and $143.8 million in Superloop Limited shares issued at $2.74 per share. At
30 June 2017, the fair value of the assets acquired and liabilities assumed were recognised on a provisional basis.
During the period, the fair value of assets acquired and the liabilities has been finalised and the effect on the financial
statements has been summarised below. The goodwill of $156.6 million represents the residual value of the purchase
price over the fair value of the identifiable assets and liabilities.
a) Identifiable assets acquired and
liabilities assumed
Provisional fair value
at 30 June 2017
Fair value
adjustments
Cash
Receivables
Other assets
Property, plant and equipment
Customer relationships
Brand name and trademarks
Other identifiable Intangible assets
Payables and other liabilities
Deferred revenue
Provisions
Deferred tax liabilities
Term debt funding
$
2,134,644
7,482,719
4,674,065
37,632,555
48,739,000
500,000
5,114,000
(12,493,025)
(2,899,682)
(4,063,782)
(15,399,000)
(30,055,019)
$
-
441,383
-
(7,102,564)
280,000
-
(1,943,000)
(232,521)
-
-
(84,000)
-
Net identifiable assets acquired
41,366,475
(8,640,702)
b) Consideration transferred
Cash paid
Shares
Total consideration
c) Goodwill on acquisition
Consideration
Add net identifiable liabilities acquired
Goodwill on acquisition
d) Net cash outflow on acquisition
Consideration paid in cash
Cash and cash equivalent balances acquired
Net cash inflow on acquisition
45,804,556
143,769,449
189,574,005
189,574,005
(41,366,475)
148,207,530
45,804,556
(2,134,644)
43,669,912
-
-
-
-
8,640,702
8,640,702
-
-
-
Final fair value at
30 December 2017(1)
$
2,134,644
7,924,102
4,674,065
30,529,991
49,019,000
500,000
3,171,000
(12,725,546)
(2,899,681)
(4,063,782)
(15,483,000)
(30,055,019)
32,725,774
45,804,556
143,769,449
189,574,055
189,574,005
(32,725,773)
156,848,232
45,804,556
(2,134,644)
43,669,912
(1)
The 30 June 2017 comparative information shown in the Statement of Financial Position and the relevant notes
have been revised for the final fair values.
84
ANNUAL REPORT FY18
Directors’
Declaration
In the directors’ opinion:
(a) The financial statements and notes set out on pages 46 to 84 are in accordance with the Corporations
Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements, and
(ii) giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its
performance for the year ended on that date, and
At the date of this declaration, there are reasonable grounds to believe that the Group will be able to pay
its debts as and when they become due and payable. Note 1(a) confirms that the financial statements also
comply with International Financial Reporting Standards as issued by the International Accounting Standards
Board. The directors have been given the declarations by the chief executive officer and chief financial officer
required by 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors as per section 295(5) of the
Corporations Act 2001.
Bevan Slattery
Executive Director
Brisbane
20 August 2018
85
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Independent
Auditor’s
Report
86
Independent Auditor’s Report
ANNUAL REPORT FY18
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Level 23, Riverside Centre
123 Eagle Street
Brisbane, QLD, 4000
Australia
Phone: +61 7 3308 7000
www.deloitte.com.au
Independent Auditor’s Report to the
Members of Superloop Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Superloop Limited (the “Company”) and its subsidiaries (the “Group”)
which comprises the consolidated statement of financial position as at 30 June 2018, 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, and notes to the financial statements,
including a summary of significant accounting policies and other explanatory information, and the directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial
performance for the year then ended; and
(ii)
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 (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 confirm that the independence declaration required by the Corporations Act 2001, which has been given
to the directors of the Company, would be in the same terms if given to the directors as at the time of this
auditor’s report.
87
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities. DTTL (also referred to as
“Deloitte Global”) and each of its member firms are legally separate and independent entities. DTTL does not provide services to clients. Please see
www.deloitte.com/about to learn more.
The entity named herein is a legally separate and independent entity. In providing this document, the author only acts in the named capacity and does not act in any
other capacity. Nothing in this document, nor any related attachments or communications or services, have any capacity to bind any other entity under the ‘Deloitte’
network of member firms (including those operating in Australia).
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Independent Auditor’s Report
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report for the current period. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Key Audit Matter
How the scope of our audit responded to the Key
Audit Matter
Business acquisition
As disclosed in Note 37, the Group completed
the acquisition of 100% of the shares of:
In conjunction with our valuation specialists our
procedures included, but were not limited to:
Nuskope Pty Ltd and associated
entities via an agreement for cash
and equity consideration of $12.9m
on 13 October 2017; and
GX2 Holdings Pty Ltd via an
agreement for cash and equity
consideration of $12.2m on 17
November 2017.
Additionally, the provisional fair values for the
following acquisitions were finalised during the
year:
BigAir Group Limited
SubPartners Pty Ltd
Accounting for acquisitions is complex and
involves a number of significant judgements
and estimates as disclosed in Note 3 including:
88
the identification of and fair value
attributed to the separately identifiable
assets
acquired,
including intangible assets; and
the determination of the useful lives of
the acquired intangible assets.
liabilities
and
standards
reading the agreements to understand the
terms and conditions of the transaction and
evaluating management’s application of the
relevant accounting
including
appropriateness of the acquisition date and
identification of the acquiring entity;
obtaining an understanding of and assessing
the external expert’s draft report by reading
the report and evaluating its scope, and
holding discussions with the expert;
assessing the competency and objectivity of
the
the
appropriateness of valuation methodologies
and key judgements adopted in determining
the
fair values of software, customer
relationships, licences and brands which
include:
-
-
-
-
EBIT margins;
growth rates;
discount rates; and
attrition rates.
challenging
expert
and
evaluating the useful lives of the intangible
assets, based on the nature of the assets and
industry practice; and
assessing
the
disclosures included in Notes 3 and 37 to the
financial statements.
the appropriateness of
ANNUAL REPORT FY18
Key Audit Matter
How the scope of our audit responded to the
Key Audit Matter
Revenue recognition – appropriateness of
revenue recorded from complex contracts
As disclosed in Note 3, the determination of the
timing of revenue recognition associated with
some of the Group’s capacity and construction
contracts involves the application of judgement
due to the complexity and bespoke nature of the
arrangements entered into with customers.
Carrying value of Goodwill
As at the 30 June 2018 the Group’s goodwill
balance totals $178.2 million as disclosed in
Note 14.
The assessment of the recoverable amount of
the goodwill and other intangible assets
allocated to the cash generating units (“CGUs”)
or groups of CGUs requires management to
exercise significant judgement including:
the determination of and the allocation
of goodwill to the CGUs or groups of
CGUs; and
the determination of the following key
assumptions used in the calculation of
the recoverable amount of each of the
CGUs or groups of CGUs:
the cash flow forecasts;
-
- market growth rates;
-
-
terminal growth factors; and
discount rates.
In conjunction with our accounting
technical
specialists, our procedures included, but were not
limited to:
substance
the appropriateness of
reviewing the underlying agreements;
understanding
the
of
the
transactions and specific nature of the service
being provided;
assessing
application of
standards and industry practice;
agreeing the amounts recorded in the financial
records to supporting documentation; and
assessing
the
disclosures included in Note 3 to the financial
statements.
the
relevant accounting
the appropriateness of
the
In conjunction with our valuation specialists our
procedures included, but were not limited to:
obtaining an understanding of the process
that management undertook to determine the
CGUs or groups of CGUs and prepare the
valuation models;
evaluating the Group’s identified groups of
CGUs and the allocation of goodwill to the
carrying value of the groups of CGUs based on
our understanding of the Group’s business.
This evaluation
included performing an
analysis of the Group’s internal reporting;
assessing and challenging:
-
-
-
historical
the cash flow forecasts by agreeing
inputs in the cash flow models to
relevant data
including approved
budgets and assessing forecasting
comparing historic
accuracy by
forecasts to actual outcomes;
the market and terminal growth rates
against
and
relevant
industry data; and
rates applied, by
the discount
comparing the rates used to the
discount rates calculated by our
valuation specialists.
performing sensitivity analysis on key
assumptions;
testing on a sample basis the mathematical
accuracy of the valuation models; and
assessing the appropriateness of the
disclosures in Note 3 and 14 to the financial
statements.
89
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Independent Auditor’s Report
Other Information
The directors are responsible for the other information. The other information comprises the Directors’
Report, which we obtained prior to the date of this auditor’s report, and also includes the following
information which will be included in the Group’s annual report (but does not include the financial report and
our auditor’s report thereon): Chairman’s letter, Report from the Chief Executive Officer, Business Overview,
Corporate Governance Statement and Shareholder information, which is expected to be made available to
us after that date.
Our opinion on the financial report does not cover the other information and we do not and will not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with the
financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If,
based on the work we have performed on the other information that we obtained prior to the date of this
auditor’s report, 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.
When we read the Chairman’s letter, Report from the Chief Executive Officer, Business Overview, Corporate
Governance Statement and Shareholder Information, if we conclude that there is a material misstatement
therein, we are required to communicate the matter to the directors and use our professional judgement to
determine the appropriate action.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the 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 an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with the 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 the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of this financial report.
90
ANNUAL REPORT FY18
As part of an audit in accordance with the 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 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 financial report. We are responsible
for the direction, supervision and performance of the Group’s audit. We remain solely responsible
for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
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.
91
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 25 to 39 of the Directors’ Report for the year
ended 30 June 2018.
In our opinion, the Remuneration Report of Superloop Limited, for the year ended 30 June 2018, 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.
DELOITTE TOUCHE TOHMATSU
Stephen Tarling
Partner
Chartered Accountants
Brisbane, 20 August 2018
92
ANNUAL REPORT FY18
ASX Additional
Information
The following shareholder information was applicable as at 27 September 2018.
The Company has one class of shares on issue, fully paid ordinary shares.
(A) DISTRIBUTION OF EQUITY SECURITIES
Holding
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Unmarketable parcels
Number of investors
121
Number of securities
154,152,370
2,074
1,776
3,389
2,012
9,362
404
50,347,568
13,281,525
9,807,328
1,007,842
228,596,633
34,898
93
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
ASX Additional Information
(B) EQUITY SECURITY HOLDERS
The names of the twenty largest holders of quoted equity securities are listed below:
Name
BEVAN ANDREW SLATTERY
J P MORGAN NOMINEES AUSTRALIA LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
AVANTEOS INVESTMENTS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
SCM CAPITAL PTY LTD
AET CT PTY LIMITED
MICROEQUITIES ASSET MANAGEMENT PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
BNP PARIBAS NOMINEES PTY LTD
JMAS PTY LTD
BALNAVES FOUNDATION PTY LTD
BNP PARIBAS NOMS PTY LTD
FRETENSIS PTY LTD
LEANNE CATELAN SUPERANNUATION FUND PTY LTD
ALLEGRO CAPITAL NOMINEES PTY LTD
BNP PARIBAS NOMS (NZ) LTD
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
SUB-TOTAL
BALANCE OF REGISTER
GRAND TOTAL
(C) SUBSTANTIAL HOLDERS
Name
BEVAN ANDREW SLATTERY
BLACKROCK GROUP
1
2
(D) UNQUOTED EQUITY SECURITIES
Issued
Percentage of
shares
61,169,389
38,694,332
9,849,262
3,117,991
2,533,555
1,873,986
1,506,271
1,437,594
1,250,000
1,225,104
1,136,432
1,107,996
1,089,834
865,713
800,000
785,904
742,000
719,297
690,788
644,573
131,240,021
97,356,612
228,596,633
issued shares
26.76%
16.93%
4.31%
1.36%
1.11%
0.82%
0.66%
0.63%
0.55%
0.54%
0.50%
0.48%
0.48%
0.38%
0.35%
0.34%
0.32%
0.31%
0.30%
0.28%
57.41%
42.59%
100.00%
Issued
Percentage of
shares
61,169,389
12,120,883
issued shares
26.76%
5.30%
Options
A total of 1,446,094 unlisted options are on issue. All unlisted options are held by current employees under the
Company’s Executive Option Plan.
(E) VOTING RIGHTS
The voting rights attaching to each class of equity securities are set out below:
Ordinary shares
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.
Options
Holders of options do not have voting rights.
Performance Rights
Holders of performance rights do not have voting rights.
94
Corporate Directory
ANNUAL REPORT FY18
DIRECTORS
Michael Malone
Non-executive Chairman
Bevan Slattery
Founder and Executive Director
Greg Baynton
Non-executive Director
Louise Bolger
Non-executive Director
Richard Anthony (Tony) Clark
Non-executive Director
Vivian Stewart
Non-executive Director
Jason Ashton
Executive Director
Matthew Hollis
Executive Director
CHIEF EXECUTIVE OFFICER
AUDITOR
Deloitte Touche Tohmatsu
Level 23, Riverside Centre
123 Eagle Street
Brisbane QLD 4000
www.deloitte.com/au
SOLICITORS
McCullough Robertson
Level 11, Central Plaza Two
66 Eagle Street
Brisbane QLD 4000
www.mccullough.com.au
SHARE REGISTER
Link Market Services Limited
Level 21, 10 Eagle Street
Brisbane QLD 4000
www.linkmarketservices.com.au
Telephone: (within Aus): 1300 554 474
Facsimile: (02) 9287 0303
Drew Kelton
SECURITIES EXCHANGE LISTING
COMPANY SECRETARY
Paul Jobbins (until 20 September 2018)
Louise Bolger (from 20 September 2018)
Superloop Limited shares are listed on the
Australian Securities Exchange (ASX: SLC)
COMPANY WEBSITE
www.superloop.com
REGISTERED OFFICE
Superloop Limited
Level 17, 333 Ann Street
Brisbane QLD 4000
Tel: +61 (7) 3905 2400
95
Superloop Limited Annual Report FY18
96