2019
ANNUAL REPORT
SUPERLOOP LIMITED | ABN 96 169 263 094
superloop.com
2019
ANNUAL REPORT
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Table of Contents
Chairman & CEO Report
FY19 Business Overview
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Financial Report
Notes to the Consolidated Financial Report
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
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SUPERLOOP LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT FY19
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Chairman & CEO Report
On behalf of the Board of Directors of Superloop Limited, it is our
pleasure to present the Annual Report for the 12 months ended 30
June 2019 (FY19).
Superloop was founded to change the way that Asia Pacific
connects, identifying in 2014 that legacy incumbent networks
around the region were designed before the advent of the cloud,
therefore creating an opportunity for a brand new purpose-
built network and organisation to meet the growing demand
for high capacity, low latency, connectivity across the region.
This was your Company’s fourth full financial year since listing,
and arguably its most momentous and eventful year so far. 2019
saw the completion of the two final pieces of our pan-Asia Pacific
core network ‘loop’. This was also a year of significant corporate
activity including a capital raise, a debt facility extension, due
diligence from a non-binding indicative offer, as well as restructuring
and refocusing the company on our core assets.
Company Highlights
Founded in 2014 to connect Asia Pacific to the cloud, with a legacy-free network capable of fulfilling
the growth in demand for bandwidth
Invested $256m in advanced fibre networks connecting bandwidth-intensive properties across Asia
Pacific, on average 2 years into 20+ year useful life
Superloop also distributes connectivity within campuses smartly and securely, leveraging $210m of
investments in adjacent platforms through acquisitions
Net book value of assets $1.37 per share at 30th June 2019; $346m net assets post $50.7m
impairment of non-core services segment
Core fibre connectivity(1) revenues up 89% year-on-year (YoY), with sales expected to ramp up now
core Asia Pacific loop is live and connected
FY19 EBITDA of $8.5m & reconfirming FY20 $14m-$16m guidance, excluding other one-off
transactions that may occur
With core network now in place, the marginal incremental investment required to win new
customers represents the majority of the future capital needs of Superloop(2)
FY20 Operational Highlights
Completed Asia Pacific
core network loop
INDIGO & AU backbone
On-Net Buildings
392
+26% YoY
Award-winning network
Best Telco Innovation
Best Fixed Wireless Provider
Best Virtual Network Operator
Traffic on Network
+1900%
On FY16
Re-launched portfolio
Integrated teams
All products operating under
Superloop brand
Unified ~300-strong
organisation
Delivery of these core network projects has been capital intensive. We are nearing the end of this investment in our future
and are well positioned to monetise these assets to deliver long-term shareholder value. We are already seeing the benefit
of these investments with a strong sales pipeline, network traffic increasing 1900% on FY16 levels and receipt of several
awards related to the innovative nature and overall quality of our networks.
Superloop is well positioned for future value creation
Nearing the end of a major capital
investment program
Significant new sales opportunities on our
owned core fibre connectivity business on a
strong growth trajectory
Our on-net footprint in Australia and Asia
Pacific is positioned to take advantage of the
burgeoning demand for connectivity and
broadband
Superloop is now well positioned to continue
to deliver significant growth to deliver
on long-term customer and shareholder
expectations
FY19 is the year that Superloop completed building the foundations on which it must now build. To be able to deliver
all of the above cornerstone projects, while facing many significant growth challenges, is testament to the quality and
commitment of Superloop’s outstanding people. We would like to thank all of the Superloop team for the effort they’ve put
in over the last year.
On behalf of the Board and Management, we would like to thank you for your continued support.
(1)Core Fibre Connectivity Revenues excluding INDIGO development revenue, includes installation revenues, IRU revenue (AASB15) and
domestic construction revenue
(2)In the absence of any major new infrastructure opportunities arising
Michael Malone
Chairman
Superloop Limited
Drew Kelton
Chief Executive Officer
Superloop Limited
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ANNUAL REPORT FY19
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SUPERLOOP LIMITED AND CONTROLLED ENTITIES
“At Superloop we believe we have built the
only network that can deliver a seamless
cloud-first experience to the major traffic
hubs and enterprise buildings in Asia Pacific.”
Drew Kelton
Chief Executive Officer
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ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES “Over the next 2 years I believe the ‘clouds’
will be coming out of the data centre and
directly to where we live, work and play.
In a cloud world the ‘last mile’ is now
becoming the ‘first mile’ of connection.”
Bevan Slattery
Founder - Superloop, Megaport, NEXTDC, PIPE Networks
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SUPERLOOP LIMITED AND CONTROLLED ENTITIES
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ANNUAL REPORT FY19 FY19 Business Overview
JAPAN
HONG KONG
SAN JOSE
LOS ANGELES
SINGAPORE
DARWIN
PERTH
BRISBANE
ADELAIDE
MELBOURNE
SYDNEY
CANBERRA
HOBART
AUCKLAND
Asia Pacific Fibre Network
FIBRE NETWORK
INDIGO West
INDIGO Central
Fibre
Australia
Singapore
Hong Kong
30 June 2019
430km
Fibre
301
Strategic Sites
30 June 2018
242km
Fibre
225
Strategic Sites
30 June 2019
216km
Fibre
59
Strategic Sites
30 June 2018
190km
Fibre
57
Strategic Sites
30 June 2019
248km
Fibre
32
Strategic Sites
30 June 2018
239km
Fibre
28
Strategic Sites
Superloop’s Portfolio Connecting Asia Pacific
1
Asia Pacific
Core Fibre Network
2
Platforms Leveraging
Fibre Network
3
Non-Core CMS
Fibre networks connecting
key hubs in Singapore, Australia
and Hong Kong and INDIGO
subsea cable
Fixed Wireless (Connectivity)
Guest WiFi (Broadband)
Home Broadband (NBN & FW)
CyberHound Security (Services)
Cloud Managed Services providing
hosted IT & equipment procurement
to small businesses
89%
Revenue YoY
11%
Revenue YoY
31%
Revenue YoY
Core Fibre Connectivity Revenues
Total Annual Revenue
Revenue Mix % excl. subsea dev.
$35.2m
$3.1
$18.6m
$21.8
$1.3
$11.3
$6.0
$10.3
FY18
FY19
$12.3m
$0.1
$9.4
$2.9
FY17
$0.0
FY15
$0.0
FY16
$55m
$22m
$19
$7
$6
$61m
$21
$19
$17
$5
$23m
$13
$7
$3
38%
Legacy
26%
Legacy
16%
Legacy
FY17
FY18
FY19
H2 FY17
H2 FY18
H2 FY19
Australia
Fixed Wireless
Guest WiFi
Core Fibre Connectivity
Home Broadband
Cybersecurity
Fixed Wireless, Broadband & CyberHound
184km
June 2015
378km
June 2016
614km
June 2017
671km
June 2018
894km
June 2019
Superloop Owned Optic
Fibre Build Progression
33.2%
From 30 June 2018
$7.6m
$7.6m
FY16
$0.0
FY15
Hong Kong
Singapore
392 Connected Strategic Sites
As of 30 June 2019
26.5%
From 30 June 2018
$256m
Invested capital to date in core
connectivity networks including IRUs.
$214m
Carrying Value of Non Current
Assets excluding Fibre Connectivity
& Services segments.
Legacy CMS being discontinued
$(50.7)m
Impairment to $6m Carrying Value
of Services segment.
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SUPERLOOP LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT FY19
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Directors’ Report
“Network coverage across the Asia Pacific
region, combined with the INDIGO subsea
cable system, together with a standardised
and scalable suite of connectivity solutions
including broadband and cybersecurity,
will provide trusted and reliable services
to a broad range of customer segments.”
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SUPERLOOP LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT FY19
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Directors’ Report
COMPLETE CONNECTIVITY
PLATFORM FOR ASIA PACIFIC
The Directors present their report on the consolidated
entity (referred to hereafter as ‘Superloop’, ‘the Group’
or ‘the Company’) consisting of Superloop Limited and
the entities it controlled at the end of, or during, the year
ended 30 June 2019.
DIRECTORS
The following persons were Directors of the Group during
the year:
Michael Malone (Chairman)
Bevan Slattery
Greg Baynton
Richard (Tony) Clark
Vivian Stewart
Louise Bolger (resigned: 23 November 2018)
Jason Ashton (resigned: 30 September 2018)
(Guest WiFi and Home Broadband) and Services
(cybersecurity under the CyberHound product brand,
and Cloud Managed Services).
In order to deliver Connectivity, Broadband and Services
to customers within Asia Pacific, the Group’s process value
chain and organisational structure encompasses:
• Developing strategy and capital requirements;
• Building the core network ‘loop’ connecting bandwidth-
intensive properties in Singapore, Australia and Hong
Kong including a subsea cable network;
• Marketing and selling to a range of wholesale, enterprise
and residential customers under a single Superloop brand;
• Delivering products & services to customers in an efficient
and effective manner;
• Operating and maintaining the networks and services to
Matthew Hollis (resigned: 23 November 2018)
high quality service levels;
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Alexander (Drew) Kelton (appointed: 23 November 2018)
PRINCIPAL ACTIVITIES
The principal activities of the Group include:
• The construction and operation of independent
telecommunications infrastructure throughout the Asia
Pacific region, including the provision of complete high-
performance network solutions for wholesale, enterprise
and channel customers;
• The operation of an advanced, large scale fixed wireless
broadband network in Australia providing breadth of
coverage;
• The management and delivery of Guest WiFi broadband
solutions for campus environments including student
accommodation, hotels and schools;
• Residential and small business broadband services in
Australia via fixed wireless or fixed line NBN services;
• Cyber safety and security services for schools and other
organisations demanding safe internet.
REVIEW OF OPERATIONS
Superloop was founded in 2014 to connect Asia Pacific to
the cloud, with a legacy-free network capable of fulfilling the
growth in demand for bandwidth across the region. Our core
purpose is to change the way Asia Pacific connects.
Superloop is delivering on its core purpose by investing
in advanced fibre networks connecting bandwidth-
intensive properties across key markets in Asia Pacific,
complemented by distributing connectivity within those
campuses and properties smartly and securely, leveraging
the Group’s investments and acquisitions in Fixed Wireless
access, Guest WiFi, Cybersecurity and Home Broadband
assets, processes, systems and people.
The Group’s three reporting segments reflect the nature
of these service offerings, including Connectivity (fibre,
fixed wireless and third party access networks), Broadband
• Enabling its core value chain by providing people &
culture, legal & governance, finance, technology and
security support.
FY19 Operational Highlights include:
• Completing the Asia Pacific core network loop including
INDIGO subsea cable from Singapore to Perth to Sydney,
and connecting Australia seamlessly through NBN’s
nationwide Points of Interconnect;
• Cumulatively connecting 392 ‘on-net’ buildings, +26%
year-on-year across 894km of terrestrial fibre, in addition
to ~9,000km of subsea cable;
• Relaunching a simplified product portfolio under the
single Superloop brand;
• Growing traffic on the network by more than 1900%
since 2016;
• Achieving industry recognition including Best Telco
Innovation, Best Fixed Wireless provider, and Best Virtual
Network Operator awards;
• Unifying a ~300-strong organisation into an integrated
Superloop team.
The Group has cumulatively invested $256m in fibre
network assets that are on average less than 2 years into
a 20+ year useful life.
FINANCIAL AND OPERATING PERFORMANCE
The Group’s revenues and other income were $119.8 million
in FY19 versus $118.2 million in the previous financial year.
The revenue mix shifted significantly towards the core
connectivity segment due to the significant revenue growth
on fibre assets, the growth in broadband segment and the
planned retirement of non-core ‘Services’ products.
The Group had a full year net loss after tax of $72.1 million
in FY19 (compared to a profit of $1.3 million in FY18). Net loss
before tax was $84.4 million (compared to a $2.8 million loss
in FY18). The Group generated earnings before interest, tax,
depreciation and amortisation (EBITDA) of $8.5 million.
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2
3
Subsea cable network
connecting Asia Pacific
Fibre Networks in Singapore,
Hong Kong and Australia
CyberHound secure
education based internet
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5
6
Fixed Wireless Network
across Australia
Guest WiFi platform for leisure,
health & education campuses
Residential & small business
Broadband across Australia
INVESTED CAPITAL IN FIBRE NETWORK ASSETS NOW LIVE
$256m
<2 Year Old
Weighted average asset age
as at 30th June 2019
Network Assets
20+ Years of
Useful Life
Weighted average asset useful life
INDIGO Subsea Cable
Hong Kong
Australia
Singapore
$163m
$129m
$69
$57
$23
$48
FY17
$41
$53
FY18
$33m
$5
$28
FY15
$45m
$7
$38
FY16
$48
$82
$68
$59
FY19
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ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Directors’ Report
FY17(1)
FY18(1)
FY19
YoY
Total Revenue
$57.7
$118.2
$119.8
+1.4%
Revenue excl.
subsea dev.
$54.8
$104.2
$115.8
+11%
Direct Costs
$(28.0)
$(51.1)
$(61.4)
+20%
Gross Margin
$29.7
$67.0
$58.5
(13%)
Gross Margin excl.
subsea dev.
$26.8
$54.0
$55.0
Gross Margin %
51%
57%
49%
+2%
(8%)
Gross Margin
excluding
subsea dev. %
Network coverage across the Asia Pacific region, combined
with the INDIGO subsea cable system, along with a
standardised and scalable suite of connectivity solutions
including broadband and cybersecurity, will provide trusted
and reliable services to a broad range of customer segments.
Superloop intends to continue to invest in connectivity
solutions in markets where the Board and Management
believe the demand for services will deliver an attractive
return for Shareholders. This includes exchanging spare
capacity for capacity on other networks (thus expanding
the footprint), under varying commercial constructs in value
and timing.
49%
52%
47%
(5%)
MATERIAL BUSINESS RISKS
Operational Costs
$(27.2)
$(44.9)
$(50.0)
+11%
EBITDA (AASB15)
$2.5
$22.1
$8.5
The material business risks faced by the Group that are
likely to have an effect on its financial prospects include:
Depreciation &
Amortisation(2)
Non-Cash
Impairment(2)
Net profit/ (loss)
before tax
$(9.0)
$(22.1)
$(36.5)
-
-
$(50.7)
$(7.8)
$(2.8)
$(84.4)
(1) Prior year adopting AASB15 standard retrospectively
(2) Impairment of non-core CMS services segment includes $43.3m
goodwill, PP&E and accelerated amortisation of contracts
Financial position
At 30 June 2019, the Group held property, plant and
equipment (primarily the construction of its metro and
subsea fibre networks) of $228.7 million, and intangible
assets of $234.2 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.
Intangible assets include $135.1 million of goodwill, having
impaired the $43.3 million of goodwill relating to the
retiring of cloud managed services, as part of a $50.7
million overall impairment.
Cash flow performance
The Group generated operating cash flows of $5.3 million
in the year, and invested $53.1 million predominantly in
property, plant and equipment to complete the core
Asia Pacific network ‘loop’, funded by $51.7 million of net
financing cash flows inclusive of a $31 million equity raise
in March 2019 and further draw down of the Group’s senior
debt facilities.
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.
Competition and disruption: While considering itself an
industry disruptor in its own right, a key risk to Superloop,
particularly in the residential broadband and fixed wireless
markets, are new market entrants and technological
advancements that better support the way customers
choose to consume their data. 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, societal trends
and the competitive environment as part of its strategic
planning and review processes;
• Selecting and deploying technologies with future
developments and growth in mind;
• Periodically reviewing its customer offerings in the
context of the market and customer needs.
Regulatory: Superloop operates in an increasingly
regulated environment with significant growth in the
regulation of ‘non-traditional’ areas including governance
of pricing, product, customer experience and increasingly
in the past 12 months, data protection. The protection of
customer and third party data is now not only a regulatory
risk that carries significant penalties, but also a reputational
risk that may significantly damage trust and long-term
shareholder value.
This increase in regulatory burden, while important, adds
complexity and therefore cost to our operations. It also
introduces the risk of non-compliance which could place
the operating licenses and approvals we need to operate
our business, at risk. 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.
monetise these assets, lower our costs and reduce our
overall debt levels. Failure to do this could result in a loss
of confidence from our shareholders, pressure on our debt
levels, and long-term impacts to our share price.
Data and information governance: The increase in reliance
on technology and associated risk in the consumption
and generation of data has been accompanied by
unprecedented cyber security risks and stakeholder
expectations in relation to their data being safe and service
continuity assured. In addition, the recent evolution of
the regulatory environment and heighten 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
Privacy Officer;
• Undertaken audits to understand and classify the data it
holds and to qualify the exposure to this risk;
• Restricted access to company premises, systems, and
network devices and implemented strict change control
measures, anti-virus software and firewall protections;
• Developed mandatory training in relation to data security
and privacy awareness for its employees including
development of policies and procedures to guide staff in
the management of privacy related issues.
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:
• Designing and investing in the network to provide
in-built resilience;
• Implementing advanced security measures to both
prevent and monitor for cyber security threats;
• 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 to failure to provide contracted services
due to specific events outside of Superloop’s control;
• Maintenance of business interruption insurance.
Monetising our assets: Over the past four years Superloop
has built a unique asset base, including its share in the
INDIGO subsea cable. A key risk is that we are unable to
achieve the anticipated sales traction to appropriately
The continued growth of Superloop’s business relies on the
acquisition, development and ongoing maintenance of
telecommunications and IT infrastructure.
Integration and operating model: While Superloop’s
operating model is structured to successfully deliver against
its strategic objectives, the Company must also concurrently
transform legacy capabilities and optimise its cost base.
We have made significant strides towards integrating the
businesses we have acquired, but our ability to optimise
this integration represents a potential opportunity risk. This
risk is well recognised internally and projects to ensure the
opportunity is realised have been developed and are being
monitored and governed by a project management office
that reports through to our executive team.
Funding: The continued growth of Superloop’s business
relies on the acquisition, development and ongoing
maintenance of telecommunications and IT infrastructure.
Superloop requires access to sufficient 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 on reasonable
commercial terms. Superloop believes the risk is mitigated,
to some extent, through the generation of operating cash
flows, negotiation and maintenance of lines of credit at
favourable rates and access to other forms of capital. In
particular, Superloop expects its capex requirement to
have peaked in FY19 and stabilise at approximately $20m
per annum from H2 FY20 and thereafter, excluding major
capital investment opportunities including IRUs that may
arise.
On the 24 and 26 September 2019 Superloop announced
a recapitalisation plan intended to replace the amount
outstanding on its senior debt facility with a new $61.7
million facility limit to bring the renegotiated debt/EBITDA
and interest cover ratio (ICR) covenants for that facility in
line with forecast EBITDA for the business. Details of the
renegotiated senior debt facility are set out in Note 35 to
the Financial Statements on page 76 and 77. Failure to
obtain capital on favourable 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 Superloop. Superloop believes the proceeds to be
raised by this recapitalisation will be sufficient to fund
the Group. However, Superloop may require additional
funds for its other activities and future projects. Further
funds raised may result in dilution for shareholders, and
future debt financing, if required and available, may involve
further restrictive covenants which may limit Superloop’s
operations and business strategy. .
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ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Directors’ Report
Reputation: Just like every business, the reputation it
maintains with its shareholders, customers, suppliers
and regulators can account for a significant part of a
company’s value in terms of market capitalisation. Risks
that threaten an organisation’s reputation can have
significant impacts on its revenue and brand and the speed
at which information can now be shared publicly via social
media can intensify the impact of this risk. The various
controls described in the previous sections combined
with our focus on customer experience, social media and
crisis management processes are our key mechanisms for
managing our reputation.
MATTERS SUBSEQUENT TO THE END
OF FINANCIAL YEAR
On 24 and 26 September 2019, Superloop announced a
recapitalisation plan containing an equity raise (consisting
of a placement and rights issue) of up to $92.2m, with
$32.6m subject to shareholder approval at the Company’s
2019 AGM. In addition, the company signed an amended
and extended four year bank facility with its existing
lenders (ANZ and Westpac) comprising a $61.7m total
facility limit, and financial undertakings disclosed in Note
35 of the financial statements.
People and safety: People are at the heart of everything
we do. As such, attracting and retaining talent with the
right mix of skills and alignment to our values is critical to
our ongoing success. That is why we are in the process of
developing an employee value proposition that captures
the essence of what Superloop is all about and continues to
foster the fun and entrepreneurial mindset that we stand for.
The construction, maintenance and operation of our assets
have inherent workplace health and safety (WHS) risks
which our employees and delivery partners must manage.
To do this we operate a risk based WHS management and
assurance system which provides clear expectations and
supporting tools for our employees and contractors to utilise.
Sociopolitical: A significant focus of Superloop’s forward
strategy is within the Asia Pacific region. Successful
execution of this strategy is not only based on our ability to
monetise our assets, but also the ongoing stability within
these regions from a sociopolitical perspective.
Historically the regions in which Superloop has invested
have enjoyed a high degree of stability and as such, have
represented a relatively low risk investment and the security
of our assets and the returns they generate. However, the
rising tension and unrest in Hong Kong may impact the
local economy and security of our assets and therefore
ultimately our revenues. There also remains a potential risk
that further, more direct government intervention in the
region could result in a suite of potential risks that could
materially impact our interests including: nullification of
existing contracts, leases, permits, imposts, controls or
prohibitions on the production or use of certain services,
restrictions on repatriation of earnings or capital and
changes in laws and policy.
The Superloop Board continues to monitor the situation
and continues to focus on growing its interests in other
locations to act as a natural hedge against this risk.
SIGNIFICANT CHANGES IN THE STATE
OF AFFAIRS
There were no other significant changes in the state of
affairs of Superloop other than those listed in matters
subsequent to the end of financial year below.
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.
DIVIDENDS
No dividend has been declared or paid in respect of the
2019 financial year. Dividends declared in 2017 financial
year were paid in 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 the 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 favour of the Director for seven years
after the Director has ceased to be a Director.
During the year, the Group paid premiums of $640,330
(2018: $327,793) 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.
This rise in premiums was not due to any action or inaction
by Superloop, rather the uplift has resulted from insurers’
re-evaluating their pricing models and overall appetite for
public company D&O insurance in the face of significant
securities class action claims activity.
NON-AUDIT SERVICES
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 27 to the financial statements.
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 thousand dollar, where
permissible in accordance with the Instrument.
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 38.
18
ANNUAL REPORT FY19
19
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Information on Directors
MICHAEL MALONE
BEVAN SLATTERY
GREG BAYNTON
LOUISE BOLGER
Independent Non-Executive Chairman
Executive Director
Independent Non-Executive Director
Independent Non-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
Appointed: 28 April 2014
Appointed: 27 April 2015
Resigned: 23 November 2018
Experience and expertise
Michael Malone founded iiNet Limited in 1993 and
continued as CEO until his retirement in 2014. During his
tenure, iiNet grew to serve over a million households with
a relentless focus and reputation for outstanding customer
service, and executed more than 30 successful company
acquisitions and integrations.
Michael is a Telecommunications Society Charles Todd
Medallist, was CEO of the Year in the Australian Telecom
Awards and 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. Michael was admitted to
the Telecommunications Hall of Fame in 2019.
In April 2016, Michael was appointed to the Board of NBN
Co Limited. In 2018, he joined the board of the Axicom
Group. He is on the board of the APNIC Foundation and the
Advisory Board of the Commonwealth Regional and Small
Publishers Innovation Fund.
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
Former Directorships of listed entities in last 3 years
Dreamscape Networks Limited (ASX: DN8) - resigned
28 September 2018
Sky and Space Global Limited (ASX: SAS) - resigned
as Chairman of the Board 8 April 2019
Special responsibilities
> Chairman of the Board
> Chair of the Remuneration and Nomination Committee
> Member of the Audit Committee
> Member of the Risk Management Committee
Interests in shares and options
664,698 fully paid ordinary shares
20
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.
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
Megaport Limited (ASX: MP1) - appointed 27 July 2015
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 and NOVONIX
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
has been a Fellow of the Governance Institute of Australia.
Other current Directorships of listed entities
NOVONIX Limited (ASX: NVX) – appointed 5 April 2012
intelliHR Holdings Limited (ASX: IHR) - appointed 18
November 2016
State Gas Limited (ASX: GAS) - appointed 3 August 2017
Former Directorships of listed entities in last 3 years
Nil
Special responsibilities
> Chair of the Audit Committee
> Member of the Risk Management Committee
> Member of the Remuneration and Nomination
Committee
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
before continuing on to in-house roles which included
acting as General Counsel and Company Secretary for ASX
listed companies 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 Bachelor of Education Studies from the University of
Queensland. She is a member of the Australian Institute
of Company Directors 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
Nil
Interests in shares and options
74,363 fully paid ordinary shares
Former Directorships of listed entities in last 3 years
Nil
Interests in shares and options
856,192 fully paid ordinary shares
Special responsibilities
Nil
Interests in shares and options
64,567,689 fully paid ordinary shares
21
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Information on Directors
RICHARD ANTHONY (TONY) CLARK
VIVIAN STEWART
Independent Non-Executive Director
Independent Non-Executive Director
Appointed: 23 December 2015
Appointed: 21 December 2016
Experience and expertise
Tony Clark 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
421,949 fully paid ordinary shares
Experience and expertise
Vivian Stewart served on BigAir Group Limited’s Board from
June 2008 and was its Chairman at the time of BigAir’s
acquisition by Superloop in December 2016.
Vivian is the Chief Operating Officer of Bigtincan Holdings
Ltd - an ASX listed enterprise software company focused on
the Sales Enablement market.
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 and
its two venture capital funds. He serves on the Investment
committee of Sydney Angels Sidecar Fund I and II.
Most recently, 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.
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 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
JASON ASHTON
Executive Director
Appointed: 21 December 2016
Resigned : 30 September 2018
MATTHEW HOLLIS
Executive Director
Appointed: 1 March 2017
Resigned : 23 November 2018
Experience and expertise
Jason Ashton was the co-founder and Chief Executive
Officer of BigAir Group Limited prior to its acquisition by
Superloop in December 2016. He stepped down from his
Executive position with Superloop on 30 September 2018.
Jason was previously Managing Director of business ISP
Magna Data which he co-founded in 1993 and
subsequently sold in 1999.
Jason has extensive experience with high speed microwave
and fixed wireless access networks and is a regular speaker
at industry conferences.
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
Experience and expertise
Matthew Hollis was Superloop’s Group GM Sales and
Marketing until December 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 Integrators.
Matt is a member of the Australian Institute of Company
Directors and has attended the Company Directors course.
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
15,408 fully paid ordinary shares
Special responsibilities
Nil
Interests in shares and options
Nil
22
23
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Information on Directors
DREW KELTON
Chief Executive Officer
Appointed : 1 July 2018
Appointed Director : 23 November 2018
Experience and expertise
Drew Kelton is a global business leader and professional
board director. With over 30 years’ experience in the ICT
and telecommunications arena, he held senior operational
roles in the UK, Europe, India, Australasia and most
recently, the US. In addition to executive leadership roles
in global organisations, he has also been responsible for
startups, M&A transactions and the IPO of one of those
businesses. Drew would describe himself as a “professional
entrepreneur”.
Drew holds a Bachelor of Science with commendation in
Electrical and Electronic Engineering from the University
of Western Scotland. He is a Chartered Engineer with the
Institute of Electrical and Electronic Engineers.
Other current Directorships of listed entities
Nil
Former Directorships of listed entities in last 3 years
Megaport Limited (ASX:MP1) - resigned 1 June 2019
Firstwave Cloud Technology Limited (ASX: FCT) - resigned
6 November 2018.
Mobile Embrace Limited (ASX:MBE) - resigned
30 June 2018
Enice Holding Company Limited (ASX:ENC) - resigned
22 August 2017
Special responsibilities
Nil
Interests in shares and options
Nil
COMPANY SECRETARY
LOUISE BOLGER
The company secretary at the end of the financial year
was Louise Bolger, having been appointed on 20
September 2018.
Experience and expertise
Louise Bolger joined Superloop in April 2015 as a Non-
Executive Director. In November 2018 she was engaged in
a full-time executive capacity and now leads the Group’s
legal, risk and compliance function as General Counsel and
Company Secretary.
Louise is an experienced in-house telecommunications,
media and technology lawyer and company secretary
having held General Counsel and Company Secretary roles
with various ASX listed companies. She holds a Bachelor of
Laws (Hons) and a Bachelor of Arts (Modern Asian Studies)
from Griffith University and is a member of the Australian
Institute of Company Directors and a Fellow of the
Governance Institute of Australia.
PAUL JOBBINS
Paul Jobbins was Superloop’s Company Secretary and
Group Chief Financial Officer until his resignation on
20 September 2018.
Prior to Superloop, Paul 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.
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 (1)
Tony Clark
Vivian Stewart
Jason Ashton (2)
Matthew Hollis (3)
Alexander (Drew) Kelton (4)
Meeting of Committees
Meetings of
Directors
Audit
Risk
Management
Remuneration
and Nomination
A
19
19
18
8
18
19
3
7
11
B
19
19
19
8
19
19
3
8
11
A
4
B
5
A
5
B
5
A
4
B
4
N/A
N/A
N/A
N/A
N/A
N/A
5
N/A
N/A
5
N/A
N/A
N/A
5
N/A
N/A
5
N/A
N/A
N/A
5
N/A
N/A
4
N/A
N/A
N/A
5
N/A
N/A
5
N/A
N/A
N/A
4
2
4
2
N/A
N/A
3
N/A
N/A
N/A
4
N/A
N/A
N/A
(1) Louise Bolger resigned as a Director on 23 November 2018
(2) Jason Ashton resigned as a Director on 30 September 2018
(3) Matthew Hollis resigned as a Director on 23 November 2018
(4) Alexander (Drew) Kelton was appointed Managing Director on 23 November 2018
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
24
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT FY19
25
SUPERLOOP LIMITED AND CONTROLLED ENTITIES Remuneration Report
LETTER FROM THE CHAIR OF THE REMUNERATION AND NOMINATION COMMITTEE
Dear Shareholders,
We are pleased to present Superloop’s Remuneration Report for 2019, for which we seek your support.
Superloop’s vision, to change the way Asia Pacific connects, is designed to support the creation of long-term shareholder
value. Throughout the 2019 financial year, the Company underwent significant transformation in pursuit of this vision.
FY19 Operational Highlights include:
• Completing the Asia Pacific core network loop including INDIGO subsea cable from Singapore to Perth to Sydney, and
connecting Australia seamlessly through NBN’s nationwide points of interconnect;
• Cumulatively connecting 392 ‘on-net’ buildings, +26% year-on-year across 894km of terrestrial fibre in addition to
~9,000km of subsea cable;
• Re-launching entire simplified product portfolio under the single Superloop brand;
• Growing traffic on the network by more than 1900% since 2016;
• Achieving industry recognition including best telco innovation, best fixed wireless provider, and best virtual network
operator awards;
• Unifying a ~300-strong organisation into an integrated Superloop team.
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.
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,
Michael Malone
Chair, Remuneration and Nomination Committee
Superloop Limited
Remuneration Report
Letter from the Chair of the Remuneration and Nomination Committee
Remuneration Report Audited
1.
The Persons Covered by this Report
2. Overview of Remuneration Governance Framework
3. Director Remuneration
4. Executive Remuneration
5. Employment Terms for Key Management Personnel
6. Remuneration for FY19
7. Performance Outcomes for FY19
8. Summary of Shares Held by Key Management Personnel
9. Summary of Options Held by Key Management Personnel
10. Summary of Rights Held by Key Management Personnel
11. Shares Under Option or Performance Rights
12. Other Transactions with Key Management Personnel
27
28
28
29
29
29
32
33
35
36
36
36
37
37
26
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
27
ANNUAL REPORT FY19 Remuneration Report
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 2019 (FY19), 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.
DIRECTORS
Name
Michael Malone
Bevan Slattery
Greg Baynton
Louise Bolger (until November 2018)
Tony Clark
Vivian Stewart
Position
Independent Non-Executive Chairman
Member of the Audit and Risk Management Committee
Executive Director
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
Jason Ashton (until September 2018)
Executive Director
Matthew Hollis (until November 2018)
Executive Director
SENIOR EXECUTIVES
Name
Position
Alexander (Drew) Kelton
Jon Tidd
David Thorn
Alex West
Paul Jobbins
David Thomas
Chief Executive Officer (CEO) (appointed 1 July 2018)
Executive Director (appointed 23 November 2018)
Group Chief Financial Officer (appointed 4 September 2018)
Chief Revenue Officer (appointed 28 September 2018)
Group Chief Operating Officer
Group Chief Financial Officer (resigned 28 September 2018)
Chief Commercial Officer (resigned 21 May 2019)
Matthew Whitlock
Chief Operations Officer - Infrastructure (resigned 8 March 2019)
Except as noted above or elsewhere in this report, the named persons held their position for the whole financial year.
2. OVERVIEW OF REMUNERATION
GOVERNANCE FRAMEWORK
3. DIRECTOR REMUNERATION
3.1 DIRECTOR REMUNERATION POLICY
2.1 REMUNERATION AND NOMINATION COMMITTEE
The role of the Remuneration and Nomination Committee
(“the Committee”) is to review and make recommendations
to the Board on matters relating to:
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.
• Board and Senior Executive succession planning;
• Non-Executive Director fees and the aggregate fee pool;
• The Company’s remuneration policy and procedures and
other relevant policies including recruitment, retention
and termination policies;
• Senior Executive remuneration arrangements, 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
• Market practices and trends on remuneration matters.
Further information regarding the Committee’s role,
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 https://investors.superloop.com.
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 https://investors.superloop.com.
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,
and where relevant are inclusive of superannuation
contributions.
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 FY19 were $375,166
(FY18 $400,000).
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
Superloop’s Senior Executive remuneration policy is
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.
28
29
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Remuneration Report
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
The short term incentive structure 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 incentives will be
forfeited unless otherwise determined by the Board.
Short term incentive outcomes for FY19
During the year there were no short term incentives
awarded. After year end, short term incentives were
awarded in line with the short term incentive policy set out
above, as follows:
• Remuneration will be managed within a range so as to
Name
allow for the recognition of individual differences such as
the calibre of the Executive and competency with which
they fulfil a role.
Fixed
Remuneration
Target
Incentive
Awarded
Incentive
Alexander
(Drew) Kelton
$500,000
$250,000
$ -
4.2 SHORT TERM INCENTIVE (STI) POLICY AND PROCEDURE
Jon Tidd
$330,000
$66,000
$70,000
The STI policy provides incentives for Senior Executives to
achieve the Group’s strategic objectives by delivering or
exceeding annual performance targets.
David Thorn
$350,000
$70,000
$ -
Alex West
$350,000
$70,000
$70,000
Measurement period and award
The measurement period for achieving 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.
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% of their annual
fixed remuneration.
Performance metrics and weightings
The performance metrics for the CEO include:
• Financial performance: Group EBITDA (60%)
• Operational performance (40%)
The performance metrics for other Senior Executives
include:
• Financial performance: Group EBITDA (40%)
• Operational performance (30%)
• Specific individual performance incentives linked to
specific strategic projects or objectives (30%).
The senior executives were deemed to have achieved 50%
of their performance targets for FY19 with the delivery of
the NBN Backhaul infrastructure project and Indigo subsea
cable.
For further details refer to Section 7 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.
Shareholders have approved the Company’s two LTI plans
being the Employee Rights Plan and the Executive
Option Plan.
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.
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.
It was decided that the Long-Term Incentives that were
offered to the CEO and Executives in FY19, with the first
vesting to occur at the end of the financial year, will be
baselined following the release of the FY19 annual results.
As a result, no grants were made during FY19 to senior
executives.
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.
The long-term incentive structure 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.
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
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 2019, Nil 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.
30
31
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES Remuneration Report
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 2019, Nil options were issued
under the Executive Option Plan and at the date of this
report there were Nil options on issue to Key Management
Personnel.
Mr Kelton can be restrained from working for a competing
business for a period of six months following termination
of employment. An amount equal to one months’ salary
including superannuation must be paid for each month
during the restraint period.
5.3 SENIOR EXECUTIVES
Remuneration and other terms of employment for Senior
Executives are formalised in employment agreements. Key
terms of those employment agreements are as follows:
Name
Duration
of Contract
Notice
Period
Termination
Payments (1)
Jon Tidd
No fixed term 3 months
3 months
David Thorn
No fixed term 3 months
3 months
Alex West
No fixed term 3 months
3 months
(1) Base salary payable if the Company terminates the Executive
without notice or without cause.
5. EMPLOYMENT TERMS FOR KEY
MANAGEMENT PERSONNEL
5.1 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.
5.2 EXECUTIVE DIRECTORS
Chief Executive Officer
Mr Kelton entered into a Chief Executive Officer
Employment Agreement with Superloop which
commenced on 1 July 2018. The term is ongoing until
terminated by Superloop and the employee.
During the first twelve months of employment, either party
could terminate the agreement by providing three months
written notice. Following this, the notice period is increased
to six months.
Employment may be terminated immediately for serious
misconduct.
6. REMUNERATION FOR FY19
The tables below outline the remuneration received by 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
Long-term
employee benefits
Post
employ-
ment
benefits
Salary
/ Fees
$
STI
$
Other
benefits
$
Total
$
Superan-
nuation
$
LTI
$
Long
Service
Leave
$
Total
Remun-
eration
Package
(TRP)
$
% of TRP
linked to
perfor-
mance
%
Executive Directors
Drew Kelton (1)
2019
2018
477,758
-
Bevan Slattery (2)
2019
54,795
2018 475,000
Former Executive Directors
-
-
-
-
-
-
-
-
477,758
22,242
-
-
54,795
5,205
475,000
25,000
Matthew Hollis (3) 2019
162,504
50,000
12,660
225,164
10,266
-
-
-
-
-
2018 325,000 140,000
-
465,000
25,000
198,756
Jason Ashton (4)
2019
77,554
52,920
104,603
235,077
5,133
2018
302,055
52,920
Non-Executive Directors
Michael Malone
Greg Baynton
Tony Clark
2019
2018
2019
2018
2019
2018
Vivian Stewart (5)
2019
110,000
110,000
90,000
80,000
54,795
54,795
82,192
2018
73,060
Former Non-Executive Directors
Louise Bolger(6)
2019
2018
26,636
63,927
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
354,975
28,695
110,000
110,000
90,000
80,000
54,795
54,795
82,192
73,060
-
-
-
-
5,205
5,205
7,808
6,940
26,636
63,927
2,530
6,073
TOTAL - 2019
2019 1,136,234
102,920
117,263 1,356,417
58,389
-
-
-
-
-
-
-
-
-
-
-
-
-
- 500,000
-
-
-
60,000
- 500,000
-
-
-
-
-
-
-
235,490
21.24%
688,756
49.18%
240,210
22.03%
4,606
388,276
13.63%
-
-
-
-
-
-
-
-
-
-
-
110,000
110,000
90,000
80,000
60,000
60,000
90,000
80,000
29,166
70,000
-
-
-
-
-
-
-
-
-
-
1,414,806
7.27%
TOTAL - 2018
2018 1,483,837
192,920
-
1,676,757
96,913
198,756
4,606 1,977,032
19.81%
(1) Drew Kelton commenced his employment on 2 April 2018. He commenced as a KMP on 1 July 2018.
(2) Bevan Slattery ceased as CEO on 30 June 2018 and commenced as Executive Director on 1 July 2018.
(3) Matthew Hollis resigned as an Executive Director on 23 November 2018 but continued to be employed until 31 December 2018. His ‘Other’
earnings includes $12,659.56 of unused Annual Leave and Long Service Leave paid out on termination.
(4) Jason Ashton ceased his employment on 30 September 2018. His Salary/Fees includes $27,897.41 of unused Annual Leave and $76,705.15
of unused Long Service Leave paid out on termination.
(5) Vivian Stewart was appointed on 21 December 2016.
(6) Louise Bolger also received $146,338.50 in consulting fees during the period she was engaged as a Non-Executive Director.
Louise resigned as a Non-Executive director on the 23 November 2018.
32
33
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Remuneration Report
SENIOR EXECUTIVES
7. PERFORMANCE OUTCOMES FOR FY19
Short-term employee benefits
Long-term
employee benefits
Post
employ-
ment
benefits
Salary
/ Fees
$
STI
$
Other
benefits
$
Total
$
Superan-
nuation
$
LTI
$
Long
Service
Leave
$
Total
Remun-
eration
Package
(TRP)
$
% of TRP
linked to
perfor-
mance
%
Senior Executives
Jon Tidd (1)
David Thorn (2)
Alex West
2019
2018
2019
2018
2019
2018
257,891
70,000
-
248,369
-
-
-
-
329,469
70,000
257,578
98,000
-
-
-
-
-
-
257,891
19,327
-
-
248,369
17,110
-
-
399,469
20,531
355,578
23,488
-
-
-
-
-
-
Former Senior Executives
Paul Jobbins (3)
2019
76,992
-
36,005
112,997
5,133
983
David Thomas (4)
Matthew
Whitlock (5)
2018
303,506
52,560
-
356,066
24,978
41,513
2019
2018
2019
2018
255,127
-
-
-
94,044
349,171
24,705
-
-
-
-
-
139,968
60,000
20,958
220,926
14,691
25,815
240,241
82,831
-
323,072
25,083
7,163
TOTAL - 2019
2019 1,307,816 200,000
151,007 1,658,823
101,497
26,798
TOTAL - 2018*
2018
801,325
233,391
-
1,034,716
73,549
48,676
-
-
-
-
347,218
20.16%
-
265,479
-
-
-
-
- 420,000
16.67%
-
-
-
-
-
-
-
-
-
379,066
25.85%
119,113
0.83%
422,557
22.26%
373,876
-
-
-
261,432
32.82%
355,318
25.33%
1,787,118
12.69%
1,156,941
24.38%
* The total for FY18 of $1,156,941 in this table is different to the total for FY18 in the FY18 Remuneration Report as it does not include the
$488,639 for Ryan Crouch who was reported as a KMP in last year’s report.
(1) Jon Tidd commenced his employment on 4 September 2018.
(2) David Thorn commenced his employment on 28 September 2018.
(3) Paul Jobbins ceased his employment on 28 September 2018. In his ‘Other’ category there is $36,004.79 in Annual Leave payout,
paid on termination.
(4) David Thomas commenced his employment on 15 August 2018. His employment ceased on 21 May 2019. In his ‘Other’ category there is
$82,367.16 in notice paid in lieu and $11,676.96 Annual Leave payout, both paid on termination.
(5) Matthew Whitlock ceased his employment on 8 March 2019. In his ‘Other’ earnings there is $20,958 in unused Annual Leave which was
paid out on termination.
The following table outlines the performance of the Company over the 2019 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 was $1.54 at 30 June 2019.
Year ended 30 June
2019
$
2018*
Restated $
2017
$
2016
$
2015**
$
Net profit / (loss)
(72,057,460)
$1,315,981
(1,239,792)
(7,164,110)
(1,193,442)
Dividends declared***
Share price at start of year
Share price at end of year
-
2.52
1.54
-
2.56
2.52
0.01
2.35
2.56
-
1.94
2.35
-
1.00
1.94
* Please refer to Note 4 AASB 15 Restatement for further information
** 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.
*** Dividend was declared in FY2017 but paid in FY2018
The 2019 financial year was the Company’s fourth 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:
• Completion of INDIGO subsea cable
• Completion of Australian national backbone connecting through NBN’s nationwide points of interconnect
• 89% increase in core fibre connectivity revenues
• Integration and synergies related to consolidating prior year acquisitions into a single Superloop brand and organisation
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.
Short term incentives were awarded as follows in accordance with the short term incentive policy in place during the year
(refer section 4.2):
Name
Fixed Remuneration
Target Incentive
Awarded Incentive
Alexander (Drew) Kelton
Jon Tidd
David Thorn
Alex West
$500,000
$330,000
$350,000
$350,000
$250,000
$66,000
$70,000
$70,000
$ -
$70,000
$ -
$70,000
During the year, there were no Performance Rights issued to Senior Executives in accordance with the Employee Rights
Plan. The Performance Rights outlined in the table below are considered long-term incentive arrangements provided as part
of the Senior Executive’s remuneration for the 2018 financial year and beyond:
Name
Date of issue
Number of
Rights granted
/ to be issued
Number
of Rights
vested
Issue
price of
shares
Fair value
of Right at
grant date ($)
Vesting date
Expiry date
of Rights
Paul Jobbins
13 July 2016
Matthew Whitlock
13 July 2016
4,149
4,149
4,149
4,149
29 June 2018
10,110
10,110
2.29
2.29
2.29
2.44
15 Sept 2018
15 Sept 2018
2.44
15 Sept 2018
15 Sept 2018
2.52
15 Sept 2018
15 Sept 2018
34
35
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES Remuneration Report
8 . SUMMARY OF SHARES HELD BY KEY MANAGEMENT PERSONNEL
11. SHARES UNDER OPTION OR PERFORMANCE RIGHTS
The table below outlines the movement in shareholdings by Key Management Personnel during the year:
Details of unissued shares or interest under Option at the date of this report are:
Opening
balance
1 July 2018
Balance at
date of
appointment
Received
as part of
remuneration
Additions
Disposals
Other
movements*
Closing
balance
30 June 2019
Directors
Michael Malone
Drew Kelton
Bevan Slattery
Greg Baynton
Louise Bolger
Tony Clark
Jason Ashton
Vivian Stewart
Matthew Hollis
636,293
-
61,169,389
812,331
69,563
399,741
1,347,447
577,738
30,408
Senior Executives
Paul Jobbins
Matthew Whitlock
TOTAL
39,500
114,680
65,197,090
* Individual was not a KMP as at 30 June 2019
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,149
14,259
28,405
-
3,398,300
43,861
4,800
22,208
-
-
-
-
-
-
-
-
-
-
-
(1,347,447)
-
-
-
-
-
-
-
-
-
664,698
-
64,567,689
856,192
74,363
421,949
-
577,738
(15,000)
(15,408)
-
-
(43,649)
(128,939)
-
-
-
18,408
3,497,574
(1,362,447)
(187,996)
67,162,629
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.
Date of issue
Number of shares
under option
Class of shares
Exercise price
of option
Vesting date
Expiry date
of options
24 August 2018
24 August 2018
24 August 2018
24 August 2018
24 August 2018
24 August 2018
24 August 2018
210,000
120,000
210,000
120,000
210,000
120,000
120,000
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
$2.00
15 September 2018
15 September 2022
$2.00
15 March 2019
15 September 2022
$2.00
15 September 2019
15 September 2022
$2.00
15 March 2020
15 September 2022
$2.00 15 September 2020
15 September 2022
$2.00
$2.00
15 March 2021
15 September 2022
15 March 2022
15 September 2022
756,094 Options expired during the year. At the date of this report there were 795,000 Options on issue.
At the date of this report there are no Performance Rights on issue, 97,093 Performance Rights vested and 26,455 lapsed
during the year to 30 June 2019.
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 for the rights to vest.
12. OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
9. SUMMARY OF OPTIONS HELD BY KEY MANAGEMENT PERSONNEL
There were no other transactions with Key Management Personnel not otherwise disclosed in the report.
The table below outlines the movement in shareholdings by Key Management Personnel during the year:
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.
Opening
balance
1 July 2018
Received
as part of
remuneration
Exercised
Other
movements
Closing
balance
30 June 2019
Vested and
exercisable
Vested
during
the year
On behalf of the Directors
Directors
Matthew Hollis
336,094
-
Senior Executives
Matthew Whitlock
TOTAL
-
336,094
315,000
315,000
-
-
-
(336,094)
(315,000)
(651,094)
-
-
-
-
-
-
-
-
-
10. 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 2018
Received
as part of
remuneration
Vested and
converted
to shares
Other
movements
Closing
balance
30 June 2019
Vested
during
the year
30,604
14,259
44,863
-
-
-
(4,149)
(14,259)
(26,455)
(18,408)
(26,455)
-
-
-
4,149
14,259
18,408
Senior Executives
Paul Jobbins
Matthew Whitlock
TOTAL
36
Alexander (Drew) Kelton
Chief Executive Officer & Director
30 September 2019
37
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES 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
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
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
Auditor’s Independence Declaration
The Board of Directors
Superloop Limited
Level 17, 333 Ann Street
Brisbane QLD 4000
The Board of Directors
30 September 2019
Superloop Limited
Level 17, 333 Ann Street
Brisbane QLD 4000
Dear Board Members
Superloop Limited
30 September 2019
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Superloop Limited.
Dear Board Members
As lead audit partner for the audit of the financial statements of Superloop Limited for the financial year
ended 30 June 2019, I declare that to the best of my knowledge and belief, there have been no
Superloop Limited
contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Superloop Limited.
and
(ii) any applicable code of professional conduct in relation to the audit.
As lead audit partner for the audit of the financial statements of Superloop Limited for the financial year
ended 30 June 2019, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
Financial Report
30 June 2019
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 13, which is not part of these financial statements.
The financial statements were authorised for issue by the Directors on 30 September 2019. The Directors have
the power to amend and reissue the financial statements.
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
Yours sincerely
and
(ii) any applicable code of professional conduct in relation to the audit.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
DELOITTE TOUCHE TOHMATSU
Yours sincerely
Stephen Tarling
Partner
DELOITTE TOUCHE TOHMATSU
Chartered Accountants
Stephen Tarling
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network
38
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Report
40
41
42
43
44
ANNUAL REPORT FY19
39
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Financial Report
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
For the Year Ended 30 June 2019
Revenue
Other income
Total revenue and other income
Direct costs
Employee benefits expense
Share based payments expense
Professional fees
Marketing costs
Administrative and other expenses
Total expenses
Earnings before interest, tax, depreciation, amortisation
and foreign exchange gains/losses (EBITDA)
Depreciation and amortisation expense
Impairment losses
Interest expense
Foreign exchange gains / (losses)
Share of associate’s profit / (loss)
Loss before income tax
Income tax benefit
Note
30 June 2019
$’000
30 June 2018
*Restated
$’000
6
6
14 / 15
7
8
13
9
117,338
2,507
119,845
(61,366)
(32,800)
(112)
(3,995)
(2,487)
(10,586)
(111,346)
8,499
(36,513)
(50,683)
(5,054)
(429)
(195)
(84,375)
12,318
115,491
2,667
118,158
(51,140)
(29,858)
(375)
(4,020)
(1,887)
(8,786)
(96,066)
22,092
(22,085)
-
(1,852)
(818)
(136)
(2,799)
4,115
(Loss) / profit for the year after tax for the year attributable
to the owners of Superloop Limited
(72,057)
1,316
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 on hedging transactions entered into the cash
flow hedge reserve
Total Other Comprehensive Income, net of income tax
Total Comprehensive (Loss) / Profit for the year attributable
to the owners of Superloop Limited
Profit / (Loss) per share for profit /(loss) attributable
to the ordinary equity holders of the Group:
Basic (loss) / profit per share
Diluted (loss) / profit per share
The notes following the financial statements form part of the financial report.
* Please refer to Note 4 AASB 15 Restatement for further information.
5,684
461
6,145
(65,912)
4,073
892
4,965
6,281
Note
Cents
Cents
34
34
(30.52)
(30.52)
0.59
0.59
As at 30 June 2019
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
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Provisions
Deferred revenue
Interest-bearing borrowings
Total current liabilities
NON-CURRENT LIABILITIES
Provisions
Deferred revenue
Interest-bearing borrowings
Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Other equity
Accumulated losses
TOTAL EQUITY
The notes following the financial statements form part of the financial report.
* Please refer to Note 4 AASB 15 Restatement for further information.
Note
30 June 2019
$’000
30 June 2018
*Restated
$’000
10
11
12
14
15
12
13
16
17
19
20
18
19
20
18
21
22
23
24
18,898
27,072
1,043
7,063
54,076
228,675
234,169
3,135
-
9,435
475,414
529,490
50,329
2,679
4,208
2,462
59,678
2,109
34,279
86,692
574
123,654
183,332
346,158
426,283
6,266
(3,327)
(83,064)
346,158
15,437
11,120
1,518
7,018
35,093
182,127
280,669
3,828
9,994
2,354
478,972
514,065
32,233
2,813
6,463
-
41,509
2,549
18,245
62,779
7,172
90,745
132,254
381,811
395,911
234
(3,327)
(11,007)
381,811
40
41
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES Financial Report
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2019
Contributed
equity
$’000
Reserves
$’000
Other equity
$’000
Accumulated
losses
$’000
Total equity
$’000
Restated Balance at 1 July 2018
395,911
Loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
Dividends paid
Share based payments
Issue of ordinary share capital
Share issue costs
Balance at 30 June 2019
-
-
-
-
-
31,106
(734)
234
-
6,145
6,145
-
(113)
-
-
(3,327)
-
-
-
-
-
-
-
(11,007)
(72,057)
-
(72,057)
-
-
-
-
381,811
(72,057)
6,145
(65,912)
-
(113)
31,106
(734)
426,283
6,266
(3,327)
(83,064)
346,158
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2019
OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Income taxes (paid) / received
Net cash inflow from operating activities
31
INVESTING ACTIVITIES
Interest received
Payments for property, plant and equipment
Payments for intangible assets
Net cash outflow on acquisition of subsidiaries
Net cash inflow / (outflow) on investment in associate
Deferred consideration payments
For the Year Ended 30 June 2018
Contributed
equity
$’000
Reserves
$’000
Other
equity(i)
$’000
Accumulated
losses
$’000
Total equity
$’000
Transaction costs associated with the acquisition of subsidiaries
Net cash inflow / (outflow) from investing activities
Previously Reported Balance at 1 July 2017
351,290
(4,894)
(3,327)
Change in accounting policy arising from
-
-
-
(9,597)
(1,677)
333,472
(1,677)
AASB15: ‘Revenue from contracts with
customers’*
Restated balance as at 1 July 2017
351,290
(4,894)
(3,327)
(11,274)
331,795
Restated Profit for the year
Other comprehensive income for the year
Restated Total Comprehensive Income
for the year
Dividends paid
Share based payments
Issue of ordinary share capital
Share issue costs
Restated Balance at 30 June 2018
-
-
-
-
-
45,298
(677)
395,911
-
4,965
4,965
-
163
-
-
234
-
-
-
-
-
-
-
1,316
-
1,316
(1,049)
-
-
-
(3,327)
(11,007)
1,316
4,965
6,281
(1,049)
163
45,298
(677)
381,811
The notes following the financial statements form part of the financial report.
* Please refer to Note 4 AASB 15 Restatement for further information.
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
10
10
The notes following the financial statements form part of the financial report.
Note
30 June 2019
$’000
30 June 2018
$’000
115,918
(110,100)
(525)
5,293
68
(52,048)
(9,254)
-
10,138
(2,000)
-
(53,096)
31,106
(734)
-
41,375
(15,000)
(5,054)
51,693
3,890
15,437
(429)
18,898
134,599
(98,289)
1,632
37,942
34
(44,084)
(23,416)
(12,355)
(10,129)
(1,542)
(330)
(91,822)
35,000
(1,113)
(1,050)
65,230
(32,725)
(2,295)
63,047
9,167
7,105
(835)
15,437
42
43
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES Notes to the Consolidated
Financial Report
1. Summary of Significant Accounting Policies
2. Application of New and Revised Accounting Standards
3. Critical Accounting Estimates and Judgement
4. Restatement Note AASB 15
5. Segment Information
6. Revenue
7.
Interest Expense
8. Foreign Exchange Gains / (Losses)
9.
Income Tax Expense
10. Cash and Cash Equivalents
11. Trade and Other Receivables
12. Other Assets
13. Investment in Associate
14. Property, Plant and Equipment
15. Intangible Assets
16. Deferred Tax Assets
17. Trade and Other Payables
18. Interest-Bearing Loans and Borrowings
19. Provisions
20. Deferred Revenue
21. Deferred Tax Liabilities
22. Contributed Equity
23. Reserves
24. Accumulated Losses
25. Dividends
26. Key Management Personnel Disclosures
27. Remuneration of Auditors
28. Operating Lease Arrangements
29. Commitments and Contingencies
30. Related Party Transactions
45
51
53
54
55
58
58
58
59
59
60
61
61
62
63
64
65
65
66
66
66
67
68
68
68
69
69
70
70
71
31. Reconciliation of Loss After Income Tax To Net Cash Flow From Operating Activities 72
32. Non-Cash Transactions
33. Financial Risk Management
34. Earnings Per Share
35. Events Occurring After The Reporting Period
36. Parent Entity Financial Information
37. Subsidiaries
38. Controlled Entities Acquired Or Disposed
72
73
75
76
77
78
79
Notes to the Consolidated Financial Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
The principal accounting policies adopted in the
preparation of these consolidated financial statements
are set out below. These policies have been consistently
applied to all the 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.
(A) REPORTING YEAR AND COMPARATIVE INFORMATION
These financial statements cover the period 1 July 2018
to 30 June 2019. The prior year covers the period 1 July
2017 to 30 June 2018. Comparative information has,
where necessary and immaterial, been reclassified to be
consistent with current year disclosures. A full 1 July 2017
restated Statement of Financial Position has not been
included in the Statement of Financial Position as the
impact of AASB 15 has been disclosed in Note 4 and is not
significant on the 1 July 2017 opening position.
(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
Standards (‘IFRS’) as issued by the International Accounting
Standards Board (‘IASB’).
(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. The
financial impact of the adoption of AASB 15 has been
disclosed in Note 4.
(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 2018.
(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 financial statements have been prepared on the basis
that the Group is a going concern, able to realise assets
in the ordinary course of business and settle liabilities as
and when they fall due. Like some other participants in the
telecommunications sector, the Group experienced
a challenging environment during FY 2019, with declines
in the Services Segment in the year ended 30 June 2019,
resulting in impairments of $50.7 million for the year (see
note 14 and 15) and therefore incurred a statutory loss after
tax of $72.1 million. The Group had net current liabilities
of $5.6 million at the balance sheet date, and net debt
of $70.3 million. Despite the aforementioned, the Group
generated positive cash flows from operating activities of
$5.3 million and generated a positive EBITDA of $8.5 million.
The group has invested $258 million capital into brand
new fibre networks that are on average 2 years into a 20+
year useful life and are part of the Group’s total net assets
of $346 million as at 30th June 2019. In addition, the core
fibre connectivity revenues are growing significantly as the
company monetises these new assets.
As referred to in note 18 of the financial statements, the
Group’s revolving debt facility was subject to certain
financial covenants including a Leverage Ratio and Interest
Cover Ratio. As at 30 June 2019 the Group had agreed
variations with certain undertakings in respect of the
Leverage and Interest Cover covenants and agreed with its
lenders to retest the covenants at 30 September 2019. On
24 September 2019 Superloop announced a recapitalisation
plan comprising a fully underwritten equity raise of up to
$92.2 million and a newly signed amended and extended
four year bank facility with its existing lenders ANZ and
Westpac comprising a $61.7 million facility limit with
revised financial undertakings (for details see note 35).
The new amended and extended facility is conditional on
the repayment of $50 million by 18 October 2019 from the
fully underwritten tranche 1 of the institutional placement
and entitlement offers (together the equity raising) outlined
in Note 35. The Group has reviewed the above and other
conditions pertaining to the recapitalisation plan, and
in light of the equity raise being fully underwritten and
sub-underwritten, has concluded that there is no material
uncertainty in meeting the requirements for the new facility.
The Directors therefore have reasonable grounds to believe
that the Group will achieve a satisfactory outcome in
respect of the above mentioned matters and, accordingly,
that it is reasonable for the Company to prepare accounts
on a going concern basis.
In addition, the Group has prepared detailed cash flows for
the next 18 months and forecasted covenant calculations
under the new facility including sensitised scenarios and
concluded that the Group has the capital available to
execute its business plan and meet its obligations as they
fall due.
.
44
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
45
ANNUAL REPORT FY19
Notes to the Consolidated Financial Report
(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 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. The Group’s
operating segments have remained consistent in FY19 on the
prior year, albeit renamed Connectivity (formerly ‘Superloop’),
Services (formerly ‘Superloop+’), Broadband (formerly
‘Superbb’) and Group Shared Services (formerly Corporate).
(E) REVENUE RECOGNITION
Superloop earns revenue from contracts with customers
primarily through the provision of telecommunications
and other related offerings. Superloop records revenue
from contracts with customers over time or at a point in
time on the delivery of the promised goods or services to
the customer in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for
those goods or services.
Revenue is recognised for the major business activities
as follows:
(i) Long-term capacity revenue
Long-term capacity arrangements (including Indefeasible
rights-of-use (‘IRU’) agreements) provide customers
exclusive access to fibre core capacity over an agreed
contract term. These arrangements include the initial
provisioning of the fibres, ongoing availability of capacity
and maintenance of the infrastructure over the contract
term which form part of an integrated service to the
customer and is considered to be a single performance
obligation. The transaction price is generally fixed, net of
any upfront discounts given. The customer receives and
consumes the benefit of the service simultaneously and
revenue is recognised over time, as the service is performed.
IRU agreements generally require the customer to make
payment upon the execution of the agreement. In these
cases the Group receives most or all of the transaction price
at the inception of the contract, resulting in a contract
liability being recognised upfront and amortised over the
contract term. Contract liabilities are presented in the
Group’s consolidated statement of financial position as
deferred revenue.
At inception of each IRU contract, in determining the
transaction price, Superloop gives consideration to
whether the timing of payments agreed to by the parties
to the contract provides the customer or the entity with
a significant benefit of financing the transfer of goods or
services to the customer. Factors considered takes into
account the difference, if any, between the amount of
promised consideration and the cash selling price of the
promised goods or services, and the combined effect of the
expected length of time between when Superloop transfers
the promised goods or services to the customer and when
the customer pays for those goods or services and the
prevailing interest rates in the relevant market.
If a significant financing component is deemed to exist,
the transaction price is adjusted for the effects of the time
value of money, and for revenue to be recognised at an
amount that reflects the price that a customer would have
paid if the customer had paid cash for the goods or services
when (or as) they transfer to the customer (i.e. the cash
selling price).
When the period between transferring a good or service
and the customer paying for it will be one year or less,
Superloop will adopt the practical expedient available in
AASB 15 not to adjust the consideration for the effects of
a significant financing component and applies this policy
consistently to contracts with similar characteristics and in
similar circumstances.
The revenue in relation to long-term capacity arrangements
and IRU’s are all recognised within the Superloop
Connectivity segment.
Services
Superloop provides a range of tailored services to
customers. Revenue associated with these arrangements is
recognised over time as the services are performed.
Hardware and software sales
Superloop sells certain hardware and software products to
customers, including installation services as an integrated
offering with the respective hardware or software products.
Revenue in relation to hardware is recognised on delivery at
the point in time when the customer obtains control of the
goods. Software products are provided to the customer on-
premises with a right-to-use the software as it exists when
made available to the customer, generally with no further
service obligation once the product has been installed.
Revenue from distinct on-premises licenses with no further
service obligation is recognised upfront at the point in time
when the software is made available to the customer.
There are some software products which require minor
ongoing maintenance and software upgrades that do not
significantly modify the form or function of the software
and are therefore accounted for as a performance
obligation distinct from the installed software. The stand-
alone selling price of the ongoing maintenance and
software updates has been determined using a residual
approach, by reference to the total transaction price less
the sum of the observable stand-alone selling price of the
installed software (using an expected cost plus margin
approach). Revenue associated with the ongoing service
obligation is recognised over the term of the contract.
Contract Costs
For certain long-term capacity agreements and managed
services contracts, upfront set-up type activities are
required to be performed for hardware to be installed
to activate these arrangements. For costs incurred in
fulfilling the contract with the customer that are within the
scope of another Standard, the group accounts for those
costs in accordance with those standards (e.g. AASB 116
Property, Plant and Equipment). Where the costs do not
fall within the scope of another standard, the guidance in
AASB 15 is applied and Superloop defers costs incurred
to fulfil contracts that relate directly to the contract, are
expected to generate resources that will be used to satisfy
Superloop’s performance obligation under the contract
and are expected to be recovered through revenue
generated under the contract. Contract fulfilment costs
capitalised under AASB 15 are expensed to cost of service
as Superloop satisfies its performance obligations under
each arrangement. Deferred costs are presented in the
Group’s consolidated statement of financial position as
other current and other non-current assets.
(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. Interest income
on impaired loans is recognised using the original effective
interest rate.
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, less any
loss allowances. 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.
The loss allowances for financial assets are based on
assumptions about risk of default and expected loss rates.
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
loss allowances for financial assets measured at amortised
cost are deducted from the gross carrying amount of the
assets. Cash flows relating to short-term receivables are not
discounted if the effect of discounting is immaterial.
46
47
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES Notes to the Consolidated Financial Report
The amount of the allowance for expected credit
loss is recognised in the Consolidated Statement of
Comprehensive Income within administrative expenses.
When a trade receivable for which an allowance had
been recognised becomes uncollectible, 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
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 incurred 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.
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 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 11) 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
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.
The Group records lifetime expected losses on all eligible
financial assets including trade receivables, contract assets
and lease receivables.
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 Comprehensive Income.
If, in a subsequent period, the amount of the impairment
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
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 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 Comprehensive Income.
(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.
Assets in the course of construction are transferred to
property, plant and equipment upon successful testing
and commissioning.
(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
3-10 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 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.
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.
Spectrum Licenses
Spectrum licence assets acquired as part of a business
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.
48
49
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES Notes to the Consolidated Financial Report
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
reassessed for indications that an impairment loss
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
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.
(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 34).
(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
(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 thousand dollars, unless
otherwise indicated.
(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.
2. APPLICATION OF NEW AND REVISED
ACCOUNTING STANDARDS
The Group’s assessment of the impact of the new standards,
amendments and interpretations are provided below.
(A) New and amended standards that are effective from
the current year
(1) 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.
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.
50
51
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
The standard is applicable to annual reporting periods
beginning on or after 1 January 2018 and accordingly the
group has applied this standard from 1 July 2018. The group
has adopted AASB 15 using the fully retrospective approach
and has restated comparative information.
Impact of adopting AASB 15
The only material impact on Superloop resulting from
the adoption of AASB 15 relates to long-term capacity
arrangements.
Under Superloop’s previous accounting policy, revenue
from long-term capacity arrangements was recognised in
line with the delivery of the services, based on the stage of
completion (the percentage of completion method using
the proportion of costs incurred to date compared to the
estimated total costs). This has historically resulted in a 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 from long-term
capacity arrangements (including sale of indefeasible
rights-of-use (‘IRU’) agreements) are recognised over the
term that the fibre core capacity is to be provided to the
customer. IRU agreements generally require the customer
to make payment upon the execution of the agreement. In
these cases the group receives most or all of the transaction
price at the inception of the contract, resulting in a contract
liability (deferred revenue) being recognised upfront and
amortised over the contract term.
The adoption of AASB 15 did not have a material impact on
any of the other revenue streams. The quantitative impact
of the adoption of AASB 15 has been outlined in note 4.
(2) 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 has
adopted AASB 9 from 1 July 2018 and has not restated
comparative information as permitted by the Standard.
The applicable of AASB 9 Financial Instruments did not
have a significant impact on the Group, in particular:
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 are measured at amortised cost.
• Impairment - under AASB 9, expected credit losses
on financial assets are recorded either on a 12-month
or lifetime basis. The Group has applied the simplified
approach and record lifetime expected losses on all
eligible financial assets. It is expected that the revised
methodology for calculation of impairment has not had
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.
(B) New and amended standards in issue but not
yet effective
(1) AASB 16 Leases
This standard will replace AASB 117 Leases and is applicable
to annual reporting periods beginning on or after 1 January
2019. This standard provides a comprehensive model
for the identification of lease arrangements and their
treatment in the financial statements of both lessees
and lessors. This standard introduces three main changes:
• 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 Group has elected to
apply a modified retrospective transition approach with
assessments being carried out at initial application date
as to whether a contract contains a lease.
The Group’s current estimate of the pre-tax financial
impact of these changes on the consolidated statement
of financial position on adoption is the recognition of an
additional lease liability and right of use asset at 1 July 2019
of $10.2 million.
• Classification and measurement - there is no material
impact on the Statement of Financial Position or
equity on applying the classification and measurement
requirements of AASB 9. Financial assets currently held at
The impact on the consolidated income statement for the
year to 30 June 2020 will depend on factors that may occur
during the year including new leases entered into, changes
or reassessments of the Group’s existing lease portfolio and
changes to discount rates. However, the operating lease
charges incurred in the year to 30 June 2019 were
$6.4 million and it is expected that a similar amount
of lease depreciation and interest would have been
recognised had IFRS 16 been applied in the year to
30 June 2019.
These impacts are based on the assessments undertaken
to date. The exact financial impacts of the accounting
changes of adopting IFRS 16 at 1 July 2019 may be revised.
The Group will issue further details on the impact of
adopting IFRS 16 as part of the interim financial statements
for the six months ending 31 December 2019.
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,
and the accompanying 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
estimates and judgements, which involved a higher
degree of judgement or complexity, and which have the
most significant effect on the amounts recognised in the
consolidated financial statements.
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 15.
Revenue recognition
The Group’s construction contracts are recognised as
and when performance obligations are met. Identifying
performance obligations, allocating the transaction
price to performance obligations, and determining the
timing of revenue recognition of these construction
contracts requires the application of judgement due to
the complexity and nature of the customer arrangements.
The assumptions made in the estimates are based on the
information available to Management at the reporting
date.
A change in the estimated stage of completion could have
an impact on the timing of the revenue recognition. Refer
to Note 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 16, for judgement made in relation to
deferred tax assets.
Business combinations
Accounting for acquisitions is 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 liabilities acquired, including intangible assets such
as customer relationships, software and brand name and
trademarks identified, refer to Note 38. 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) and 1(K).
For the acquisition of 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 NuSkope and Gx2 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.
52
53
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
4. RESTATEMENT NOTE AASB 15
Consolidated Statement of Financial Position
In the current year, the Group has applied AASB 15 Revenue from Contracts with Customers (as amended in April 2016)
which is effective for an annual period that begins on or after 1 January 2018. The Group has applied AASB 15 in accordance
with the fully retrospective transitional approach. The amount of adjustment for each financial statement line item affected
by the application of AASB 15 is illustrated below.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Revenue and other income
Direct costs
Employee benefits expense
Share based payments expense
Professional fees
Marketing costs
Administrative and other expenses
Total expenses
Earnings before interest, tax, depreciation,
amortisation and foreign exchange gains/losses
(EBITDA)
Depreciation and amortisation expense
Interest expense
Foreign exchange gains / (losses)
Share of associate’s profit / (loss)
Profit / (loss) before income tax
Income tax benefit
(Loss) / profit for the year after tax for the year
attributable to the owners of Superloop Limited
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
Total Comprehensive (Loss) / Profit for the year
attributable to the 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
30 June 2018 (as
previously reported)
$’000
125,171
(51,140)
(29,858)
(375)
(4,020)
(1,887)
(8,786)
(96,066)
29,105
(22,085)
(1,852)
(818)
(136)
4,214
2,908
7,122
4,073
892
4,965
12,087
Cents
3.19
3.18
AASB 15
Adjustment
(7,013)
-
-
-
-
-
-
-
(7,013)
-
-
-
-
(7,013)
1,207
(5,806)
-
-
-
(5,806)
30 June 2018
Restated
$’000
118,158
(51,140)
(29,858)
(375)
(4,020)
(1,887)
(8,786)
(96,066)
22,092
(22,085)
(1,852)
(818)
(136)
(2,799)
4,115
1,316
4,073
892
4,965
6,281
Cents
0.59
0.59
Impact of Assets, Liabilities & Equity
as at 30 June 2018
Investment in associate
Deferred tax assets
Total Deferred revenue
Deferred tax liabilities
Total Effect on Net Assets
Accumulated losses
Total Effect on Equity
Impact of Assets, Liabilities & Equity
as at 1 July 2017
Investment in associate
Deferred tax assets
Total Deferred revenue
Deferred tax liabilities
Total Effect on Net Assets
Accumulated losses
Total Effect on Equity
5. SEGMENT INFORMATION
30 June 2018 (as
previously reported)
$’000
AASB 15
Adjustment
30 June 2018
*Restated
$’000
9,505
954
(14,978)
(7,530)
(3,524)
489
1,400
(9,730)
358
(7,483)
(7,483)
(7,483)
9,994
2,354
(24,708)
(7,172)
(11,007)
1 July 2017
(as previously stated)
$’000
AASB 15
Adjustment
1 July 2017
*Restated
$’000
-
1,943
(2,432)
(10,104)
(9,597)
-
-
(2,104)
427
(1,677)
(1,677)
(1,677)
-
1,943
(4,536)
(9,677)
(11,274)
(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 (Connectivity);
ii) the provision of outsourced cloud and managed services, cyber security and cyber safety (Services); and
iii) the provision of broadband services for individual end users including residential NBN, retail fixed wireless and fixed line
internet services and connectivity services for hotels, student accommodation sites and schools (Broadband).
The operations of the Group are reported in these segments to Superloop’s Senior Management team (chief operating
decision makers). Items not specifically related to an individual segment are classified as Group Shared Services, 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.
54
55
ANNUAL REPORT FY19SUPERLOOP 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
for year ending 30 June 2019
Connectivity
(1) $000
Services (2)
$000
Broadband (3)
$000
Group Shared
Services (4)
$000
Revenue and other income
Direct costs
Gross Margin
Operating expenses
Depreciation and amortisation
Impairment losses
Interest, FX & other
Loss before income tax
59,472
(27,682)
31,790
(24,380)
-
24,678
(13,926)
10,752
(5,102)
(50,683)
35,586
(19,758)
15,828
(7,031)
-
109
-
109
-
-
Operating Segments
for year ending 30 June 2019
Connectivity
(1) $000
Services (2)
$000
Broadband (3)
$000
Group Shared
Services (4)
$000
Non-current assets
Property, plant & equipment
218,064
728
9,883
Intangible assets excl. goodwill
(includes indefeasible rights to use)
Goodwill
Total Non-current assets
85,689
104,855
408,608
5,229
-
5,957
8,186
30,210
48,279
-
-
-
-
TOTAL
$000
119,845
(61,366)
58,479
(49,980)
(36,513)
(50,683)
(5,678)
(84,375)
TOTAL
$000
228,675
99,104
135,065
462,844
(1) Connectivity includes earnings associated with the development of the INDIGO subsea cable system.
(2) Services includes earnings associated with the Cloud Managed Services entities acquired through the 2016 Big Air acquisition, and from
cybersecurity subsidiary, CyberHound.
(3) Broadband includes earnings and assets from BigAir Community Broadband, NuSkope and GX2 Technology for the full year, and the NBN
fixed line customer base acquired by SkyMesh.
(4) Group Shared Services includes inter-segment eliminations and unallocated earnings.
The below table provides further information regarding the group’s main Connectivity segment.
Analysis of Connectivity Operating
Segment for the year ending
30 June 2019
Australia
Fibre (5)
$000
Australia
Fixed Wireless
$000
Singapore
Fibre
$000
Hong Kong
Fibre
$000
Connectivity
Sub Total
$000
Revenue and other income
Direct costs
Gross Margin
Depreciation and amortisation
25,428
(12,988)
12,440
(5,516)
20,627
(7,774)
12,853
(13,063)
10,305
(4,207)
6,098
(2,263)
3,112
(2,713)
399
(3,538)
59,472
(27,682)
31,790
(24,380)
Operating Segments
for year ending 30 June 2018
Connectivity
(1) $000
Services (2)
$000
Broadband (3)
$000
Group Shared
Services (4)
$000
Revenue and other income
Direct costs
Gross Margin
Operating expenses
Depreciation and amortisation
Impairment losses
Interest, FX & other
Loss before income tax
54,227
(18,867)
35,360
(15,303)
-
36,583
(20,210)
16,373
(3,019)
-
26,652
(12,406)
14,246
(3,763)
-
696
343
1,039
-
-
TOTAL
$000
118,158
(51,140)
67,018
(44,926)
(22,085)
-
(2,806)
(2,799)
(1) Connectivity includes earnings associated with the development of the INDIGO subsea cable system.
(2) Services includes earnings associated with the Cloud Managed Services entities acquired through the 2016 Big Air acquisition, and from
cybersecurity subsidiary, CyberHound.
(3) Broadband includes earnings and assets from BigAir Community Broadband, NuSkope and GX2 Technology for the full year, and the NBN
fixed line customer base acquired by SkyMesh.
(4) Group Shared Services includes inter-segment eliminations and unallocated earnings.
(5) Australia includes INDIGO subsea cable assets and development revenue.
Operating Segments
for year ending 30 June 2018
Connectivity
(1) $000
Services (2)
$000
Broadband (3)
$000
Group Shared
Services (4)
$000
TOTAL
$000
Non-current assets
Property, plant & equipment
166,029
9,418
6,680
Intangible assets excl. goodwill
(includes indefeasible rights to use)
Goodwill
78,493
104,855
349,377
9,409
43,255
62,082
14,448
30,209
51,337
-
-
-
-
The below table provides further information regarding the group’s main Connectivity segment.
Analysis of Connectivity
Operating Segment
for the year ending 30 June 2018
Australia
Fibre
$000
Australia
Fixed Wireless
$000
Singapore
Fibre
$000
Hong Kong
Fibre
$000
Revenue and other income
Direct costs
Gross Margin
Depreciation and amortisation
Impairment Losses
24,713
(8,607)
16,106
(5,201)
-
21,760
(5,524)
16,236
(5,668)
-
5,969
(1,498)
4,471
(1,857)
-
1,785
(3,239)
(1,454)
(2,576)
-
182,127
102,350
178,319
462,796
Sub Total
$000
54,227
(18,868)
35,359
(15,302)
-
Sub Total
$000
Analysis of Connectivity Operating
Segment for the year ending
30 June 2019
Australia
Fibre (5)
$000
Australia
Fixed Wireless
$000
Singapore
Fibre
$000
Hong Kong
Fibre
$000
Connectivity
Sub Total
$000
Analysis of Connectivity
Operating Segment
for the year ending 30 June 2018
Australia
Fibre
$000
Australia
Fixed Wireless
$000
Singapore
Fibre
$000
Hong Kong
Fibre
$000
PP&E and Intangible Assets
(excluding Goodwill)
Property, plant & equipment
Intangible assets excl. goodwill
(includes indefeasible rights to use)
86,794
21,060
49,573
60,637
218,064
39,411
126,205
29,669
50,729
1,945
51,518
14,664
75,301
85,689
303,753
(5) Australia Fibre includes INDIGO subsea cable assets and development revenue.
56
Non-current assets
Property, plant & equipment
39,949
21,419
46,511
58,150
166,029
Intangible assets excl. goodwill
(includes indefeasible rights to use)
34,421
74,370
33,709
55,128
1,812
48,323
8,551
66,701
78,493
244,522
57
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
6. REVENUE
9. INCOME TAX EXPENSE
Revenue from ordinary activities
Customer revenue
Other Income
Interest income
Gain on sale of assets
Gain on sale of investment in associate
Other income
Total revenue and other income
30 June 2019
$ ’000
30 June 2018
Restated
$ ’000
117,338
115,491
68
474
315
1,650
119,845
33
-
-
2,634
118,158
(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
30 June 2019
$ ’000
30 June 2018
$ ’000
2,758
1,394
(15,076)
-
(15,076)
(1,336)
(4,173)
(5,509)
(12,318)
(4,115)
The total future revenue from the Group’s contracts with customers with performance obligations not satisfied at 30 June
2019 is $38.5 million of which $4.2 million is expected to be recognised within the next year and the remaining amount will
be recognised beyond 12 months over the life of the contracts on a straight line basis. The future revenue primarily relates to
the groups long-term capacity arrangements or IRUs, refer to revenue recognition accounting policy for further information.
These contracts have contract terms of between 7 and 20 years, with a weighted average remaining term of 13 years.
7. INTEREST EXPENSE
Interest on borrowings
Total interest expense
30 June 2019
$ ’000
30 June 2018
$ ’000
(5,054)
(5,054)
(1,852)
(1,852)
The Group incurs interest on the drawn amount and fee on the undrawn portion of its debt facility (refer to Note 18).
Other
8. FOREIGN EXCHANGE GAINS / (LOSSES)
Foreign exchange (losses) for the year arose as a result of unfavourable exchange rate movements in the ordinary course
of business.
(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
(84,375)
(2,799)
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 Impairment
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
Deferred tax credits in respect of temporary differences and unused tax losses
not recognised in prior years
Income tax expense / (benefit)
(25,313)
(840)
-
-
12,976
56
34
59
-
(130)
-
-
(12,318)
-
22
-
32
112
41
(4,172)
602
88
-
(4,115)
(i) Adjustments in relation to finalisation of prior years tax positions and impact of acquisitions into the tax consolidated group.
30 June 2019
$ ’000
30 June 2018
$ ’000
The tax rate used for the 2019 and 2018 reconciliations above is the corporate tax rate of 30% payable by Australian
corporate entities on taxable profits under Australian tax law.
Net foreign exchange (losses) for the year
Total net foreign exchange (losses)
(429)
(429)
(818)
(818)
10. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short term deposits
Total cash and cash equivalents
30 June 2019
$ ’000
30 June 2018
$ ’000
18,386
512
18,898
8,393
7,044
15,437
58
59
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES Notes to the Consolidated Financial Report
11. TRADE AND OTHER RECEIVABLES
Trade receivables
Allowance for expected credit losses
Net trade receivables
Consumption tax receivable
Other receivables
Total
Trade receivables
Allowance for expected credit losses
Net trade receivables
Consumption tax receivable
Other receivables
Total
Note
(A)
(B)
(C)
Note
(A)
(B)
(C)
Current
$’000
Non-Current
$’000
30 June 2019 TOTAL
$’000
27,356
(296)
27,060
12
-
27,072
-
-
-
-
-
-
27,356
(296)
27,060
12
-
27,072
Current
$’000
Non-Current
$’000
30 June 2018 TOTAL
$’000
11,297
(335)
10,962
91
67
11,120
-
-
-
-
-
-
11,297
(335)
10,962
91
67
11,120
(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 2019
$’000
30 June 2018
$’000
848
2,191
3,039
536
1,465
2,001
(B) AGING OF ALLOWANCE FOR EXPECTED CREDIT LOSS (“LOSS ALLOWANCE”)
As at 30 June 2019, the Group had a loss allowance of $296k (2018: $335k). Superloop applies the AASB 9 simplified
approach to measure expected credit loss (“ECL”) which uses a lifetime expected loss allowance for all trade receivables.
Aging of loss allowance
0 – 60 days
60 – 90 days
90 days plus
Total past due and impaired
Movement in loss allowance
Balance at beginning of the year
Impairment losses recognised on receivables
Allowance for expected credit losses
Balance from acquisition
Balance at end of the year
60
30 June 2019
$’000
30 June 2018
$’000
47
17
232
296
-
128
207
335
30 June 2019
$’000
30 June 2018
$’000
335
(48)
9
-
296
183
-
24
128
335
(C) CONSUMPTION TAX RECEIVABLE
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.
12. OTHER ASSETS
CURRENT
Prepayments
Contract assets
Other current financial assets
Total other assets – current
NON-CURRENT
Other non-current assets
Installation costs
Total other assets – non-current
13. INVESTMENT IN ASSOCIATE
30 June 2019
$’000
30 June 2018
$’000
4,357
2,667
39
7,063
299
2,836
3,135
3,262
3,668
88
7,018
396
3,432
3,828
The Group sold its minority interest of 16.8% in Fiber Sense Pty Ltd on the 24 June 2019 for $10.1 million consideration. It held
a carrying amount prior to disposal of $9.8 million, with a gain on disposal of $0.3 million recognised. The Group’s interest
was equity accounted for in the consolidated financial statements. Although the Group did hold less than 20% of the equity
shares of the associate, the Group did have significant influence by virtue of its protective 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:
30 June 2019
$’000
30 June 2018
$’000
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
-
-
-
-
-
-
149
(137)
(1,672)
-
(1,660)
498
(1,162)
(1,162)
(195)
1,568
9,028
(241)
(1,601)
8,754
9,994
78
(5)
(1,452)
(21)
(1,400)
386
(1,014)
(1,014)
(136)
61
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES Notes to the Consolidated Financial Report
14. PROPERTY, PLANT AND EQUIPMENT
15. INTANGIBLE ASSETS
30 June 2019
$’000
30 June 2018
$’000
6,805
174,925
46,628
317
228,675
31,551
114,620
34,921
1,035
182,127
Carrying amounts of:
Assets in the course of construction
Rights and licences
Software
Customer acquisition costs & Other Intangible Assets
Customer relationships, brands and trademarks
Assets in the
course of
construction
$’000
Network
assets
$’000
Communic-
ation assets
$’000
Other assets
$’000
TOTAL
$’000
Goodwill
Total intangible assets
Movements
30 June 2019
$’000
30 June 2018
$’000
1,074
47,294
5,998
4,427
40,312
135,064
234,169
3,755
39,918
6,438
1,159
51,080
178,319
280,669
Carrying amounts of:
Assets in the course of construction
Network assets
Communication assets
Other assets
Total
Cost or Valuation:
Balance at 30 June 2017
Additions
Additions through business combinations (Note 38)
Movement in foreign exchange
Transfer
Balance at 30 June 2018
Additions
Additions through business combinations (Note 38)
Movement in foreign exchange
Disposals
Transfer
Balance at 30 June 2019
Accumulated depreciation:
Balance at 30 June 2017
Depreciation charge
Disposals
Movement in foreign exchange
Balance at 30 June 2018
Depreciation charge
Disposals
Impairment
Movement in foreign exchange
Balance at 30 June 2019
Carrying value – 2019
Carrying value – 2018
6,597
30,908
-
-
(5,954)
31,551
47,201
-
39
-
104,017
9,149
-
4,129
5,570
122,865
5,630
-
6,715
(44)
(71,986)
57,503
6,805
192,669
(3,581)
(4,406)
58
(316)
(8,245)
(5,673)
26
(3,282)
(570)
-
-
-
-
-
-
-
-
-
-
35,914
5,275
1,569
78
316
43,152
9,390
-
176
(103)
14,021
66,636
(2,754)
(5,453)
-
(24)
(8,231)
(7,837)
80
(3,967)
(53)
1,365
1,292
168
-
68
2,893
827
-
16
(75)
462
147,893
46,624
1,737
4,207
-
200,461
63,048
-
6,946
(222)
-
4,123
270,233
(353)
(1,501)
-
(4)
(1,858)
(1,816)
62
(180)
(14)
(6,688)
(11,360)
58
(344)
(18,334)
(15,326)
168
(7,429)
(637)
(17,744)
(20,008)
(3,806)
(41,558)
6,805
31,551
174,925
114,620
46,628
34,921
317
1,035
228,675
182,127
Assets
being
developed
$’000
Rights
and
licences
$’000
Software
$’000
Customer
Acquisition
costs & Other
Intangible Assets
$’000
Customer,
brand &
trademarks
$’000
Goodwill
$’000
Total
$’000
Cost or valuation:
Balance as at 30 June 2017
3,113
20,759
2,472
561
49,956
167,771
244,632
Additions through business
combinations (refer Note 38)
Other additions
Movements in foreign
exchange
-
642
-
-
21,780
5,250
825
530
1,442
7,800
2,058
9
-
-
-
10,548
-
-
24,128
26,747
9
Balance as at 30 June 2018
3,755
42,548
8,547
2,533
59,814
178,319
295,516
Additions through business
combinations (refer Note 38)
Additions
Disposal
Transfer
Movements in foreign
exchange
-
-
2,563
9,387
-
(5,244)
-
-
-
1,367
(21)
873
-
750
1
Balance as at 30 June 2019
1,074
52,685
10,767
Accumulated amortisation:
Balance as at 30 June 2017
Amortisation charge
Movements in foreign
exchange
Balance as at 30 June 2018
Amortisation charge
Disposal
Impairment
Movements in foreign
exchange
Balance as at 30 June 2019
-
-
-
-
-
-
-
-
-
(874)
(1,756)
-
(2,630)
(2,740)
-
-
(21)
(732)
(1,377)
-
(2,109)
(2,673)
13
-
-
-
1,873
(296)
3,113
33
7,256
(27)
(1,347)
-
(1,374)
(1,525)
81
-
(11)
-
1,459
-
1,258
-
-
-
-
-
-
-
16,649
(317)
-
784
62,531
178,319
312,632
(3,193)
(5,541)
-
(8,734)
(13,485)
-
-
-
-
-
-
-
-
-
(4,826)
(10,021)
-
(14,847)
(20,423)
94
(43,255)
(43,255)
-
(32)
(5,391)
(4,769)
(2,829)
(22,219)
(43,255)
(78,463)
62
63
Carrying value – 2019
Carrying value – 2018
1,074
3,755
47,294
39,918
5,998
6,438
4,427
1,159
40,312
51,080
135,064
234,169
178,319
280,669
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES Notes to the Consolidated Financial Report
Goodwill has been allocated for impairment testing purposes to the following cash-generating units and groups of cash-
generating units (“cash-generating units”):
17. TRADE AND OTHER PAYABLES
Connectivity
Services
Broadband
Total goodwill
30 June 2019
$’000
30 June 2018
$’000
104,855
-
30,210
135,065
104,855
43,255
30,210
178,320
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 2020 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 1.5% - 3.0% is applied beyond the forecast period. A post-tax discount rate of 10.89% 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 was delivered May 2019, and assumptions about wholesale
and retail opportunities in the NBN fixed line market.
For the Services segment impairment testing calculated, indicated that the carrying amount exceeded the recoverable
amount at 30 June 2019, resulting in an impairment of $43.3 million to goodwill, and a property, plant & equipment
impairment of $7.4 million (refer to Note 14). No other impairment loss on goodwill has been identified.
Management has reviewed sensitivities on the key assumptions on which the recoverable amounts are based and believe
that changes would not cause the cash-generating units’ carrying amounts to exceed their recoverable amounts, with
exception to the Services segment. The sensitivities applied were to reduce the long-term perpetual growth rate by 1.0%, or
increase the post-tax discount rate from 10.9% to 12.0% . These sensitivity tests did not result in the cash-generating units’
carrying amounts exceeding their recoverable amounts, with exception to the Services segment.
Trade payables
Other payables
Accrued expenses
Other current financial payables
Current tax liabilities
Deferred consideration
Total trade and other payables
30 June 2019
$’000
30 June 2018
$’000
39,126
204
4,997
74
2,988
2,940
50,329
12,402
5,812
6,847
429
1,027
5,716
32,233
The Group had higher than usual Trade payables as at 30 June 2019 due to timing of the completion of the Indigo subsea cable, NBN
infrastructure and other network projects. These projects accounted for $21.6m of the total balance.
18. INTEREST-BEARING LOANS AND BORROWINGS
The Group had interest bearing loans and borrowing as at 30 June 2019 of $89.2 million (30 June 2018: $62.8 million). The Group
has a $120.0 million three year revolving facility with ANZ and Westpac maturing on 21 October 2021. The facility can be used for
working capital, capital expenditures and permitted acquisitions and is available to be drawn in multiple currencies. The Group
is required to adhere to financial covenants, including leverage ratio, debt capitalisation ratio and interest cover ratio. Bank
guarantees to the value of $2.0m have been issued under the facility. Refer Note 36 for details of new debt facility announced on
24 September.
The Group utilises an equipment vendor to provide funding for network equipment, entering into three year fixed rate instalment
payment agreements. At 30 June 2019, a total of $6.3 million had been funded under this arrangement (30 June 2018: Nil). In
terms of the cash flow statement, the impact of the equipment financing has been shown on a gross basis, with the amount of
property, plant and equipment funded by the equipment financing included in the payments for property, plant and equipment
and shown as a cash inflow in proceeds from borrowings.
Note
30 June 2019
$’000
30 June 2018
$’000
16. DEFERRED TAX ASSETS
Deferred tax assets attributable to:
Employee benefits
Exchange differences on foreign operations
Cash flow hedges
Expenses deductible in future periods
Tax credits from tax losses
Deferred Revenue
Future deduction of share issue costs
Total deferred tax assets
Note
30 June 2019
$’000
30 June 2018
*Restated
$’000
Current
Equipment financing
Revolving debt facility drawn
Total current interest-bearing loans and borrowings
1,201
-
-
2,750
13,014
5,516
743
23,224
(13,789)
-
9,435
1,593
-
-
2,057
9,785
1,400
966
15,801
(13,447)
-
2,354
2,462
-
2,462
3,885
82,807
86,692
-
-
-
-
62,779
62,779
Non-Current
Equipment financing
Revolving debt facility drawn (net of transaction costs)
(A)
Total non-current interest-bearing loans and borrowings
Total interest-bearing loans and borrowings
89,154
62,779
Total revolving debt facility limit
Less bank guarantees issued under the facility
Less amounts drawn (before transaction costs)
Revolving debt facility available
120,000
(1,082)
(83,929)
34,989
80,000
(1,524)
(63,805)
14,671
30 June 2018
$’000
Financing
cashflows
Net transaction
costs
30 June 2019
$’000
Total interest-bearing loans and borrowings
62,779
26,471
(96)
89,154
(A) 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.
65
Set-off deferred tax liabilities pursuant to set-off provisions
21
Deferred tax assets not recognised
Deferred tax assets recognised in the statement of financial position
Deferred tax assets are recognised where it is considered probable that they will be recovered in the future, and as such involve estimates and
assumptions in respect of future events.
64
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES Notes to the Consolidated Financial Report
19. PROVISIONS
Current – employee benefits
Non-current – employee benefits
Total provisions
30 June 2019
$’000
30 June 2018
$’000
2,679
2,109
4,788
2,813
2,549
5,362
The provision for employee benefits represents accrued annual leave and long service leave entitlements.
20. DEFERRED REVENUE
Deferred revenue
Deferred installation fees
Total deferred revenue
Current
Non-current
Total deferred revenue
30 June 2019
$’000
30 June 2018
$’000
38,462
25
38,487
4,208
34,279
38,487
21,186
3,522
24,708
6,463
18,245
24,708
Deferred revenue includes long-term capacity arrangements (indefeasible rights-of-use (‘IRU’) agreements) which provides
customers exclusive access to fibre core capacity over an agreed contract term in addition to other customer contracts
where payment has been received but services not yet provided. The IRU arrangements include the initial provisioning of the
fibres, ongoing availability of capacity and maintenance of the infrastructure over the contract term which form part of an
integrated service to the customer and is considered to be a single performance obligation. The transaction price is generally
fixed, net of any upfront discounts given. The customer receives and consumes the benefit of the service simultaneously
and revenue is recognised over time, as the service is performed. For other customer contracts revenue is recognised once
performance obligations are met.
The table below shows the movement of deferred revenue for the year.
Deferred Revenue movement
Opening balance
Additions
Revenue recognised
Closing balance
21. DEFERRED TAX LIABILITIES
30 June 2019
$’000
30 June 2018
$’000
24,708
19,712
(5,933)
38,487
4,536
22,312
(2,140)
24,708
22. CONTRIBUTED EQUITY
(A) SHARE CAPITAL
30 June 2019
Number of Shares
30 June 2018
Number of Shares
30 June 2019
$’000
30 June 2018
$’000
Fully paid ordinary shares
253,301,037
228,499,540
Total share capital
Less: Issue costs
Contributed equity
253,301,037
228,499,540
253,301,037
228,499,540
432,811
432,811
(6,528)
426,283
401,706
401,706
(5,795)
395,911
(B) MOVEMENTS IN ORDINARY SHARE CAPITAL
Date
Details
Number
of Shares
Issue Price
$
Value
$
30-Jun-17
Balance
208,795,883
11-Aug-17
2-Oct-17
13-Oct-17
Partial consideration for acquisition
of SubPartners Pty Ltd (i)
Share placement
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
17-Sept-18
Vesting of performance rights (i)
5-Mar-19
5-Mar-19
Share placement
Entitlement Offer (Institutional Component)
27-Mar-19
Entitlement Offer (Retail Component)
30-Jun-19
Balance
(i) These share issues were non-cash transactions (refer to Note 32).
1,161,495
8,888,889
1,221,110
6,666,666
71,597
1,680,672
13,228
228,499,540
97,093
12,000,000
5,977,188
6,727,216
253,301,037
2.56
2.25
2.37
2.25
2.49
2.51
2.52
2.32
1.25
1.25
1.25
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
225,256
15,000,000
7,471,485
8,409,020
432,811,444
(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.
30 June 2019
$’000
30 June 2018
$’000
(D) DIVIDEND REINVESTMENT PLAN
The Group does not have a dividend reinvestment plan in place.
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 16)
Deferred tax liabilities recognised in the statement of financial position
66
-
1,297
1,239
11,925
(98)
14,363
(13,789)
574
-
1,341
1,351
17,896
31
20,619
(13,447)
7,172
(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.
67
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES Notes to the Consolidated Financial Report
30 June 2019
$’000
30 June 2018
$’000
26. KEY MANAGEMENT PERSONNEL DISCLOSURES
(A) KEY MANAGEMENT PERSONNEL COMPENSATION
Total borrowings (as per Note 18)
Less: cash and cash equivalents
Net debt / (surplus cash)
Total equity
Gearing ratio
89,154
(18,898)
70,256
62,779
(15,437)
47,342
346,158
381,811
20.3%
12.4%
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.
23. RESERVES
Cash flow hedge reserve(1)
Share based payments
Foreign currency translation reserves(2)
Total reserves
30 June 2019
$’000
30 June 2018
$’000
532
865
4,869
6,266
71
977
(814)
234
(1) 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.
(2) 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.
Short term employee benefits
Post employment benefits
Long-term employee benefits
Share based payments
Total key management personnel compensation
Detailed remuneration disclosures are provided in the Remuneration Report.
30 June 2019
$
30 June 2018
$
2,746,970
428,156
26,798
-
3,201,924
3,149,785
191,814
27,063
253,950
3,622,612
(B) SHARE BASED PAYMENTS
During the year, key management personnel and other employees of the Group participated in long-term incentive schemes.
30 June 2019
$
30 June 2018
$
Expense arising from equity-settled share based payments
Total expense arising from share based payment transactions
112,395
112,395
374,710
374,710
There were no cancellations or modifications to the awards during the year.
(C) 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 30.
27. 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
24. ACCUMULATED LOSSES
Opening balance
(Loss) / profit for the year
Dividends paid
Total accumulated losses
25. DIVIDENDS
No dividends were paid or declared in FY19. (FY18: $1.05 million paid).
30 June 2019
$’000
30 June 2018
*Restated $’000
(11,007)
(72,057)
-
(83,064)
(11,274)
1,316
(1,049)
(11,007)
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 2019
$
30 June 2018
$
444,938
7,500
45,227
-
24,136
-
-
521,801
298,000
10,000
41,800
23,000
36,750
28,000
437,550
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.
68
69
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES Notes to the Consolidated Financial Report
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) NON-DELOITTE AUDIT FIRMS
Superloop Limited did not engage with any other non-Deloitte audit firms.
28. 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 fourteen 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:
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
29. COMMITMENTS AND CONTINGENCIES
30 June 2019
$’000
30 June 2018
$’000
6,399
6,399
5,249
5,249
30 June 2019
$’000
30 June 2018
$’000
3,557
3,934
474
7,965
4,157
6,020
227
10,404
(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 2019
$’000
30 June 2018
$’000
6,002
6,002
31,148
31,148
Capital commitments relate to contractual commitments associated with network expansion. Non-cancellable operating
lease commitments are disclosed in Note 28 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 material contingent liabilities during the year or as at the date of this report.
30. RELATED PARTY TRANSACTIONS
All related party sales transactions are reviewed by the Chief Revenue Officer (CRO) unless the Chief Revenue Officer is the
related party then the review is completed by Chief Financial Officer (CFO). In the unlikely event that both the CRO 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. In addition to the above during the
period the Group provided one-off consulting services to Capital B.
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 had entered into an agreement for the provision of legal services from Louise Bolger and Associates Pty Ltd.
Former 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. Ms Louise Bolger has since become a direct employee of
Superloop and hence the Louise Bolger and Associates agreement is no longer in operation.
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.
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 sold it’s 16.8% minority interest in the associate in June 2019 in part to
founding shareholder. Remaining shareholders of the associate are unrelated parties. Refer to note 13.
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.
70
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ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES Notes to the Consolidated Financial Report
PROVISION OF SERVICES TO/FROM RELATED PARTIES
33. FINANCIAL RISK MANAGEMENT
30 June 2019
$
30 June 2018
*Restated $
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.
SALES OF GOODS / SERVICES
Revenue earned from related parties
Proceed from sale of Investment in associate
AMOUNTS PAID TO THIRD PARTIES
Provision of services to Superloop
Investment in associate
Payments in relation to SubPartners acquisition
BALANCE OUTSTANDING AT THE END OF THE YEAR
Receivables
Trade and other payables
2,518,743
9,797,307
1,916,171
-
408,817
-
-
408,817
37,528
42,759
443,007
10,123,282
5,659,926
16,226,215
1,320,862
687,551
31. RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH FLOW FROM OPERATING ACTIVITIES
30 June 2019
$’000
30 June 2018
*Restated $’000
Profit / (loss) for the year after income tax
(72,057)
1,316
Adjustments for:
Depreciation and amortisation
Impairment
Other adjustments
Interest expense
Gain on disposal assets and associate
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 deferred revenue
(Decrease) / increase in provisions
(Decrease) / increase in finance lease liabilities
(Decrease) / increase in tax related balances
Net cash from operating activities
32. NON-CASH TRANSACTIONS
36,513
50,683
(257)
5,054
(789)
-
(15,952)
(927)
2,979
13,778
(574)
-
(13,158)
5,293
22,085
-
(317)
2,469
-
1,542
303
(3,865)
(4,207)
19,559
980
(32)
(1,891)
37,942
During the year, the Group entered into no non-cash investing and financing activities which are not reflected in the
consolidated statement of cash flows.
The following non-cash investing and financing activities occurred in the prior year.
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. Refer to
Note 38 for additional information on these transactions.
In terms of fair value measurement, the carrying value of the Group’s financial assets are set out in note 10 “Cash and cash
equivalents” and note 11 “Trade and other receivables”. For all financial assets held at amortised cost the carrying values
approximate fair value. The carrying value of the Group’s financial liabilities are set out in notes 17 “Trade and other payables”
and 18 “Interest-bearing loans and borrowings”. For the Trade and other payables the carrying values approximate fair value.
The Group holds the following financial instruments measured at fair value:
Level 1 -
Quoted prices in
active markets
$’000
Level 2 -
Significant
observable inputs
$’000
Level 3 -
Significant
unobservable inputs
$’000
Total
30 June 2019
Financial assets measured at fair value
Derivative financial assets
Total financial assets
Financial liabilities
measured at fair value
Deferred consideration
Derivative financial liabilities
Total financial liabilities
30 June 2018
Financial assets measured at fair value
Derivative financial assets
Total financial assets
Financial liabilities measured
at fair value
Deferred consideration
Derivative financial liabilities
Total financial liabilities
-
-
-
-
-
-
-
-
-
-
39
39
-
74
74
88
88
-
11
11
-
-
39
39
2,940
-
2,940
2,940
74
3,014
-
-
88
88
5,761
-
5,761
5,761
11
5,772
(A) MARKET RISK
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market prices. Market risk comprises three types of risk: foreign exchange risk, price risk and interest rate risk.
(i) Foreign exchange risk
Superloop is exposed to exchange rate movements, in particular movements in the A$/US$ rate, A$/SG$, A$/HK$ and SG$/
US$. 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$/SG$, A$/HK$ and the
SG$/US$ 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.
72
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ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Notes to the Consolidated Financial Report
(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.
Contractual maturities
of financial liabilities
Within 12
months
$’000
Between
1 and 5 years
$’000
Over 5 years
$’000
Total contractual
cash flows
$’000
Carrying Amount
$’000
The Group’s main interest rate risk arises from its cash at bank, term deposits (refer Note 10), 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 2019, 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 $828k higher / 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:
CASH AT BANK AND SHORT TERM DEPOSITS
AA rated
A+ rated
BBB+ rated
TOTAL
30 June 2019
$’000
30 June 2018
$’000
18,898
15,437
-
-
-
-
18,898
15,437
In determining the credit quality of the financial assets, Superloop has used the long-term rating from Standard & Poor’s in
July 2019.
(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 2019, the Group had $27.4 million customer trade receivables (refer Note 11).
(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 favourable 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.
2019
Trade payables
Interest-bearing borrowings
Total non-derivatives
2018
Trade payables
Interest-bearing borrowings
Total non-derivatives
50,329
2,462
52,791
32,233
-
32,233
-
86,692
86,692
-
63,805
63,805
-
-
-
-
-
-
50,329
89,154
139,483
32,233
63,805
96,038
50,329
89,154
139,483
32,233
63,805
96,038
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 $20.0 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$3.9 million has been entered into to reduce
the potential impact of exchange rate movements in contractual obligations in relation to submarine cable construction.
34. EARNINGS PER SHARE
(A) EARNINGS PER SHARE
Total basic earnings per share attributable to the ordinary
equity holders of the Group
(B) DILUTED EARNINGS PER SHARE
30 June 2019
Cents
30 June 2018
Restated
Cents
(30.52)
0.59
30 June 2019
Cents
30 June 2018*
Restated
Cents
Total diluted earnings per share attributable to the ordinary
equity holders of the Group
(30.52)
0.59
(C) RECONCILIATIONS OF EARNINGS USED IN CALCULATING EARNINGS PER SHARE
30 June 2019
$’000
30 June 2018*
Restated
$’000
The Group believes the new senior debt facility and equity raise detailed in Note 35 of Financial Statements, together with
cash flows from operations, will provide sufficient capital to complete its committed capital expenditure program and fund
its expected working capital requirements for at least the next 12 months (see also Note 1B(vi)).
Basic Earnings Per Share
Profit attributable to the ordinary equity holders of the Group used
in calculating basic losses per share
(72,057)
1,316
74
Diluted Earnings Per Share
Profit from continuing operations attributable to the ordinary
equity holders of the Group
(72,057)
1,316
75
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES Notes to the Consolidated Financial Report
(D) WEIGHTED AVERAGE NUMBER OF SHARES USED AS THE DENOMINATOR
30 June 2019
Number of
Shares
30 June 2018
Number of
Shares
Weighted average number of ordinary shares used as the denominator in
calculating basic earnings per share
236,107,785
222,997,402
Effects of dilution from:
Performance rights
Share options
-
-
130,825
562,075
Weighted average number of ordinary shares and potential ordinary shares used
as the denominator in calculating diluted earnings per share
236,107,785
223,690,302
Performance rights and Share Options granted to employees under the Performance Rights and Options Plan are
considered to be potential ordinary shares. These have not been included in the calculation of diluted earnings per share
because potential ordinary shares that would reduce a loss per share are not considered to be dilutive.
35. EVENTS OCCURRING AFTER THE REPORTING PERIOD
On 24 and 26 September 2019, Superloop announced a recapitalisation plan comprising a fully underwritten equity raise
of up to $92.2 million, and a newly signed amended and extended four year bank facility with its existing lenders ANZ and
Westpac.
The new four year bank facility is comprised of a $61.7 million facility limit and revised financial undertakings with key terms
including:
1.
Facilities and purpose:
a. Facility B1: Revolving capex facility of $40 million for success-based capital expenditure and refinancing existing
indebtedness
b. Facility B2: Revolving working capital/ capex facility of $20 million for general corporate purposes, refinancing existing
indebtedness and non success-based capital expenditure including operating and maintenance
c. Facility C and D: To be used as revolving lines of credit, bank guarantees and performance bonds of $1.5 million and
$0.2 million credit cards.
2.
Financial undertakings of new facility:
a. Leverage Ratio (defined as net financial indebtedness divided by trailing 12 months adjusted EBITDA; see below for
summary of EBITDA adjustments) must not exceed 5.25x as at 31 March 2020, 5.25x from 1 April 2020 to 30 June
2020, 4.50x from 1 July 2020 to 30 September 2020, 4.25x from 1 October 2020 to 31 December 2020, 3.50x from 1
January 2021 to 31 March 2021, 3.0x from 1 April 2021 to 30 June 2021; and 2.50x thereafter.
b. Interest Cover Ratio (defined as adjusted trailing 12 months EBITDA divided by interest expense to be calculated by
annualising interest expense for the period from financial close of the new facility to that calculation date to reflect
the reduced facility limits post financial close) must not fall below 1.0x from 30 September 2019 to 30 March 2020,
2.25x from 31st March 2020 to 30 June 2020, 2.75x from 1st July 2020 to 30th September 2021 and thereafter 4.0x.
c. Debt Capitalisation Ratio (defined as percentage of A divided by (A plus B) where A is the sum of all financial
indebtedness of the group and B is the total assets of the group less the total liabilities of the group), must not
exceed 30%
d. Leverage Ratio and Interest Cover Ratio both use “Bank-Adjusted last 12 months EBITDA”, being reported EBITDA
adjusted for clauses including but not limited to: i) Exclusion of AASB16 adoption, i.e. operating leases continue to be
included as an operational cost not a financing lease ii) inclusion of the pro-forma annualised EBITDA from customer
contracts signed that haven’t yet had 12 months of actual EBITDA iii) exclusion of revenue recognised from IRUs
where cash has already been received prior to financial close iv) other adjustments
e. In addition to other customary review events for a listed entity, the Lenders may review the Facilities if Mr Bevan
3.
Slattery ceases to own legally and beneficially 12.5% or more of each class of the issued share capital of Superloop.
The facilities are subject to customary conditions precedent for a debt facility of this nature as well as receipt of at least
$50 million of the proceeds of the equity offer to be used to repay Lenders’ existing term loan commitments by 18
October 2019. A variation to the existing senior debt facility is in place to enable the transition.
The $92.2 million equity raising is comprised of:
1. A fully underwritten two-tranche placement to institutional investors to raise approximately $57.6 million (Institutional
Placement)
76
2. A fully underwritten 1 for 6 accelerated non-renounceable entitlement offer of fully paid ordinary shares in Superloop
(New Shares) to raise approximately $34.6 million (Entitlement Offer). The Entitlement Offer comprises an accelerated
institutional component (Institutional Entitlement Offer) and a retail component (Retail Entitlement Offer).
A total of approximately 48 million new Superloop shares will be issued to successful applicants under the first tranche of
the Institutional Placement and the Institutional Entitlement Offer at an issue price of $0.82 per new Superloop share (Offer
Price). Those funds, totalling approximately $39.4 million, will be available to Superloop on or about 1 October 2019. Proceeds
from the fully underwritten Retail Entitlement Offer will be available to Superloop by the 18 October 2019.
The issue of shares under the second tranche of the Institutional Placement remains subject to shareholder approval being
obtained at Superloop’s 2019 annual general meeting, which is scheduled to be held on Wednesday, 30 October 2019.
The institutional shortfall, comprised of the entitlements not taken up by eligible institutional shareholders along with the
entitlements of ineligible institutional shareholders, and the Institutional Placement, attracted demand from new and
existing institutional and sophisticated investors, with demand significantly in excess of the amount sought to be raised by
Superloop.
Approximately $32.6 million of the $92.2 million equity raising is conditional upon shareholder approval at the Company’s
2019 AGM. In the event that the final tranche of the equity raise is not approved by shareholders either in the AGM or
a subsequent meeting prior to 15 November 2019, the Company has agreed to provide its senior lenders with a revised
business plan.
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
Profit/ (loss) for the year
Total comprehensive profit/ (loss) for the period
30 June 2019
$’000
30 June 2018
$’000
1,993
502,922
504,915
4,710
90,592
95,302
426,283
(1,050)
1,393
(17,013)
409,613
(8,015)
(7,671)
9,681
468,623
478,304
8,560
82,832
91,392
395,911
(1,050)
1,049
(8,997)
386,913
(3,774)
(3,539)
(A) GUARANTEES ENTERED INTO BY THE PARENT ENTITY IN RELATION TO THE DEBTS OF ITS SUBSIDIARIES
As at 30 June 2019, 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 2019, Superloop Limited did not have any contingent liabilities.
77
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES Notes to the Consolidated Financial Report
37. SUBSIDIARIES
38. CONTROLLED ENTITIES ACQUIRED OR DISPOSED
Country of
Incorporation
Class
of Shares
30 June 2019
%
30 June 2018
%
During the year Superloop Limited did not acquire any entities. The Group have finalised the fair value of the identifiable
assets acquired and liabilities assumed in respect of Nuskope and Gx2 acquisitions. These acquisitions were made during
FY18 and the fair values were provisional at 30 June 2018.
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)
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
United Kingdom
USA
Fiji
New Zealand
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
(1) These wholly-owned subsidiaries are members of the Australian tax-consolidated group.
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%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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 installments 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 $5.2 million represents the residual value of the
purchase price over the provisional fair value of the identifiable assets and liabilities shown below.
Accordingly the values identified below were finalised at 31 December 2018. Details of the acquisition are:
Provisional fair value
at 30 June 2018
$’000
Fair value
adjustments
$’000
Final fair value at
31 December 2018
$’000
a) Identifiable assets acquired and liabilities assumed
Cash
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
Deferred Consideration(1)
Total consideration
242
136
1,412
2,118
150
3,846
2,489
(719)
(241)
(1,707)
7,726
7,000
2,894
3,000
12,894
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) Estimated Deferred consideration is dependent on EBITDA earned by NuSkope in 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.
c) Goodwill arising on acquisition
Consideration
Less net identifiable assets
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
(7,726)
5,168
7,000
(242)
6,758
-
-
-
-
-
-
242
136
1,412
2,118
150
3,846
2,489
(719)
(241)
(1,707)
7,726
7,000
2,894
3,000
12,894
12,894
(7,726)
5,168
7,000
(242)
6,758
78
79
ANNUAL REPORT FY19SUPERLOOP LIMITED AND CONTROLLED ENTITIES Notes to the Consolidated Financial Report
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 and has technology, software and systems that will add value to the
combined group. Goodwill of $5.4 million represents the residual value of the purchase price over the fair value of the
identifiable assets and liabilities shown below.
Accordingly the values identified below are final as at the reporting date. Details of the acquisition are:
Provisional fair
value at
30 June 2018
$’000
Fair value
adjustments
$’000
Final fair value at
31 December 2018
$’000
a) Identifiable assets acquired and liabilities assumed
Cash
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
Deferred Consideration
Total consideration
c) Goodwill arising on acquisition
Consideration
Less net identifiable assets
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
403
905
281
2,053
150
3,802
3,050
(845)
(1,025)
(396)
(1,445)
6,933
6,000
4,219
2,000
12,219
12,219
(6,933)
5,286
6,000
(403)
5,597
-
-
-
(95)
-
-
-
-
-
-
-
(95)
-
-
-
-
-
95
-
-
-
-
403
905
281
1,958
150
3,802
3,050
(845)
(1,025)
(396)
(1,445)
6,838
6,000
4,219
2,000
12,219
12,219
(6,838)
5,381
6,000
(403)
5,597
Directors’ Declaration
In the Directors’ opinion:
(a) the financial statements and notes set out on pages 40 to 80 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 2019 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.
Alexander (Drew) Kelton
Chief Executive Officer and Director
30 September 2019
80
ANNUAL REPORT FY19
81
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Independent
Auditor’s Report
Independent Auditor’s Report
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 2019, 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 2019 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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
82
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
83
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network
ANNUAL REPORT FY19
Independent Auditor’s Report
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
Carrying value of Goodwill assets
As at 30 June 2019 the Group’s goodwill balance totals
$135.1 million as disclosed in Note 15, following an
impairment recognised during the year of $43.3 million.
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:
•
• market growth rates;
•
•
terminal growth factors; and
discount rates.
the cash flow forecasts;
How the scope of our audit responded to the
Key Audit Matter
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:
•
the cash flow forecasts by agreeing inputs in
the cash flow models to relevant data including
approved budgets and assessing forecasting
accuracy by comparing historic forecasts to actual
outcomes;
the market and terminal growth rates against
relevant historical and industry data; and
the discount rates applied, by comparing the
rates used to the discount rates calculated by our
valuation specialists.
•
•
performing sensitivity analysis on key assumptions;
testing the mathematical accuracy of the valuation
models; and
assessing the appropriateness of the disclosures in Note
3 and 15 to the financial statements.
Classification of borrowings, funding and
liquidity
As at 30 June the Group has net current liabilities of $5.6
million, cash and cash equivalents of $18.9 million and has
drawn down $83.9 million on its revolving debt facility
of $120 million as disclosed in Note 1(B)(vi) and Note 18
The debt facility agreements stipulate certain financial
covenants are required to be met.
Prior to the 30 June 2019, Superloop’s lenders had agreed
to certain waivers and variations to the loan covenants and
therefore the debt has been classified as non-current as at
the 30 June 2019.
Subsequent to year end as disclosed in Note 35, the Group
announced a recapitalisation plan which includes an
underwritten placement and entitlement offer, expected to
raise up to $92.2 million. The placement will be performed
in two tranches with approximately $32.6 million requiring
shareholder approval.
A new bank facility agreement has also been signed, which
will be effective once the conditions precedent as set out in
Note 35 have been met.
Our procedures included, but were not limited to:
•
•
•
•
•
•
•
•
•
reviewing the terms and conditions of existing loan
agreements and recalculating the covenants;
reviewing and assessing the impact of correspondence
with lenders, including waivers and variation letters;
assessing the classification of the debt at 30 June 2019;
reviewing the terms of the placement and entitlement
offer announced 24 September 2019 and the
associated underwriting agreement;
assessing the terms and covenants of the new banking
facility;
reviewing management’s financial forecasts including
forecast covenant compliance;
inquiring of management and the directors in relation
to their review of the Group’s
recapitalisation plan and cash flow forecasts; and
assessing the appropriateness of the disclosures in Note
1(B)(vi), Notes 18 and 35 to the financial statements.
Revenue recognition – appropriateness of revenue
recorded from complex contracts
As disclosed in Note 3, the allocation of the transaction
price between performance obligations and the timing of
revenue recognition associated with some of the Group’s
complex contracts involves the application of judgement
due to the complexity and bespoke nature of the
arrangements entered into with customers.
In conjunction with our financial reporting specialists,
our procedures included, but were not limited to:
•
reviewing the underlying agreements to understand
the substance of the transactions and specific nature of
the goods and service being provided;
assessing the appropriate application of the relevant
accounting standards;
assessing the allocation of the transaction price
between the performance obligations and the timing
of revenue for each performance obligation;
agreeing the amounts recorded in the financial records
to supporting documentation; and
assessing the appropriateness of the disclosures
included in Note 3 to the financial statements.
•
•
•
•
Other Information
The directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2019 but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and we do not 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.
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 have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with 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.
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.
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Independent Auditor’s Report
ASX Additional Information
•
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.
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 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 communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding
to outweigh the public interest benefits of such communication.
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.
The following shareholder information was applicable as at 30 September 2019.
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
%
Number of securities
181
2,914
1,960
3,654
2,293
11,002
1,034
60.08
29.49
5.85
4.10
0.48
100.00
0.10
152,187,391
74,693,968
14,824,270
10,382,636
1,212,772
253,301,037
257,696
From the matters communicated with the Directors, we determine those matters that were of most significance in the
Report on the Remuneration Report
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
Opinion on the Remuneration Report
of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
We have audited the Remuneration Report included in pages 28 to 37 of the Directors’ Report for the year
REPORT ON THE REMUNERATION REPORT
ended 30 June 2019.
Opinion on the Remuneration Report
In our opinion, the Remuneration Report of Superloop Limited, for the year ended 30 June 2019, complies
We have audited the Remuneration Report included in pages 28 to 37 of the Directors’ Report for the year ended 30 June
with section 300A of the Corporations Act 2001.
2019.
In our opinion, the Remuneration Report of Superloop Limited, for the year ended 30 June 2019, complies with section
300A of the Corporations Act 2001.
Responsibilities
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Report, based on our audit conducted in accordance with Australian Auditing Standards.
Standards.
DELOITTE TOUCHE TOHMATSU
Stephen Tarling
Partner
Chartered Accountants
Brisbane, 30 September 2019
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Corporate Directory
DIRECTORS
Michael Malone
Non-executive Chairman
Bevan Slattery
Founder and Executive Director
Greg Baynton
Non-executive Director
Richard Anthony (Tony) Clark
Non-executive Director
Vivian Stewart
Non-executive Director
Drew Kelton
Executive Director
CHIEF EXECUTIVE OFFICER
Drew Kelton
COMPANY SECRETARY
Louise Bolger
REGISTERED OFFICE
Superloop Limited
Level 17, 333 Ann Street
Brisbane QLD 4000
Tel: +61 (7) 3905 2400
AUDITOR
Deloitte Touche Tohmatsu
Level 23, Riverside Centre
123 Eagle Street
Brisbane QLD 4000
www.deloitte.com/au
SOLICITORS
Baker & McKenzie
Level 8, 175 Eagle Street
Brisbane QLD 4000
www.bakermckenzie.com/australia
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
SECURITIES EXCHANGE LISTING
Superloop Limited shares are listed on the Australian
Securities Exchange (ASX: SLC)
COMPANY WEBSITE
https://superloop.com
https://investors.superloop.com
(B) EQUITY SECURITY HOLDERS
The names of the twenty largest holders of quoted equity securities are listed below:
Name
1
2
3
BEVAN ANDREW SLATTERY
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
4 MRS JODIE ANN SLATTERY
5
6
7
8
9
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSI EDA
FISON INVESTMENTS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
SCM CAPITAL PTY LTD
10 BEVAN ANDREW SLATTERY
11
CS THIRD NOMINEES PTY LIMITED
12 MANSFIELD INVESTMENTS (VIC) PTY LTD
13
KYRIACO BARBER PTY LTD
14 BALNAVES FOUNDATION PTY LTD
15 ALLEGRO CAPITAL NOMINEES PTY LTD
16
17
CHARANDA NOMINEE COMPANY PTY LTD
FRETENSIS PTY LTD
18 ROCKET SCIENCE PTY LTD
19 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
20 NEBRAN PTY LTD
SUB-TOTAL
BALANCE OF REGISTER
GRAND TOTAL
(C) SUBSTANTIAL HOLDERS
Name
1
BEVAN ANDREW SLATTERY
(D) UNQUOTED EQUITY SECURITIES
Issued
shares
Percentage of
issued shares
60,007,894
23.69%
28,283,633
10,199,730
3,398,300
2,376,597
2,032,531
1,978,097
1,856,081
1,517,461
1,161,495
889,589
871,002
815,776
800,000
690,788
622,762
600,001
600,000
556,105
542,251
11.17%
4.03%
1.34%
0.94%
0.80%
0.78%
0.73%
0.60%
0.46%
0.35%
0.34%
0.32%
0.32%
0.27%
0.25%
0.24%
0.24%
0.22%
0.21%
119,800,093
133,500,944
47.30%
52.70%
253,301,037
100.00%
Issued
shares
Percentage of
issued shares
60,007,894
24.15%
Options
A total of 315,000 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.
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Superloop Limited Annual Report FY19