WE’RE ALL
CONNECTED
2020
ANNUAL REPORT
SUPERLOOP LIMITED | ABN 96 169 263 094
superloop.com
2
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
2020
ANNUAL REPORT
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Table of Contents
Chairman & CEO Report
FY20 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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11
23
35
37
42
74
75
80
ANNUAL REPORT FY20
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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 2020 (FY20).
For Superloop, FY20 has been a transformational year, we have
completed the major infrastructure builds in both Australia and
internationally, restructured our balance sheet, continued to
drive financial discipline to realise a positive operating cash
flow position, enabled early actions to manage the business
in the COVID-19 environment, whilst selling more “on net”
services, with longer contracts and delivered them quicker.
We have seen the continued migration towards a cloud
first world. There has been a rapid acceleration of hosted
applications and content in a multi cloud environment
deployed in major data centres across Asia. This significant
demand to access the cloud re-emphasises the fundamental
vision of Superloop, to provide virtually unlimited connectivity
across cities, states & countries.
Superloop is now beginning to operationalise our founding
thematic, “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’
connection is now becoming the ‘first mile’ connection”.
Company Highlights
Achieved midpoint of guidance EBITDA of $13.5 million ($8.5 million in FY19) and
$107.6 million of total Group revenues.
Core fibre connectivity revenues (excluding INDIGO development revenue
and design & construction revenue) up 37% year-on-year to $38.0 million.
Continued strong fibre connectivity recurring revenue sales trajectory,
with 46% year-on-year growth.
Strengthening of the balance sheet through the successful recapitalisation completed
September 2019, reducing capital expenditure and transitioning to positive operating
cash flow, producing a reduction in gearing ratio to 8.4% (FY19: 16.9%).
$50m reduction in capital expenditure (~70%) year-on-year (excluding IRUs),
as a result of major network infrastructure completed in FY19.
Continued improvement in cost base delivering a 14% reduction in operating
costs (excluding AASB16 Leases Impact).
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SUPERLOOP LIMITED AND CONTROLLED ENTITIES FY20 Operational Highlights
Recurring Fibre Connectivity
Growth 37% YoY
Key major
customer wins
Asia Pacific
network complete
0
30K
SUBS
64% growth in Home Broadband
subscriptions since July 2019
Capex(1) 70% down YoY & Opex spend(2)
14% down YoY
Recapitalisation completed
& balance sheet strengthened
(1) Capex additions during the period excluding IRU Swaps
(2) Opex spend excluding AASB16 Leases Impact
The delivery of the major infrastructure network builds was completed in FY20, with the business focus shifting to the
monetisation of these assets to deliver long term shareholder value. We are seeing the benefits of these investments
with fibre connectivity new recurring revenue sales growth of 46% year-on-year in FY20.
Superloop’s Response to COVID-19
The COVID-19 pandemic brought a period of uncertainty. Superloop responded quickly & prudently, with a focus on
supporting our people, as they transitioned to working from home arrangements, and our customers, through the
provisioning of f ree internet services to support families with children learning remotely. Network demand during the
period peaked, and we continued to deliver uninterrupted services to all our customers to our normal high level standard.
Initiatives to accelerate to Free Cash Flow (Q4)
A more focused capital expenditure program,
identification of further COGS efficiencies,
temporary & permanent operating cost
saving measures.
Support provided to our customers
Online Learning Plan launched to support
families with children learning remotely.
Temporary hardship billing support provided
to our customers experiencing hardship.
Increased network demand
~30% Increased demand on our Internet /
IP network in a matter of weeks, delivered
seamlessly, without significant increase in
operating or capital costs.
Our people working from home
Transitioned our staff in multiple locations across
Australia, Singapore & Hong Kong into working
from home arrangements, whilst increasing
employee engagement scores.
FY20 has brought some interesting challenges, but we have rapidly responded to the unprecedented environment with
the unequivitable support of our people. We would like to thank every Superloop employee who has remained committed,
diligent and resilient despite an incredibly challenging environment.
On behalf of the Board and Management, we would like to thank you for your continued support.
Bevan Slattery
Chairman and Non-Executive Director
Superloop Limited
Drew Kelton
Chief Executive Officer
Superloop Limited
ANNUAL REPORT FY20
5
“FY 2020 has been a transformational year for Superloop.
We have completed the major infrastructure builds
in both Australia and internationally, restructured our
balance sheet, continued to drive financial discipline
to realising an operating cash positive position, enabled
early actions to manage the business in the COVID
environment, whilst selling more “on net” services,
with longer contracts AND delivered them quicker.”
Drew Kelton
Chief Executive Officer
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SUPERLOOP LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT FY20
7
FY20 Business Overview
MARSEILLE
JAPAN
HONG KONG
SINGAPORE
DARWIN
Asia Pacific Fibre Network
PERTH
FIBRE NETWORK
INDIGO West
INDIGO Central
BRISBANE
ADELAIDE
MELBOURNE
HOBART
SYDNEY
CANBERRA
AUCKLAND
Fibre
Australia
Singapore
Hong Kong
$20.8 Million
36%(1) YoY revenue growth
$136m
Carrying Value
Invested Cap
$14.9 Million
$3.4 Million
45% YoY revenue growth
Carrying Value
Invested Cap
$58m
16% YoY revenue growth
Carrying Value
Invested Cap
$74m
30.5%(2) Utilisation
16.8% Utilisation
3.7% Utilisation
2.0yrs Avg. Asset Age
4.0yrs Avg. Asset Age
3.2yrs Avg. Asset Age
16.5yrs Avg. Asset Life
29.5yrs Avg. Asset Life
25.5yrs Avg. Asset Life
524 Fibre Kms
236 Fibre Kms
255 Fibre Kms
338 No. of Buildings
64 No. of Buildings
33 No. of Buildings
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SUPERLOOP LIMITED AND CONTROLLED ENTITIES
SAN JOSE
LOS ANGELES
Superloop’s Portfolio Connecting Asia Pacific
Asia Pacific
Core Fibre Network
Platforms Leveraging
Connectivity Network
Non-Core CMS
Fibre networks connecting
key hubs in Singapore, Australia
and Hong Kong and INDIGO
subsea cable
Guest WiFi, Home Broadband &
CyberHound Security
Cloud Managed Services providing
hosted IT & equipment procurement
to small businesses
37%
Revenue YoY(1)
2%
Revenue YoY(2)
39%
Revenue YoY
Singapore
Australia
Hong Kong
$38m
$3.6m
Revenue
Gross Margin
$27.8m
$3.1m
$18.6m
$19.5m
$1.8m
$14.4m
$10.9m
$6m
FY18
$10.3m
$14.9m
FY19
FY20
28%
Gross Margin YoY(1)
$18.5m
$19m
$38.3
FY19
$37.5
FY20
3%
Gross Margin YoY(2)
$30.5m
$19.8m
$12.5m
FY18
FY19
FY20
14%
Gross Margin YoY
(1)Core Fibre Connectivity revenues excluding INDIGO development revenue and design & construction revenues.
(2)Excluding Divestment Gx2 US/UK.
ANNUAL REPORT FY20
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10
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Directors’ Report
“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.”
ANNUAL REPORT FY20
11
Directors’ Report
The Directors present their report on the consolidated
entity (referred to hereafter as ‘Superloop’ or ‘the Group’)
consisting of Superloop Limited and the entities it
controlled at the end of, or during, the year ended
30 June 2020.
DIRECTORS
The following persons were Directors of the Group during
the year:
Bevan Slattery (Chairman) appointed 11 March 2020
Greg Baynton
Richard (Tony) Clark
Vivian Stewart
Alexander (Drew) Kelton
Stephanie Lai (appointed 11 March 2020)
Michael Malone (Chairman) resigned 11 March 2020
PRINCIPAL ACTIVITIES
The Group’s three reporting segments reflect the nature
of these service offerings, including Connectivity (fibre,
fixed wireless and third party access networks), Broadband
(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, secure and effective manner;
The principal activities of the Group include:
• Operating and maintaining the networks and services
• The construction and operation of telecommunications
infrastructure throughout the Asia Pacific region,
providing complete high-performance network solutions
for wholesale, enterprise and channel customers;
• The operation of an advanced, large scale fixed wireless
network in Australia providing alternative/redundant
access methods from fixed line infrastructure;
• The management and delivery of Guest WiFi broadband
solutions for various environments including student
accommodation, hotels and schools;
• Residential and small business broadband services in
to high quality service levels;
• Enabling its core value chain by providing people &
culture, legal & governance, finance, technology and
security support.
FY20 Operational Highlights include:
• Expansion and activation of international network capacity
by leveraging assets to obtain capacity and reach;
• Cumulatively connecting 435 ‘on-net’ buildings, +14%
year-on-year across 1,015km of terrestrial fibre, in addition
to ~9,000km of subsea cable;
Australia via fixed wireless or fixed line NBN services; and
• Strength in our network, able to respond to >30%
• Cyber safety and security services for schools and other
organisations demanding safe internet.
REVIEW OF OPERATIONS
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.
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.
increased bandwidth requirements during the COVID-19
pandemic whilst maintaining excellent network
performance;
• Increasing employee engagement across ~300
Superloopers from 6.5/10 to 7.4/10;
• Achieving a net promoter score of +62 across our ~30k
homes on Superloop Home Broadband; and
• Increased year-on-year growth in cybersecurity revenue,
with sales in both the Australian school market, and
overseas (NZ, Hong Kong and Singapore). New strategic
partnerships with AARNET and global partnerships with
HPE and Aruba continue to support increased sales.
The Group has cumulatively invested $268m in fibre
network assets that are on average less than 3 years into
a 20+ year useful life.
Buildings and fibre total kilometres have now reached
435 and 1,015km respectively.
Superloop’s metro fibre network covers the major data
centres and enterprise locations in key markets:
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SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Platforms Leveraging our Asia Pacific Network
Platforms Leveraging our Asia Pacific Network
Fibre Networks in Singapore,
Australia & Hong Kong
(Connectivity)
Fixed Wireless Network
across Australia
(Connectivity)
CyberHound
Secure Internet
(Services)
Guest WiFi platform for
leisure, health & education
campuses
(Broadband)
Residential & small business
Broadband across Australia
(Broadband)
Subsea cable network
connecting Asia Pacific
(Connectivity)
FY20 Performance Sales Momentum Infrastructure Supporting Our Growth Strategy Appendix
FY20 Update
FY20 Update
16
16
HONG KONG FIBRE NETWORK
SINGAPORE FIBRE & DUCT NETWORK
iTech Tower 1
!
HK3
!
!
Equinix HK1
!
Equinix HK2
CITIC
iTech Tower 2
!
!
!
!
One Asia
Tuas CLS
!
!
Equinix SG2
!
Keppel DC Singapore 5
Digital Realty
!
!
!
!
!
Telecom House
!
!
!
!
!
NTT FDC1
TGT HKDC2
Equinix HK5
HK Colo TKO
!
!
!
!!
!
!!
HKEx
Telstra
HKCS2
Digital Realty
!
Global Switch
Telstra HKCS1
!!
Sino Favour Centre
Iron Mountain DC
iSolutions
DCSG
!
!!
!
SGX
NTT
KCTC1
!
!
STT
Equinix SG4
Racks Central
Global Switch
!
!
!
BDx
!
1-Net
!
!
!
Katong CLS
Equinix SG3
!!!!
!
! !
!
!!!!!!!!
!!
!!
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!!
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!
!
Equinix SG1
!
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!!
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APAC SUBSEA CABLE NETWORK
AUSTRALIA FIBRE NETWORK
SINGAPORE
PERTH
SYDNEY
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ANNUAL REPORT FY20
Directors’ Report
FINANCIAL AND OPERATING PERFORMANCE
The Group’s revenues were $107.6 million in FY20 versus
$119.8 million in the previous financial year. The revenue mix
shifted significantly towards the core connectivity segment
replacing one off INDIGO development and design &
construction revenue with recurring monthly connectivity
revenue. The Group saw growth in Home Broadband
subscribers which impacted favourably on revenue, this was
offset by the decline in Guest WiFi due to COVID impact on
Student accommodation occupancy rates and the planned
retirement of non-core ‘Services’ products.
The Group had a full year net loss after tax of $41.1 million
in FY20 (compared to a loss of $72.1 million in FY19). Net
loss before tax was $37.8 million (compared to a loss of
$84.4 million in FY19).
In response to COVID-19 and with the support of
employees, the Group reduced workforce capacity from
5 working days to 4 per week for a large proportion of
the employees, commencing April 2020. In April 2020,
the Group also made the prudent decision to reduce the
cost base through 30 FTE redundancies. In June 2020,
the Group met the eligibility requirements to receive
the Government JobKeeper allowance for its Australian
employees, at this point all staff were reverted back to 5
days per week with the government support subsidising
this cost. The Government allowance has been offset
against employee benefits expense and for the period
ended 30 June 2020 the total amount included in the
Consolidated Statement of Profit or Loss and Other
Comprehensive Income was $714,000. It is expected
that the Group will continue to receive the support until
September 2020.
The Group generated earnings before interest, tax,
depreciation and amortisation (EBITDA) of $13.5 million.
(2) Impairment of non-core CMS services segment includes $43.3m
goodwill, PP&E and accelerated amortisation of contracts
(3) AASB16 Leases was applied on 1 July 2019 in accordance with
the modified retrospective transition approach, therefore the
comparative information has not been restated and continues
to be reported under AASB 117.
Financial Position
At 30 June 2020, the Group held property, plant and
equipment (primarily the construction of its metro and
subsea fibre networks) of $231.6 million, and intangible
assets of $240.0 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.
$ ‘Mil
June 19
June 20
Change
Cash & cash equivalents
$18.9
$17.1
-1.8%
Property, plant &
equipment
Network IRUs intangible
assets
$228.7
$231.6
2.9%
$47.3
$59.9
12.6%
Goodwill from acquisitions
$135.1
$135.1
-
Other intangible assets
$51.8
$45.0
-6.8%
Total Assets
$529.5
$519.7
-9.8%
Net Debt(1)
$71.3
$36.3
-35.0%
Total Liabilities
$183.3
$124.9
-58.4%
Net Assets
$346.2
$394.8
48.6%
(1) Net debt = short-term & long-term interest-bearing borrowings
(excluding Operating Leases) less cash & cash equivalents.
(2) Gearing ratio = net debt (excluding operating leases) / (net debt
+ equity).
(3) Leverage ratio = 12 month rolling Adjusted EBITDA / Net
Financial Indebtedness.
$ ‘Mil
FY19
FY20
YoY
(4) Free cash flow = operating cash flows less investing cash flows
Total Revenue
$119.8
$107.6
-10%
Revenue excl. One-off(1)
$108.7
$106.2
-2%
Direct Costs
Gross Margin
$(61.3)
$(53.1)
-14%
$58.5
$54.5
Gross Margin excl. One-off(1)
$50.1
$53.3
Gross Margin %
49%
51%
-7%
+6%
+4%
Gross Margin excluding
One-off (1) %
46%
50%
+9%
Operational Costs
$(50.0)
$(41.0)
-18%
Statutory EBITDA
$8.5
$13.5
Depreciation &
Amortisation(2)
$(36.5)
$(46.6)
Non-Cash Impairment(2)
$(50.7)
-
Net profit/ (loss) before tax
$(84.4)
$(37.8)
(does not include lease payments)
Cash Flow Performance
The Group generated operating cash flows of $12.9 million
in the year, and invested $55.1 million predominantly in
property, plant and equipment to complete the core
Asia Pacific network ‘loop’, funded by $40.7 million of net
financing cash flows inclusive of a $92 million equity raise
in September 2019 which was used to strengthen the
balance sheet and reduce the Group’s senior debt facilities
limits from $120 million to $61.7 million.
$ ‘Mil
Operating cash flows
FY19
$5.3
FY20
YoY
$12.9
7.6%
Investing cash flows
$(53.1)
$(55.1)*
2.0%
Financing cash flows
$51.7
$40.7
-11.0%
Net cash flows
$3.9
-$1.6
-5.5%
* Includes ~$22m H2 FY19 AP balance as indicated in FY 2019
(1) One-off revenue includes Subsea development, Design & Fibre
construction.
Annual Report.
14
SUPERLOOP LIMITED AND CONTROLLED ENTITIES 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 position Superloop as a true Pan Asian
telecommunications network owner and operator.
Network coverage across the Asia Pacific region, combined
with the INDIGO subsea cable system, along with a
standardised and scalable suite of connectivity solutions
including broadband and cybersecurity, provide trusted and
reliable services to a broad range of customer segments.
Completion and activation of our Australian NBN backhaul
and international capacity was completed during the
first half of the 2020 financial year, the Group is focused
on monetising these assets and increasing utilisation to
deliver a return on investment to shareholders. The Group
will 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.
MATERIAL BUSINESS RISKS
The material business risks faced by the Group that are
likely to have an effect on its financial prospects include:
Superloop has made investments in further tightening
controls related to risk. In June 2020 Superloop attained
ISO27001:2013 certification of its core networks, personnel,
IT infrastructure and management systems, demonstrating
our capability and commitment in this area.
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.
2020 has included various damaging natural events that
impacted some of our assets and our customers. We see
the frequency and severity of these natural events being
likely to increase and as such the inherent resilience in our
network design and support processes will become even
more important.
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 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;
Competition and disruption: The competitive
environment continues to evolve and failing to
appropriately respond could result in a decline in our
revenue and margin and ultimately our forecasted earning
and asset positions.
• 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; and
• Maintenance of business interruption insurance.
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
data protection and associated rights of access to
customers and regulators.
We continue to actively monitor the evolving regulatory
landscape and ensure Superloop’s and our customers’
interests through our memberships to key industry groups.
Data and information governance: The number and
sophistication of cyber related risks continues to evolve
as evidenced by a number of high profile and highly
publicised breaches in 2020. As such the management
of data represents a key legal and reputational risk for
Superloop that if realised, could impact shareholder value.
Monetising our assets: Over the past five years Superloop
has built a unique asset base, including its share in
the INDIGO subsea cable. A key risk and opportunity is
our ability to achieve the anticipated sales traction to
appropriately 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.
An additional challenge in the effective monetisation of our
assets has been the impact of COVID-19.
COVID-19: While the Group has not experienced significant
disruptions to its operations or material impacts on its
financial results thus far, the Group continues to monitor
operational and financial implications closely. It is not yet
possible to predict the full financial impact of COVID-19
on our business nor the length of time our business will
be impacted. COVID-19 has impacted the financial results
of the Guest WiFi business, although the lower than
anticipated revenues in our Guest WiFi business have been
broadly offset with an uplift in our other offerings by virtue
of the increase in remote working.
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.
15
ANNUAL REPORT FY20
Directors’ Report
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. In
previous annual reports Superloop disclosed the risk
associated with not effectively integrating the businesses
and network infrastructure that it has acquired.
Sociopolitical: The tensions 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.
To date significant progress, efficiencies and savings have
been made in both the integration of core platforms and
networks and this work will continue to speed up and
reduce our cost of delivery. Management continues to focus
on these opportunities for delivery of efficiencies into FY21.
Funding: While the capital intensive period of our growth
is complete for the foreseeable future, the maintenance of
our telecommunications and IT infrastructure and delivery
to our customers still requires ongoing capital investment.
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 $20 million per annum
from H2 FY20 and thereafter, excluding major capital
investment opportunities including IRUs that may arise.
Reputation: Risks that threaten an organisation’s
reputation can have significant impacts on its revenue
and brand. 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.
People and safety: Attracting and retaining talent with the
right mix of skills continues to be critical to our ongoing
success. That is why we are looking for ways to make
Superloop an even greater place to work and develop a career.
A positive outcome of the COVID-19 pandemic has been that
it has demonstrated that we are able to work and thrive in a
remote working model. Many staff have communicated their
preference for greater working flexibility and this has been
embraced as a key pillar in attracting and retaining talent.
The safety of our people will always be number one at
Superloop and this is why we have adopted and continue
to adopt a conservative approach to the management
of COVID-19 related risk. We also continue to mature our
workplace health and safety (WHS) management system
to not only keep our people safe, but ensure we meet the
expectations of our customers.
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
2020 or 2019 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 $722,000
(2019: $640,330) 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.
16
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
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 26 to the financial statements.
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 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 35.
ANNUAL REPORT FY20
17
Information on Directors
BEVAN SLATTERY
GREG BAYNTON
Chairman & Non-Executive Director
Independent Non-Executive Director
Appointed: 28 April 2014
Appointed Chairman: 11 March 2020
Chief Executive Officer: 23 February 2016 to 30 June 2018
Experience and expertise
Bevan Slattery is the founder and a Non-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 f rom Central Queensland University.
Other current Directorships of listed entities
Megaport Limited (ASX: MP1) - appointed 27 July 2015
Former Directorships of listed entities in last 3 years
Nil
Appointed: 28 April 2014
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,
intelliHR 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. Greg is a Fellow of the Geological Society
of London.
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 (resigned: 26 March 2020)
> Member of the Audit Committee
> Member of the Risk Management Committee
> Member of the Remuneration and Nomination
Committee
Interests in shares and options
971,323 fully paid ordinary shares
Special responsibilities
Nil
Interests in shares and options
64,023,689 fully paid ordinary shares
18
SUPERLOOP LIMITED AND CONTROLLED ENTITIES 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
> Chair of the Remuneration and Nomination Committee
(appointed: 26 March 2020)
Interests in shares and options
492,274 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
19
ANNUAL REPORT FY20
Information on Directors
MICHAEL MALONE
STEPHANIE LAI
Independent Non-Executive Chairman
Independent Non-Executive Director
Appointed Non-executive Director: 27 April 2015
Appointed Chairman: 22 June 2017
Resigned: 11 March 2020
Experience and expertise
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.
Appointed: 11 March 2020
Experience and expertise
Stephanie Lai has over 20 years’ experience as a Chartered
Accountant and is a former M&A partner of Deloitte (to
2019) and KPMG (to 2009).
Stephanie has significant experience providing due
diligence and advisory services, including forecast
reviews to listed entities, sovereign wealth funds, wealth
managers and private equity. Stephanie has advised on
numerous transactions (acquisitions /divestments, debt/
equity raisings and IPOs), across a range of industries
(infrastructure, property, banking, insurance, wealth
management, retail and transport) and markets (Australia,
UK, Europe, Asia and the US).
Stephanie is a Non-Executive Director and Chair of
the Audit, Risk and Compliance Committee of Future
Generation Investment Company Limited (ASX:FGX), was
a Non-Executive Director and Chair of the Audit, Risk
and Compliance Committee of Shine For Kids (a not for
profit) from 2013 to 2017 and also founded an online retail
business, which she grew and successfully divested in 2016.
Other current Directorships of listed entities
Seven West Media Limited (ASX: SWM)
- appointed 24 June 2015
SpeedCast Ltd (ASX: SDA) – appointed 14 July 2014
Stephanie holds a Bachelor of Business (University of
Technology Sydney) and is a Graduate of the Australian
Institute of Company Directors and the Institute of
Chartered Accountants (Australia and New Zealand).
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
Other current Directorships of listed entities
Future Generation Investment Company Limited
(ASX: FGX) - appointed 27 March 2019
Former Directorships of listed entities in last 3 years
Nil
Special responsibilities
> Chairman of the Board
> Chair of the Remuneration and Nomination Committee
> Member of the Audit Committee
> Member of the Risk Management Committee
Special responsibilities
> Chair of the Audit Committee
(appointed: 26 March 2020)
> Member of the Risk Management Committee
Interests in shares and options
125,000 fully paid ordinary shares
Interests in shares and options
95,000 fully paid ordinary shares
20
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
LOUISE BOLGER
General Counsel and Company Secretary
Appointed: 20 September 2018
Experience and expertise
Louise Bolger joined Superloop in April 2015 and served
as a Non-Executive Director between April 2015 and
November 2018. 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.
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
100,000 fully paid ordinary shares
21
ANNUAL REPORT FY20 Information on 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:
Bevan Slattery
Michael Malone (1)
Greg Baynton
Tony Clark
Stephanie Lai (2)
Vivian Stewart
Alexander (Drew) Kelton
Meeting of Committees
Meetings of
Directors
Audit
Risk
Management
Remuneration
and Nomination
A
27
20
28
26
8
27
28
B
28
20
28
28
8
28
28
A
B
A
B
A
B
N/A
N/A
N/A
N/A
N/A
N/A
5
6
5
6
3
2
3
4
N/A
N/A
N/A
N/A
4
4
1
4
5
1
1
5
1
6
1
4
1
4
N/A
N/A
5
5
N/A
N/A
N/A
N/A
N/A
N/A
(1) Michael Malone resigned as a Director on 11 March 2020
(2) Stephanie Lai was appointed as a Director on 11 March 2020
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
22
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
SUPERLOOP LIMITED AND CONTROLLED ENTITIES 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 FY20
7. Performance Outcomes for FY20
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
24
26
26
27
27
27
29
31
33
33
34
34
34
34
ANNUAL REPORT FY20
23
Remuneration Report
LETTER FROM THE CHAIR OF THE REMUNERATION AND NOMINATION COMMITTEE
Dear Shareholders,
On behalf of the board, we are pleased to present Superloop’s Remuneration Report for 2020.
For Superloop, FY20 was a year that was scored with many highlights, underpinned by external challenges such as
COVID-19, and operational changes such as continuing to manage the end of life of our cloud and managed services
segment - all of which had an impact on our people - but also saw us excel in times of uncertainty. An attribution to every
single person that makes up Superloop.
FY20 Operational Highlights include:
• Achieving midpoint of guidance EBITDA $13.5 million;
• Group revenue of $107.6 million, supported by strong growth in underlying recurring fibre connectivity revenue, 37%
year-on-year growth (excluding construction & subsea one-off revenue). Continued strong fibre connectivity sales
trajectory with 46% year-on-year growth in total new fibre connectivity annualised revenue;
• Successful recapitalisation completed September 2019 strengthening the balance sheet and reducing gearing ratio
from 16.9% FY19 to 8.4% FY20;
• Reduction in capital expenditure of +70% year-on-year; and
• Cost base reductions achieved through full year benefit of the retirement of the non-core infrastructure, continued cost
efficiencies gained and prudent response plan to COVID-19.
In the past 12 months we have made strategic changes in regards to the remuneration, reward and benefits provided to
our team, including introducing a flexible working policy that encourages outcome based performance assessment. This
will assist us in attracting, retaining, and motivating our people, particularly as we manage and adapt to a post COVID-19
way of working.
At the midway point of FY20, we reviewed our structure to enable a greater focus on our customers, infrastructure and our
people. The change in structure allowed us to better focus and improve on how we operate as a business and deliver to our
customers - including the ‘go to market’ and customer experience, leadership capability and engagement.
We have welcomed a number of new faces into our Home Broadband team as our residential/consumer brand
experienced 64% growth in FY20, surpassing the planned growth for the entire year within the first 6 months.
In response to the impacts of COVID-19, our team, including the Board, elected to accept reduced remuneration in order
to better position Superloop through this uncertain period. The impacts of this are reflected in the disclosures made in
this report. I would like to thank the entire team for the personal contribution that they have made to support Superloop
through this time.
During the year, options were granted to executives under the Executive Option Plan and in accordance with contractual
entitlements. The change in the total remuneration provided to our executive team was to ensure they have a vested
interest in the long term performance of Superloop. The vesting and continued issue of these options have been designed
to align with outcomes in relation to total shareholder return.
In our FY19 remuneration report we indicated an intention to amend the incentive component of the CEO’s remuneration.
Given that the equity component of his employment agreement had not been issued, we took the opportunity to consider
his overall incentive and construct it in a way that aligns with the performance outcomes we are now trying to drive.
24
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
In August 2020 we announced the appointment of Paul Tyler as successor to Drew Kelton. Given that this change will take
effect f rom 1 October 2020, the amendment to Mr Kelton’s incentive was considered under changed circumstances. Mr
Kelton’s incentive for the year ended 30 June 2021 will comprise a Base Component which is targeted to drive performance
in relation to net cash flow and EBITDA outcomes in the half year ending 31 December 2020. An Additional Component is
targeted to drive out performance in relation to strategic goals. The make-up of each is as follows:
• Base Component comprising cash incentive of $200,000, 250,000 options with an exercise price of $1.11 and 1,000,000
options with an exercise price of $2.00.
• Additional Component comprising cash incentive of $200,000 and 250,000 options with an exercise price of $1.11.
This incentive replaces the Short and Long Term Incentives contained in Mr Kelton’s employment agreement and which
Mr Kelton has received no payment for. Mr Kelton and Mr Tyler’s targets for the vesting of incentives are aligned.
Further on from the framework that was adopted in FY20, the Committee will continue to oversee the development
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.
Yours sincerely,
Tony Clark
Chair, Remuneration and Nomination Committee
Superloop Limited
25
ANNUAL REPORT FY20 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 2020 (FY20), 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
Bevan Slattery
Greg Baynton
Tony Clark
Vivian Stewart
Stephanie Lai (from 11 March 2020)
Michael Malone (until 11 March 2020)
Position
Chairman & Non-Executive Director
Independent Non-Executive Director
Member of the Audit Committee
Member of the 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
Chair of the Risk Management Committee
Member of the Audit Committee
Member of the Remuneration and Nomination Committee
Independent Non-Executive Director
Chair of the Audit Committee
Member of the Risk Management Committee
Independent Non-Executive Chairman
Member of the Audit Committee
Member of the Risk Management Committee
Chairman of the Remuneration & Nomination Committee
SENIOR EXECUTIVES
Name
Position
Alexander (Drew) Kelton
Jon Tidd
Chief Executive Officer (CEO)
Executive Director
Group Chief Financial Officer (resigned 31 December 2019)
Chief Customer Officer (appointed 1 January 2020)
Lidia Valenzuela
Group Chief Financial Officer (appointed 1 January 2020)
Paul Smith
David Thorn
Alex West
Chief Operations Officer, Infrastructure (appointed 1 January 2020)
Chief Revenue Officer (resigned 6 January 2020)
Group Chief Operating Officer (resigned 30 January 2020)
Except as noted above or elsewhere in this report, the named persons held their position for the whole financial year.
26
SUPERLOOP LIMITED AND CONTROLLED ENTITIES 2. OVERVIEW OF REMUNERATION
GOVERNANCE FRAMEWORK
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:
• 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/
investors.
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/investors.
3. DIRECTOR REMUNERATION
3.1 DIRECTOR REMUNERATION POLICY
Superloop’s Director remuneration policy is to provide
fair remuneration that is sufficient to attract and retain
Non-Executive Directors with appropriate experience,
knowledge, skills and judgment.
The Directors’ determine the total amount paid to each
Director as remuneration for their services. Under the
Listing Rules, the total amount paid to all Non-Executive
Directors must not exceed in any financial year, the
amount fixed in a general meeting of Superloop. This
amount is currently $750,000. Non-Executive Directors
fees include base fees and fees for membership of
board committees, 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 FY20 were $351,005
(FY19 $375,166). This reflects the reduced fees accepted by
the Board during the COVID-19 period.
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. In response to COVID-19, the Directors
were paid at reduced fees for the period April 2020 to
June 2020.
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.
27
ANNUAL REPORT FY20
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 (STI) that provide a reward for
performance against annual performance targets; and
• Long term incentives (LTI) that provide a securities-
based reward for performance against indicators of
long-term shareholder value creation, vesting 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 FY20
In order to better support Superloop through the
COVID-19 crisis, the Executive team elected to waive their
short term incentive for the period ended 30 June 2020.
As a result of this, no short term incentives were awarded.
• Remuneration will be managed within a range so as to
allow for the recognition of individual differences such as
the calibre of the executive, and competency with which
they fulfil a role.
Name
Alexander
(Drew) Kelton
Fixed
Remuneration
Target
Incentive
Awarded
Incentive
4.2 SHORT TERM INCENTIVE (STI) POLICY
AND PROCEDURE
The short term incentive policy provides incentives for
Senior Executives to achieve the Group’s strategic objectives
by delivering or exceeding annual performance targets.
Measurement period and award
The measurement period 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.
For FY20 the CEO could have earned 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 (50%)
• Operational performance (50%)
28
$500,000
$250,000
Jon Tidd
$350,000
$70,000
Lidia
Valenzuela
$300,000
$60,000
David Thorn
$350,000
$70,000
Alex West
$350,000
$70,000
Paul Smith
$300,000
$60,000
$ -
$ -
$ -
$ -
$ -
$ -
4.3 LONG-TERM INCENTIVE (LTI) POLICY AND
PROCEDURE
The purpose of the long term incentive 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.
SUPERLOOP LIMITED AND CONTROLLED ENTITIES 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 Executive Directors,
incentives may be awarded in cash.
Other Senior Executives can be awarded LTIs of up to 40%
of their annual fixed remuneration.
Performance metrics and weightings
Vesting of long term incentives for participating Senior
Executives is based on share price growth at the relevant
vesting date. In order for subsequent tranches to be
issued, goals in relation to total shareholder return must
be achieved.
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 Senior Executives.
Cessation of employment
If a Senior Executive’s employment terminates prior to the
end of the measurement period, all unvested 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 Board may designate a Director, Employee or
Consultant as an Eligible Participant for the purposes
of the Executive Option Plan. 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
Executives and Management and shareholders and helps
preserve the Company’s cash funds.
The Directors are empowered to operate the Executive
Option Plan and grant options to Eligible Participants
in accordance with the Listing Rules and on the terms
and conditions set out in the Executive Option Plan. The
Board has an absolute discretion to determine appropriate
procedures for the administration of the Executive Option
Plan and resolve questions of fact or interpretation and
formulate special terms and conditions in addition to
those set out in the plan.
All options are to be offered to Participants for no
consideration. The offer must be in writing and specify,
amongst other things, the number of options for which
the Participants may accept, any conditions to be satisfied
before exercise, the option expiry date (as determined by
the Board) and the exercise year for the options.
Where employment or consultancy ends on or before an
Exercise Date, the options will lapse. In the case where
the employment ends as a result of death or disability,
the Options will lapse 90 days after the date of death or
disability. Except in the event of death or disability, when
employment ends during an Exercise Period the Expiry
Date will be adjusted by up to 60 days.
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 2020, 940,592 options were
issued under the Executive Option Plan and at the date of
this report there were a total of 1,255,592 options on issue.
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.
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.
Each appointment has no initial term, has no notice period
and is not subject to any termination benefits.
At 30 June 2020, 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.
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.
29
ANNUAL REPORT FY20 Remuneration Report
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 an Employment Agreement with
Superloop which commenced on 1 July 2018. The term is
ongoing until terminated by Superloop or 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
was increased to six months.
Employment may be terminated immediately for
serious misconduct.
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
Lidia
Valenzuela
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
Paul Smith
No fixed term 3 months
3 months
(1) Base salary payable if the Company terminates the Executive
without notice or without cause.
30
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
6. REMUNERATION FOR FY20
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
Post
employ-
ment
benefits
Long-term
employee benefits
Salary
/ Fees
$
Other
benefits
$
STI
$
Superan-
nuation
$
Total
$
Executive Directors
Drew Kelton
2020
463,110
2019
477,758
Former Executive Directors
Matthew Hollis(1)
2020
-
-
-
-
-
-
-
463,110
477,758
21,003
22,242
-
-
Jason Ashton(2)
2019
162,504
50,000
12,660
225,164
10,266
2020
2019
-
-
-
-
-
77,554
52,920
104,603
235,077
5,133
Non-Executive Directors
Bevan Slattery(3)
Greg Baynton(4)
Tony Clark(5)
Vivian Stewart
Stephanie Lai (6)
2020
2019
2020
41,097
54,795
78,750
2019
90,000
2020
2019
2020
2019
2020
2019
49,087
54,795
75,342
82,192
13,347
-
-
Former Non-Executive Directors
Louise Bolger (7)
2020
2019
Michael Malone (8) 2020
26,636
76,389
TOTAL - 2020
2020
797,122
2019
110,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
41,097
54,795
78,750
90,000
49,087
54,795
75,342
82,192
13,347
-
-
26,636
76,389
110,000
3,904
5,205
-
-
4,663
5,205
7,157
7,808
1,268
-
-
2,530
-
-
797,122
37,995
TOTAL - 2019
2019
1,136,234
102,920
117,263
1,356,417
58,389
Total
Remun-
eration
Package
(TRP)
$
% of TRP
linked to
perfor-
mance
%
Long
Service
Leave
$
LTI
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
484,113
500,000
-
-
-
-
235,430
21.24%
-
-
240,210
22.03%
45,001
60,000
78,750
90,000
53,750
60,000
82,499
90,000
14,615
-
-
29,166
76,389
110,000
835,117
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,414,806
7.27%
(1) Matthew Hollis ceased his employment on 31 December 2018. His ‘Other’ earnings include $12,659 of unused annual leave paid out on termination.
(2) Jason Ashton ceased his employment on 30 September 2018. His Salary/Fees includes $27,897 of unused annual leave and $76,705 of unused long
service leave paid out on termination.
(3) Bevan Slattery ceased as CEO on 30 June 2018 and commenced as Non-Executive Director on 1 July 2018. Bevan commenced as Chairman on
11 March 2020.
(4) Greg Baynton ceased as Chair of the Audit Committee on 26 March 2020.
(5) Tony Clark commenced as Chair of the Remuneration & Nomination Committee on 26 March 2020.
(6) Stephanie Lai commenced as Independent Non-Executive Director on 11 March 2020, Chair of the Audit Committee and Member of the Risk
Management Committee on 26 March 2020.
(7) Louise Bolger also received $146,338 in consulting fees during the period she was engaged as a Non-Executive Director. Louise resigned as a
Non-Executive Director on 23 November 2018.
(8) Michael Malone ceased as Independent Non-Executive Chairman on 11 March 2020.
31
ANNUAL REPORT FY20 Remuneration Report
SENIOR EXECUTIVES
Short-term employee benefits
Post
employ-
ment
benefits
Long-term
employee benefits
Salary
/ Fees
$
Other
benefits
$
STI
$
Superan-
nuation
$
Total
$
Senior Executives
Jon Tidd(1)
2020
314,778
-
2,957
317,735
2019
257,891
70,000
-
327,891
Lidia Valenzuela(2) 2020
130,200
Paul Smith(3)
2020
130,200
2019
-
2019
Former Senior Executives
Paul Jobbins(4)
David Thomas(5)
2020
2019
2020
2019
-
-
76,992
-
255,127
David Thorn(6)
2020
164,903
Alex West(7)
2020
192,416
2019
248,369
-
-
-
-
-
-
-
-
-
-
-
3,597
133,797
-
-
21,003
19,327
10,501
-
7,148
137,348
10,501
6,735
-
-
-
-
-
-
-
-
36,005
112,997
5,133
983
-
-
-
94,044
349,171
24,705
109,363
274,266
-
248,369
3,341
195,757
18,314
17,110
12,251
Matthew
Whitlock(8)
2019
329,469
70,000
2020
-
-
-
-
399,469
20,531
-
-
2019
139,968
60,000
20,958
220,926
14,691
TOTAL - 2020
2020
932,497
-
126,406 1,058,903
72,570
TOTAL - 2019
2019
1,307,816
200,000
151,007 1,658,823
101,497
26,798
Long
Service
Leave
$
Total
Remun-
eration
Package
(TRP) $
% of TRP
linked to
perfor-
mance
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
346,595
-
347,218
20.16%
151,033
-
154,584
-
-
-
-
-
-
-
119,113
0.83%
-
373,876
292,580
265,479
208,008
-
-
-
-
-
420,000
16.67%
-
-
261,432
32.82%
1,152,800
1.85%
1,787,118
12.69%
LTI
$
7,857
-
6,735
-
-
-
-
-
-
-
-
25,815
21,327
(1) Jon Tidd ceased to be Group Chief Financial Officer on 31 December 2019 and commenced as Chief Customer Officer on 1 January 2020.
(2) Lidia Valenzuela commenced as Group Chief Financial Officer on 1 January 2020.
(3) Paul Smith commenced as Chief Operations Officer, Infrastructure on 1 January 2020.
(4) Paul Jobbins ceased his employment on 28 September 2018. In his ‘Other’ earnings there is $36,005 in unused annual leave which was
paid out on termination.
(5) David Thomas commenced his employment on 15 August 2018. His employment ceased on 21 May 2019. In his ‘Other’ category there is
$82,367 in notice paid in lieu and $11,677 of unused annual leave, both paid on termination.
(6) David Thorn ceased his employment on 6 January 2020. In his ‘Other’ category there is $97,920 in notice paid in lieu and $11,443 of
unused annual leave, both paid on termination.
(7) Alex West ceased his employment on 30 January 2020. In his ‘Other’ category there is $3,341 of unused annual leave paid on termination.
(8) 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.
Includes the net movement of annual leave entitlement balance, or termination payments if applicable.
*
32
SUPERLOOP LIMITED AND CONTROLLED ENTITIES 7. PERFORMANCE OUTCOMES FOR FY20
The following table outlines the performance of the Company over the 2020 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 $0.99 at 30 June 2020.
Year ended 30 June
2020
$
2019
$
2018
$
2017**
$
2016
$
2015*
$
Net profit / (loss)
$(41,087,857)
$(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
-
$1.54
$0.99
-
$2.52
$1.54
-
$2.56
$2.52
$0.01
$2.35
$2.56
-
$1.94
$2.35
-
$1.00
$1.94
* 2015 includes the period from 28 April 2014 to 30 June 2015. The share price at the start of the 2015 period refers to the issue price of shares
in the Company’s Initial Public Offering in June 2015.
** Dividend was declared in FY17 but paid in FY18.
The 2020 financial year has been a transformation year for Superloop. The Company has completed major infrastructure
builds in Australia and internationally. It has strengthened its balance sheet through successful recapitalisation, reduction
in capital expenditure and continued drive of financial discipline. The Group responded early to the COVID environment
and enabled actions to manage the business into realising an operating cash positive position, whilst continued to be
focused on selling more “on net” services, with longer contracts and delivering them quicker.
Short term incentives were not awarded for the current financial year.
During the year, there were no Performance Rights issued to Senior Executives in accordance with the Employee Rights Plan.
8. SUMMARY OF SHARES HELD BY KEY MANAGEMENT PERSONNEL
The table below outlines the movement in shareholdings by Key Management Personnel during the year:
Opening
balance
1 July 2019
Received
as part of
remuneration
Additions
Disposals
Other
movements*
Closing
balance
30 June 2020
Directors
Bevan Slattery
Michael Malone(1)
Drew Kelton
Greg Baynton
Tony Clark
Vivian Stewart
Stephanie Lai
Senior Executives
Paul Smith
TOTAL
64,567,689
664,698
-
856,192
421,949
577,738
-
-
67,088,266
* Individual was not a KMP as at 30 June 2020
-
-
-
-
-
-
-
-
-
-
(544,000)
-
64,023,689
139,083
100,000
115,131
70,325
-
95,000
4,424
523,963
-
-
-
-
-
-
(4,424)
(803,781)
-
-
-
-
-
-
-
100,000
971,323
492,274
577,738
95,000
-
(548,424)
(803,781)
66,260,024
The Company’s Securities Trading Policy is designed to ensure that any trading in Superloop’s securities is in accordance
with the law and it prohibits all Directors and Senior Executives from engaging in hedging arrangements, dealing in
derivatives or entering into similar arrangements.
33
ANNUAL REPORT FY20 Remuneration Report
9. SUMMARY OF OPTIONS HELD BY KEY MANAGEMENT PERSONNEL
The table below outlines the movement in options held by Key Management Personnel during the year:
Opening
balance
1 July 2019
Received
as part of
remuneration
Exercised
Other
movements
Closing
balance
30 June 2020
Vested and
exercisable
Vested
during
the year
Senior Executives
Jon Tidd
Lidia Valenzuela
Paul Smith
TOTAL
-
-
-
-
138,614
118,811
118,811
376,236
-
-
-
-
-
-
-
-
138,614
118,811
118,811
376,236
-
-
-
-
-
-
-
-
10. SUMMARY OF RIGHTS HELD BY KEY MANAGEMENT PERSONNEL
No Performance Rights were held by Key Management Personnel during the year.
11. SHARES UNDER OPTION OR PERFORMANCE RIGHTS
Details of unissued shares or interest under Option at the date of this report are:
Date of issue
12 February 2020
12 February 2020
12 February 2020
12 February 2020
24 August 2018
24 August 2018
24 August 2018
Number of shares
under option
Class of shares
Exercise price
of option
Vesting date
Expiry date
of options
235,144
235,146
235,151
235,151
105,000
105,000
105,000
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
$1.11
1 September 2020
1 September 2025
$1.22
1 September 2021
1 September 2025
$1.34
1 September 2022
1 September 2025
$1.47
1 September 2023
1 September 2025
$2.00
15 September 2018
15 September 2022
$2.00
15 September 2019
15 September 2022
$2.00
15 September 2020
15 September 2022
480,000 Options expired during the year. At the date of this report there were 1,255,592 Options on issue.
At the date of this report there are no Performance Rights on issue.
The Options are subject to the terms and conditions as set out in the Executive Option Plan. The holders of these Options
do not have the right, by virtue of the Option, to participate in any share issue or interest issue of the Company.
Performance Rights are subject to the terms and conditions as set out in the Employee Rights Plan. The holders of the
Performance 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
There were no other transactions with Key Management Personnel not otherwise disclosed in the report.
This report is made in accordance with a resolution of the Board of Directors, in accordance with section 298(2) of the
Corporations Act 2001.
On behalf of the Directors
Alexander (Drew) Kelton
Chief Executive Officer & Director
24 August 2020
34
SUPERLOOP LIMITED AND CONTROLLED ENTITIES Auditor’s
Independence
Declaration
Auditor’s
Independence
Declaration
Auditor’s Independence Declaration
The Board of Directors
Superloop Limited
Level 17, 333 Ann Street
Brisbane QLD 4000
The Board of Directors Superloop Limited
Level 1, 545 Queen Street
Brisbane QLD 4000
The Board of Directors Superloop Limited
30 September 2019
Level 1, 545 Queen Street
Brisbane QLD 4000
Dear Board Members
24 August 2020
24 August 2020
Superloop Limited
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
Dear Directors
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 Directors
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:
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.
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.
Auditor’s Independence Declaration to Superloop Limited
Auditor’s Independence Declaration to Superloop Limited
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
As lead audit partner for the audit of the financial report of Superloop Limited for the year ended 30 June
(ii) any applicable code of professional conduct in relation to the audit.
2020, I declare that to the best of my knowledge and belief, there have been no contraventions of:
As lead audit partner for the audit of the financial report of Superloop Limited for the year ended 30 June
2020, I declare that to the best of my knowledge and belief, there have been no contraventions of:
and
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
Yours sincerely
(ii) any applicable code of professional conduct in relation to the audit.
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Stephen Tarling
Partner
DELOITTE TOUCHE TOHMATSU
Chartered Accountants
Tendai Mkwananzi
Partner
Chartered Accountants
Tendai Mkwananzi
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network
Page 26 of 73 ⁞ Superloop Limited and controlled entities
Page 26 of 73 ⁞ Superloop Limited and controlled entities
Financial Report 2020
Financial Report 2020
35
ANNUAL REPORT FY20
36
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Financial Report
30 June 2020
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 1, 545 Queen Street, Brisbane QLD 4000.
A description of the nature of the consolidated entity’s operations and its principal activities is included in the
Directors’ Report on page 11, which is not part of these financial statements.
The financial statements were authorised for issue by the Directors on 24 August 2020. The Directors have the
power to amend and reissue the financial statements.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Report
38
39
40
41
42
ANNUAL REPORT FY20
37
Financial Report
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the Year Ended 30 June 2020
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
5
5
13 / 14
6
7
12
8
30 June 2020
$’000
30 June 2019
$’000
106,644
947
107,591
(53,122)
(26,968)
(8)
(2,903)
(2,408)
(8,712)
(94,121)
13,470
(46,631)
-
(4,407)
(217)
-
(37,785)
(3,303)
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
(Loss) / profit for the year after tax for the year attributable
to the owners of Superloop Limited
(41,088)
(72,057)
Other Comprehensive income, net of income tax
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising from translation of foreign
1,499
5,684
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
-
1,499
461
6,145
to the owners of Superloop Limited
(39,589)
(65,912)
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.
Note
Cents
Cents
32
32
(12.33)
(12.33)
(30.52)
(30.52)
38
SUPERLOOP LIMITED AND CONTROLLED ENTITIES Consolidated Statement of Financial Position
As at 30 June 2020
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
Deferred tax assets
Total non-current assets
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Employee benefits
Deferred revenue
Interest-bearing loans and borrowings
Total current liabilities
NON-CURRENT LIABILITIES
Employee benefits
Deferred revenue
Interest-bearing loans and 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.
Note
30 June 2020
$’000
30 June 2019
$’000
9
10
11
13
14
11
15
16
18
19
17
18
19
17
20
21
22
23
17,090
14,691
-
7,610
39,391
231,644
240,013
1,751
6,889
480,297
519,688
17,581
2,188
4,813
5,889
30,471
1,614
38,389
52,479
1,936
94,418
124,889
394,799
514,505
7,773
(3,327)
(124,152)
394,799
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
39
ANNUAL REPORT FY20 Financial Report
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2020
Balance at 1 July 2019
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 2020
Contributed
equity
$’000
426,283
-
-
-
-
-
92,304
(4,082)
514,505
Reserves
$’000
Other equity
$’000
Accumulated
losses
$’000
Total equity
$’000
6,266
-
1,499
1,499
-
8
-
-
(3,327)
-
-
-
-
-
-
-
(83,064)
(41,088)
-
346,158
(41,088)
1,499
(41,088)
(39,589)
-
-
-
-
-
8
92,304
(4,082)
394,799
7,773
(3,327)
(124,152)
For the Year Ended 30 June 2019
Contributed
equity
$’000
Reserves
$’000
Other
equity
$’000
Accumulated
losses
$’000
Total equity
$’000
Restated balance as 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
The notes following the financial statements form part of the financial report.
40
SUPERLOOP LIMITED AND CONTROLLED ENTITIES Consolidated Statement of Cash Flows
For the Year Ended 30 June 2020
OPERATING ACTIVITIES
Receipts f rom customers
Payments to suppliers and employees
Income taxes (paid) / received
Net cash inflow from operating activities
29
INVESTING ACTIVITIES
Interest received
Payments for property, plant and equipment
Payments for intangible assets
Proceeds received for sale of intangible assets
Net cash inflow / (outflow) on investment in associate
Deferred consideration payments
Net cash inflow / (outflow) from investing activities
FINANCING ACTIVITIES
Proceeds f rom issues of shares
Transaction costs paid in relation to issue of shares
Dividends paid
Lease payments
Proceeds f rom borrowings (net of fees)
Repayment of borrowings
Interest paid
Net cash inflow / (outflow) 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
9
9
The notes following the financial statements form part of the financial report.
Note
30 June 2020
$’000
30 June 2019
$’000
116,206
(104,316)
1,000
12,890
40
(37,133)
(16,050)
-
-
(2,000)
(55,143)
92,304
(4,081)
-
(5,961)
72,051
(109,625)
(4,026)
40,662
(1,591)
18,898
(217)
17,090
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
41
ANNUAL REPORT FY20 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. Segment information
5. Revenue
6.
Interest expense
7. Foreign exchange gains / (losses)
8. Income tax expense
9. Cash and cash equivalents
10. Trade and other receivables
11. Other assets
12. Investment in associate
13. Property, plant and equipment
14. Intangible assets
15. Deferred tax assets
16. Trade and other payables
17. Interest-bearing loans and borrowings
18. Employee benefits
19. Deferred revenue
20. Deferred tax liabilities
21. Contributed equity
22. Reserves
23. Accumulated losses
24. Dividends
25. Key management personnel disclosures
26. Remuneration of auditors
27. Commitments and contingencies
28. Related party transactions
29. Reconciliation of loss after income tax to net cash flow from operating activities
30. Non-cash transactions
31. Financial risk management
32. Earnings per share
33. Subsidiaries
34. Events occurring after the reporting period
35. Parent entity financial information
42
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
43
49
51
51
54
54
54
55
55
55
57
57
57
59
61
61
61
62
62
63
63
64
65
65
65
66
66
67
68
68
68
71
72
73
73
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 2019
to 30 June 2020. The prior year covers the period 1 July
2018 to 30 June 2019. Comparative information has, where
necessary and immaterial, been reclassified to be consistent
with current year disclosures. On 1 July 2019 the Group
applied AASB 16 Leases in accordance with the modified
retrospective transition approach, therefore the comparative
information has not been restated and continues to be
reported under AASB117, refer to Note 2 for further detail.
(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 16 has
been disclosed in Note 2.
(iii) Early adoption of standards issued, but not effective
The Group has not elected to apply any pronouncements
before their operative date in the financial year beginning
1 July 2019.
(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.
Based on forecast profitability, positive operating cash
flows and available funding capacity under the Group’s
debt facilities, the directors are of the opinion that no
material uncertainties exist in relation to events or
conditions which cast doubt on the Group’s ability
to continue as a going concern.
(C) PRINCIPLE OF CONSOLIDATION
(i) Subsidiaries
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls
an entity when the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and
has the ability to affect those returns through its power
to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred
to the Group. They are deconsolidated from the date that
control ceases. The acquisition method of accounting is
used to account for business combinations by the Group.
Intercompany transactions, balances and unrealised gains
on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the transferred asset.
Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies
adopted by the Group.
(ii) Business Combinations under Common Control
A business combination involving entities or businesses under
common control is a business combination in which all of the
combining entities or businesses are ultimately controlled by
the same party or parties both before and after the business
combination, and that the control is not transitory.
Where an entity within the Group acquires an entity under
common control, the acquirer consolidates the carrying
values of the acquired entity’s assets and liabilities from the
date of acquisition. No fair value adjustments are made to the
acquired entity’s assets and liabilities at the date of acquisition.
The consolidated financial statements of the Superloop Group
include the acquired entity’s income and expenses from the
date of acquisition onwards. Any difference between the fair
value of the consideration paid / transferred by the acquirer
and the net assets / (liabilities) of the acquired entity are taken
to the common control reserve within other equity.
This other equity relates to transactions during the period
ended 30 June 2015 to form the Group.
(iii) Investment in Associate
An associate is an entity over which the Group has
significant influence. The Group’s investments in its
associate are accounted for using the equity method.
Under the equity method, the investment in an associate
is initially recognised at cost. The carrying amount of the
investment is adjusted to recognise changes in the Group’s
share of net assets of the associate since the acquisition.
43
ANNUAL REPORT FY20
Notes to the Consolidated Financial Report
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 FY20 on
the prior year.
(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 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 the 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 take
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.
44
SUPERLOOP LIMITED AND CONTROLLED ENTITIES 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.
The amount of the allowance for expected credit loss is
recognised in the Consolidated Statement of Profit or
Loss and Other Comprehensive Income within
administrative expenses. When a trade receivable for
which an 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 Profit or
Loss and Other Comprehensive Income.
(H) CONSUMPTION TAXES
Revenues, expenses and assets are recognised net of the
amount of associated consumption tax per jurisdiction,
unless the consumption based tax 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.
45
ANNUAL REPORT FY20 Notes to the Consolidated Financial Report
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 other comprehensive income 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 10) in the Consolidated Statement
of Financial Position.
Measurement
At initial recognition, the Group measures a financial
asset at its fair value plus, in the case of a financial asset
not at fair value through the Consolidated Statement of
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 Profit or Loss and Other Comprehensive Income during
the reporting year in which they are incurred.
Depreciation on other assets is calculated using the
straight-line method to allocate their cost, net of their
residual values, over their estimated useful lives or, in the
case of leasehold improvements and certain leased plant
and equipment, the lease term (if shorter) as follows:
Category
Network assets
Communications assets
Other assets
Leasehold improvements
Useful Life
15-40 Years
3-5 Years
3-10 Years
3-10 Years
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
46
SUPERLOOP LIMITED AND CONTROLLED ENTITIES An asset’s carrying amount is written down immediately
to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount. Gains
and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in
the Consolidated Statement of Profit or Loss and Other
Comprehensive Income.
(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.
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
When the Group leases an asset, a ‘right-of-use asset’
is recognised for the leased item and a lease liability
is recognised for any lease payments due at the lease
commencement date. The right-of-use asset is initially
measured at cost, being the present value of the lease
payments paid or payable, plus any initial direct costs incurred
in entering the lease and less any lease incentives received.
Right-of-use assets are depreciated on a straight-line basis
from the commencement date to the end of the lease
term. The lease term is the non-cancellable period of the
lease plus any periods for which the Group is ‘reasonably
certain’ to exercise any extension options.
Lease liabilities are initially measured at the value of the
lease payments that are not paid at the commencement
date and are discounted using the incremental borrowing
rates of the applicable Group entity (the rate implicit in the
lease is used if it is readily determinable). Only fixed lease
payments for the term of the lease are included in the
lease liability.
After initial recognition, the lease liability is recorded at
amortised cost using the effective interest method. It
is remeasured when there is a change in future lease
payments arising from a change in an index or rate (e.g.
an inflation related increase) or if the Group’s assessment
of the lease term changes; any change in the lease liability
as a result of these changes also results in a corresponding
change in the recorded right-of-use asset.
47
ANNUAL REPORT FY20
Notes to the Consolidated Financial Report
(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 loss
recognised for goodwill is not reversed in subsequent periods.
(P) TRADE AND OTHER PAYABLES
These amounts represent liabilities for goods and services
provided to the Group prior to the end of financial year which
are unpaid. The amounts are unsecured and are usually paid
within 30 days of recognition. Trade and other payables are
presented as current liabilities unless payment is not due
within 12 months from the reporting date. They are recognised
initially at their fair value and subsequently measured at
amortised cost using the effective interest method.
(Q) BORROWINGS
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption
amount is recognised in the Consolidated Statement of
Profit or Loss and Other Comprehensive Income over
the year of the borrowings using the effective interest
method. Fees paid on the establishment of loan facilities
are recognised as transaction costs of the loan to the extent
that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw
down occurs. To the extent there is no evidence that it is
probable that some or all of the facility will be drawn down,
the fee is capitalised as a prepayment for liquidity services
and amortised over the year of the facility to which it relates.
(R) EMPLOYEE BENEFITS
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary
benefits and annual leave expected to be settled within
12 months after the end of each reporting year in which
the employees render the related service are recognised
in respect of employees’ services up to the end of the
reporting year and are measured at the amounts expected
to be paid when the liabilities are settled. The liability for
annual leave is recognised in the provision for employee
benefits. In June 2020 the Group met the eligibility
requirements to receive the Government JobKeeper
allowance, this allowance has been offset against employee
benefits expense and for the period ended 30 June 2020
the total amount included in the Consolidated Statement
of Profit or Loss and other Comprehensive Income was
$714,000. It is expected that the Group will continue to
receive the support till September 2020.
(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;
48
SUPERLOOP LIMITED AND CONTROLLED ENTITIES • 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 32).
(Z) PARENT ENTITY FINANCIAL INFORMATION
The financial information for the parent entity, Superloop
Limited, disclosed in Note 35 has been prepared on the
same basis as the consolidated financial statements.
(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.
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 16 LEASES
On 1 July 2019 the Group applied AASB 16 Leases which
is effective for an annual period that begins on or after 1
January 2019. The Group has applied AASB 16 in accordance
with the modified retrospective transition approach,
therefore the comparative information has not been restated
and continues to be reported under AASB 117.
The Group has applied the following expedients in relation to
the adoption of AASB 16:
• the right-of-use assets were measured at an amount
based on the lease liability at adoption and initial direct
costs incurred when obtaining leases were excluded
from this measurement;
• The Group has elected to use a single discount rate to
measure lease liabilities for each identified lease contract
with similar lease characteristics and has elected to use
hindsight where applicable when determining lease term
and inclusions of options to extend or terminate the lease.
Impact of applying the AASB 16 accounting policy
The impacts to the Group’s financial statements and the
key movements recorded in the Consolidated Statement of
Financial Position on 1 July 2019 are shown in the table below.
30 June
2019 (as
previously
reported)
$’000
AASB 16
Adjustment
1 July
2019
$’000
228,675
11,209
239,884
(2,462)
(5,184)
(7,646)
(86,692)
(6,025)
(92,717)
-
Impact on assets
& liabilities
Property, plant
and equipment
Current interest-
bearing
borrowings
Non-current
interest-bearing
borrowings
Total effect
on net assets
49
ANNUAL REPORT FY20 Notes to the Consolidated Financial Report
Right-of-Use assets have been recognised as at 1 July 2019
under the following property, plant and equipment categories:
Asset categories
Communication assets
Other assets
$’000
7,642
3,567
11,209
The largest proportion of the total right-of-use asset
recognised relates to base stations, which have been
included in the Communication category. The remaining
right-of-use assets largely relate to office and vehicle
leases and have been included in Other Assets.
Changes made to previous accounting policy (AASB 117)
as a result of applying the AASB 16 (‘current’) accounting
policy are as follows:
Under AASB 117, lessees were classified as either operating
or finance leases. Operating lease costs were expensed on
a straight-line basis over the period of the lease. Finance
leases resulted in the recognition, in the statement of
financial position, of an asset and a corresponding liability
for lease payments, at the lower of the fair value or present
value of minimum lease payments. Under AASB 16, all lease
agreements give rise to the recognition of a ‘right-of-use
asset’ representing the right to use the leased item and a
liability for any future lease payments over the ‘reasonably
certain’ period of the lease, which may include future lease
periods for which the Group has extension options.
Lessee accounting under AASB 16 is similar to finance
lease accounting for lessees under AASB 117; lease costs are
recognised in the form of depreciation of the right-of-use
asset and interest on the lease liability which is generally
discounted at the incremental borrowing rate of the
relevant Group entity, although the interest rate implicit
in the lease is used when it is more readily determinable.
Interest charges will typically be higher in the early stages
of a lease and will reduce over the term. Lease interest
costs are recorded in financing costs and associated cash
payments are classified as financing cash flows in the
Group’s Consolidated Statement of Cash Flows.
The lease payments made during the period ended 30
June 2020 were $5.96 million. With the adoption of AASB
16 Leases these payments are no longer included in
EBITDA, but instead depreciation and interest expense
are recognised. A depreciation expense of $5.68 million
and interest expense of $0.38 million has been recognised
during the period in relation to operating leases.
Critical accounting judgements and key sources
of estimation relating to AASB 16
i) Lease identification
Whether an arrangement is considered a lease or a service
contract depends on the analysis by Management of both
the legal form and substance of the arrangement between
the Group and the counter-party to determine if control of
an identified asset has been passed between the parties;
if not, the arrangement is a service arrangement. Control
exists if the Group obtains substantially all of the economic
benefit from the use of the asset and has the ability to
direct its use, for a period of time. An identified asset exists
where an agreement explicitly or implicitly identifies an
asset or a physically distinct portion of an asset which the
lessor has no substantive right to substitute.
The judgement impacts the nature and timing of both
costs and reported assets and liabilities. A lease results in
depreciation and interest being recognised and an asset
and a liability being reported. The interest charge will
decrease over the life of the lease. A service contract results
in operating expenses being recognised evenly over the life
of the contract and no assets or liabilities being recorded
(other than trade payables, prepayments and accruals).
ii) Lease term
Where leases include additional optional periods after
an initial lease term, significant judgement is required
in determining whether these optional periods should
be included when determining the lease term. Optional
periods are included in the lease term if the Group is
reasonably certain it will exercise an extension option
or will not exercise a termination option. This depends
on an analysis by Management of all relevant facts
and circumstances including the leased asset’s nature
and purpose, the economic and practical potential for
replacing the asset and any plans that the Group has in
place for the future use of the asset.
Transition disclosures
The weighted average incremental borrowing rate applied
to the Group’s lease liabilities recognised in the balance
sheet at 1 July 2019 was 4.88%.
The Group’s undiscounted operating lease commitments
at 30 June 2019 were $8.0 million with the material
differences between AASB 117 lease commitments and the
lease liabilities recognised on transition to AASB 16 Leases
are shown in the table below:
Operating Lease Commitment
at 30 June 2019
Less: effect of discounting on payments
included in the operating lease commitment
Plus: lease liabilities in respect of additional
‘reasonably certain’ lease extensions assumed
under AASB 16
Lease liability opening balance reported
at 1 July 2019
$’000
7,965
(989)
4,233
11,209
50
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
3. CRITICAL ACCOUNTING ESTIMATES
AND JUDGEMENT
of completion could have an impact on the timing of
the revenue recognition. Refer to Note 1(E) for further
information on revenue recognition.
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 14.
The identification of cash generating units (“CGU”) is an
area of significant judgement, given the interdependence
of the services and offerings. Our Connectivity operating
segment includes a number of different connectivity
services. The connectivity assets are interconnected
and the different connectivity services are offered in
conjunction with each other to our enterprise customers.
The various telecommunications equipment which forms
our connectivity network is considered to be working
together to generate our cash inflows.
Deferred tax recoverability
Deferred tax assets are recognised to the extent that
their utilisation is probable. The utilisation of deferred tax
assets will depend on whether it is possible to generate
sufficient taxable income in the respective tax type
and jurisdiction. Various factors are used to assess the
probability of the future utilisation of deferred tax assets,
including past operating results, operational plans, and
tax planning strategies.
Revenue recognition
The Group’s construction and other complex contracts
are recognised as and when performance obligations
are met. Identifying performance obligations, allocating
the transaction price to performance obligations, and
determining the timing of revenue recognition of
these contracts 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
Useful life of assets
The economic life of property, plant and equipment, and
intangible assets is a critical accounting estimate, with the
ranges outlined in Note 1(K) and Note 1(M), respectively.
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 at
least at each reporting period. Should the actual lives of these
component parts be significantly different this would impact
the depreciation and amortisation 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.
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. 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).
4. SEGMENT INFORMATION
(A) DESCRIPTION OF SEGMENTS
Superloop is a trusted enabler of connectivity and managed
services in Asia Pacific. During the year, the principal
activities of the Group included:
i) the development and operation of independent
connectivity infrastructure and services throughout the
Asia Pacific region for wholesale and enterprise customers
including fibre optic cable, international submarine cables
and fixed wireless networks (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).
51
ANNUAL REPORT FY20 Notes to the Consolidated Financial Report
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.
(B) SEGMENT INFORMATION PROVIDED TO MANAGEMENT
The segment information provided to Management for the reportable segments is as follows:
Operating Segments
for year ended 30 June 2020
Connectivity(1)
$000
Services(2)
$000
Broadband(3)
$000
Revenue and other income
Direct costs
Gross Margin
Operating expenses
56,989
(27,240)
29,749
18,126
(8,407)
9,719
31,857
(17,475)
14,382
Depreciation and amortisation
(37,545)
(2,812)
(6,274)
Interest, FX & other
Loss before income tax
Operating Segments
for year ended 30 June 2020
Connectivity(1)
$000
Services(2)
$000
Broadband(3)
$000
Group Shared
Services(4)
$000
619
-
619
-
Group Shared
Services(4)
$000
Non-current assets
Property, plant & equipment
Intangible assets excl. goodwill
(includes indefeasible rights to use)
Goodwill
Total
219,790
91,274
104,854
415,918
-
11,854
5,058
-
5,058
8,617
30,210
50,681
-
-
-
-
TOTAL
$000
107,591
(53,122)
54,469
(40,999)
(46,631)
(4,624)
(37,785)
TOTAL
$000
231,644
104,949
135,064
471,657
(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 BigAir 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 ended
30 June 2020
Australia(5)
$000
Singapore
$000
Hong Kong
$000
Revenue and other income
Direct costs
Gross Margin
Depreciation and amortisation
38,493
(20,035)
18,458
(27,734)
14,897
(2,703)
12,194
(4,789)
3,599
(4,502)
(903)
(5,022)
Connectivity
Sub Total
$000
56,989
(27,240)
29,749
(37,545)
52
SUPERLOOP LIMITED AND CONTROLLED ENTITIES 91,274
311,064
TOTAL
$000
119,845
(61,366)
58,479
(49,980)
(36,513)
(50,683)
(5,678)
(84,375)
Analysis of Connectivity Operating
Segment for the year ended
30 June 2020
Australia(5)
$000
Singapore
$000
Hong Kong
$000
Connectivity
Sub Total
$000
PP&E and Intangible Assets
(excluding Goodwill)
Property, plant & equipment
Intangible assets excl. goodwill
(includes indefeasible rights to use)
Total
111,429
68,669
180,098
48,217
8,852
57,069
Operating Segments
for year ended 30 June 2019
Connectivity(1)
$000
Services(2)
$000
Broadband(3)
$000
13,753
73,897
Group Shared
Services(4)
$000
60,144
219,790
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
-
-
(1) Connectivity includes earnings associated with the development of the INDIGO subsea cable system.
(2) Services include earnings associated with the Cloud Managed Services entities acquired through the 2016 BigAir 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, Australia Fibre and Australia Fixed Wireless.
Operating Segments
for year ended 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
85,690
104,854
408,608
5,229
-
5,957
8,186
30,210
48,279
-
-
-
-
The below table provides further information regarding the group’s main Connectivity segment.
TOTAL
$000
228,675
99,105
135,064
462,844
Analysis of Connectivity
Operating Segment
for the year ended 30 June 2019
Revenue and other income
Direct costs
Gross Margin
Depreciation and amortisation
Impairment losses
Australia(5)
$000
Singapore
$000
Hong Kong
$000
Sub Total
$000
46,055
(20,762)
25,293
(18,579)
-
10,305
(4,207)
6,098
(2,263)
-
3,112
(2,713)
399
(3,538)
-
59,472
(27,682)
31,790
(24,380)
-
53
ANNUAL REPORT FY20 Notes to the Consolidated Financial Report
Analysis of Connectivity
Operating Segment
for the year ended 30 June 2019
Non-current assets
Australia(5)
$000
Singapore
$000
Hong Kong
$000
Sub Total
$000
Property, plant & equipment
107,854
49,573
60,637
218,064
Intangible assets excl. goodwill
(includes indefeasible rights to use)
Total
5. REVENUE
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
69,081
176,935
1,945
51,518
14,664
75,301
85,690
303,754
30 June 2020
$ ’000
30 June 2019
$ ’000
106,644
117,338
40
16
-
891
107,591
68
474
315
1,650
119,845
The total future revenue from the Group’s contracts with customers with performance obligations not satisfied at 30 June
2020 is $43.2 million of which $4.8 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 Group’s 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 12 years.
6. INTEREST EXPENSE
Interest on borrowings
Total interest expense
30 June 2020
$ ’000
30 June 2019
$ ’000
(4,407)
(4,407)
(5,054)
(5,054)
The Group incurs interest on the drawn amount of its debt facility (refer to Note 17).
7. 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.
Net foreign exchange (losses) for the year
Total net foreign exchange (losses)
54
30 June 2020
$ ’000
30 June 2019
$ ’000
(217)
(217)
(429)
(429)
SUPERLOOP LIMITED AND CONTROLLED ENTITIES 8. INCOME TAX EXPENSE
(a) Income tax recognised in profit or loss
In respect of the current year
In respect of prior years
Total current tax
Deferred tax
In respect of the current year
In respect of prior years
Total deferred tax
Total income tax (expense) / benefit
30 June 2020
$ ’000
30 June 2019
$ ’000
-
2,758
2,758
(3,303)
(2,758)
(6,061)
(3,303)
(2,758)
-
(2,758)
15,076
-
15,076
12,318
(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
(37,785)
(84,375)
Tax (expense) / credit at the Australian tax rate of 30%
Non-deductible Impairment
Non-deductible entertainment expenses
Non-deductible share based payments
Equity accounting loss on investment
Effect of different tax rates of subsidiaries operating in other jurisdictions
Adjustments to opening deferred tax balances
Deferred tax credits in respect of temporary differences and unused tax losses
not recognised in current year
Total income tax (expense) / benefit
9. CASH AND CASH EQUIVALENTS
11,336
-
-
(3)
-
(159)
(2,758)
(11,719)
(3,303)
25,313
(12,976)
(56)
(34)
(59)
130
-
-
12,318
30 June 2020
$ ’000
30 June 2019
$ ’000
7,660
9,430
17,090
18,386
512
18,898
Cash at bank and on hand
Short term deposits
Total cash and cash equivalents
10. TRADE AND OTHER RECEIVABLES
Trade receivables
Allowance for expected credit losses
Net trade receivables
Consumption tax receivable
Other receivables
Total
Note
(A)
(B)
(C)
Current
$’000
Non-Current
$’000
30 June 2020 TOTAL
$’000
14,203
(424)
13,779
207
705
14,691
-
-
-
-
-
-
14,203
(424)
13,779
207
705
14,691
55
ANNUAL REPORT FY20 Notes to the Consolidated Financial Report
Trade receivables
Allowance for expected credit losses
Net trade receivables
Consumption tax receivable
Other receivables
Total
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
(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 credit loss 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 2020
$’000
30 June 2019
$’000
605
1,957
2,562
848
2,191
3,039
(B) AGING OF ALLOWANCE FOR EXPECTED CREDIT LOSS (“LOSS ALLOWANCE”)
As at 30 June 2020, the Group had a loss allowance of $0.4 million (2019: $0.3 million). 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 at end of the year
30 June 2020
$’000
30 June 2019
$’000
77
121
226
424
47
17
232
296
30 June 2020
$’000
30 June 2019
$’000
296
(19)
147
424
335
(48)
9
296
(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.
56
SUPERLOOP LIMITED AND CONTROLLED ENTITIES 11. 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
12. INVESTMENT IN ASSOCIATE
30 June 2020
$’000
30 June 2019
$’000
4,167
3,443
-
7,610
289
1,462
1,751
4,357
2,667
39
7,063
299
2,836
3,135
The Group sold its minority interest of 16.8% in Fiber Sense Pty Ltd on the 24 June 2019 for $10.1 million consideration. 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 protected right to appoint
one Director to the Board of the associate. Superloop held one of the two Director positions during the year.
The following table illustrates the summarised financial information of the Group’s investment in the associate:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Group’s carrying amount of investment
Revenue
Cost of sales
Operating expenses
Finance costs
Loss before tax
Income tax benefit
Loss for the year
Total comprehensive income / (loss) for the year
Group’s share of loss for the year
13. PROPERTY, PLANT AND EQUIPMENT
Carrying amounts of:
Assets in the course of construction
Network assets
Communication assets
Other assets
Total
30 June 2020
$’000
30 June 2019
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
149
(137)
(1,672)
-
(1,660)
498
(1,162)
(1,162)
(195)
30 June 2020
$’000
30 June 2019
$’000
1,866
179,341
50,091
346
231,644
6,805
174,925
46,628
317
228,675
57
ANNUAL REPORT FY20 Notes to the Consolidated Financial Report
Cost or Valuation:
Balance at 30 June 2018
Additions
Movement in foreign exchange
Disposals
Transfers
Balance at 30 June 2019
Adoption of AASB16 Lease accounting standard
Additions
Movement in foreign exchange
Disposals
Transfers
Balance at 30 June 2020
Accumulated depreciation:
Balance at 30 June 2018
Depreciation charge
Disposals
Impairment
Movement in foreign exchange
Balance at 30 June 2019
Depreciation charge
Disposals
Movement in foreign exchange
Balance at 30 June 2020
Carrying value – 2020
Carrying value – 2019
Assets in the
course of
construction
$’000
Network
assets
$’000
Communic-
ation assets
$’000
Other
assets
$’000
TOTAL
$’000
31,551
47,201
39
-
(71,986)
6,805
-
2,315
(2)
-
(7,252)
1,866
-
-
-
-
-
-
-
-
-
-
122,865
5,630
6,715
(44)
57,503
192,669
-
5,895
877
-
6,025
205,466
(8,245)
(5,673)
26
(3,282)
(570)
43,152
9,390
176
(103)
14,021
66,636
7,637
8,641
38
-
1,227
84,179
(8,231)
(7,837)
80
(3,967)
(53)
(17,744)
(20,008)
(8,464)
(14,088)
-
82
-
8
2,893
827
16
(75)
462
4,123
3,573
274
9
(593)
-
200,461
63,048
6,946
(222)
-
270,233
11,210
17,125
922
(593)
-
7,386
298,897
(1,858)
(1,816)
62
(180)
(14)
(3,806)
(3,844)
593
17
(18,334)
(15,326)
168
(7,429)
(637)
(41,558)
(26,395)
593
107
(26,125)
(34,088)
(7,040)
(67,253)
1,866
6,805
179,341
174,925
50,091
46,628
346
317
231,644
228,675
Implementation of AASB16 Leases has increased the opening balance of property, plant and equipment by $11.2 million.
A “right of use” asset is recognised for the leased item and a lease liability is recognised for lease payments due. “Right
of use” asset additions during FY20 totalled $1.1 million.
Right of Use Asset
Communication
assets
$’000
Other assets
$’000
Adoption of AASB16 Lease accounting standard
Additions during the year
Depreciation charge
Carrying value – 2020
7,637
1,138
(3,489)
5,286
3,573
-
(2,193)
1,380
TOTAL
$’000
11,210
1,138
(5,682)
6,666
58
SUPERLOOP LIMITED AND CONTROLLED ENTITIES 14. INTANGIBLE ASSETS
Carrying amounts of:
Assets being developed
Rights and licences
Software
Customer acquisition costs & other intangible assets
Customer relationships, brands and trademarks
Goodwill
Total intangible assets
30 June 2020
$’000
30 June 2019
$’000
1,785
59,884
5,367
4,506
33,407
135,064
240,013
1,074
47,294
5,998
4,427
40,312
135,064
234,169
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
3,755
2,563
-
(5,244)
-
1,074
711
42,548
9,387
-
-
750
52,685
19,498
-
-
32
-
8,547
1,367
(21)
873
1
10,767
2,627
-
-
2,533
1,873
(296)
3,113
33
7,256
1,292
(9)
-
59,814
178,319
295,516
1,459
-
1,258
-
-
-
-
-
16,649
(317)
-
784
62,531
178,319
312,632
-
-
-
-
-
-
24,128
23
-
Movements
Cost or valuation:
Balance as at 30 June 2018
Other additions
Disposals
Transfers
Movements in foreign
exchange
Balance as at 30 June 2019
Additions
Movements in foreign
exchange
Transfers
Balance as at 30 June 2020
1,785
72,215
13,394
8,539
62,531
178,319
336,783
Accumulated amortisation:
Balance as at 30 June 2018
Amortisation charge
Disposals
Impairment
Movements in foreign
exchange
Balance as at 30 June 2019
Amortisation charge
Movements in foreign
exchange
Balance as at 30 June 2020
-
-
-
-
-
-
-
-
-
(2,630)
(2,740)
(2,109)
(2,673)
(1,374)
(1,525)
(8,734)
(13,485)
-
-
(21)
(5,391)
(7,035)
95
13
-
-
(4,769)
(3,258)
-
81
-
(11)
(2,829)
(1,210)
6
-
-
-
(14,847)
(20,423)
94
(43,255)
(43,255)
-
(32)
-
-
-
(22,219)
(43,255)
(78,463)
(6,905)
-
-
-
(18,408)
101
(12,331)
(8,027)
(4,033)
(29,124)
(43,255)
(96,770)
Carrying value – 2020
Carrying value – 2019
1,785
1,074
59,884
47,294
5,367
5,998
4,506
4,427
33,407
40,312
135,064
240,013
135,064
234,169
Goodwill has been allocated for impairment testing purposes to the following operating segments, which represent
the lowest level within the Group at which the goodwill is monitored for internal management purposes. The operating
segments are comprised of cash-generating units or groups of cash-generating units.
59
ANNUAL REPORT FY20 Notes to the Consolidated Financial Report
Connectivity
Services
Broadband
Total goodwill
30 June 2020
$’000
30 June 2019
$’000
104,854
-
30,210
135,064
104,854
-
30,210
135,064
Goodwill and intangible assets with an indefinite useful life are not subject to amortisation and are assessed for
impairment at least annually, or whenever an indication of impairment arises.
An impairment loss relating to goodwill is recognised for the amount by which the carrying amount of a group of cash-
generating units exceeds their recoverable amount. The recoverable amount for each group of cash-generating units is
determined based on the higher of fair value in use less costs of disposal or value in use. An impairment loss recognised for
goodwill is not reversed in subsequent periods.
The COVID-19 outbreak has developed rapidly in early calendar 2020, with measures taken to contain the virus having an
adverse effect on economic activity and causing disruption to many businesses. As the outbreak continues to progress
and evolve, it is extremely challenging to predict the full extent and duration of its impact on Superloop, in particular
the Student accommodation revenue stream (part of the Guest WiFi business within the Broadband group of cash-
generating units). Based on information available as at 30 June 2020, Management has made additional adjustments to
the five-year business plan used in the Group’s impairment testing in order to reflect the estimated impact. As at 30 June
2020, Management has assumed Guest WiFi revenues will continue to be impacted by COVID-19 in FY21, returning to pre
COVID-19 levels in early FY22.
Management apply judgement to identify cash-generating units and groups of cash-generating units. Recoverable
amounts and impairment assessment is determined using a value in use calculation. Value in use calculations require
judgements to be made in relation to cash flow forecasts and projections, terminal value growth rates and discount rates.
The forecast cash flows are based on the financial year ending 30 June 2021 budget approved by the Board with the cash
flows beyond the budget period projected 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 terminal value growth rate is
applied beyond the financial projection period and a post-tax discount rate 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.
Management have used the following key assumptions in determining the recoverable amount of each group of cash-
generating units to which goodwill has been allocated:
Terminal value growth rate
Discount rate
30 June 2020
30 June 2019
30 June 2020
30 June 2019
Connectivity
Services
Broadband
2.9%
2.5%
3.0%
3.0%
2.5%
1.5%
10.7%
10.7%
10.7%
10.89%
10.89%
10.89%
Management has reviewed sensitivities on the key assumptions on which the recoverable amounts are based and believe
that any reasonable change would not cause the cash-generating units’ carrying amounts to exceed their recoverable
amounts. The sensitivity tests applied were to reduce the terminal value growth rate by 1.0%, or increase the post-tax
discount rate from 10.7% to 11.5% for each cash-generating unit and groups of cash-generating units, which did not result
in any cash-generating units’ carrying amounts exceeding their recoverable amounts.
60
SUPERLOOP LIMITED AND CONTROLLED ENTITIES 15. DEFERRED TAX ASSETS
Deferred tax assets attributable to:
Employee benefits
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 2020
$’000
30 June 2019
$’000
1,434
3,697
13,745
3,033
1,732
23,641
1,201
2,750
13,014
5,516
743
23,224
Set-off deferred tax liabilities pursuant to set-off provisions
20
(16,752)
(13,789)
Deferred tax assets recognised in the Consolidated Statement
of Financial Position
6,889
9,435
At the reporting date, the Group has unused tax losses of $130.4 million available for offset against future profits. A deferred
tax asset of $13.7 million has been recognised in respect of $61.7 million of such losses. No deferred tax asset has been
recognised in respect of the remaining $68.7 million. Deferred tax assets are recognised where it is considered probable
that they will be recovered against taxable profits in the future.
16. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Accrued expenses
Other current financial payables
Current tax liabilities
Deferred consideration
Total trade and other payables
30 June 2020
$’000
30 June 2019
$’000
13,299
1,116
2,413
34
219
500
17,581
39,126
204
4,997
74
2,988
2,940
50,329
17. INTEREST-BEARING LOANS AND BORROWINGS
The Group had interest bearing loans and borrowings as at 30 June 2020 of $58.4 million (30 June 2019: $89.2 million).
The Group has a $61.7 million four year revolving facility with ANZ and Westpac maturing on 28 October 2023. 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 $1.1 million have been issued under the facility.
The Group utilises an equipment vendor to provide funding for network equipment, entering into three year fixed rate
instalment payment agreements. At 30 June 2020, a total of $3.9 million had been funded under this arrangement
(30 June 2019: $6.3 million). In terms of the Consolidated Statement of Cash Flows, 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.
61
ANNUAL REPORT FY20 Notes to the Consolidated Financial Report
Note
30 June 2020
$’000
30 June 2019
$’000
Current
Equipment financing
Lease liability
Total current interest-bearing loans and borrowings
Non-Current
Equipment financing
Lease liability
Revolving debt facility drawn (net of transaction costs)
(A)
Total non-current interest-bearing loans and borrowings
2,499
3,390
5,889
1,386
3,398
47,695
52,479
2,462
-
2,462
3,885
-
82,807
86,692
Total interest-bearing loans and borrowings
58,368
89,154
Total revolving debt facility limit
Less bank guarantees issued under the facility
Less amounts drawn (before transaction costs)
Revolving debt facility available
61,700
(1,095)
(49,462)
11,143
120,000
(1,082)
(83,929)
34,989
(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.
Total interest-bearing loans and borrowings
(excluding lease liability)
18. EMPLOYEE BENEFITS
30 June 2019
$’000
Financing
cashflows
Net transaction
costs
30 June 2020
$’000
89,154
(36,929)
(645)
51,580
Current
Non-current
Total employee benefits
The employee benefits represents accrued annual leave and long service leave entitlements.
19. DEFERRED REVENUE
Deferred revenue
Deferred installation fees
Total deferred revenue
Current
Non-current
Total deferred revenue
30 June 2020
$’000
30 June 2019
$’000
2,188
1,614
3,802
2,679
2,109
4,788
30 June 2020
$’000
30 June 2019
$’000
41,765
1,437
43,202
4,813
38,389
43,202
38,462
25
38,487
4,208
34,279
38,487
Deferred revenue includes long-term capacity arrangements (rights-of-use (‘IRU’) agreements) which provide 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 obligation is met.
62
SUPERLOOP LIMITED AND CONTROLLED ENTITIES The table below shows the movement of deferred revenue for the year.
Deferred Revenue movement
Opening balance
Additions
Revenue recognised
Closing balance
20. DEFERRED TAX LIABILITIES
Deferred tax liabilities attributable to:
Deferred revenue
Customer acquisition and equipment installations costs
Property, plant and equipment and intangible assets
Cashflow hedges
Total deferred tax liabilities
Set-off of deferred tax liabilities pursuant to set-off provisions (Note 15)
Deferred tax liabilities recognised in the Consolidated Statement
of Financial Position
21. CONTRIBUTED EQUITY
(A) SHARE CAPITAL
30 June 2020
$’000
30 June 2019
$’000
38,487
11,408
(6,693)
43,202
24,708
19,712
(5,933)
38,487
30 June 2020
$’000
30 June 2019
$’000
663
1,234
16,791
-
18,688
(16,752)
1,936
1,297
1,239
11,925
(98)
14,363
(13,789)
574
30 June 2020
Number of Shares
30 June 2019
Number of Shares
30 June 2020
$’000
30 June 2019
$’000
Fully paid ordinary shares
Total share capital
Less: Issue costs
Contributed equity
365,866,416
365,866,416
253,301,037
253,301,037
365,866,416
253,301,037
525,115
525,115
(10,610)
514,505
432,811
432,811
(6,528)
426,283
(B) MOVEMENTS IN ORDINARY SHARE CAPITAL
Date
Details
Number
of Shares
Issue Price
$
Value
$
30-Jun-18
Balance
17-Sept-18
Vesting of performance rights
5-Mar-19
5-Mar-19
Share placement
Entitlement Offer (Institutional Component)
27-Mar-19
Entitlement Offer (Retail Component)
30-Jun-19
Balance
30-Sep-19
Accelerated Entitlement Offer
30-Sep-19
Share placement
18-Oct-19
Retail Entitlement Offer
18-Oct-19
Retail Entitlement Offer
1-Nov-19
Share placement
30-Jun-20
Balance
228,499,540
97,093
12,000,000
5,977,188
6,727,216
253,301,037
17,703,183
30,527,680
3,778,921
20,739,140
39,816,455
365,866,416
2.32
1.25
1.25
1.25
0.82
0.82
0.82
0.82
0.82
401,705,683
225,256
15,000,000
7,471,485
8,409,020
432,811,444
14,516,610
25,032,698
3,098,715
17,006,095
32,649,493
525,115,055
63
ANNUAL REPORT FY20 Notes to the Consolidated Financial Report
(C) ORDINARY SHARES
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group in proportion
to the number of, and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at
a meeting in person or by proxy, is entitled to one vote, and upon a poll each share, is entitled to one vote.
Ordinary shares have no par value and the Group does not have a limited amount of authorised capital.
(D) DIVIDEND REINVESTMENT PLAN
The Group does not have a dividend reinvestment plan in place.
(E) CAPITAL MANAGEMENT
The Group’s objectives when managing capital are to safeguard the ability to continue as a going concern, so that it
can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital. In future, the Directors may pursue other funding options such as other debt, sale
and leaseback of assets, additional equity and various other funding mechanisms as appropriate in order to undertake
its projects and deliver optimum shareholders’ return. The Group intends to maintain a gearing ratio appropriate for
a company of its size and stage of development.
Total borrowings (as per Note 17)
Less: cash and cash equivalents
Net debt / (surplus cash)
Total equity
Gearing ratio
30 June 2020
$’000
30 June 2019
$’000
58,368
(17,090)
41,278
89,154
(18,898)
70,256
394,799
346,158
10.5%
20.3%
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 Consolidated Statement of Financial Position. Excluding lease liabilities & net borrowing transaction costs, the
gearing ratio was 8.4% as at 30 June 2020 (FY19: 16.9%).
22. RESERVES
Cash flow hedge reserve(1)
Share based payments
Foreign currency translation reserve(2)
Total reserves
30 June 2020
$’000
30 June 2019
$’000
532
873
6,368
7,773
532
865
4,869
6,266
(1) The cash flow hedge reserve represents the cumulative effective portion of gains or losses arising f rom changes in fair value of hedging
instruments entered into as cash flow hedges. The cumulative gain or loss arising f rom 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.
64
SUPERLOOP LIMITED AND CONTROLLED ENTITIES 23. ACCUMULATED LOSSES
Opening balance
Loss for the year
Dividends paid
Total accumulated losses
24. DIVIDENDS
No dividends were paid or declared in FY20 (FY19: Nil).
25. KEY MANAGEMENT PERSONNEL DISCLOSURES
(A) KEY MANAGEMENT PERSONNEL COMPENSATION
Short term employee benefits
Post employment benefits
Other long-term employee benefits
Share based payments
Total key management personnel compensation
Detailed remuneration disclosures are provided in the Remuneration Report.
30 June 2020
$’000
30 June 2019
$’000
(83,064)
(41,088)
-
(124,152)
(11,007)
(72,057)
-
(83,064)
30 June 2020
$
30 June 2019
$
1,729,619
236,971
-
21,327
1,987,917
2,746,970
428,156
-
26,798
3,201,924
(B) SHARE BASED PAYMENTS
During the year, Key Management Personnel and other employees of the Group participated in long-term incentive schemes.
Total expense arising from share based payment transactions in the year to 30 June 2020 was $8,407 (FY19: $112,395).
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 28.
65
ANNUAL REPORT FY20 Notes to the Consolidated Financial Report
26. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms:
(A) DELOITTE TOUCHE TOHMATSU
Audit or review of financial reports:
- Group
- Subsidiaries
Other assurance and agreed-upon procedures under other legislation
or contractual arrangements
Other services:
- Tax services
Total remuneration of Deloitte Touche Tohmatsu
30 June 2020
$
30 June 2019
$
424,969
49,234
17,779
-
491,982
444,938
35,554
17,173
24,136
521,801
The Group may decide to employ the auditor (Deloitte) on assignments additional to their statutory audit duties where the
auditor’s expertise and experience with the Group are important. Details of the amounts paid or payable to the auditor for
audit and non-audit services provided during the year are set out above.
The Board of Directors has considered the position and, in accordance with advice received from the Audit Committee, is
satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor, as set
out above, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
• All non-audit services have been reviewed by the Audit Committee to ensure they do not impact the impartiality and
objectivity of the auditor;
• None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants.
(B) NON-DELOITTE AUDIT FIRMS
Superloop Limited did not engage with any other non-Deloitte audit firms.
27. COMMITMENTS AND CONTINGENCIES
(A) CAPITAL COMMITMENTS
Capital expenditure contracted for at the end of each reporting year but not recognised as liabilities is as follows:
Property, plant and equipment
Total capital commitments
30 June 2020
$’000
30 June 2019
$’000
729
729
6,002
6,002
Capital commitments relate to contractual commitments associated with network expansion.
(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.
66
SUPERLOOP LIMITED AND CONTROLLED ENTITIES 28. RELATED PARTY TRANSACTIONS
The following is a summary of the transactions with related parties.
Shared services agreement with Capital B
The Group has entered into a shared services agreement with Capital B Pty Ltd (Capital B), a company controlled by the
Chairman of Superloop. Under the agreement, Capital B and Superloop provides certain services to/from the Group (e.g.
administrative and information technology services) on an as needed basis and provided on arm’s length terms. Either
party may terminate the agreement for convenience on 60 days’ written notice. For FY20, the total amount net payable in
relation to the shared services agreement was $4,500 (2019: $1,884,000).
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 Chairman of Superloop is also the Chairman and significant shareholder of
Megaport. The agreements are on the same terms as other agreements between Superloop and unrelated customers and
the fees are at competitive market rates. During FY20, net fees earned from Megaport totalled $516,200 (2019: $380,609).
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. During FY20, fees earned from Rising Sun Pictures totalled $66,800
(2019: $56,600).
Consulting services provided to APX Partners Pty Ltd
The Chairman of the Superloop is also the founder and a shareholder of APX Partners Pty Ltd. APX Partners Pty Ltd 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 (completed in May 2019). In addition to the above, the Group provides
adhoc consulting services to APX Partners Pty Ltd. During FY20, fees earned from APX Partners Pty Ltd totalled $1.0 million
(2019: Nil).
Long-term capacity agreement with Fiber Sense Pty Ltd
Superloop entered into a customer agreement in June 2018 with a former associate entity 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, deferred revenue release with respect to this agreement
in FY20 totalled $413,600 (FY19: $395,400). Superloop sold its minority interest in the associate in June 2019, in part to the
Chairman of Superloop. Remaining shareholders of the associate are unrelated parties. Refer to Note 12.
Supplier agreement with Cloudscene
Superloop has entered into a supplier agreement for the provision of marketing data services from Cloudscene. The
Chairman of Superloop is the founder of Cloudscene and has significant influence over the business. The agreement is on
an arm’s length basis. During FY20, payments made to Cloudscene totalled $7,300 (2019: Nil).
PROVISION OF SERVICES TO/FROM RELATED PARTIES
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
BALANCE OUTSTANDING AT THE END OF THE YEAR
Receivables
Trade and other payables
30 June 2020
$
30 June 2019
$
2,176,071
-
2,518,743
9,797,307
191,187
408,817
1,102,346
-
37,528
42,759
67
ANNUAL REPORT FY20 Notes to the Consolidated Financial Report
29. RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH FLOW FROM
OPERATING ACTIVITIES
Profit / (loss) for the year after income tax
(41,088)
(72,057)
30 June 2020
$’000
30 June 2019
$’000
Adjustments for:
Depreciation and amortisation
Impairment
Other adjustments
Interest expense
Gain on sale of assets
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 tax related balances
Net cash from operating activities
30. NON-CASH TRANSACTIONS
46,631
-
(9)
4,407
(16)
12,110
799
(9,545)
(3,362)
(987)
3,950
12,890
36,513
50,683
(257)
5,054
(789)
(15,952)
(927)
2,979
13,778
(574)
(13,158)
5,293
During the year, the Group entered into a number of intangible IRU non-cash investing activities which are not reflected in
the consolidated statement of cash flows. FY20: $8.0 million (FY19: (Nil)).
31. FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risk (including interest rate risk and price risk), credit
risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the financial performance of the Group.
In terms of fair value measurement, the carrying value of the Group’s financial assets are set out in Note 9 “Cash and
cash equivalents” and Note 10 “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 16 “Trade and other
payables” and Note 17 “Interest-bearing loans and borrowings”. For the Trade and other payables the carrying values
approximate fair value.
68
SUPERLOOP LIMITED AND CONTROLLED ENTITIES 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
$’000
30 June 2020
Financial assets measured at fair value
Derivative financial assets
Total financial assets
Financial liabilities measured at fair value
Deferred consideration
Derivative financial liabilities
Total financial liabilities
30 June 2019
Financial assets measured at fair value
Derivative financial assets
Total financial assets
Financial liabilities measured
at fair value
Deferred consideration
Derivative financial liabilities
Total financial liabilities
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
39
39
-
74
74
Total
-
-
500
-
500
39
39
-
-
500
-
500
-
-
2,940
-
2,940
2,940
74
3,014
(A) MARKET RISK
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market prices. Market risk comprises three types of risk: foreign exchange risk, price risk and interest rate risk.
(i) Foreign exchange risk
Superloop is exposed to exchange rate movements, in particular movements in the A$/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, none of which were open as at 30 June 2020.
The Group also has a multi-currency debt facility (refer (C)), which allows the Group to draw funds in a range of different
currencies, providing the Group with another method to manage the potential adverse impacts of changes in exchange
rate movements.
(ii) Price risk
The Group is not exposed to any equity securities price risk or commodity price risk.
(iii) Cash flow and fair value interest rate risk
Interest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instrument
will fluctuate due to changes in market interest rates.
The Group’s main interest rate risk arises from its cash at bank, term deposits (refer Note 9), and the Group’s interest-
bearing liabilities. The Group mitigates potential exposure to a movement in interest rates via the use of a derivative
interest rate swap when required. The interest rate swap has the economic effect of converting borrowings from floating
rates to fixed rates.
69
ANNUAL REPORT FY20
Notes to the Consolidated Financial Report
(iv) Sensitivity
At 30 June 2020, 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 $495k 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 2020
$’000
30 June 2019
$’000
17,090
18,898
-
-
-
-
17,090
18,898
In determining the credit quality of the financial assets, Superloop has used the long term rating from Standard & Poor’s.
(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 2020, the Group had $14.2 million customer trade receivables (refer Note 10).
(C) LIQUIDITY RISK
Superloop’s business is capital intensive in nature, and the continued growth of the Company relies on the acquisition
and development of new telecommunications infrastructure and ongoing maintenance of existing telecommunications
infrastructure. Superloop requires sufficient access to debt and equity capital to fund this expenditure.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability
of funding through an adequate amount of committed credit facilities to meet obligations when due. Failure to obtain
capital on 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.
The Group believes the amended senior debt facility and equity raise completed September 2019, together with cash flows
from operations, provides sufficient capital to fund its expected working capital requirements for at least the next 12 months.
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
30 June 2020
Trade payables
Interest-bearing borrowings
Total non-derivatives
30 June 2019
Trade payables
Interest-bearing borrowings
Total non-derivatives
70
17,581
5,889
23,470
50,329
2,462
52,791
-
52,479
52,479
-
86,692
86,692
-
-
-
-
-
-
17,581
58,368
75,949
50,329
89,154
139,483
17,581
58,368
75,949
50,329
89,154
139,483
SUPERLOOP LIMITED AND CONTROLLED ENTITIES 32. EARNINGS PER SHARE
(A) EARNINGS PER SHARE
30 June 2020
Cents
30 June 2019
Cents
Total basic earnings per share attributable to the ordinary equity holders
of the Group
(12.33)
(30.52)
(B) DILUTED EARNINGS PER SHARE
30 June 2020
Cents
30 June 2019
Cents
Total diluted earnings per share attributable to the ordinary equity holders
of the Group
(12.33)
(30.52)
(C) RECONCILIATIONS OF EARNINGS USED IN CALCULATING EARNINGS PER SHARE
30 June 2020
$’000
30 June 2019
$’000
Basic Earnings Per Share
Profit attributable to the ordinary equity holders of the Group used
in calculating basic losses per share
(41,088)
(72,057)
Diluted Earnings Per Share
Profit from continuing operations attributable to the ordinary equity holders
of the Group
(41,088)
(72,057)
(D) WEIGHTED AVERAGE NUMBER OF SHARES USED AS THE DENOMINATOR
30 June 2020
Number of
Shares
30 June 2019
Number of
Shares
Weighted average number of ordinary shares used as the denominator
in calculating basic earnings per share
333,191,823
236,107,785
Effects of dilution from:
Performance rights
Share options
-
-
-
-
Weighted average number of ordinary shares and potential ordinary shares
used as the denominator in calculating diluted earnings per share
333,191,823
236,107,785
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.
71
ANNUAL REPORT FY20 Notes to the Consolidated Financial Report
33. SUBSIDIARIES
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
SuperBB Pty Ltd(1)
RA WiFi 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)
Country of
Incorporation
Class
of Shares
30 June 2020
%
30 June 2019
%
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
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%
(1) These wholly-owned subsidiaries are members of the Australian tax-consolidated group.
72
SUPERLOOP LIMITED AND CONTROLLED ENTITIES 34. EVENTS OCCURRING AFTER THE REPORTING PERIOD
There are no matters or circumstances that occurred subsequent to the end of the financial year that has significantly
affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state
of affairs of the consolidated entity in future financial years.
35. 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 2020
$’000
30 June 2019
$’000
11,475
537,127
548,602
998
58,432
59,430
514,505
(1,050)
1,402
(25,685)
489,172
(8,672)
(8,663)
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)
(A) GUARANTEES ENTERED INTO BY THE PARENT ENTITY IN RELATION TO THE DEBTS OF ITS SUBSIDIARIES
As at 30 June 2020, Superloop Limited did not have any parent entity guarantees.
(B) CONTINGENT LIABILITIES OF SUPERLOOP LIMITED (PARENT ENTITY)
As a 30 June 2020, Superloop Limited did not have any contingent liabilities.
73
ANNUAL REPORT FY20 Directors’ Declaration
In the Directors’ opinion:
(a) The financial statements and notes set out on pages 38 to 73 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 2020 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
24 August 2020
74
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Independent
Auditor’s Report
ANNUAL REPORT FY20
75
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 2020, 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 2020 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 & Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (including Independence Standards) (the “Code”) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We 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.
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.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Organisation
76
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
Key Audit Matter
Carrying value of Goodwill assets
As at the 30 June 2020 the Group’s goodwill balance totals
$135.1 million as disclosed in Note 14.
The assessment of the recoverable amount of the
goodwill and other intangible assets allocated to the cash
generating units (“CGUs”) or groups of CGUs requires
management to exercise significant judgement including:
•
•
the determination of and the allocation of goodwill to
the CGUs or groups of CGUs; and
the determination of the following key assumptions
used in the calculation of the recoverable amount of
each of the CGUs or groups of CGUs:
•
•
•
the cash flow forecasts;
terminal growth rates; and
discount rates.
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 CGUs and groups of
CGUs and the allocation of goodwill to the carrying
value of the CGUs and 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
Notes 3 and 14 to the financial statements.
Revenue recognition – appropriateness of
revenue recorded from complex contracts
In conjunction with our financial reporting specialists, our
procedures included, but were not limited to:
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.
•
•
•
•
•
reviewing the underlying agreements to understand
the substance of the transactions and specific nature
of the 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.
77
ANNUAL REPORT FY20 Independent Auditor’s Report
Other Information
The directors are responsible for the other information. The other information comprises the Directors’ Report,
which we obtained prior to the date of this auditor’s report, and also includes the following information which
will be included in the Group’s annual report (but does not include the financial report and our auditor’s report
thereon): Chairman Report, CEO Report, Business Overview and ASX Additional Information, which is expected
to be made available to us after that date.
Our opinion on the financial report does not cover the other information and we do not and will not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information identified
above and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on
the work we have performed on the other information that we obtained prior to the date of this auditor’s report,
we conclude that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
When we read the Chairman Report, CEO Report, Business Overview and ASX Additional Information, if we
conclude that there is a material misstatement therein, we are required to communicate the matter to the
directors and use our professional judgement to determine the appropriate action.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or 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.
78
SUPERLOOP LIMITED AND CONTROLLED ENTITIES •
•
•
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a
going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether
the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and
performance of the Group’s audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most significance in the
audit of the financial report of the current period and are therefore the key audit matters. We describe these matters
in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
REPORT ON THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 24 to 34 of the Directors’ Report for the year ended 30 June 2020.
In our opinion, the Remuneration Report of Superloop Limited, for the year ended 30 June 2020, complies with section
300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Tendai Mkwananzi
Partner
Chartered Accountants
Brisbane, 24 August 2020
79
ANNUAL REPORT FY20 ASX Additional Information
The following shareholder information was applicable as at 25 September 2020.
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
198
2,906
1,720
3,397
2,368
10,589
1,208
72.18
21.30
3.57
2.60
0.35
100.00
0.09
264,064,668
77,911,440
13,075,181
9,530,775
1,284,352
365,866,416
339,111
80
SUPERLOOP LIMITED AND CONTROLLED ENTITIES (B) EQUITY SECURITY HOLDERS
The names of the twenty largest holders of quoted equity securities are listed below:
Name
BEVAN ANDREW SLATTERY
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
NATIONAL NOMINEES LIMITED
1
2
3
4 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
5
CITICORP NOMINEES PTY LIMITED
6 MRS JODIE ANN SLATTERY
7
8
9
BNP PARIBAS NOMINEES PTY LTD
SANDHURST TRUSTEES LTD
FISON INVESTMENTS PTY LTD
10 BNP PARIBAS NOMS PTY LTD
11
12
BNP PARIBAS NOMINEES PTY LTD
SCM CAPITAL PTY LTD
13 MANSFIELD INVESTMENTS (VIC) PTY LTD
14 NEBRAN PTY LTD
15 MR DENNIS JAY JOLLEY
16 CHARANDA NOMINEE COMPANY PTY LTD
17
ALLEGRO CAPITAL NOMINEES PTY LTD
18 BENSARA PTY LTD
18 BALNAVES FOUNDATION PTY LTD
19 N A INVESTMENTS (VIC) PTY LTD
20 KEMBLA NO 20 PTY LTD
Total
Balance of register
Grand total
(C) SUBSTANTIAL HOLDERS
Name
1
2
BEVAN ANDREW SLATTERY
PERENNIAL VALUE MANAGEMENT LIMITED
(D) UNQUOTED EQUITY SECURITIES
Issued
shares
Percentage of
issued shares
60,625,389
58,927,529
34,029,349
26,996,296
21,862,469
3,398,300
3,322,493
2,821,691
2,307,780
2,123,044
1,936,028
1,770,372
1,000,000
850,000
825,000
810,375
805,919
800,000
800,000
756,529
730,000
227,498,563
138,367,853
16.57%
16.11%
9.30%
7.38%
5.98%
0.93%
0.91%
0.77%
0.63%
0.58%
0.53%
0.48%
0.27%
0.23%
0.23%
0.22%
0.22%
0.22%
0.22%
0.21%
0.20%
62.18%
37.82%
365,866,416
100.00%
Issued
shares
Percentage of
issued shares
64,023,689
27,236,640
17.5%
7.44%
Options
A total of 1,255,592 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.
(F) ON-MARKET BUY-BACK
There is no current on-market buy back of equity securities.
81
ANNUAL REPORT FY20 Corporate Directory
DIRECTORS
Bevan Slattery
Founder and Non-Executive Director
Greg Baynton
Non-Executive Director
Richard Anthony (Tony) Clark
Non-Executive Director
Vivian Stewart
Non-Executive Director
Stephanie Lai
Non-Executive Director
Drew Kelton
Executive Director
CHIEF EXECUTIVE OFFICER
Drew Kelton
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
COMPANY SECRETARY
SECURITIES EXCHANGE LISTING
Louise Bolger
REGISTERED OFFICE
Superloop Limited
Level 1, 545 Queen Street
Brisbane QLD 4000
Tel: +61 (7) 3905 2400
Superloop Limited shares are listed on the Australian
Securities Exchange (ASX: SLC)
COMPANY WEBSITE
https://superloop.com
https://investors.superloop.com
82
SUPERLOOP LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT FY20
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