Superloop
Annual Report 2022

Plain-text annual report

Annual Report 2022 _____ SUPERLOOP LIMITED | ABN 96 169 263 094 Our Business Superloop is an integrated provider of connectivity services in Australia High-quality fibre networks (predominantly in Australia) connecting ~200,000 customers Connected to all 121 NBN™ Points Of Interconnect and major data centres across Australia 5 Terabits of Indigo subsea cable capacity Capacity for > 1 million Subscriber aggregation and termination Providing Residential & Business broadband, high-performance network solutions for wholesale, enterprise, and channel customers Cyber safety and security services for schools and other organisations demanding safe internet We have around 600 employees across Australia, Sri Lanka, and Philippines Strategy Enable better internet access through competition Our ambition is to fuel challenger providers towards a 30% collective market share of connectivity services. Contents Chair & CEO Report Responsible Business 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 Corporate Directory Timeline October 2020 CEO/MD, Paul Tyler joins Superloop January 2021 Accelerated growth strategy launched June 2021 Announced acquisition of Exetel for $110m Leverage substantial fibre network via ‘Infrastructure-on-Demand’ wholesale platform to deliver a superior customer experience. October 2021 Announced $140m sale of Hong Kong and certain Singapore assets September 2021 CFO, Luke Oxenham joins Superloop November 2021 Independent Chair, Peter O'Connell joins Superloop May 2022 Announced acquisition of Acurus February 2022 Restructured business into Consumer, Business and Wholesale segments July 2022 Announced 10% on market share buyback 2 Build scale, improve margins, and drive customer growth across all three segments, consumer, business, and wholesale 6 8 22 42 58 60 66 109 112 116 118 3 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESFY22 Achievements Underlying EBITDA Reported underlying EBITDA of $25.4m, above EBITDA guidance range of $23m -$25m $140 Million Gross Proceeds Completed the sale of the Hong Kong entity and certain select Singapore assets for net proceeds of $125m +110,000 Customers Completed the acquisition of the Exetel business on 31 July 2021, adding more than 110,000 new consumer and business customers Net Cash Position $83m cash, resulting in a $42.8m net cash position Acquired Acurus Completed the acquisition of the Acurus business, a white label internet provider to major household brands New Management Continued Management team renewal Streamlined Reports Streamlined reporting segments into three areas: consumer, business, and wholesale Appointed New Chair Appointed Independent Chair in November 2021 FY22 Underlying EBITDA includes $5m from discontinued operations (HK/Singapore) (FY21: $6m) and excludes transaction costs $7.5m and Share Based payments of $0.4m Cash at bank of $83.1m less $40.3m short-term & long-term interest-bearing borrowings (excluding Operating Leases) 4 5 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESCHAIR & CEO REPORT Chair Report PETER O’CONNELL Independent Chair & Non-Executive Director On behalf of the Board of Directors of employees (excluding executives) Superloop Limited, it is my pleasure to 2,000 performance rights. present the Annual Report for the 12 months ending 30 June 2022 (FY22). In FY23, we will continue to focus on growth, increasing margins, and I joined the Board in November 2021 acquiring customers. In addition, we are as independent Chair, because I saw working hard to build a unified culture in Superloop a vibrant, dynamic, and as we welcome the Extetel and Acurus growing organisation. My experience in teams and embed those acquired the consumer telco space complements businesses. This will allow us to the Board’s existing strong experience in operate more efficiently, optimise CEO Report PAUL TYLER Chief Executive Officer FY22 marks the halfway point since the implementation our three year growth strategy in January 2021. It was a plan that began with simplifying the business and righting the course to ensure a clean, predictable business that was primed for growth and building scale. 18 months in, I am very pleased with the progress we have made, and even more excited the business and wholesale markets. The our portfolio, and drive digital and about our future. Board, along with the executive team systems transformation. and Superloop employees, have made a tremendous difference in the Australian telco market in FY22. Superloop is committed to delivering superior returns to shareholders and has implemented an on-market share Whilst the worst of the pandemic is buyback for up to 10% of issued capital. thankfully behind us, new challenges have arisen. We’ve responded by continuing to support our customers and people, along with implementing Superloop will continue to deploy capital prudently, evaluate M&A prospects where appropriate and invest in organic growth opportunities, whilst maintaining a range of retention initiatives for both. sound financial metrics. We would like to thank every Superloop team member, given the significant changes the business has undergone in FY22. In recognition of this hard work, the Board has offered all I would like to thank shareholders for their continued support, and I look forward to engaging with you in the future. To date, we have substantially improved our balance sheet and have exceeded our FY22 EBITDA guidance range of $23m-$25m. FY22 saw the divestment of Hong Kong and certain Singapore assets, along with the acquisition of the Exetel and Acurus businesses. The Exetel and Acurus acquisitions enabled us to increase asset utilisation by adding customers and scale, positioning us well to accelerate our growth strategy. This has driven continued solid performance in cash flow and provided substantial balance sheet flexibility. We also simplified the business into three segments based around customers, leveraging our significant fibre networks, and allowing us to broaden our product scope delivering a lower ‘cost to serve’. This simplification of our reporting segments has provided great clarity in terms of roles and responsibilities within the organisation. telecommunications infrastructure assets to fuel challengers in our market (Superloop included) to a 30% share of the Australian internet/connectivity market. Following changes made in FY22, Superloop is in a position to do exactly that. In FY23 we will complete the second half of our turnaround and deliver our growth strategy. We will continue to leverage our assets, and invest in our brand, products, and customer experience. We recognise that customer experience is core to driving an increase in market share. Equally, adding new customers at reasonable acquisition multiples, with high levels of retention, will require additional As part of repositioning the business, marketing investment in FY23, and we we made several new appointments at expect returns on this investment to the executive level, which brought us a commence during FY23. wealth of experience and expertise. This is an incredibly exciting chapter We have a clear and simple intent: for Superloop, and I thank you for your to leverage our quality continued support. 6 7 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESCOMMUNITY SUPPORT The Port Macquarie Koala Hospital Serving our community Exetel is a proud supporter of the Port Macquarie Koala Hospital. We have been working with the hospital to completely modernise their telecommunications infrastructure and services, so they can spend more time looking after the local koala population, and less time worrying about staying connected to their network remotely. Exetel also provides the hospital with mobile SIM cards for the mobile camera systems deployed around Port Macquarie. The cameras help the hospital monitor the number of local fauna (not just koalas) accessing water feeders in the area, which are vitally important in a drought. Responsible Business Superloop recognises it has obligations In the following pages, Superloop has beyond delivering financial returns outlined several important areas of to shareholders, and that success interest which it believes are critical to depends on meeting the expectations its success. These themes will evolve as of a variety of stakeholders. Superloop the Superloop business grows, as will recognises the operating environment maturity around reporting with greater has changed markedly, and investors detail, data, and insights to be refined are seeking to evaluate company in the coming years. We look forward to performance in a range of areas. providing more transparent details on Therefore, enhanced disclosures on ESG performance in FY23 and beyond. non-financial matters are now accepted as the norm for ASX listed entities. Superloop does not consider that it has a material exposure to environmental, Over the course of FY23, Superloop will social and sustainability risks. The engage with stakeholders to better Company has disclosed its material understand what the most appropriate exposure to these risks and what it criteria is for evaluating Environmental, believes are the material risks faced by Social & Governance (ESG) performance. the business in the Directors’ Report. Environment As a business, reducing our impact on look to implement an electronic waste the environment is a responsibility we program recycling obsolete network take seriously. This also includes the hardware at the end of its life. Electronic impact of climate change and waste is one of the fastest growing climate-related policy on our customers areas and needs to be disposed of and the communities in which we safely to avoid disastrous environmental operate. Whilst our environmental impacts. This program will assist in the footprint is less than some other safe disposal of dangerous waste like companies, there is more we can do batteries, modems, servers, laptops etc. to further reduce our impact on the environment. In FY23, Superloop will 8 9 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESOUR NETWORKS Migrating Exetel and Acurus customers to our network Acquisition synergies and real savings achieved as Exetel customers join the Superloop network The two critical acquisitions of FY22 on a single network, and accelerated – Exetel and Acurus – introduced their efforts. Within three months, 90% 115,000 business, wholesale, and of customers were migrated. By month residential customers to Superloop. four we had shifted 100% of the Exetel For those acquisitions to be successful, customer base to our network. customers needed to experience a seamless transition from their former network to the Superloop network. Pleasingly, we were able to deliver that. In a group-wide collaboration effort, employees from Exetel and Superloop worked together to churn 10,000 services per night. In addition to the In the case of the Exetel acquisition, customer migration, the team worked our Network Team began working on backhaul, intercepts, transits, alongside their soon-to-be colleagues and created 260 additional backhaul prior to completion, mapping out services to support the migration. requirements and planning for the customer migration. Their efforts were not in vain. In the 12 months since the acquisition was The day after the competition of the completed, we have exceeded our deal, we began migrating Exetel target of $5 million of synergies by $1m, customers to the Superloop network. and surpassed our $2 million savings While giving ourselves 12 months to target, realising $3.6 million in FY22. complete the task, the entire team We’re hopeful these numbers will was eager to deliver the synergies continue to grow, as the teams unearth associated with having all customers new ways of streamlining operations. “I’m immensely proud of the way the teams came together and achieved our synergy targets ahead of schedule,” said Chief Operating Officer, Paul Smith. “We set some stretch goals that felt impossible at the time – but the team never shied away from the challenge and proceeded to completely exceed our expectations!” OUR NETWORKS Investing in our network Why investing in resiliency is core to our challenger ambition In FY22 Superloop cemented its place Right across Australia our customers as Australia’s most progressive and have the added assurance that in the dynamic network services provider. unlikely event of a primary router or Following nation-wide upgrades that path going down, it will immediately deliver more benefits to customers failover to a secondary back-up. As a looking to achieve faster, more reliable, result, our network is as robust as any secure connectivity. in the country. In 2021 we laid out an ambitious plan Achieving these critical new to deploy diverse connectivity to milestones is a testament to the the 121 NBN™ Points Of Interconnect ambitious vision of the Superloop (POIs), providing network redundancy Board. We’re cementing the protecting customers from network company’s broader commitment to outages. By end of 2022 we achieved being the wholesale network and that, offering fully redundant, scalable retail provider-of-choice, in a market connections to all 121 1 NBN™ POIs. dominated by large incumbents. Committing to deploying physically Now one of Australia’s most diverse and redundant connectivity successful tier-1 challengers in the removes single points of failure from telecommunications industry, we are the network. This ensures fast, reliable increasing our ability to provide an delivery to meet the increasing amazing, reliable experience at mass demands of existing customers, and scale nationwide. Building confidence any organisations – or individuals for customers seeking a fast, reliable, - seeking better performance, capacity, and modern automated network. and resilience. Our network is core to our ability Delivering further significant resiliency, to challenge the market and win we have deployed secondary routers over customers – from consumers at regional POIs throughout Australia, to corporates. Which is why in where vast distances between FY23 we’ll continue investing in locations would mean lengthy outages operations and network infrastructure if physical on-site repairs to equipment around a single technology stack, was required. This ensures we can offer further differentiating ourselves from an enhanced MTTR (mean time to our competitors. repair) if these issues were to occur. 10 11 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESOUR CUSTOMERS An integral part of our business, adapting to customer needs is crucial to our success. There has been no better example of this than during the pandemic. Customer support through the pandemic How COVID changed customer behaviour When COVID-19 reached Australian Executive – Consumer, said; shores, and state governments began “Pre-COVID, mornings and late evening implementing lockdowns, offices across were the peak periods for customers the country were closed and employees reaching out to our call centre. As were relegated to working from home. people began working from home, Offices across the country were closed analysed patterns confirmed we had and employees relegated to working the same volume of calls, just spread from home. Things were no different out across the business day. So, we in our call centre. modified our operating hours to closely In line with public health advice, our mirror work from home hours.” team were encouraged to work from The shift in peak periods wasn’t the home and provided with laptops, only change. The way customers monitors, and at-home ergonomic viewed their service also shifted. assessments. Thanks to our cloud-based “People are more reliant on the internet systems, they were able to remotely log than ever before, with internet usage in to our system and continue taking increasing 20 to 25%. So, even the calls to support our customers. smallest blip in their experience will While the leadership teams worked to result in customers calling our contact manage employee levels and anticipate centre straight away.” COVID-related employee challenges, Our contact centres remain an they discovered customer behaviour incredibly busy and vital part of had shifted dramatically. While demand Superloop. As hybrid working looks fell significantly for many industries set to become ingrained in many during lockdown, the experience for organisations, including Superloop, internet service providers was the internet will only continue to be seen by complete opposite as home became most Australians as an essential service. the new office. Mehul Dave, Group A special thanks to our incredible contact centre team who work tirelessly to support and satisfy our customers. 13 SUPERLOOP LIMITED & CONTROLLED ENTITIESPeople & Culture Our people play a huge part in our success. With around 600 employees across Australia, Sri Lanka, and the Philippines, it’s clear we have a diverse range of people from different backgrounds, which to us is a huge positive for Superloop. In FY22, we implemented a range of initiatives to retain and reward our people including: » Offering 2000 performance rights to all employees, (excluding executives). » Increased salaries for some our foreign based employees to manage cost of living pressures. » Continuing to offer a range of employee benefits including home broadband to all employees. » Employee assistance program via independent provider to support employees with personal matters. » Super flexible working arrangements. PEOPLE & CULTURE: CASE STUDY Creating connection and embracing opportunity Bringing out the best in two businesses and two teams with the Exetel acquisition Acquisitions. They can be fraught and The key to employee confidence frightening, or filled with opportunity throughout the merger was open for employees, all depending on how communication. Combined Town they’re managed. The FY22 acquisition of Exetel saw Superloop employee numbers more than double, with the business closing out the financial year at just over 600 team members. Former Exetel marketing chief, now Superloop CMO, Ben Colman believes the leadership team’s focus on listening to employees, and understanding the uniqueness of each business, is what made the merger a success. Hall meetings, supported by regular updates f rom the Executive team, were essential to creating that confidence in the future. Returning to central offices post-lockdown, especially in Sydney where both Superloop and Exetel employees moved into a new office, broke down remaining barriers, helping everyone work shoulder-to-shoulder with their new peers. “The Executive team worked hard to understand what they had acquired and make informed decisions on how best to move forward. We were laser focused on taking the best of both businesses – the best ideas and processes – and moving forward with an integrated offer. We were agnostic about the brand. Our mantra was that the winning idea would need to deliver the best outcome for customers, our people, and the business.” The first objective was the migration By the time this report is released, of the Exetel customer base to the Superloop employees will be Superloop network. A process that Brisbane-bound for the first ever happened swiftly and flawlessly, all-Australian-employee conference, thanks to the wholesale software including representatives from our capabilities of Superloop’s Infra-on-Demand platform. Equally important was integrating two teams to create a combined culture. The proof of success is shown in the number of employees that opted to stay and work together to integrate and optimise the business. team in Sri Lanka. The two-day event is designed to align and unite all team members behind a single identity and shared purpose. Employees will hear from the leadership team on strategy, brand, FY23 priorities, and have the opportunity to bond with each other. Concluding the year-long transition and several years of pandemic-related remote working. 14 15 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIES PRODUCT & INNOVATION My Speed Boost Our f irst-to-market innovation that gives customers greater flexibility and control In June we launched something completely unique to the Australian market. Something to surprise and delight our customers: My Speed Boost. My Speed Boost is unique in that no other RSP offers customers the ability to instantly upgrade their speed – let alone five times per month, every month, for f ree! This demonstrates two things: 1. We get our customers. We know with rising interest rates 2. When we have a great idea, we act fast. and inflation, people are looking for Credit goes to our Go-to-Market ways to stretch their dollar further. We Consumer team for dreaming up also know the internet is considered this idea, and our development and an essential service. So, customers marketing teams for creating the expect it to be reliable, uninterrupted, backend functionality and making and fast. Now, whether working from customers aware of this latest home, having visitors stay, handling innovation. This was a testament kids on school holidays, or a special to their combined skill and ability streaming event, they can boost their to deliver, with more than 1,000 internet speed for 24 hours, five times customers opting to boost on the per month, every month for free. And day My Speed Boost was launched if they don’t use all their boost days, what’s left over is rolled over into their And this was just a warm-up… wait until you see what’s coming in FY23. Boost Bank for later. BUSINESS: IXOM Bringing our strategy to life in Business Partnering with Ixom to deliver managed services demonstrates our ability to deliver the Superloop strategy In Q3 Ixom signed a three-year deal with Superloop. Ixom, the water treatment and chemical distribution business with operations across Australia and New Zealand, and more than 1,000 employees, needed a network partner who could provide a full-service connectivity and managed cyber security offering for remote workers. The solution comes in the form of the Superloop Secure Access Service Edge or SASE. Built using Palo Alto Networks’ Prisma Access and Prisma SD-WAN solutions, the cloud-based services architect combines SD-WAN with network security that includes Firewall as a Service (FWaaS), Cloud Secure Web Gateway (SWG), Cloud Access Security Broker (CASB), and Zero Trust Network Access (ZTNA). And we’re delivering this comprehensive package to Ixom. Last year we shared our strategy outlining our intention to be more than a network provider, by extending our service offering to include managed services, and white-label products to help disrupt and challenge the market. Securing the Ixom business is a strong endorsement for this strategy and demonstrates not only the appetite in the business market for this offering, but the confidence in the Superloop network and team to deliver unparalleled security. 16 17 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESMODERN SLAVERY Modern Slavery In FY22, Superloop continued to make progress on modern slavery. Superloop progressively added a standard modern slavery contractual clause to new contracts for suppliers, to warrant to us that there is no modern slavery in their supply chains. We also added clauses in our customer contracts. We conducted audits with each of our agents providing virtual co-worker services, as to their compliance with local employment laws and whether the payments they provide workers compare no less favourably than benchmarked norms for those occupations in those countries. We also conducted an investigation to understand what happens to our ‘E-waste’ to check that processing companies are taking appropriate steps to minimise the risk of modern slavery. Our focus for the 2022/2023 period will be to: » Establish an executive committee that will have oversight of modern slavery actions to both guide the direction of the initiatives and check the effectiveness of any actions taken. » Develop and enforce a supplier code of conduct which would consider issues such as modern slavery. » Develop and issue a modern slavery questionnaire to our top 30% of suppliers by spend. » Continue to undertake annual salary benchmarking in all the jurisdictions in which we have employees to ensure remuneration is consistent with benchmarked norms for their occupation. » Look at implementing electronic waste recycling across the company. 18 SUPERLOOP ANNUAL REPORT 2022MARSEILLE JAPAN GUAM HAWAII HONG KONG SINGAPORE SAN JOSE LOS ANGELES DARWIN PERTH ADELAIDE SYDNEY BRISBANE CANBERRA MELBOURNE HOBART AUCKLAND INDIGO Cable System SINGAPORE Asia Pacific Fibre Network Fibre network INDIGO West INDIGO Central 20 PERTH SYDNEY 21 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 2022. DIRECTORS The following persons were Directors of the Group during the year: » Peter O’Connell » Vivian Stewart (appointed 2 November 2021) » Bevan Slattery (ceased 28 October 2021) » Richard (Tony) Clark » Alexander (Drew) Kelton » Stephanie Lai » Paul Tyler ABOUT SUPERLOOP PURPOSE AND VISION Founded in 2014, and listed on the ASX Superloop’s purpose is to enable better since 2015, Superloop operates in three internet for all Australians through segments of the market: Consumer, offering great products and services Business and Wholesale connectivity. and the creation of competition. All segments leverage Superloop’s Superloop aims to lead the challenger investments in physical infrastructure internet players (both traditional and assets that include fibre, subsea cables, non-traditional) in the Australian and fixed wireless, as well as Superloop’s market to a combined 30% market software platforms. Hundreds of share by leveraging its secure thousands of homes and businesses “Infra-on-Demand” platform and in rely on Superloop, Exetel and the other so doing, will strive to deliver superior brands within the Group for their capital returns to its investors. connectivity needs. DIRECTORS' REPORT DIRECTORS' REPORT STRATEGY Having established a new three Network coverage across Australia, year strategy to triple the size of the combined with the Indigo subsea cable business in three years in late 2020, system, and a standardised scalable FY22 represents the first full year of suite of connectivity solutions (including Superloop’s revised strategy. In FY22 broadband and cybersecurity) provide significant progress was made in trusted and reliable services to each of re-orienting the business around the Group’s core customer segments. a more simplified structure and creating a strong, stable and well capitalised base on which to deliver growth in both revenue and profitability moving forward. In the future the Group will continue to focus on monetising its infrastructure assets and increasing utilisation to support its strategic focus of growing the market share of the challenger Superloop’s network assets are brands. The Group will continue strategically well positioned to to invest in connectivity solutions capitalise on market dynamics, driven in markets where the Board and by strong data growth, growth in Management believe the demand for data centre demand and the need for services will deliver appropriate returns connectivity services. for Shareholders. CORE OPERATING SEGMENTS There are seven broad products (with In FY22 the Group has re-oriented its business and financial reporting to focus on three core customer segments. The Consumer segment serves Australian homes and residential customers with fixed broadband, mobile, voice over IP (VOIP) services, and in-home cyber security. Following the acquisition of Exetel in August of 2021, the Group’s products in the Consumer space are delivered to customers on two retail brands – Superloop and Exetel. The Business segment operates in the three key sub-segments of small business (SMB), medium and large corporate. The Business segment has an ambition to provide an amazing B2B customer experience, simple offerings and excellent delivery. In the Business segment, the Group offers Internet, Mobile, VOIP, Security, VPN, SASE, Wi-Fi and Fixed Wireless products through both direct and indirect sales channels. multiple sub categories) offered through the Wholesale segment which include NBN™ Backhaul, IP Transit, Dark Fibre, Ethernet, NBN™ Enterprise Ethernet, International (Indigo) and Wholesale Aggregation (sometimes referred to as Superloop Connect). Superloop Connect is a new offering launched in FY22. It is an automated platform that will allow customers to self-serve Service Qualification (SQ) and order services to qualified locations for other Retail Service Providers (RSP’s). This platform also enables internal Superloop operations to order and provision services to streamline delivery of Superloop Aggregated Virtual Circuit (AGVC) products to customers. RESPONSIBLE BUSINESS Superloop believes that sustainable investment and business practices are aligned with long-term value creation and should not be dilutive to returns. The Group’s long-term success depends on meeting the expectations of a variety of The Wholesale segment predominantly stakeholders and enhanced disclosures provides products and services to two on non-financial matters is now accepted broad pools of wholesale customers. as the norm for ASX listed entities. 1. Large domestic and multinational technology and telecommunication customers who require data and connectivity solutions throughout Australia and from Australia to Singapore on Superloop’s Indigo subsea cable; and 2. Domestic internet service providers who require either data and connectivity solutions or a technological interface to the NBN™ through the Superloop Connect platform. In FY22, with the assistance of external specialists, Superloop began the process of identifying what Environmental, Social and Governance (ESG) considerations are most relevant to the Group. We also invested in additional in-house ESG focused resources to bolster the Group’s ability to set criteria and performance metrics which can be reported and measured in the future. Over the course of FY23 Superloop will engage with a wider variety of stakeholders to better understand what ESG criteria and performance metrics 3. White label capability supporting major brands including banks, are important to them. Superloop looks forward to providing transparent energy providers, and retailers with disclosure on ESG in FY23 and beyond. an exceptional telco experience. 24 25 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESDIRECTORS' REPORT FY22 REVIEW OF OPERATIONS Operating Environment Consumer DIRECTORS' REPORT The NBN™/Connectivity market in which Superloop operates can be characterised as one of strong but rational competition. It remains a highly concentrated market around four major incumbents. In the last 12 months however, challenger brands have increased their market FY22 has been a pivotal year for Superloop and the Consumer segment. The acquisition of Exetel along with organic growth from the Superloop brand, saw the total number of consumer broadband subscribers increase from 47k at 30 June 2021 to over 166k at 30 June 2022. share in total from 8.0% to 12.6% The growth in subscriber numbers led as at 20 June 2022. Strategic On the Strategic front, the Group made significant progress on refocusing the business around its three core Australian customer segments, and built significant financial strength and momentum through a number of strategic portfolio transactions, including: a. The sale of the Hong Kong entity and certain Singapore assets for net proceeds of $125 million; b. The acquisition of Exetel, a transformational deal for Superloop, predominantly funded by an equity raise of $100 million in June/July 2021. Completion of the transaction occurred 1 August 2021; and c. The acquisition of the Acurus business for $15 million (up to $35 million including earn outs) to add to an increase in consumer revenue of 275.9%, up from $34.8 million in FY21 to $130.9 million in FY22. The Gross Margin contribution from the Consumer segment also increased from $9.6 million in FY21 to $30.7 million in FY22, an increase of 219.6% Over the last year Superloop’s share of the NBN™ residential market has increased from 0.5% as at 31 March 2021, to 1.8% as at 30 June 2022, demonstrating clear subscriber and revenue growth momentum. In FY22, these results have been delivered by: a. Investing in marketing and promotion to grow brand awareness of the chosen acquisition brand; b. Delivering customer experiences that create retention and consequently reduce churn in the portfolio; c. Focusing on growing multi product holdings and Gross Margin per white label business capabilities and customer; and infrastructure. Completion of the transaction occurred on 23 June 2022. d. Creating efficiencies in cost to serve. With over 8.4 million homes now on Wholesale the NBN1, consumers can switch to The strategic goal of the Wholesale challenger providers like Superloop in segment is to be the trusted minutes and get better performance Wholesaler and white label provider and customer service at a lower price. of choice for more challenger brands The Group believes that the macro and enable Superloop and those other market environment is set to increase challenger brands to increase their customer switching. market share to 30%. With the network build complete the Throughout FY22 growth in the incremental cost of delivering services Wholesale segment has been driven by: to new customers for Superloop is now marginal and the segment is now primed for investment in accelerating profitable customer growth. Business a. Opportunities to monetise the Superloop Network Asset (including the Indigo subsea cable) and leveraging the proprietary “Infrastructure-on-Demand” In FY22, the acquisition of both Exetel software; and and Acurus has provided the Business segment with increased sales capability, a vastly enhanced product set and new distribution channels. During FY22, the b. Creation and growth of the Superloop Connect offering for third party ISP’s. Business segment has rapidly enhanced The Wholesale segment was not its ability to drive volumes onto the impacted by the Exetel acquisition. Superloop network and has momentum Notwithstanding that, revenue in the Wholesale segment (excluding the discontinued operations of Hong Kong and Singapore) grew by 20.8% and was up from $31.7 million in FY21 to $38.3 million in FY22. in sales and margin expansion. Revenue in the Business segment increased 176.0% when compared to the prior corresponding period, increasing from $29.3 million in FY21 to $80.5 million in FY22. The Gross Margin contribution of the Business segment increased 108.2% from $12.2 million in FY21 to $25.3 million in FY22. 26 27 1 NBN Wholesale Market Indicators Report, ACCC SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESDIRECTORS' REPORT FINANCIAL AND OPERATING PERFORMANCE FY21 Restatement Within this financial report the results for the financial year ended 30 June 2021 have been restated from previous financial statements reflecting the The impairment relates primarily to the Goodwill that was booked to the Balance Sheet f rom Superloop’s previous acquisition of the BigAir business in 2016. reporting of the Hong Kong entity and Financial Position certain Singapore assets as ‘Discontinued Operations’. This restatement has been made in accordance with AASB 108 in order to provide consistency in reporting, and comparability of performance, between FY21 and FY22. Revenue and Profitability The Group’s revenues (including the discontinued operations) were $262.5 million in FY22 versus $110.7 million in At 30 June 2022, the Group held property, plant and equipment (primarily the construction of its domestic and subsea fibre networks) of $127.3 million, and intangible assets of $302.5 million including rights to access (via Indefeasible Rights to Use (IRU) agreements) network capacity in Australia, and Singapore as well as intangible assets arising from business combinations. Intangible assets the previous financial year, an increase include $181.3 million of Goodwill. of 137.1%. Adjusting for the impact of the During the period, Goodwill increased discontinued operations, the Revenue from $135.0 million to $181.3 million. for the Group in FY22 was $249.7 million The increase reflects the additional compared to $95.9 million in the previous Goodwill booked from the acquisitions financial year. This growth is the result of Exetel ($87.3 million) and Acurus of the acquisition of Exetel, as well as the ($19.2 million), which were offset by a organic growth of both the Exetel and $35.0 million derecognition of Goodwill Superloop businesses. On a statutory reported basis, the Group generated earnings before interest, tax, depreciation and amortisation (EBITDA) associated with the sale of Hong Kong and select Singapore assets, as well as the $25.0 million impairment that was booked against the Goodwill in the of $12.7 million compared to $11.4 million Business segment. in FY21 on a like for like basis. On an Cash Flow Performance underlying basis (adjusting for the inclusion of the discontinued operations, and the add back of transaction costs and share based payments) the EBITDA for the Group was $25.4 million in FY22 compared to $18.6 million in FY21, an increase of 37.1%. The Group reported operating cashflows of ($11.5) million compared to $15.1 million in the prior year. The current year result was impacted by significant transaction costs of $7.5 million, tax payments of $3.4 million related to Exetel, an increase of prepayments of $4.4 million, and a The Group had a full year net loss clean out of $14.4 million of the prior year after tax of $52.6 million including trade creditors balance. the Discontinued Operations in FY22 (compared to a loss of $32.0 million in FY21). The increase in the net loss after tax was in part a consequence of an impairment of $25.0 million that was booked against the Business segment. The Group generated $7.4 million in investing cash flows compared to an outflow of $15.2 million in FY21. The result in FY22 reflects the net of the proceeds received for the sale of Hong Kong and select Singapore assets offset by the DIRECTORS' REPORT net proceeds paid for the acquisition of Guest Wi-Fi revenues to gradually Exetel and Acurus. Overall, excluding the recover. It is not possible to predict impact of Foreign exchange movements, the length of time our business will be the Group’s cash declined by $6.6 million impacted by COVID-19. over the course of the year. MATERIAL BUSINESS RISKS The material business risks faced by the Group that may have an effect on its financial prospects include: Revenue Growth Underperformance Increasing Business Complexity As Superloop currently conducts business in multiple jurisdictions, Superloop is exposed to a range of multi-jurisdictional risks including risks relating to labour practices, difficulty in enforcing contracts, changes to or Superloop is focused on accelerating uncertainty in the relevant legal, political growth and the monetisation of and regulatory regime (including network assets, by targeting markets of in relation to taxation and foreign scale, winning and retaining business, investment and practices of government considering M&A and capital recycling and regulatory authorities) and other opportunities and increasing sales and revenue (and thereby increasing utilisation). The speed with which issues in foreign jurisdictions in which Superloop operates. In particular, the regulatory environment continues to Superloop can achieve revenue growth grow as do the direct and indirect costs on its networks in Australia and of compliance and the consequences Singapore is, in the short to medium of non-compliance. Two areas that have term, a key factor in the market’s seen particular regulatory attention valuation of Superloop. The occurrence of and are pertinent to the growth that anything that adversely affects the sales Superloop will see in its consumer and revenue growth in those markets, customer base as a result of the including lower than expected customer acquisition of Exetel Pty Ltd demand and aggressive competition, (completed 31 July 2021) relate to will adversely affect Superloop’s growth privacy and information governance, prospects and/or financial performance. and consumer information and rights. Impact of COVID-19 The ongoing COVID-19 pandemic has had a significant impact on the Australian and global economy and the ability of businesses to operate. The pandemic continues to evolve, as do the measures and recommendations introduced by governments in the countries where Superloop operates In addition, Superloop operates in a number of different sub-market segments within the telecommunications industry, including fibre infrastructure and network solutions, fixed wireless, cloud and managed services, cyber safety, campus broadband and fixed line residential NBN™ services. and Superloop's customers and suppliers Competition and Disruption are located. While Superloop has not Superloop operates in a competitive experienced significant disruptions to landscape alongside other owners its operations, the impact COVID-19 has and operators of telecommunications had on the student accommodation infrastructure with competing offerings and hotel sectors has in turn negatively and a geographically diverse presence. impacted the financial performance The competitive environment continues of our Guest Wi-Fi platform. Superloop to evolve and failing to appropriately continues to monitor operational and respond could result in a decline in financial implications closely and expects our financial performance and asset 28 29 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESDIRECTORS' REPORT valuations. In addition, demand for Business Resilience technology infrastructure can change A significant network, systems failure or rapidly because of technological interruption could cause both tangible innovation, new product introductions, and intangible losses of shareholder declining prices and evolving industry value for Superloop through its inability standards, among other factors. The risk to honour customer contracts, resultant DIRECTORS' REPORT People and Safety through to our executive team. To date, Attracting and retaining talent with significant growth opportunities have the right mix of skills continues to be been identified which Management critical to our ongoing success. A key continues to focus on for delivery in pillar of our strategy is to attract and FY23 and beyond. retain talent and support our people Reputation risk of disruption to the Consumer business customer churn and reputational damage. to reach their potential. remains escalated with further significant capital investment in 5G deployment and related spectrum purchases. New solutions and new technology often render existing solutions and services obsolete, excessively costly, or otherwise unmarketable. As a result, the success of Superloop depends on Superloop being able to keep up with the latest technological progress and to Network failure or interruptions can be caused by a variety of events (many outside the control of Superloop), including accidental damage from civil works (cable cuts), intentional damage from vandalism or terrorism and natural disasters such as earthquakes. Superloop’s key risk mitigations regarding business resilience related risks include: develop or acquire and integrate new » Designing and investing in the technologies into its telecommunications network to provide in-built resilience; infrastructure and offerings. Advances in technology also require Superloop to commit resources to developing or acquiring and then deploying new technologies for use in operations. Superloop attempts to mitigate these risks through key activities including the following: » Considering emerging technologies, societal trends and the competitive environment as part of its strategic planning and review processes; » Implementing advanced security measures to prevent, test for, monitor and respond to cyber security threats or incidents; » 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 f ramework to complement existing disaster recovery plans; » 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; and » 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 » Considering M&A and capital recycling opportunities that can support and » Maintenance of business interruption insurance. accelerate growth, leverage our competitive advantage and deliver enhanced returns on investment. The availability and lead time for supply of critical customer equipment continues to be an issue. Management continues to actively manage stock levels as far as possible and will continue this practice. The risk trade-off for this practice is the financial impacts of carrying additional stock. Risks that threaten an organisation’s It has been another busy period with reputation can have significant impacts prioritisation required between business on its revenue and brand. The speed at as usual and projects including the which information can now be shared integration of Exetel, the divestment of publicly via social media can intensify the Hong Kong and select Singaporean the impact of this risk. Superloop's assets and other M&A projects. A positive governance and risk management outcome of the COVID-19 pandemic has been that it has demonstrated framework, the various controls described in the previous sections combined with that we are able to work and thrive in our focus on customer experience, social 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 and wellbeing of our people will always be number one at Superloop, particularly in the wake of the COVID-19 pandemic and its flow on impacts. This is why we have adopted and maintained 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. Integration and Operating Model The Acurus acquisition presents Superloop with significant growth and cross sell opportunities. While Superloop’s operating model is structured to successfully deliver against its strategic objectives, there is a risk the Company may not achieve these anticipated opportunities. 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 media and crisis management processes are our key mechanisms for managing our reputation. Regulatory Risk 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, privacy, data protection and associated rights of access to customers and regulators. We continue to actively monitor the evolving regulatory landscape and defend Superloop’s and our customers’ interests through our memberships to key industry groups and related initiatives. Funding Risk While the material capital expenditure associated with Superloop's network build is complete, Superloop’s business requires ongoing capital expenditure for the maintenance of telecommunications and IT infrastructure. Superloop requires access to sufficient capital to fund this expenditure. Given the current global and domestic macro-economic conditions, the cost of any future debt is likely to increase. 30 31 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESDIRECTORS' REPORT There is no assurance that additional funds will be available in the future on Relationships with key intellectual property licensors and technology reasonable terms. Superloop believes the Superloop uses intellectual property risk is mitigated, to some extent, through and technology developed in the the control of capital expenditure requirements, generation of operating course of its business that is owned by Superloop. Superloop also relies cash flows, maintenance of lines of credit on relationships with key intellectual on reasonable terms, and access to property licensors and technology other forms of capital. Failure to obtain capital on favourable terms may hinder Superloop’s business, potentially reducing competitiveness and having an adverse effect on the financial performance, position and growth prospects of Superloop. Cyber risk, data and information governance The quantum and sophistication of cyber related risks continues to evolve partners, from whom it licenses the right to use particular intellectual property and technology. Superloop’s ability to maintain and manage its fibre optic telecommunications infrastructure is dependent on its ability to use particular intellectual property and technology, and any change in the ability to use intellectual property Superloop relies on may have an effect on Superloop’s future financial performance and position. and increase, evidenced by a number Socio-political risks of high profile breaches impacting The failure to meet ever-increasing other businesses in recent years. The social and community expectations Australian Cyber Security Centre has as to responsible corporate conduct reported that, since Russia’s invasion presents as a risk for many companies of Ukraine in February 2022, the risk of on a number of f ronts, including ESG. malicious cyber operations by Russian Recognising the operating environment state sponsored and criminal cyber actors has changed markedly and stakeholders has increased. The threats to critical are seeking to evaluate company infrastructure could impact organisations performance in a range of areas, both within and beyond Ukraine. The Superloop is mitigating this risk by regulatory environment for information enhancing its activity and disclosures on security and privacy is also evolving non-financial, environmental and social constantly and becoming increasingly sustainability matters. complex, including compliance with a number of mandatory data breach reporting and more recently, the cyber surveillance laws and consumer data rights legislation. Customer requirements and expectations are also becoming more stringent. The management of cyber risk and data represents a key legal, financial, operational, and reputational risk for Superloop. Superloop considers the protection of customer, employee and third party data as a critical business priority and has processes and strategies in place to manage these risks. Adverse socio-political developments in jurisdictions in which Superloop operates, may impede the ability to carry out stable business operations. Sri Lanka (where Superloop employs both professional and contact centre staff) continues to be impacted by hyperinflation and rolling power outages which is giving rise to civil unrest and social instability. The move of the Colombo office to a building with power backup has reduced the risk of service outages from the rolling power outages that continue in the region. DIRECTORS' REPORT 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 growth in demand for services provided by the Company. The Board continues to evaluate further investment in expansion opportunities, based on underlying market dynamics and demand for products and services. DIVIDENDS No dividend has been declared or paid in respect of the 2022 or 2021 financial years. During FY22, the Company paid a premium in respect of a contract insuring the directors and officers of the Company against any liability that may arise from the carrying out of their duties and responsibilities to the extent permitted by the Corporations Act. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the deductible or premium. 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 23 to the financial statements. The Board of Directors has considered the position and, in accordance ENVIRONMENTAL REGULATION with advice received from the Audit The Group is not subject to any significant environmental laws. Committee, is satisfied that the provision of the non-audit services is compatible with the general INDEMNIFICATION OF OFFICERS standard of independence for auditors The Company’s Constitution provides imposed by the Corporations Act that to the extent permitted by law, the 2001. The Directors are satisfied that Company indemnifies each current and former director or secretary of the provision of non-audit services by the auditor, as set out below, did not the Company and/or its related bodies compromise the auditor independence corporate on a full indemnity basis requirements of the Corporations Act against all losses, liabilities, costs, charges 2001 for the following reasons: and expenses incurred by the officer as an officer of the Company or a related body corporate. » All non-audit services have been reviewed by the Audit Committee to ensure they do not impact The current and former directors and the impartiality and objectivity secretary of the Company, as well as a of the auditor; number of executives, are also party to a customary deed of insurance, access and indemnity. » None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. 32 33 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESDIRECTORS' REPORT PROCEEDINGS ON BEHALF AUDITOR’S INDEPENDENCE OF THE GROUP DECLARATION No person has applied to the Court A copy of the auditor’s independence under section 237 of the Corporations declaration as required under section Act 2001 for leave to bring proceedings 307C of the Corporations Act 2001 is on behalf of the Group, or to intervene set out on page 59. 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 dollars, where permissible in accordance with the Instrument. 34 35 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESInformation on directors PETER O’CONNELL PAUL TYLER Independent Chair & Non-Executive Director Chief Executive Officer & Executive Director Appointed: 02 November 2021 Appointed: 1 October 2020 Experience and Expertise Peter was most recently CEO and Managing Director of Amaysim, which he co-founded in 2010, having previously held senior executive or board roles at Optus Communications, BellSouth, Commander Communications, Eircom (Ireland's national carrier) and Meteor (an Irish mobile operator). He is the founder of Hargrave Consultants, an advisory firm for the Technology and Telecommunications sectors and was previously a partner at major Australian law firms Minter Ellison and Gilbert & Tobin. Peter is a Director and co-founder of Tiger and Bear advisory group. Peter was a member of the team responsible for the formation of Optus, has served on a number of boards for private and public companies in the energy, telecommunications and technology verticals and is also the Chair of Australian fintech company, Padua, and Chair of energy reduction and decarbonisation specialist Crowley Carbon. Appointed Executive Director: 1 September 2020 Experience and Expertise Paul brings several decades of experience and a distinguished international reputation for transforming and leading businesses in the IT and Telecommunications sector. Born and raised in Australia, Paul was most recently the Chief Customer Officer of NBN™ Co building their enterprise, business and government segments from near infancy. As well as holding senior roles in Telstra including Group Managing Director of both Telstra Business and Telstra International, Paul had a long career with Nokia holding executive roles in various countries across Australia, Europe and Asia, most recently based in Singapore as the President of Nokia in the Asia Pacific region. An experienced public company director (ASX and NYSE), Paul graduated with an Executive MBA from UCD – National University of Ireland, a Bachelor of Electrical Engineering – University of New South Wales and is a Fellow of the Australian Institute of Company Directors. Other current Directorships of Listed Entities Other current Directorships of Listed Entities Nil Nil Former Directorships of Listed Entities in last 3 years Former Directorships of Listed Entities in last 3 years Nil Special Responsibilities Nil Nil Special Responsibilities Nil BEVAN SLATTERY Chair & Non-Executive Director (until 28 October 2021) Appointed Director: 28 April 2014 Appointed Chair: 11 March 2020 Chief Executive Officer: 23 February 2016 to 30 June 2018 Resigned: 28 October 2021 Experience and Expertise Bevan Slattery is the founder and a former Chair and Non-Executive Director of Superloop. He also served as Executive Chair until June 2017 and Chief Executive Officer until 30 June 2018. Bevan, one of Australia’s leading entrepreneurs, has founded some of the nation’s biggest technology success stories. Starting as a co-founder of PIPE Networks, Australia’s largest Internet Exchange and third largest metropolitan fibre network provider, Slattery sold the company to TPG in 2010. Subsequently, he founded NEXTDC, Asia’s most innovative data centre-as-a-service provider; Megaport, the global leading elastic interconnection provider; Cloudscene, the world’s largest platform for searching cloud and connectivity services; Biopixel, Australia’s leading production service provider for natural history and animal behavioural sequences; Superloop; SubPartners, a submarine cable operator and Indigo Cable investor; SUBCO, an independent specialist submarine cable development group with 9,800km of submarine cable infrastructure currently under construction between Perth and Oman as part of the Oman Australia Cable system; and HyperOne, expected to become Australia’s first hyperscale fibre optic network and the largest private, independent digital infrastructure project in Australia’s history. Slattery’s entrepreneurial success is highlighted in having listed five companies on the Australian Securities Exchange and received many industry awards including EY Champion of Entrepreneurs Award in 2016, National Charles Todd Medal, and the Pearcey Foundations Benson. Other current Directorships of Listed Entities » Megaport Limited (ASX: MP1) - Appointed 27 July 2015 Former Directorships of Listed Entities in last 3 years » Superloop Limited (ASX: SLC) Special Responsibilities Nil 36 37 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESINFORMATION ON DIRECTORS RICHARD ANTHONY (TONY) CLARK VIVIAN STEWART STEPHANIE LAI ALEXANDER (DREW) KELTON Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Non-Executive Director Appointed: 23 December 2015 Appointed: 21 December 2016 Appointed: 11 March 2020 Experience and Expertise Experience and Expertise 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 co-founder of Cinenet Systems Pty Ltd and Cospective Pty Ltd. Tony has a wealth of digital media industry knowledge and experience. 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 Scientific & Technical Achievement Award 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 and Ausfilm, and is an active member of 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) Vivian Stewart served on BigAir Group Limited’s Board from June 2008 and was its Chair 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, where he also leads the M&A and IR functions and special projects. 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. Prior to Bigtincan, he 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 Nil Special Responsibilities » Chair of the Risk Management Committee » Member of the Audit Committee » Member of the Remuneration and Nomination Committee Stephanie Lai has over 20 years’ experience as a Chartered Accountant and is a former M&A partner of Deloitte and KPMG. 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 an experienced Chair of listed Audit and Risk Committees. She is a Non-Executive Director and Chair of the Audit and Risk Committee of Future Generation Investment Company Limited (ASX:FGX), HomeCo Daily Needs REIT (ASX:HDN) and HealthCo Healthcare and Wellness REIT (ASX:HCW) 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). Other current Directorships of Listed Entities » Future Generation Investment Company Limited (ASX: FGX) - Appointed March 2019 » HMC Funds Management Limited, responsible entity of HomeCo Daily Needs REIT Limited (ASX:HDN) - Appointed October 2020 » HealthCo Healthcare and Wellness REIT - (ASX:HCW) - Appointed August 2021 Former Directorships of Listed Entities in last 3 years Nil Special Responsibilities » Chair of the Audit Committee (Appointed: 26 March 2020) » Member of the Risk Management Committee » Member of the Remuneration and Nomination Committee Appointed: 1 April 2021 (Executive Director from 23 Nov 2018 to 31 Mar 2021) Experience and Expertise Drew Kelton is a global business leader and professional board director. With over 40 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 » Zoom2u Technologies Limited (ASX:Z2U) - Appointed 30 July 2021 Former Directorships of Listed Entities in last 3 years » Megaport Limited (ASX:MP1) - Resigned 1 June 2019 Special Responsibilities » Member of the Audit Committee » Member of the Risk Management Committee 38 39 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESINFORMATION ON DIRECTORS TINA OOI RONNIE LAKE General Counsel & Company Secretary Head of Risk & Company Secretary Appointed: 23 August 2021 Experience and Expertise Appointed: 28 May 2021 Resigned: 12 June 2022 Tina Ooi is the General Counsel and Company Secretary for Superloop. Tina is responsible for Company Secretarial, Legal, Risk and Compliance at Superloop. Tina joins Superloop with more than 25 years of experience in senior governance roles in industries including energy and financial services, most recently as General Counsel and Company Secretary of ME Bank, a role she also held at Jemena/Zinfra. Ms Ooi has also held senior legal, company secretarial, and regulatory roles at Equity Trustees Ltd, Alinta Ltd, United Energy Ltd and Freehills. A member of the Australian Institute of Company Directors, Tina holds a Bachelor of Law (Hons)/Bachelor of Commerce (Hons) from the University of Melbourne. Experience and Expertise Ronnie Lake joined Superloop in July 2018 as Head of Risk. Ronnie has broad risk and governance experience having worked across several sectors including consulting. Appointed Company Secretary in May 2021, Ronnie held that role until he left the organisation in June 2022. Ronnie holds a science related undergraduate and postgraduate degree, a Graduate Certificate of Executive Leadership from the University of Queensland and a Graduate Certificate in Applied Risk Management from the Governance Institute of Australia. Ronnie is also a member of Australian Institute of Company Directors and the Governance Institute of Australia. Meeting 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: Meetings of Directors Audit Risk Management Remuneration and Nomination Meeting of Committee A 5 12 19 19 19 18 19 B 7 12 19 19 19 19 19 A N/A N/A N/A 6 6 6 B N/A N/A N/A 6 6 6 A N/A N/A N/A 4 4 4 B N/A N/A N/A 4 4 4 N/A N/A N/A N/A A N/A N/A 6 6 5 N/A N/A B N/A N/A 6 6 6 N/A N/A Bevan Slattery(1) Peter O’Connell(2) Tony Clark Stephanie Lai Vivian Stewart Alexander (Drew) Kelton Paul Tyler (1) Bevan Slattery resigned as a Chair & Non-Executive Director on 28 October 2021 (2) Peter O’Connell was appointed as Chair & Non-Executive Director on 2 November 2021. 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 40 41 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESRemuneration Report Letter from the Chair of the Remuneration and Nomination Committee 44 Remuneration Report Audited 1. The Persons Covered by this Report 45 2. Overview of Remuneration Governance Framework 3. Director Remuneration 4. Executive Remuneration 5. Employment Terms for Key Management Personnel 6. Remuneration 7. Performance Outcomes 8. Summary of Shares Held by Key Management Personnel 9. Summary of Options Held by Key Management Personnel 46 47 47 51 52 54 54 55 10. Summary of Performance Rights Held by Key Management Personnel 55 11. Shares Under Option or Performance Rights 12. Other Transactions with Key Management Personnel 56 57 REMUNERATION REPORT Letter f rom 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 FY22. In FY22 significant progress has been made in re-orienting the business around a more simplified structure and creating a strong, stable and well capitalised base on which to deliver growth in both revenue and profitability moving forward. Since assuming the position of CEO & Managing Director of Superloop in October of 2020, Paul Tyler has established a new Accelerated growth strategy with the aim of tripling the size of the business in 3 years. Paul has in parallel, refreshed and bolstered the executive team, adding 100+ years of industry experience. Combined, the executive team has positioned the Group to capitalise on market dynamics, driven by strong data growth, growth in data centre demand and the need for connectivity services. As Chair, I am pleased to report that in FY22 the Remuneration and Nomination Committee have continued to evolve the remuneration framework for the Group and 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. During the year, options were granted to executives under the Executive Option Plan and in accordance with contractual entitlements. In addition to this, we were pleased to extend participation in equity-based remuneration to some non-executive members of the Superloop team. The following Remuneration report sets out the principles and outcomes of the Group Remuneration framework for FY22. 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 2022 (FY22), 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 Key Management Personnel. The term “Key Management Personnel” refers to the Chief Executive Officer and those executives with responsibility for planning, directing and controlling the activities of the Group. During the year, and following the completion of the Exetel acquisition in August 2021, the Group and the Executive team was re-organised and refocused around the three customer facing segments of Consumer, Business and Wholesale. In addition previous group wide responsibilities around product, network and operations were split amongst new and existing executives to create more in depth management focus. As a consequence the assessment of those executives that meet the criteria of having a responsibility for “planning, directing and controlling the activities of the Group” has changed. In this report, the disclosure around KMP covers the following individuals. Directors Name Peter O'Connell Bevan Slattery Tony Clark Position Non-Executive Chair (appointed 2 November 2021) Chair & Non-Executive Director (resigned 28 October 2021) Independent Non-Executive Director Chair of the Remuneration and Nomination Committee Vivian Stewart Independent Non-Executive Director Chair of the Risk Management Committee Member of the Audit Committee Member of the Remuneration and Nomination Committee Stephanie Lai Independent Non-Executive Director Chair of the Audit Committee Member of the Risk Management Committee Member of the Remuneration and Nomination Committee Yours sincerely, Alexander (Drew) Kelton Non Executive Director Tony Clark Chair, Remuneration and Nomination Committee Superloop Limited Member of the Audit Committee Member of the Risk Management Committee Key Management Personnel Name Paul Tyler Lidia Valenzuela Luke Oxenham Position Chief Executive Officer (CEO) Executive Director Group Chief Financial Officer (resigned 31 August 2021) Group Chief Financial Officer (appointed 01 September 2021) Except as noted above or elsewhere in this report, the named persons held their position for the whole financial year. 44 45 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIES REMUNERATION REPORT 2. OVERVIEW OF REMUNERATION GOVERNANCE FRAMEWORK 2.1 REMUNERATION AND NOMINATION COMMITTEE 3. DIRECTOR REMUNERATION 3.1 DIRECTOR REMUNERATION POLICY 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 Key Management Personnel succession planning; 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 » Non-Executive Director fees and the aggregate fee pool; amount fixed in a general meeting of Superloop. This amount is currently $750,000. Non-Executive Directors » The Company’s remuneration policy and procedures and other relevant policies including recruitment, retention and termination policies; » Key Management Personnel remuneration arrangements, including the Company’s equity-based incentives; 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 additional remuneration where a Director performs work or services considered over and above their work in their capacity as a Director of Superloop. Fees paid to Non-Executive Directors in FY22 were $458,804 (FY21 $340,334). » The annual assessment of Board and Key Management Personnel performance; There are no retirement benefit schemes for Directors other than statutory superannuation contributions. » The assessment of the Board’s skills, size and composition; 3.2 NON-EXECUTIVE DIRECTOR FEES » The Group’s reporting and disclosure practices in relation to the remuneration The fees paid to the Directors for the FY22 period are outlined in Section 6. of Directors and Key Management Personnel; 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 current Directors fees per annum including statutory superannuation, effective 1 July 2022, following an independent review, are: » Chair $ 180,000 » Non-Executive Director $ 100,000 » Committee Chair $ 20,000 » Committee member $ 10,000 (per committee) To preserve independence, Non-Executive Directors do not receive incentive or performance based remuneration. Non-Executive Directors are entitled to be reimbursed for travel and other expenses incurred while carrying out their duties as a Director. 4. EXECUTIVE REMUNERATION The Trading Policy is designed to ensure that any trading in Superloop’s securities 4.1 KEY MANAGEMENT PERSONNEL REMUNERATION POLICY is in accordance with the law and accordingly, it prohibits all Directors and Key Superloop’s Key Management Personnel remuneration policy is designed to be transparent, competitive and Management Personnel from engaging in hedging arrangements, dealing in reasonable while strengthening the alignment between performance related remuneration and shareholder derivatives, or entering into similar arrangements. Any non-compliance with the returns. Its goal is to ensure the Group can attract and retain key talent while being linked to the achievement Trading Policy will be regarded as an act of serious misconduct. of the Group’s strategic and business objectives. The Trading Policy is available on Superloop’s website at The policy includes at-risk short term and long term incentives with direct links between remuneration https://investors.superloop.com/investors. and performance (both Company and individual) that is ultimately aligned to shareholder interest. Key Management Personnel 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 to four year period. 46 47 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIES REMUNERATION REPORT The following considerations are taken into account when formulating Key Management Personnel remuneration packages: » Fixed remuneration is set with reference to market benchmarking and practice; » Financial targets on which incentives are based are suitably challenging and must meet a budget and business plan; and » 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. In addition to the above, the Board has the discretion to award other incentives related to ad-hoc strategic initiatives where it deems it would represent an appropriate alignment of executives and the creation of shareholder value. 4.2 SHORT TERM INCENTIVE (STI) POLICY AND PROCEDURE The short term incentive policy provides incentives for Key Management Personnel 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 FY22 the CEO was eligible to earn a target of $350,000 in short term incentives, with some potential for above target outcomes up to 150% of this amount. Other Key Management Personnel have a target award between 20% and 30% of their annual fixed remuneration. Performance metrics and weightings Cessation of employment If a Key Management Personnel’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 FY22 The table below contains the value of accruals for the Short Term Incentives (excluding transaction bonus) related to the FY22 year. Name Paul Tyler Luke Oxenham Fixed Remuneration $750,000 $400,000 Target Incentive $350,000 $87,500 Accrued Incentive $367,500 $84,000 No Short term incentive was accrued or paid to the outgoing CFO, Lidia Valenzuela. 4.3 LONG TERM INCENTIVE (LTI) POLICY AND PROCEDURE The purpose of the long term incentive policy is to align Key Management Personnel 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 either three or four financial years, unless the Board determines otherwise. The policy intends for grants to be issued annually with overlapping cycles. Incentives will be issued in the form of options or performance rights, subject to shareholder approval for Executive Directors. Where shareholder approval is not received for the issue of options to Executive Directors, incentives may be awarded in cash. Other Key Management Personnel can be awarded LTIs of up to 40% of their annual Assessment of performance for the CEO and CFO is against financial fixed remuneration. metrics including: » Underlying EBITDA (40%); » Revenue (25%); » Synergies from strategic deals (25%); and » People Engagement (10%) Performance metrics and weightings Vesting of current long term incentives for the CEO is dependent upon satisfaction of specific KPIs that had to be met in respect to relevant financial targets set. Vesting for current long term incentives for other KMP is based on tenure and ongoing employment at the relevant vesting date. The long term incentive structure is considered appropriate as it aligns Key Management Personnel with generating long term shareholder value and acts as an inducement to retain Key Management Personnel. The short term incentive structure is considered appropriate during the Cessation of employment Company’s current phase of growth. Key Management Personnel 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. If a Key Management Personnel’s employment terminates prior to the end of the measurement period, all unvested entitlements will be forfeited unless otherwise determined by the Board. 48 49 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESREMUNERATION REPORT 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. 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 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 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. or the Listing Rules. An offer is required to set out details such as the total number During the year to 30 June 2022, 684,250 options were issued to the Key Management Personnel under the of Performance Rights being offered, the vesting date and vesting conditions, any Executive Option Plan and at the date of this report there were a total of 4,684,250 options on issue to the disposal restrictions, and other terms attached to the Performance Rights. named Key Management Personnel under the Executive Options Plan. 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, 5. EMPLOYMENT TERMS FOR KEY MANAGEMENT PERSONNEL the Participant will be issued Superloop Shares, unless the Company decides to 5.1 DIRECTORS provide a cash payment in lieu of Superloop Shares. A Participant does not have the right to participate in dividends on Superloop Shares until Superloop Shares are issued after vesting of the Performance Rights. A Participant does not have the right to vote in respect of a Performance Right. The Company shall not grant Performance Rights if the number of shares to be issued on exercise of the Rights exceeds 5% of the issued shares at the time the offer is made. 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. As at 30 June 2022, there were nil Performance Rights on issue (FY21: 115,000). On appointment to the Board, all Non-Executive Directors enter into agreements with the Company in the form of a letter of appointment. The agreements summarise the key terms of engagement including compensation relevant to the office of director. Each appointment has no initial term, has no notice period and is not subject to any termination benefits. Subject to ASX Listing Rules, Directors must retire from office at the conclusion of the third annual general meeting after the Director was last elected and will be eligible for re-election at that annual general meeting. Upon cessation of a Director’s appointment, the Director will be paid his or her Director’s fees on a pro-rata basis, to the extent that they are unpaid, up to the date of cessation. 5.2 EXECUTIVE DIRECTORS Chief Executive Officer Mr Tyler entered into an Employment Agreement with Superloop which commenced on 1 October 2020. 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. Executive Option Plan Following this, the notice period is increased to six months. At a General Meeting of shareholders held on 21 June 2016, shareholders approved Employment may be terminated immediately for serious misconduct. an Executive Option Plan. 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 Mr Tyler 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 KEY MANAGEMENT PERSONNEL under the Executive Option Plan further aligns the interests of the Company’s Remuneration and other terms of employment for Key Management Personnel are formalised in employment Key Management Personnel and Management and shareholders and helps agreements. Key terms of those employment agreements for Key Management Personnel are as follows: 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 Name Duration of Contract Notice Period Termination Payments(1) terms and conditions set out in the Executive Option Plan. The Board has 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 Luke Oxenham(1) No fixed term 3 months 3 months (1) Base salary payable if the Company terminates the Executive without notice or without cause. 50 51 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIES6. REMUNERATION The tables below outline the remuneration received by Key Management Personnel during the year. This information is disclosed in accordance with the Corporations Act 2001 and the Australian Key Management Personnel Fees and remuneration received by Key Management Personnel: Accounting Standards. Directors Fees and remuneration received by the Directors: Short-term employee benefits Post employment benefit Long-term employee benefits Salary / Fees $ STI $ Transaction Bonus(4) Other benefits(5) $ $ Total $ Super- annuation $ LTI $ Long Service Leave Total Remuneration Package (TRP) % of TRP linked to performance $ $ % Executive Directors Paul Tyler 2022 726,432 367,500 360,000 - 1,453,932 23,568 174,278 2021 606,921 Non-Executive Directors Peter O'Connell(1) 2022 90,559 2021 - Tony Clark 2022 63,927 2021 63,927 Vivian Stewart 2022 82,192 2021 82,192 Stephanie Lai 2022 82,192 2021 78,387 Drew Kelton 2022 82,500 2021 376,233 Non-Executive Directors Bevan Slattery(2) 2022 18,265 2021 54,795 Greg Baynton(3) 2022 - 2021 34,500 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 606,921 18,078 137,063 - - - - 90,559 9,056 - 63,927 63,927 - 6,393 6,073 18,182 100,374 10,037 - 82,192 7,808 36,364 118,556 11,856 - - 78,387 7,447 82,500 - 35,308 411,541 1 6,271 - - - - 18,265 54,795 - 34,500 1,827 5,205 - - - - - - - - - - - - - - - - TOTAL - 2022 2022 1,146,067 367,500 360,000 54,546 1,928,113 62,737 174,278 TOTAL - 2021 2021 1,296,955 - - 35,308 1,332,263 60,882 137,063 (1) Peter O’Connell commenced with Superloop on 2 November 2021 as Non-Executive Director. (2) Bevan Slattery ceased as Non-Executive Director on 28 October 2021. (3) Greg Baynton ceased as Non-Executive Director on 18 November 2020. (4) During FY22 the Group paid a Transaction Bonus to the CEO on the successful completion of the Exetel Acquisition. (5) Additional fees paid for performing work considered over & above in the capacity of Director. - - - - - - - - - - - - - - - - - - 1,651,778 32.80% 762,062 99,615 - 70,320 70,000 110,411 90,000 130,412 85,834 82,500 427,811 20,092 60,000 - 34,500 - - - - - - - - - - - - - - - 2,165,128 25.02% 1,530,208 8.96% Short-term employee benefits Post employment benefit Long-term employee benefits Salary / Fees $ STI $ Transaction Bonus(4) Other Benefits(5) Total Super- annuation $ $ $ $ Long Service Leave Total Remuneration Package (TRP) % of TRP linked to performance $ $ % LTI $ Key Management Personnel Luke Oxenham(1) 2022 345,059 84,000 2021 - Former Key Management Personnel Lidia Valenzuela(2) 2022 81,608 2021 321,221 Adrian Martin(3)(4) 2022 - 2021 119,377 Paul Smith 2022 - 2021 277,302 Dean Tognella(3) 2022 - 2021 275,512 Mehul Dave(3) 2022 - 2021 124,294 - - - - - - - - - - - TOTAL - 2022 2022 426,667 84,000 TOTAL - 2021 2021 1,117,706 - - - - - - - - - - - - - - - 495 429,554 21,604 35,631 - - - - 38,199 119,807 5,892 7,089 328,310 21,694 13,726 - - - - 216,450 335,827 2,177 4,250 - - - - 999 278,301 21,694 12,530 - - - - - - - 275,512 18,079 34,471 - - - 124,294 9,039 8,273 38,694 549,361 27,496 35,631 224,538 1,342,244 72,683 73,250 - - - - - - - - - - - - - - 486,789 24.58% - 125,699 - - 363,730 3.77% - - 342,254 1.24% - - 312,525 4.01% - - 328,062 10.51% - - 141,606 5.84% 612,488 19.53% 1,488,177 4.92% (1) Luke Oxenham commenced as Group Chief Financial Officer on 1 September 2021. (2) Lidia Valenzuela resigned as Group Chief Financial Officer on 31 August 2021. Other amount includes termination payment. (3) No longer KMP from FY22 per the assessment of Executives which is defined as responsibility for planning, directing and controlling the activities of the Group. (4) Adrian Martin ceased as Group Executive, Wholesale on 01 October 2021. (5) Includes the net movement of annual leave entitlement balance, commission, or termination payments if applicable 52 53 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESREMUNERATION REPORT 7. PERFORMANCE OUTCOMES 9. SUMMARY OF OPTIONS HELD BY KEY MANAGEMENT PERSONNEL The following table outlines the performance of the Company over the 2022 financial The table below outlines the movement in options held by Key Management Personnel during the year: year and the previous periods. Since listing on the Australian Securities Exchange with an initial share price of $1.00 in June 2015, Superloop Limited’s share price was 0.72 at 30 June 2022. Year ended 30 June 2022 $ 2021 $ 2020 $ 2019 $ 2018 $ 2017 $ Net profit / (loss) $(61,532,388) $(31,963,930) $(41,087,857) $(72,057,460) $1,315,981 $(1,239,792) Dividends declared* - - - - - 0.01 Share price at start of year $0.93 $0.99 $1.54 $2.52 $2.56 $2.35 Share price at end of year $0.72 $0.93 $0.99 $1.54 $2.52 $2.56 * Dividend was declared in FY17 but paid in FY18. During the year, there were no Performance Rights issued to Key Management Personnel 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 from 1 July 2021 to 30 June 2022. Opening Received balance as part of Other Closing balance 1 July 2021 remuneration Additions Disposals movements(1) 30 June 2022 Opening balance Received as part of Closing Other balance Vested and Vested during 1 July 2021 remuneration Exercised movements 30 June 2022 exercisable the year Key Management Personnel Paul Tyler(1) 4,000,000 334,250 Luke Oxenham - 350,000 Total 4,000,000 684,250 Key Management Personnel Lidia Valenzuela(2)(4) Adrian Martin(2)(5) Dean Tognella(3) Mehul Dave(3) Paul Smith(3) Total 240,271 61,650 500,000 120,000 222,924 1,144,845 - - - - - - - - - - - - - - - - - - 4,334,250 1,000,000 1,000,000 350,000 - - 4,684,250 1,000,000 1,000,000 (240,271) (61,650) (500,000) (120,000) (222,924) (1,144,845) - - - - - - - - - - - - (1) Includes Options issued on 18 November 2020. (2) Individual was not a KMP as at 30 June 2022 and their options were forfeited. (3) No longer KMP from FY22 per the assessment of Executives which is defined as responsibility for planning, directing and controlling the activities of the Group. (4) Lidia resigned as Group Chief Financial Officer on 31 August 2021. Other amount includes termination payment. (5) Adrian Martin ceased as Group Executive, Wholesale on 01 October 2021. Directors Bevan Slattery(1) 64,332,074 Drew Kelton 114,993 Tony Clark 566,079 Vivian Stewart 599,243 Stephanie Lai 109,243 Paul Tyler 110,241 Total 65,831,873 (1)Individual was not a KMP as at 30 June 2022 - - - - - - - - - - - 148,000 120,700 268,700 - - - - - - - (64,332,074) - 10. SUMMARY OF PERFORMANCE RIGHTS HELD BY KEY MANAGEMENT PERSONNEL No Performance Rights were held by Key Management Personnel during the year. - - - - - 114,993 566,079 599,243 257,243 230,941 (64,332,074) 1,768,499 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 Key Management Personnel from engaging in hedging arrangements, dealing in derivatives or entering into similar arrangements. 54 - - - - - - 55 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIES11. SHARES UNDER OPTION OR PERFORMANCE RIGHTS 12. OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL Details of unissued shares or interest under Option for all staff including KMP at the date of this report are: There were no other transactions with Key Management Personnel not otherwise disclosed in the report. Date of issue 24 June 2022 24 June 2022 24 June 2022 24 June 2022 20 December 2021 20 December 2021 20 December 2021 20 December 2021 10 November 2021 10 November 2021 10 November 2021 10 November 2021 1 September 2021 1 September 2021 1 September 2021 1 September 2021 18 November 2020 18 November 2020 18 November 2020 18 November 2020 1 September 2020 1 September 2020 1 September 2020 1 September 2020 1 September 2020 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 75,000 75,000 75,000 75,000 25,000 25,000 25,000 25,000 12,500 12,500 12,500 12,500 515,014 515,014 515,014 515,014 1,000,000 1,000,000 1,000,000 1,000,000 450,000 211,393 211,393 211,393 211,393 64,356 64,356 64,356 64,356 105,000 105,000 105,000 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 $0.92 $1.00 $1.08 $1.17 24 June 2023 24 June 2027 24 June 2024 24 June 2027 24 June 2025 24 June 2027 24 June 2026 24 June 2027 $0.98 20 December 2022 20 December 2026 $0.98 20 December 2023 20 December 2026 $0.98 20 December 2024 20 December 2026 $0.98 20 December 2025 20 December 2026 $0.98 10 November 2022 10 November 2026 $0.98 10 November 2023 10 November 2026 $0.98 10 November 2024 10 November 2026 $0.98 10 November 2025 10 November 2026 $0.98 1 September 2022 1 September 2026 $0.98 1 September 2023 1 September 2026 $0.98 1 September 2024 1 September 2026 $0.98 1 September 2025 1 September 2026 $1.11 $1.22 $1.34 1 October 2022 1 October 2023 1 October 2023 1 October 2024 1 October 2024 1 October 2025 $1.47 31 December 2020 21 December 2023 $1.25 1 September 2021 1 September 2022 $1.26 1 September 2021 1 September 2025 $1.39 1 September 2022 1 September 2025 $1.53 1 September 2023 1 September 2025 $1.68 1 September 2024 1 September 2025 $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 No options expired during the year. At the date of this report there were 8,378,052 Options on issue. The Options are subject to the terms and conditions as set out in the Executive Option Plan. The holders of these Options do not have the right, by virtue of the Option, to participate in any share issue or interest issue of the Company. Performance Rights are subject to the terms and conditions as set out in the Employee Rights Plan. The holders of the 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. 56 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 Paul Tyler Chief Executive Officer & Director 26 August 2022 57 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESAuditor’s Independence Declaration 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 The Board of Directors Superloop Limited Level 1, 545 Queen Street Brisbane QLD 4000 26 August 2022 Dear Directors Auditor’s Independence Declaration to 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. As lead audit partner for the audit of the financial report of Superloop Limited for the year ended 30 June 2022, I declare that to the best of my knowledge and belief, there have been no contraventions of: » The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and » Any applicable code of professional conduct in relation to the audit. Yours faithfully DELOITTE TOUCHE TOHMATSU Tendai Mkwananzi Partner Chartered Accountants Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte Organisation. Financial Report 30 June 2022 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 22, which is not part of these financial statements. The financial statements were authorised for issue by the Directors on 26 August 2022. 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 62 63 64 65 66 FINANCIAL REPORT Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2022 Consolidated Statement of Financial Position As at 30 June 2022 30 June 2022 $'000 Note 30 June 2021 Restated(1) $'000 Note 30 June 2022 $'000 30 June 2021 $'000 Continuing operations 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 Transaction costs Total expenses Earnings before interest, tax, depreciation, amortisation and foreign exchange gains / losses (EBITDA) Depreciation and amortisation expense Impairment expense Interest expense Foreign exchange (losses) / gains Loss before income tax Income tax expense Loss for the year from continuing operations Discontinued operations 5 5 27 13 6 7 8 248,212 95,684 1,519 249,731 (168,191) (40,127) (381) (2,310) (8,256) (10,325) (7,483) 198 95,882 (53,039) (22,221) (447) (2,511) (1,258) (4,436) (551) (237,073) (84,463) 12,658 11,419 (44,397) (25,057) (3,964) (639) (37,794) - (3,169) 6,032 (61,399) (23,512) (133) (93) (61,532) (23,605) ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Other current assets Assets held for sale 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 Profit / (loss) for the year from discontinued operations 26 8,906 (8,359) Interest-bearing loans and borrowings Loss for the year after tax attributable to the owners of Superloop Limited (52,626) (31,964) Total Current Liabilities Other comprehensive income / (loss), net of income tax Items that may be reclassified subsequently to profit or loss: Exchange differences arising from translation of foreign operations Fair value gain / (loss) arising on hedging instruments during the period Total other comprehensive income / (loss), net of income tax Total comprehensive loss for the year attributable to the owners of Superloop Limited Loss per share for loss attributable to the ordinary equity holders of the Group: From continuing operations Note Basic loss per share Diluted loss per share From continuing and discontinued operations Basic loss per share Diluted loss per share 32 32 32 32 (1)The comparative information is restated on account of discontinued operations (Note 26). 3,611 - 3,611 (7,363) (532) (7,895) (49,015) (39,859) Cents (12.76) (12.76) (10.91) (10.91) Cents (6.40) (6.40) (8.66) (8.66) 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 9 10 11 12 13 11 14 15 17 18 16 17 18 16 14 19 20 83,133 22,119 11,862 117,114 989 118,103 127,271 302,471 5,826 - 435,568 553,671 43,060 4,833 5,037 4,812 57,742 525 16,364 53,219 9,606 79,714 137,456 416,215 623,967 4,317 (3,327) (208,742) 416,215 89,724 14,823 6,363 110,910 - 110,910 219,397 223,584 1,020 7,102 451,103 562,013 18,165 2,345 4,437 4,449 29,396 773 34,886 62,556 2,593 100,808 130,204 431,809 590,927 325 (3,327) (156,116) 431,809 62 The notes following the financial statements form part of the financial report. The notes following the financial statements form part of the financial report. 63 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIES FINANCIAL REPORT Consolidated Statement of Changes in Equity For the year ended 30 June 2022 Consolidated Statement of Cash Flows For the year ended 30 June 2022 Contributed equity Reserves Other equity Accumulated losses Total equity Note 30 June 2022 $'000 30 June 2021 $'000 For the year ended 30 June 2022 $'000 $'000 $'000 (Note 20) (Note 1C (ii)) $'000 $'000 OPERATING ACTIVITIES Receipts from customers (3,327) (156,116) 431,809 Payments to suppliers and employees (52,626) (52,626) Transaction costs Balance at 1 July 2021 590,927 Loss for the year Reserves write-back on Hong Kong disposal Other comprehensive income for the year Total comprehensive income / (loss) for the year Dividends paid Share based payments Issue of ordinary share capital Share issue costs - - - - - - 34,297 (1,257) 325 - 2,797 814 3,611 - 381 - - - - - - - - - - - - 2,797 814 (52,626) (49,015) - - - - - 381 34,297 (1,257) Balance at 30 June 2022 623,967 4,317 (3,327) (208,742) 416,215 Contributed equity Reserves Other equity Accumulated losses Total equity Income taxes (paid) / received (1) Net cash (outflow) / inflow f rom operating activities 29 INVESTING ACTIVITIES Acquisition of subsidiary Net proceeds from disposal of subsidiary and select SG assets Interest received Payments for property, plant and equipment Payments for intangible assets Proceeds received for sale of PPE & intangible assets Deferred consideration payments Net cash inflow / (outflow) f rom investing activities 26 For the year ended 30 June 2021 $'000 $'000 FINANCING ACTIVITIES $'000 (Note 20) (Note 1C (ii)) $'000 $'000 Proceeds f rom issues of shares Balance at 1 July 2020 514,505 7,773 (3,327) (124,152) 394,799 Transaction costs paid in relation to issue of shares (31,964) (31,964) Share based payment - (7,895) Lease payments Loss for the year Other comprehensive loss for the year Total comprehensive income / (loss) for the year Dividends paid Share based payments Issue of ordinary share capital Share issue costs Balance at 30 June 2021 - - - - - 78,816 (2,394) 590,927 - (7,895) (7,895) - 447 - - - - - - - - - (31,964) (39,859) - - - - - 447 78,816 (2,394) 325 (3,327) (156,116) 431,809 Proceeds from borrowings (net of fees) Repayment of borrowings Interest paid Net cash (outflow) / inflow f rom financing activities Net (decrease) / increase 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 9 280,788 (281,378) (7,483) (3,399) (11,472) (99,783) 125,000 173 (13,477) (5,519) 996 - 7,390 21,297 (1,257) - (4,924) 24,823 (41,386) (2,536) (3,983) (8,065) 89,724 1,474 83,133 117,507 (102,387) - - 15,120 - - 10 (9,635) (5,135) 100 (500) (15,160) 78,816 (2,394) - (5,636) 62,023 (57,469) (2,581) 72,759 72,719 17,090 (85) 89,724 (1) Relates to payments made to the Australian Tax Office for income tax payable by Exetel as at the date of acquisition. Refer to Note 25. 64 The notes following the financial statements form part of the financial report. The notes following the financial statements form part of the financial report. 65 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESNotes to the Consolidated Financial Report 1. Summary of significant accounting policies 68 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. Property, plant and equipment 13. Intangible assets 14. Deferred taxes 15. Trade and other payables 16. Interest-bearing loans and borrowings 17. Employee benefits 18. Deferred revenue 19. Contributed equity 20. Reserves 21. Dividends 22. Key management personnel disclosures 23. Remuneration of auditors 24. Commitments and contingencies 25. Controlled entities acquired 26. Discontinued operations 27. Transaction costs 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 76 77 79 81 81 82 82 83 83 84 85 86 89 90 90 91 92 93 94 94 94 96 97 98 100 101 102 103 104 104 107 108 109 109 NOTES TO THE CONSOLIDATED FINANCIAL REPORT 1. Summary of signif icant accounting policies The principal accounting policies adopted in the preparation of the 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 Group 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 2021 to 30 June 2022. The prior year covers the period 1 July 2020 to 30 June 2021. Comparative information has been applied consistently to all periods presented herein. 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. 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 2021. 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 from operating activities 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. 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 elected to update segment reporting for this financial year as detailed under Note 4. E. REVENUE RECOGNITION Rendering of Services 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 and 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 Wholesale segment. ii. Services Superloop provides a range of tailored services to customers. Revenue associated with these arrangements is recognised over time as the services are performed. iii. 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 68 69 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESNOTES TO THE CONSOLIDATED FINANCIAL REPORT 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 Contract assets as current and non-current. iv. Wholesale Aggregation (Superloop Connect) The Group’s Wholesale Aggregation product “Superloop Connect” was launched in September of 2021 and is an automated platform that will allow customers to self-serve SQ and order services to qualified NBN locations. The intention behind the platform is to make full use of the Superloop Network capability and coverage to make products and services available to customers through an integrated self service platform. The Group has determined that under this contract there are two separate performance obligations. The first being arranging for the delivery of Access Virtual Circuit (AVC) services provided by the NBN, and the second being the delivery of AGVC services provided by the Group on its owned Network. The Group has determined that in relation to the performance obligation of arranging the AVC services for customers on the Superloop Connect product, it is acting as an agent. Consequently, in relation to the AVC services it arranges, the Group only recognises revenue in the amount of any fee or commission to which it expects to be entitled in exchange for arranging for the specified goods or services to be provided by the NBN. The Group has determined that for the delivery obligation of the AGVC services, it is acting as principal and as such will account for the revenue of these services over time. Sale of Goods i. 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. ii. Other Revenue 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 Rebate - The Group applies AASB 120 Accounting for Government Grants and Disclosure of Government Assistance in accounting for the Research & Development (R&D) Tax Offset. 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 Group recognises lifetime expected credit losses (ECL) for trade receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate. 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. 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 against other administrative expenses in the Consolidated Statement of Comprehensive Income. H. CONSUMPTION TAXES Revenues, expenses and assets are recognised net of the amount of associated consumption tax per jurisdiction, unless the consumption based tax incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of consumption based tax receivable or payable. The net amount of the consumption based tax recoverable from, or payable to, the taxation authority is included with other receivables or payables in the Consolidated Statement of Financial Position. Cash flows are presented on a gross basis. The consumption based tax components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows. I. INCOME TAX The income tax expense or benefit for the year is the tax payable on the current year's taxable income based on the applicable income tax rate in each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting year in each jurisdiction. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is provided in full, using the balance sheet 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 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. 70 71 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESNOTES TO THE CONSOLIDATED FINANCIAL REPORT 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. J. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is stated at historical cost less depreciation and any impairment identified. 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 Useful Life 3-25 years Communication assets 3-5 years Other assets 3-10 years Leasehold Improvements 3-10 years The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Consolidated Statement of Profit or Loss and Other Comprehensive Income. K. 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. L. 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 Useful Life Rights and licenses 3-15 years Software 3-5 years Customer acquisition costs 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. Customer relationships, brands & trademarks Customer relationships have been valued on acquisition using a multi-period excess earnings approach. The fair value is calculated using an income based technique to forecast expected earnings and discount the expected cash flows. Customer brands (including trademarks) are valued using the relief from royalty method utilising evidence based median royalty rates from comparable assets. Other intangibles Other intangibles are amortised on a straight-line basis over the period of their expected benefit. M. 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. N. 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. O. 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. 72 73 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL REPORT P. BORROWINGS Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. To the extent that variable rate borrowings are used to finance a qualifying asset and are hedged in an effective cash flow hedge of interest rate risk, the effective portion of the derivative is recognised in Consolidated Statement of Profit or Loss and Other Comprehensive Income and reclassified to profit or loss when the qualifying asset affects profit or loss. To the extent that fixed rate borrowings are used to finance a qualifying asset and are hedged in an effective fair value hedge of interest rate risk, the capitalised borrowing costs reflect the hedged interest rate. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. 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. Q. EMPLOYEE BENEFITS ii. 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 2021 the total amount included in the Consolidated Statement of Profit or Loss and other Comprehensive Income was $2.5 million. 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. R. 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. S. FOREIGN EXCHANGE The financial statements are presented in Australian dollars, which is the Group’s presentation currency. i. 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. ii. 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. On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation or a partial disposal of an interest in a joint arrangement or an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in a foreign exchange translation reserve in respect of that operation attributable to the owners of the Company are reclassified to profit or loss. In addition, in relation to a partial disposal of a subsidiary that includes a foreign operation that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. partial disposals of associates or joint arrangements that do not result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income. T. EARNINGS PER SHARE i. Basic earnings per share Basic earnings per share is calculated by dividing: » the profit / (loss) attributable to owners of the Group, excluding any costs of servicing equity other than ordinary shares » by the weighted average number of ordinary shares outstanding during the financial period, adjusted for bonus elements in ordinary shares issued during the year (Note 32). i. 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. U. 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. V. 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. W. 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. 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. 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. X. 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. 74 75 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESNOTES TO THE CONSOLIDATED FINANCIAL REPORT 2. Application of new and revised accounting standards 3. Critical accounting estimates and judgement At the date of the financial statements, the Group has not applied the following new and revised Australian Accounting Standards, Interpretations and amendments that have been issued but are not yet effective: Standard/amendment Effective for annual reporting periods beginning on or after AASB 17 Insurance Contracts and AASB 2020-5 Amendments to Australian Accounting Standards – Insurance Contracts 1 January 2023 AASB 2014-10 Amendments to AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture, AASB 2015-10 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128, AASB 2017-5 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections, AASB 2021-7 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current and AASB 2020-6 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current – Deferral of Effective Date AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018-2020 and Other Amendments AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and Definition of Accounting Estimates AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction AASB 2022-1 Amendments to Australian Accounting Standards – Initial Application of AASB 17 and AASB 9 – Comparative Information 1 January 2025 1 January 2023 1 June 2022 1 January 2023 1 January 2023 1 January 2023 Management has evaluated the impact of the above Standards on the financial statements and have determined that there will be no impact on the initial application of the above Standards. 76 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. i. Impairment Testing In assessing impairment of Goodwill, other tangible and indefinite life intangible assets, in accordance with accounting policy outlined in Note 13, 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 13. The identification of cash generating units (“CGU”) is an area of significant judgement, given the interdependence of the services and offerings. During the year the Group revised the CGU’s to Consumer, Business and Wholesale. With the change to the CGU’s and reporting segments, in order to complete the impairment testing analysis, it is also necessary to re-allocate shared COGS, Network assets and intangible assets to the new CGU’s. AASB 136 Impairment of Assets acknowledges that some or all of the COGS, Assets and Goodwill may not be readily assignable to a specific CGU. In this case the Standard provides that those items may be allocated to the CGUs on a ‘reasonable and consistent basis.’ The allocation framework adopted by the Group in conducting the impairment testing in FY22 is: a. Segment Specific – Where costs, assets or Goodwill can be separately identified and allocated specifically to a CGU, they will be allocated to that CGU. b. Shared Costs, Assets and Goodwill – In relation to costs, assets or Goodwill that are not separately identifiable and/or relate to more than one CGU (i.e., Fibre cable of fixed wireless towers that carry traffic for customers in all three segments) COGS have been allocated on an estimated network usage and Assets on the basis of the CGU’s estimated relative value. During FY22, and as a consequence of the disposal of the Hong Kong entity and certain select Singapore Assets, the Group has derecognised $35.1 million of Goodwill. The amount of Goodwill that has been derecognised reflects the relative value of the discontinued operations. ii. 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. iii. 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 of completion could have an impact on the timing of the revenue recognition. Refer to Note 1(E) for further information on revenue recognition. 77 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESNOTES TO THE CONSOLIDATED FINANCIAL REPORT In respect of the Group’s Wholesale Aggregation product (Superloop Connect). The Group has determined that in relation to the performance obligation of arranging the AVC services for wholesale customers in the Superloop Connect product, it is acting as an agent. Consequently, in relation to the AVC services it arranges, the Group only recognises revenue in the amount of any fee or commission to which it expects to be entitled in exchange for arranging for the specified goods or services to be provided by the other party. iv. 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(J) and Note 1(L), 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. v. 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. vi. 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(J) and 1(L). Impairment expense (Goodwill) Interest, FX & other Loss before income tax Income tax expense (continuing operations) Discontinued operations Profit for the year from discontinued operations Loss after tax attributable to the owners of Superloop Limited 78 4. Segment information A. DESCRIPTION OF SEGMENTS Description of segments With the recent acquisition of Exetel and in consideration of management’s approach in assessing the performance of the Group, the operating segments were changed during the period to three “market led” customer segments being Wholesale, Business and Consumer. Wholesale The Wholesale segment is defined by large scale telecommunications, data and technology customers who purchase various connectivity services to support their core business services, as well as Retail Internet Service Providers who do not have access to a connectivity network of their own. The products sold in the Wholesale segment include NBN Access, NBN Enterprise Ethernet, Internet Access & IP Transit, Australian Intercapital Capacity, Dark Fibre, Fixed Wireless Access, International Ethernet, Wavelength and international (including ‘Indigo’) subsea cable capacity. Business The Business segment is defined by small, medium and large corporate customers who purchase connectivity services to facilitate their core business. The products sold in the Business segment include NBN TC2 and Enterprise Ethernet, Internet Access, Dark Fibre, Fixed Wireless Access, Third Party Access, Mobile 4G, SD-WAN, Security, VoIP and Managed Wi-Fi. Consumer The Consumer segment is defined by customers who purchase basic internet and mobile phone products for domestic residential use. The operations of the Group are reported in these segments to Superloop’s Executive Management team (chief operating decision maker). 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). B. SEGMENT INFORMATION PROVIDED TO EXECUTIVE MANAGEMENT The segment information provided to Management for the reportable segments is as follows: Operating Segments for year ended 30 June 2022 Continuing operations Revenue and other income Direct costs Gross Margin Operating expenses Transaction Costs Marketing costs Wholesale $'000 Business $'000 Consumer $'000 TOTAL $'000 38,325 (12,806) 25,519 80,522 (55,231) 25,291 130,884 (100,154) 30,730 Depreciation and amortisation (7,769) (18,312) (18,316) 249,731 (168,191) 81,540 (53,143) (7,483) (8,256) (44,397) (25,057) (4,603) (61,399) (133) 8,906 - - 8,906 (52,626) 79 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESOperating Segments as at 30 June 2022 Non-current assets Property, plant and equipment Intangible assets excluding Goodwill (includes indefeasible rights to use) Goodwill Total Wholesale $'000 Business $'000 Consumer $'000 32,513 37,663 55,312 125,488 41,727 38,772 43,794 124,293 53,031 44,724 82,206 179,961 TOTAL $'000 127,271 121,159 181,312 429,742 Australia represents 98% of revenue for the period from continuing operations on a geographical segment basis, and there is no reliance on any significant customers. Operating Segments for year ended 30 June 2021 Continuing operations Revenue and other income Direct costs Gross Margin Operating expenses Transaction Costs Marketing costs Wholesale $'000 Business $'000 Consumer $'000 TOTAL $'000 31,727 (10,647) 21,080 29,333 (17,183) 12,150 34,822 (25,209) 9,613 Depreciation and amortisation (3,876) (15,220) (18,698) Interest, FX & other Loss before income tax Income tax expense (continuing operations) Discontinued operations Loss for the year from discontinued operations Loss after tax attributable to the owners of Superloop Limited Operating Segments as at 30 June 2021 Non-current assets Property, plant & equipment Intangible assets excl. Goodwill (includes indefeasible rights to use) Goodwill Total 80 - (8,359) - - - - Wholesale $'000 Business $'000 Consumer $'000 57,763 20,952 53,444 132,159 78,462 38,368 51,420 168,250 83,172 29,200 30,200 142,572 95,882 (53,039) 42,843 (29,615) (551) (1,258) (37,794) 2,863 (23,512) (93) (8,359) (31,964) TOTAL $'000 219,397 88,520 135,064 442,981 5. Revenue Revenue from ordinary activities Rendering of Services Sale of Goods Other income Interest income Gain on sale of assets Other income 30 June 2022 $'000 30 June 2021 $'000 246,528 1,684 248,212 147 424 948 95,684 - 95,684 10 100 88 Total revenue and other income 249,731 95,882 The transaction price allocated to unsatisfied performance obligations at 30 June 2022 are as set out below. Long term capacity contracts Other 30 June 2022 $'000 30 June 2021 $'000 19,137 2,264 21,401 36,810 2,513 39,323 The total future revenue from the Group’s contracts with customers with performance obligations not satisfied at 30 June 2022 is $21.4 million (FY21: $39.3 million) of which $5.0 million (FY21: $4.4 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 11 years. 6. Interest expense Interest on borrowings Total interest expense The Group incurs interest on the drawn amount of its debt facility (refer to Note 16). 30 June 2022 $'000 30 June 2021 $'000 (3,964) (3,964) (3,169) (3,169) 81 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL REPORT 7. Foreign exchange gains / (losses) 9. Cash and cash equivalents Foreign exchange (losses) for the year arose as a result of exchange rate movements in the ordinary course of business. Net foreign exchange (losses) / gains for the year Total net foreign exchange (losses) / gains (639) (639) 6,032 6,032 30 June 2022 $'000 30 June 2021 $'000 Cash at bank and on hand Short term deposits Total cash and cash equivalents 30 June 2022 $'000 30 June 2021 $'000 42,436 40,697 83,133 7,185 82,539 89,724 8. Income tax expense 10. Trade and other receivables (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 benefit/(expense) (b) The income tax expense for the year can be reconciled to the accounting loss as follows: 30 June 2022 $'000 30 June 2021 $'000 - - - (133) - (133) (133) - - - (93) - (93) (93) Loss from continuing operations before income tax expense (61,399) (23,512) Tax (expense) / credit at the Australian tax rate of 30% Non-deductible acquisition costs Non-deductible Goodwill impairment Non-deductible entertainment expenses Non-deductible share based payments Effect of different tax rates of subsidiaries operating in other jurisdictions Deferred taxes arising from unused tax losses and unused tax credits not recognised in the current year 18,420 (2,269) (7,517) (28) (114) 49 7,053 (153) - (20) (134) (947) Note (A) (A) (B) Note (A) (A) (B) Current $'000 Non-current $'000 18,732 4,990 (2,351) 21,371 748 22,119 - - - - - - Current $'000 Non-current $'000 14,730 - (301) 14,429 394 14,823 - - - - - - 30 June 2022 Total $'000 18,732 4,990 (2,351) 21,371 748 22,119 30 June 2021 Total $'000 14,730 - (301) 14,429 394 14,823 Trade receivables: Superloop Trade receivables: Exetel and Acurus Allowance for expected credit losses Net trade receivables Other receivables Total Trade receivables: Superloop Trade receivables: Exetel and Acurus Allowance for expected credit losses Net trade receivables Other receivables Total 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 risk and the amounts are still considered recoverable. (8,674) (5,892) Age of trade receivables that are not impaired 30 June 2022 $'000 30 June 2021 $'000 Total income tax benefit/(expense) (133) (93) 0 - 30 days 31 - 60 days 61 - 90 days 90 days plus Total 82 18,598 1,258 115 1,400 21,371 10,586 1,256 181 2,406 14,429 83 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESNOTES TO THE CONSOLIDATED FINANCIAL REPORT B. AGING OF ALLOWANCE FOR EXPECTED CREDIT LOSS (“LOSS ALLOWANCE”) As at 30 June 2022, the Group had a loss allowance of $2.4 million (2021: $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. Age of trade receivables that are not impaired 30 June 2022 $'000 30 June 2021 $'000 0 – 60 days 60 – 90 days 90 days plus Total past due and impaired Movement in credit loss allowance Balance at beginning of the year Impairment losses recognised on receivables Allowance for expected credit losses Balance at end of the year 11. Other assets 1,247 53 1,051 2,351 15 3 283 301 30 June 2022 $'000 30 June 2021 $'000 301 (296) 2,346 2,351 424 (297) 174 301 Movement in credit loss allowance 30 June 2022 $'000 30 June 2021 $'000 CURRENT Prepayments Contract assets Total other assets – current NON-CURRENT Other non-current assets Contract assets Total other assets – non-current 6,979 4,883 11,862 262 5,564 5,826 4,723 1,640 6,363 370 650 1,020 12. Property, plant and equipment Carrying amounts of: Assets in the course of construction Network assets Communication assets Other assets Total Cost or valuation: Balance at 30 June 2020 Additions Transfers Disposals Movement in foreign exchange Balance at 30 June 2021 Additions Additions through business combination Transfers Disposals Movement in foreign exchange Balance at 30 June 2022 Accumulated depreciation and Impairment: Balance at 30 June 2020 Reclassifications Depreciation charge Disposals Movement in foreign exchange Balance at 30 June 2021 Depreciation charge Disposals Movement in foreign exchange Balance at 30 June 2022 Carrying value at 30 June 2022 Carrying value at 30 June 2021 30 June 2022 $'000 30 June 2021 $'000 464 75,903 38,084 12,820 127,271 1,871 171,086 40,833 5,607 219,397 Assets in the course of construction $'000 Network assets $'000 Communication assets $'000 Other assets $'000 Total $'000 1,866 5,087 (5,051) - (31) 1,871 9,566 - (10,999) - 26 464 - - - - - - - - - - 205,466 1,498 2,166 (786) (8,010) 200,334 2,037 - 2,466 (119,378) 3,452 88,911 84,179 5,831 2,687 (23,278) (332) 69,087 3,317 70 7,605 (704) 189 7,386 6,208 198 (8,002) (81) 5,709 8,615 2,364 928 (943) (310) 79,564 16,363 (26,125) (34,088) 3,256 (8,415) 787 1,249 (29,248) (7,336) 24,939 (1,363) (5,021) (12,451) 23,277 29 (28,254) (14,059) 980 (147) (7,040) 1,765 (2,890) 8,002 61 (102) (4,172) 417 314 298,897 18,624 - (32,066) (8,454) 277,001 23,535 2,434 - (121,025) 3,357 185,302 (67,253) - (23,756) 32,066 1,339 (57,604) (25,567) 26,336 (1,196) (13,008) (41,480) (3,543) (58,031) 464 1,871 75,903 171,086 38,084 40,833 12,820 5,607 127,271 219,397 Property, plant and equipment includes $16.5 million carrying value of leased assets. A “right-of-use” asset is recognised for leased items, with a lease liability recognised for lease payments due. “Right-of-use” asset additions during FY22 totalled $11.0 million. 84 85 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL REPORT Right-of-use asset Carrying value at 30 June 2020 Additions Depreciation charge Movements in foreign exchange Carrying value at 30 June 2021 Additions through business combination Additions Depreciation charge Disposals Movements in foreign exchange Communication assets $'000 Other assets $'000 5,286 3,112 (3,166) - 5,232 - 3,283 (2,915) - - 1,380 6,083 (2,150) (12) 5,301 797 7,719 (2,865) (21) (4) Total $'000 6,666 9,195 (5,316) (12) 10,533 797 11,002 (5,780) (21) (4) Carrying value at 30 June 2022 5,600 10,927 16,527 Cost or valuation: Balance as at 30 June 2020 Additions Transfers Disposals Movement in foreign exchange Balance as at 30 June 2021 Additions through business combination Additions Reclassifications Transfers Disposals Movement in foreign exchange Assets being developed Rights & licence Software Customer acquisition costs & other intangible assets Customer relationships, brands & trademarks Goodwill $'000 $'000 $'000 $'000 $'000 $'000 Total $'000 13,394 8,539 62,531 178,319 336,783 1,785 3,009 (1,613) - - 3,181 72,215 2,571 - - (1,947) 72,839 375 909 (4,742) - 9,936 - 8,447 12,728 4,759 15,454 77 (6,798) - - - 1,691 (17,318) 1,152 - 230 5,107 - - 831 704 (808) (19) 9,247 - - (9,247) - - - - - - - - 6,786 - (4,085) (43,255) (52,890) - - (1,966) 58,446 135,064 288,713 32,408 106,448 160,031 - - - - - - - - 20,213 (8,940) - (35,143) (52,461) - 1,152 90,854 206,369 408,708 13. Intangible assets Balance as at 30 June 2022 1,219 82,265 28,001 Accumulated amortisation and impairment: 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 2022 $'000 30 June 2021 $'000 1,219 59,373 17,980 - 42,587 181,312 302,471 3,181 53,835 2,654 4,759 24,091 135,064 223,584 Balance as at 30 June 2020 Disposals Amortisation charge Movement in foreign exchange Balance as at 30 June 2021 Reclassifications Disposals Amortisation charge Impairment charge Movement in foreign exchange - - - - - - - - - - (12,331) (8,027) (4,033) (29,124) (43,255) (96,770) - (6,882) 209 4,742 (3,997) - 808 (1,267) 4 4,085 (9,316) - (19,004) (7,282) (4,488) (34,355) - 4,170 (7,649) - (409) - - (2,741) - 2 - - (13,912) - - 4,488 - - - - - - 43,255 52,890 - - - - - - (21,462) 213 (65,129) 4,488 4,170 (24,302) (25,057) (25,057) - (407) Balance as at 30 June 2022 (22,892) (10,021) Carrying value at 30 June 2022 Carrying value at 30 June 2021 1,219 3,181 59,373 53,835 17,980 2,654 (48,267) (25,057) (106,237) 42,587 181,312 302,471 4,759 24,091 135,064 223,584 Intangible Assets includes the following carrying values of leased assets recorded as “right-of-use” asset for the leased items as follows: Right-of-use asset Carrying value at 30 June 2021 Additions Depreciation charge Movements in foreign exchange Carrying value at 30 June 2022 Rights and licences $'000 - 1,440 - - 1,440 87 86 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIES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. For the Business segment, impairment testing indicated that the carrying amount exceeded the recoverable amount at 30 June 2022, resulting in an impairment of $25.0 million to Goodwill. No other impairment loss on Goodwill has been identified. Wholesale Business Consumer Total Goodwill 30 June 2022 $'000 30 June 2021 $'000 55,312 43,794 82,206 181,312 53,444 51,420 30,200 135,064 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. Management applies 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 2023 budget with the cash flows beyond the budget period projected over 5 years using annual growth rates for each product within each cash-generating unit based on historical earnings growth, current and forecast trading conditions and business plans. For the impairment analysis conducted at 30 June 2022, the range of cash flow inputs have been determined as follows: Revenue growth rates for years 1-5 of the value in use model are based on most recent past performance, management’s expectations of market development, the expected expansion of market share and the inclusion of new product capabilities such as the Wholesale aggregation on white label products. Specifically, the model revenue growth rates for each segment are: » Wholesale segment - a range from 7% to 26%, » Business segment - a range from 4% to 23%; and » Consumer segment - a range from 15% to 25%. The forecast Gross Margin reflects the above revenues and a commensurate change in the associated cost of goods sold which reflect volume based increases (in the case of NBN product resale), anticipated price increases in other products, offset by cost savings that are delivered through ongoing leverage of the Group’s purchasing power. Operating Costs reflect the fixed costs of the CGUs, which do not vary significantly with sales volumes or prices, and also include management forecasts for these and other corporate costs based on the current structure of the business, adjusting for inflationary increases but not reflecting any future restructurings or cost-saving measures. The annual increase in operating costs over years 1-5 in the value in use model range from 3% to 23%. Annual Capital Expenditure reflects the expected cash costs in the CGUs for hardware and software that is developed to maintain the Network and support customer growth initiatives. The growth in Capital expenditure per year is not expected to be material and is based on an annual capital expenditure envelope of around $20m per annum. 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: Consumer Business Wholesale Terminal value growth rate Discount rate 30 June 2022 30 June 2021(1) 30 June 2022 30 June 2021(1) 3.00% 3.00% 2.75% N/A N/A N/A 10.50% 11.50% 10.50% N/A N/A N/A (1) The table above does not contain values for FY21 due to the fact that the CGU’s applied in FY22 have been revised during the course of the year. In the prior year the CGU’s were Connectivity, Broadband and Services. The Terminal Value Growth Rates for the CGU’s in FY21 were 2.9% for Connectivity, 2.5% for Broadband and 0% for Services. The WACC applied in FY21 was 11.3% for all CGU’s. During FY22, and as a consequence of the disposal of the Hong Kong entity and certain select Singapore Assets, the Group has derecognised $35.1 million of Goodwill. The amount of Goodwill that has been derecognised reflects the relative value of the discontinued operations. For the Consumer and Wholesale segments, the Group has conducted an analysis of the sensitivity of the impairment test to changes in the key assumptions used to determine the recoverable amount for each of these group of CGUs to which Goodwill is allocated. The directors believe that any reasonably possible change in the key assumptions on which the recoverable amount of the CGU’s is based would not cause the individual or aggregate carrying amounts to exceed the individual or aggregate recoverable amounts of the related CGUs. Due to current market conditions at the year-end, the Directors believe that appropriate sensitivities to include in the sensitivity analysis included a reduction in the terminal value growth rate by 1.0%, or a 1.0% increase in the post-tax discount rate for each of these cash-generating unit and groups of cash-generating units. Whilst all of these sensitivities would reduce the headroom between the value in use and the carrying value of the CGU’s, under all of these scenarios, the carrying value of these CGU’s would remain below their estimated value in use. With regards to the Business segment, a reduction in the terminal growth rate by 1% or a 1% increase in the post-tax discount rate would result in the carrying amount of the CGU reducing by $10.1 million and $9.3 million respectively. 14. Deferred tax Recognised deferred tax assets / (liabilities) attributed to: Employee benefits Expenses deductible in future periods Tax credits from tax losses Deferred revenue Future deduction of share issue costs Customer acquisition and equipment installations costs Property, plant and equipment and intangible assets Total deferred taxes Net DTA/DTL by jurisdiction: Deferred tax assets Deferred tax (liabilities) Total deferred taxes Note 30 June 2022 $'000 30 June 2021 $'000 1,592 9,369 12,490 871 849 (1,653) (33,124) (9,606) - (9,606) (9,606) 924 4,081 13,549 2,908 915 (1,567) (16,301) 4,509 7,102 (2,593) 4,509 At the reporting date, the Group has unused tax losses of $161.1 million (FY21: $154.5 million) available for offset against future profits. A deferred tax asset of $12.5 million (FY21: $13.5 million) has been recognised in respect of $41.6 million (FY21: $56.6 million) of such losses. No deferred tax asset has been recognised in respect of the remaining $119.5 million (FY21: $97.9 million). Deferred tax assets are recognised where it is considered probable that they will be recovered against taxable profits in the future. 88 89 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESNOTES TO THE CONSOLIDATED FINANCIAL REPORT 15. Trade and other payables Trade payables: Superloop Trade payables: Exetel and Acurus Other payables Accrued expenses Current tax liabilities Deferred consideration Contingent consideration 30 June 2022 $'000 30 June 2021 $'000 2,603 10,187 4,295 13,164 3,686 1,000 8,125 14,953 - 1,016 2,021 175 - - Total trade and other payables 43,060 18,165 16. Interest-bearing loans and borrowings The Group had interest bearing loans and borrowings as at 30 June 2022 of $58.0 million (30 June 2021: $67.0 million). The average effective interest rate on bank borrowing is approximately 3.1% (2021: 2.89%) per annum and rates are determined as based on the leverage ratio tiered rate table plus the bank bill swap rate applicable to the term to maturity. The Group has a $96.9 million three year revolving facility with Westpac, HSBC and ANZ maturing on 29 June 2024. The facility can be used for working capital, capital expenditures and permitted acquisitions. 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 $3.2 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 2022, there was nil funding liability outstanding under this arrangement (30 June 2021: $1.4 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. 90 Current Equipment financing Lease liability Total current interest-bearing loans and borrowings Non-current Lease liability Revolving debt facility drawn (net of transaction costs) Total non-current interest-bearing loans and borrowings Note 30 June 2022 $'000 30 June 2021 $'000 - 4,812 4,812 12,903 40,316 1,386 3,063 4,449 7,808 54,748 53,219 62,556 (A) Total interest-bearing loans and borrowings 58,031 67,005 Total revolving debt facility limit Less bank guarantees issued under the facility Less amounts drawn (before transaction costs) Revolving debt facility available 96,900 (3,199) (41,269) 52,432 92,200 (1,095) (56,269) 34,836 (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. Changes in liabilities arising from financing activities The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising f rom financing activities are those for which cash flows were, or future cash flows will be, classified in the Group’s consolidated cash flow statement as cash flows from financing activities. 30 June 2021 $'000 Financing inflows Financing outflows Non-cash movement 30 June 2022 $'000 Bank loans (Note 16) Total liabilities f rom financing activities 56,134 56,134 25,000 25,000 (41,386) (41,386) 568 568 40,316 40,316 30 June 2020 $'000 Financing inflows Financing outflows Non-cash movement 30 June 2021 $'000 Bank loans (Note 16) Total liabilities from financing activities 51,580 51,580 61,777 61,777 (57,469) (57,469) 246 246 56,134 56,134 17. Employee benef its Current Non-current Total employee benefits The employee benefits represent accrued annual leave and long service leave entitlements. 4,833 525 5,358 2,345 773 3,118 91 30 June 2022 $'000 30 June 2021 $'000 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESNOTES TO THE CONSOLIDATED FINANCIAL REPORT 18. Deferred revenue 19. Contributed equity 30 June 2022 $'000 30 June 2021 $'000 A. SHARE CAPITAL Deferred revenue Deferred installation fees Total deferred revenue Current Non-current Total deferred revenue 19,137 2,264 21,401 5,037 16,364 21,401 36,810 2,513 39,323 4,437 34,886 39,323 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. The table below shows the movement of deferred revenue for the year. Opening balance Additions through business combination Additions Disposals Revenue recognised Closing balance 30 June 2022 $'000 30 June 2021 $'000 39,323 4,130 3,528 (20,230) (5,350) 21,401 43,202 - 5,263 - (9,142) 39,323 Fully paid ordinary shares 486,807,489 450,614,343 638,228 Total share capital Less: Issue costs Contributed equity B. MOVEMENTS IN ORDINARY SHARE CAPITAL Date Details 30-Jun-20 Balance 17-Jun-21 Accelerated Entitlement Offer 17-Jun-21 Share placement 30-Jun-21 Balance 6-Jul-21 Accelerated Entitlement Offer 30-Jul-21 Exetel acquisition 27-Sep-21 Vesting of performance rights 22-Mar-22 Vesting of performance rights 24-Jun-22 Acurus acquisition 30-Jun-22 Balance C. ORDINARY SHARES 30 June 2022 Number of shares 30 June 2021 Number of shares 30 June 2022 $'000 30 June 2021 $'000 603,931 603,931 486,807,489 450,614,343 638,228 486,807,489 450,614,343 623,967 590,927 (14,261) (13,004) Number of shares Issue Price $ Value $ 365,866,416 32,059,755 52,688,172 450,614,343 22,797,291 9,900,990 87,400 13,800 0.93 0.93 0.93 1.01 0.95 0.91 525,115,055 29,815,572 49,000,000 603,930,627 21,201,481 10,000,000 83,030 12,558 3,393,665 0.884 3,000,000 486,807,489 638,227,695 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. The employee benefits represent accrued annual leave and long service leave entitlements. 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. 92 93 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESNOTES TO THE CONSOLIDATED FINANCIAL REPORT 30 June 2022 $'000 30 June 2021 $'000 B. SHARE BASED PAYMENTS Long term incentives - share options Total borrowings (as per Note 16) Less: cash and cash equivalents Net debt / (surplus cash) Total equity Gearing ratio 58,031 (83,133) (25,102) 67,005 (89,724) (22,719) 416,215 431,809 -6.0% -5.3% 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 and net borrowing transaction costs, the gearing ratio was -6.0% as at 30 June 2022 (FY21: -5.3%). 20. Reserves Share based payments Foreign currency translation reserve(1) Total reserves 30 June 2022 $'000 30 June 2021 $'000 1,701 2,616 4,317 1,320 (995) 325 (1) 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. 21. Dividends No dividends were paid or declared in FY22 (FY21: Nil). 22. 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 30 June 2022 $ 30 June 2021 $ 2,477,474 90,233 - 209,909 2,777,616 2,674,508 133,565 - 210,313 3,018,386 Detailed remuneration disclosures are provided in the Remuneration Report. 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 2022 was $380,508 (FY21: $447,146). Each employee share option converts into one ordinary share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. Options are exercisable at a price equal to the average quoted market price of the Company’s shares on the date of grant. The vesting period varies from 1 to 4 years. Options are considered expired if they remain unexercised f rom vesting to options expiration date. Options are forfeited if the employee leaves the Group before the options vesting date unless the Board deems otherwise. Details of the share options outstanding during the year are as follows: 30 June 2022 30 June 2021 Number of share options Weighted average exercise price $ Number of share options Weighted average exercise price $ Outstanding at beginning of the year 4,000,000 $1.29 Granted during the year Forfeited during the year Exercised during the year Expired during the year 684,250 $0.98 4,000,000 $1.29 - - - - - - - - $1.29 Outstanding at the end of the year 4,684,250 $1.24 4,000,000 Exercisable at the end of the year 1,000,000 $1.11 There were no share options exercised during the period. The options outstanding at 30 June 2022 had a weighted average exercise price of $1.24, and a weighted average remaining contractual life of 1.6 years. In FY22, options were granted to KMP on 01 September 2021. The aggregate of the estimated fair values of the options granted to KMP on those dates is $0.2 million. In FY21, options were granted on 18 November 2020. The aggregate of the estimated fair values of the options granted is $0.4 million. The inputs into the options black-scholes model used by the Group are as follows: Weighted average share price Weighted average exercise price Expected volatility Expected life Risk-free rate Expected dividends yields 30 June 2022 30 June 2021 $1.00 $1.11 $1.00 $1.29 40.00% 40.00% 3.25 years 3.25 years 3.77% 0.00% 1.52% 0.00% Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous 5 years. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. 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. 94 95 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESNOTES TO THE CONSOLIDATED FINANCIAL REPORT 23. Remuneration of auditors 24. Commitments and contingencies 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. 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 2022 $'000 30 June 2021 $'000 4,119 4,119 2,102 2,102 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. A. DELOITTE TOUCHE TOHMATSU Deloitte and related network firms * Audit or review of financial reports: - Group - Subsidiaries 30 June 2022 $ 30 June 2021 $ 554,300 24,520 371,050 37,410 Other assurance and agreed-upon procedures under other legislation or contractual arrangements 8,660 17,356 Other services: - Due Diligence Services Total remuneration of Deloitte Touche Tohmatsu * The auditor of Superloop Limited is Deloitte Touche Tohmatsu - 587,480 399,780 825,596 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. 96 97 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESNOTES TO THE CONSOLIDATED FINANCIAL REPORT 25. Controlled entities acquired Exetel Pty Ltd and its controlled entities (“Exetel”) On 1 August 2021, Superloop Limited acquired 100% of Exetel Pty Ltd and its controlled entities for a total consideration of $118.9 million, paid as $108.9 million in cash and $10.0 million in Superloop Limited shares issued at $1.01 per share. The acquisition accelerates the monetisation of Superloop’s infrastructure assets and is expected to deliver annualised cost synergies of $5 million per year. During the period, the fair value of assets acquired and the liabilities assumed has been assessed and the effect on the financial statements has been summarised below. The Goodwill of $87.3 million represents the residual value of the purchase price over the fair value of the identifiable assets and liabilities. As at 30 June 2022, Superloop has finalised the fair values of the assets and liabilities acquired. Details of the acquisition are: a) Identifiable assets acquired and liabilities assumed Cash Receivables Property, plant and equipment Intangibles Other assets Payables Current tax liability Deferred tax liability Provisions and other liabilities Net identifiable assets acquired b) Consideration transferred Cash paid Shares issued Consideration transferred c) Goodwill on acquisition Consideration transferred Less: net identifiable assets acquired Goodwill on acquisition d) Net cash outflow on acquisition Consideration paid in cash Less: cash and cash equivalent balances acquired Net cash outflow on acquisition Fair value $'000 18,914 3,955 2,434 43,429 2,939 (16,605) (3,480) (12,190) (7,780) 31,616 108,910 10,000 118,910 118,910 (31,616) 87,294 108,910 (18,914) 89,996 Goodwill arose on the acquisition of Exetel due to the expected synergies obtained from combining the businesses. These assets could not be separately recognised from Goodwill because they are not capable of being separated from the Group and sold, transferred, licensed, rented or exchanged, either individually or together with any related contracts. None of the Goodwill is expected to be deductible for income tax purposes. 98 Impact of the acquisition on the results of the Group Loss before tax for the period ended 30 June 2022 includes profit before tax of $11.7 million attributable to Exetel. Revenue for the period ended 30 June 2022 includes $133.2 million in respect of Exetel. Had the acquisition of Exetel been effected on 1 July 2021, the revenue of the Group f rom the continuing operations for the period ended 30 June 2022 would have been $262.2 million, and the loss for the year after tax f rom continuing operations would have been $61.7 million. The Directors of the Group consider these “pro forma” numbers to represent an approximate measure of the performance of the combined group and to provide a reference point for comparison in future years. Acurus Pty Ltd and its controlled entities (“Acurus”) On 23 June 2022, Superloop Limited acquired 100% of Acurus Pty Ltd and its controlled entities for a total consideration of $26.0 million, paid as $10.1 million in cash and $3.0 million in Superloop Limited shares issued at $0.884 per share and $9.1 million in deferred and contingent cash consideration. The acquisition accelerates the monetisation of Superloop’s infrastructure assets. During the period, the fair value of assets acquired and the liabilities assumed has been assessed and the effect on the financial statements has been summarised below. The Goodwill of $19.2 million represents the residual value of the purchase price over the fair value of the identifiable assets and liabilities. As at 30 June 2022, Superloop is continuing to receive the information required to assess the fair values of the assets and liabilities acquired. Accordingly the values identified below are provisional as at the reporting date. Details of the acquisition are: Provisional fair value $'000 a) Identifiable assets acquired and liabilities assumed Cash Receivables Other Assets Intangibles Payables Deferred tax liability Net identifiable assets acquired b) Consideration transferred Cash paid Shares issued Deferred and contingent consideration Consideration transferred c) Goodwill on acquisition Consideration transferred Less: net identifiable assets acquired Goodwill on acquisition d) Net cash outflow on acquisition Consideration paid in cash Less: cash and cash equivalent balances acquired Net cash outflow on acquisition 265 860 326 10,153 (5,700) (2,795) 3,109 10,139 3,000 9,125 22,264 22,264 (3,109) 19,155 10,139 (265) 9,874 99 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESNOTES TO THE CONSOLIDATED FINANCIAL REPORT 26. Discontinued operations On 17 October 2021, the Group entered into a sale agreement to dispose of Superloop Hong Kong Pte Ltd and select assets for Superloop Singapore Pte Ltd. The disposal was effected in order to drive greater shareholder returns by redeploying funds into more strategically aligned assets with higher growth opportunities. The disposal was completed on 29 April 2022, on which date control of Superloop Hong Kong Pte Ltd and select assets for Superloop Singapore Pte Ltd passed to the acquirer. The results of the discontinued operations, which have been included in the profit for the year were as follows: 30 June 2022 $'000 30 June 2021 $'000 Revenue Other income Total revenue and other income Direct costs Employee benefits expense Professional fees Marketing costs Administrative and other expenses Total expenses Earnings before interest, tax, depreciation, amortisation and foreign exchange gains / losses (EBITDA) Depreciation and amortisation expense Interest expense Foreign exchange (losses) / gains Profit / (loss) before income tax Income tax benefit/(expense) Profit / (loss) for the year from discontinued operations before gain on disposal Net gain on disposal (excluding Goodwill derecognition) Goodwill derecognised on discontinued operations Income tax expense Profit / (loss) for the year after tax for the year attributable to the owners of Superloop Limited 12,713 42 12,755 (4,565) (1,379) (10) (8) (1,878) (7,840) 4,915 (7,360) (2) 2,453 6 556 562 46,606 (35,144) (3,118) 8,906 14,828 14 14,842 (5,447) (1,313) (56) (7) (1,821) (8,644) 6,198 (8,580) (4) (5,329) (7,715 (644) (8,359) - - - (8,359) A gain of $46.6 million arose on the disposal of Superloop Hong Kong Pte Ltd and select Superloop (Singapore) Pte Ltd assets, being the difference between the proceeds of disposal and the carrying amount of the subsidiary’s net assets. The disposal is consistent with the Group’s long-term policy to focus its activities on the Group’s other businesses. As a consequence of the disposal of the Hong Kong entity and certain select Singapore Assets, the Group derecognised $35.1 million of Goodwill. The amount of Goodwill that has been derecognised reflects the relative value of the discontinued operations. The net assets of Superloop (Hong Kong) Limited & Superloop (Singapore) Pte Ltd and the net consideration received at 29 April 2022 were as follows: Net assets disposed Foreign currency translation reserve write back Total consideration Net gain on disposal (including Goodwill derecognition) Consideration received Less: cash for acquisition of Intangibles Net cash inflow arising on disposal 27. Transaction costs 29 April 2021 $'000 125,741 2,797 128,538 140,000 11,462 140,000 (15,000) 125,000 In the course of strategic merger and acquisition activity, the Group incurs costs associated with the acquisition and disposal of entities or assets, and the subsequent integration or separation of those entities or assets into or from the remainder of the Group's operations. In FY21, the transaction costs relate specifically to the acquisition of Exetel Pty Ltd which completed on 01 August 2021. In FY22 transaction costs have been incurred in relation to: a. The acquisition of Exetel Pty Ltd which completed on 01 August 2021; b. The disposal of the Superloop Hong Kong entity and certain select Singapore Assets which was agreed on 21 October 2021 and completed on 29 April 2022; and c. The acquisition of Acurus Pty Ltd which was agreed on 24 May 2022 and completed on 23 June 2022. The components of the transaction costs for each of FY21 and FY22 which have been included in the income statement in accordance were as follows: Adviser Fees Integration - Network Integration - Operational Termination Charges Employee Retention Total Transaction Costs 30 June 2022 $'000 30 June 2021 $'000 (4,775) (1,114) (337) (622) (635) (7,483) (551) - - - - (551) Notes: Description of Costs included in Transaction Costs (1) Adviser Fees relate to external legal and professional fees incurred relating to the transaction. (2) Network Integration costs relate to costs associated with the migration of customers and services onto the Superloop network. (3) Operational Integration costs relate to costs associated with the migration and integration of systems, processes, software and brands on the Superloop operational platform and includes the costs of the internal acquisitions department as well as general administrative costs associated with the transaction. (4) Termination Charges relate to costs associated with employee, consultant and other external provider contracts that were terminated due to a duplication of services as a consequence of a transaction. (5) Employee Retention – During FY22 the Group paid a Transaction Bonus to certain executives contingent upon and related to the successful completion Cash flow information of the Exetel Acquisition. 30 June 2022 $'000 30 June 2021 $'000 Net cash inflow from operating activities Net cash inflow/(outflow) from investing activities Net cash (outflow)/inflow from financing activities 1,562 369 (52) 3,692 (1,500) 10,376 100 101 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL REPORT 102 28. Related party transactions PROVISION OF SERVICES TO / FROM RELATED PARTIES On 28 October 2021, Bevan Slattery resigned as a Chair & Non-Executive Director of the Group. The following is a summary of the transactions with related parties for the financial year. 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 former Chair of Superloop (retired 28 October 2021). Under the agreement, Capital B and Superloop provide 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. During FY22, fees earned from Capital B totalled $1,000,000 (FY21: $nil). Net receivable by the Company in relation to the consulting services provided was $1,000,000 (FY21: $nil). 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 former Chair of Superloop (retired 28 October 2021) is the Chair 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 FY22, net fees earned from Megaport totalled $1,036,718 FY21: $830,672). Net receivables from Megaport at 30 June 2022 is $53,731 (FY21: $81,541). SALES OF GOODS / SERVICES Revenue earned from related parties AMOUNTS PAID TO RELATED PARTIES Provision of services to Superloop BALANCE OUTSTANDING AT THE END OF THE YEAR Receivables Trade and other payables 29. Reconciliation of loss after income tax to net cash flow f rom operating activities Customer agreement with Rising Sun Pictures Profit / (loss) for the year after income tax 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 FY22, fees earned from Rising Sun Pictures totalled $90,920 (FY21: $77,880). Net receivables from Rising Sun Pictures at 30 June 2022 is $nil (FY21: $12,980). Consulting services provided to APX Partners Pty Ltd The former Chair of Superloop (retired 28 October 2021) is the founder and a shareholder of APX Partners Pty Ltd. APX Partners Pty Ltd is 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 FY22, fees earned from APX Partners Pty Ltd totalled $45,438 (FY21: $592,261). Net receivables from APX Partners Pty Ltd at 30 June 2022 is $nil (FY21: $nil). Customer 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. During FY22, services received amounted to $5,218 (FY21: $5,949). Net payable to Fiber Sense Pty Ltd at 30 June 2022 totalled $nil (FY21: net payable $496). Supplier agreement with Subco Superloop has entered into a supplier agreement for the provision of connectivity services with Subco. The former Chair of Superloop (retired 28 October 2021) is the founder/Director of Subco. During FY22, payments made to Subco totalled to $412,500 (FY21: $825,000). Net payable to Subco at 30 June 2022 is $nil (FY21: $nil). Adjustments for: Depreciation and amortisation Impairment Share based payments expense Interest income Interest expense Foreign exchange gain / (losses) Gain on disposal of operations and 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 (outflows) / inflows f rom operating activities 30 June 2022 $'000 30 June 2021 $'000 2,273,683 1,591,495 412,500 921,631 1,053,731 - 112,000 17,975 30 June 2022 $ 30 June 2021 $ (52,626) (31,964) 51,758 25,057 381 (173) 3,964 (1,815) (11,538) (3,212) (4,470) (14,217) (3,676) (36) (869) (11,472) 46,373 - 447 (10) 3,173 705 (100) (132) 1,941 (1,294) (3,879) (684) 445 15,120 103 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESNOTES TO THE CONSOLIDATED FINANCIAL REPORT 30. Non-cash transactions 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 FY22: $0.3 million (FY21: $1.6 million). 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 15 “Trade and other payables” and Note 16 “Interest-bearing loans and borrowings”. For the Trade and other payables and interest-bearing loans and borrowings, the carrying values approximate fair value. The Group holds the following financial instruments measured at fair value: 30 June 2022 Financial liabilities measured at fair value Deferred consideration Contingent consideration Derivative financial liabilities Total financial liabilities 30 June 2021 Financial liabilities measured at fair value Deferred consideration Contingent consideration Derivative financial liabilities Total financial liabilities Level 1 - Quoted prices in active markets $'000 Level 2 - Significant observable inputs $'000 Level 3 - Significant unobservable inputs $'000 - - - - - - - - 1,000 8,125 - 9,125 - - - - - - - - - - - - Total $'000 1,000 8,125 - 9,125 - - - - A. MARKET RISK Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: foreign exchange risk, price risk and interest rate risk. i. Foreign exchange risk Superloop is exposed to exchange rate movements, in particular movements in the A$/US$ rate, A$/SG$, A$/HK$, SG$/US$ and A$/LKR. Because a proportion of Superloop’s payments for inventory and construction work are made or are expected to be made in foreign currency, primarily US dollars, movements in exchange rates impact on the amount paid for assets, inventory and construction work. Also, because a proportion of Superloop’s revenues and profits are earned in Singapore and Hong Kong, movements in exchange rates impact on the translation of account balances in Superloop’s Singapore and Hong Kong operations. Therefore, movements in exchange rates, particularly the A$/US$ rate, the A$/SG$, A$/HK, SG$/US$ and A$/LKR 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 2022. 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. iv. Sensitivity At 30 June 2022, if interest rates had increased by 100 basis points or decreased by 100 basis points from the year end rates, and the cash balances remained constant for the year along with all other variables, profit before tax for the year would be impacted $488k 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 2022 $'000 30 June 2021 $'000 83,133 89,724 - - - - 83,133 89,724 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 2022, the Group had $22.1 million customer trade receivables (refer Note 10). 104 105 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESNOTES TO THE CONSOLIDATED FINANCIAL REPORT 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 re-financed senior debt facility and equity raise completed July 2021, together with cash flows from operations, and proceeds from the sale of the Hong Kong entity and certain select Singapore assets provides sufficient capital to fund its expected working capital requirements for at least the next 12 months. 32. Earnings per share A. EARNINGS PER SHARE Total basic earnings / (loss) per share attributable to the ordinary equity holders of the Group Continuing operations Discontinued operations B. DILUTED EARNINGS PER SHARE Within 12 months $'000 Between 1 and 5 years $'000 Over 5 years $'000 Total contractual cash flows $'000 Carrying amount $'000 Total diluted earnings / (loss) per share attributable to the ordinary equity holders of the Group Contractual maturities of financial liabilities 30 June 2022 Trade and other payables 43,060 - Interest-bearing borrowings 5,856 55,259 Total non-derivatives 48,916 55,259 30 June 2021 Trade and other payables 18,165 - Interest-bearing borrowings 4,449 68,357 Total non-derivatives 22,614 68,357 - - - - - - 43,060 43,060 61,115 58,031 104,175 101,091 18,165 18,165 72,806 67,005 Continuing operations Discontinued operations C. RECONCILIATIONS OF EARNINGS USED IN CALCULATING EARNINGS PER SHARE Basic Earnings Per Share Earnings / (loss) attributable to the ordinary equity holders of the Group used in calculating basic losses per share Continuing operations 90,971 85,170 Discontinued operations Diluted Earnings Per Share Earnings / (loss) from continuing operations attributable to the ordinary equity holders of the Group Continuing operations Discontinued operations D. WEIGHTED AVERAGE NUMBER OF SHARES USED AS THE DENOMINATOR Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share Effects of dilution from: Performance rights Share options 30 June 2022 Cents 30 June 2021 Cents (10.91) (12.76) 1.85 (8.66) (6.40) (2.26) 30 June 2022 Cents 30 June 2021 Cents (10.91) (12.76) 1.85 (8.66) (6.40) (2.26) 30 June 2022 $'000 30 June 2021 $'000 (52,626) (61,532) 8,906 (52,626) (61,532) 8,906 (31,964) (23,605) (8,359) (31,964) (23,605) (8,359) 30 June 2022 Number of shares 30 June 2021 Number of shares 482,348,909 369,117,021 - - - - 106 107 Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share 482,348,909 369,117,021 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. SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIES33. Subsidiaries 34. Events occurring after the reporting period Country of incorporation Class of shares 30 June 2022 % 30 June 2021 % Subsequent to the reporting date, Superloop Limited announced its intention to undertake an on-market share buy-back for a maximum of 48,680,748 ordinary shares, representing 10.0% of the Company's issued share capital. Superloop (Australia) Pty Ltd(1) Superloop (Singapore) Pte Ltd Superloop (Japan) K.K. APEXN Pty Ltd(1) CINENET Systems Pty Ltd(1) BigAir Group Pty Ltd(1)(2) Clever Communications Australia 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) CyberHound Pty Ltd(1) bvSubPartners Pty Ltd(1) SubPartners Pte Ltd Nuskope Pty Ltd(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) Superloop Broadband Pty Ltd(1) Exetel Pty Ltd(1)(2) Exetel Communications (Private) Ltd Acurus Holdings Pty Ltd Acurus Pty Ltd Acurus Networks Pty Ltd Acurus Solutions Pty Ltd Tomi Broadband Pty Ltd Australia Singapore Japan Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Singapore Australia Australia Australia Australia Australia United Kingdom USA Fiji New Zealand Australia Australia Australia Australia Australia Sri Lanka Australia Australia 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 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% (1) These wholly-owned subsidiaries are members of the Australian tax-consolidated group. (2) These entities along with Superloop Limited are party to the deed of cross guarantee, Pursuant to the ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 (ASIC Instrument), for the principal purpose of enabling these entities to take advantage of relief from the requirements of the Corporations Act to prepare and lodge afinancial report. 108 Other than the above, there has not been any matter or circumstance occurring 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 f inancial 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 A. CONTINGENT LIABILITIES OF SUPERLOOP LIMITED (PARENT ENTITY) As at 30 June 2022, Superloop Limited did not have any contingent liabilities. 30 June 2022 $'000 30 June 2021 $'000 40,529 439,019 479,548 9,328 149,022 158,350 83,080 537,452 620,532 1,386 63,669 65,055 623,967 590,927 (1,050) (1,626) (300,093) 321,198 (264,373) (264,373) (1,050) 1,320 (35,720) 555,477 (10,035) (9,954) 109 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESNOTES TO THE CONSOLIDATED FINANCIAL REPORT Directors' Declaration In the directors' opinion: a. the financial statements and notes set out on pages 62 to 109 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 2022 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(b) 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. Paul Tyler Chief Executive Officer & Director 26 August 2022 110 111 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIES 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 2022, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, 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: » Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial performance for the year then ended; and » 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. Key Audit Matter How the scope of our audit responded to the Key Audit Matter Carrying Value of Goodwill Assets As at the 30 June 2022 the Group’s goodwill balance totals $181 million as disclosed in Note 13. 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. 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 and challenging 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 management 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 annual 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 13 to the consolidated financial statements. Acquisition of Exetel Pty Ltd and its controlled entities (“Exetel”) On 1 August 2021, the Group acquired 100% of Exetel for total consideration of $118.9 million, consisting of $108.9 million in cash and $10 million in Superloop Limited shares. The acquisition has been accounted for using the acquisition method as provided by AASB3 Business Combinations. Identifiable intangible assets of $43 million were recognised with $87 million of goodwill also being brought to account. The identification and valuation of intangible assets, including valuation techniques applied require significant judgement. Our procedures included, but were not limited to: » Reviewing the executed agreements to obtain an understanding of the transaction; » Evaluating the appropriateness of the identification of identifiable intangible assets; » In conjunction with our valuation specialists, challenging the key assumptions and valuation techniques used by management in the valuation of intangible assets; » Testing the mathematical accuracy of the purchase price allocation and resulting recognition of goodwill; and » Assessing the appropriateness of the disclosures in Note 25 to the consolidated financial statements. 112 113 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT Other Information The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2022, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do 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 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, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free f rom 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. » 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 45 to 57 of the Directors’ Report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Superloop Limited, for the year ended 30 June 2022, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. DELOITTE TOUCHE TOHMATSU Tendai Mkwananzi Partner Chartered Accountants Brisbane, 2 September 2022 114 115 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIES ASX ADDITIONAL INFORMATION ASX Additional Information ASX ADDITIONAL INFORMATION (C) SUBSTANTIAL HOLDERS Holding Issued Shares Percentage of issued shares 1 J P MORGAN NOMINEES AUSTRALIA PTY LIMITED 86,019,908 2 PERENNIAL VALUE MANAGEMENT LIMITED 3 NATIONAL NOMINEES LIMITED 4 CITICORP NOMINEES PTY LIMITED 60,625,389 59,100,419 49,486,392 5 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 28,740,119 17.73 12.49 12.18 10.20 5.92 (D) UNQUOTED EQUITY SECURITIES Options: A total of 8,428,052 unlisted options are on issue Performance Rights: 2,181,458 Executive Performance Rights and 1,066,000 General Performance Rights are on issue (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 Superloop has announced an on-market share buy-back on 4 July 2022 for a maximum of 48,680,748 ordinary shares, representing 10.0% of the Company’s issued share capital. The buy back period started 19 July 2022 and the proposed end date is 30 June 2023. The following shareholder information was applicable as at 31 August 2022. (A) DISTRIBUTION OF EQUITY SECURITIES The Company has one class of shares on issue, fully paid ordinary and escrow shares. Holding 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10001 to 100000 100001 and Over Total Unmarketable Parcels Number of Investors Number of Securities 1,972 2,577 1,243 2,241 189 8,222 1,340 1,008,498 7,029,606 9,369,507 61,762,119 406,065,759 485,235,489 441,600 % 0.21 1.45 1.93 12.73 83.68 100.00 0.21 (B) EQUITY SECURITY HOLDERS The names of the twenty largest holders of quoted equity securities are listed below: Issued Shares Percentage of issued shares Holding 1 2 J P MORGAN NOMINEES AUSTRALIA PTY LIMITED BEVAN ANDREW SLATTERY 3 NATIONAL NOMINEES LIMITED 4 CITICORP NOMINEES PTY LIMITED 5 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 6 7 ARGO INVESTMENTS LIMITED WASHINGTON H SOUL PATTINSON AND COMPANY LIMITED 8 UBS NOMINEES PTY LTD 9 ANNETTE ELIZABETH LINTON 10 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 11 BNP PARIBAS NOMS PTY LTD 12 WOODROSS NOMINEES PTY LTD 13 BRISPOT NOMINEES PTY LTD 14 BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD 16 WIDE HORIZONS PTY LTD 17 JMRF PTY LTD 18 PARKER THOMPSON HOLDINGS PTY LTD 19 CS FOURTH NOMINEES PTY LIMITED 20 MR DENNIS JAY JOLLEY Total Balance of register Grand total 86,019,908 60,625,389 59,100,419 49,486,392 28,740,119 22,541,176 9,441,536 9,069,595 7,920,792 6,579,235 6,152,692 5,356,145 3,770,239 2,417,647 1,980,198 1,639,730 1,639,730 1,027,989 950,000 366,843,753 118,391,736 15 NEWECONOMY COM AU NOMINEES PTY LIMITED 2,384,822 17.73 12.49 12.18 10.20 5.92 4.65 1.95 1.87 1.63 1.36 1.27 1.10 0.78 0.50 0.49 0.41 0.34 0.34 0.21 0.20 75.60 24.40 485,235,489 485,235,489 116 117 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESCORPORATE DIRECTORY DIRECTORS AUDITOR Peter O'Connell Deloitte Touche Tohmatsu Independent Chair and Non-Executive Director Richard Anthony (Tony) Clark Non-Executive Director Vivian Stewart Non-Executive Director Stephanie Lai Non-Executive Director Alexander (Drew) Kelton Non-Executive Director CHIEF EXECUTIVE OFFICER Paul Tyler COMPANY SECRETARY Tina Ooi REGISTERED OFFICE Superloop Limited Level 1, 545 Queen Street Brisbane QLD 4000 Tel: +61 (7) 3905 2400 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 Australia): 1300 554 474 Facsimile: (02) 9287 0303 SECURITIES EXCHANGE LISTING Superloop Limited shares are listed on the Australian Securities Exchange (ASX: SLC) COMPANY WEBSITES https://superloop.com https://investors.superloop.com 118 119 SUPERLOOP ANNUAL REPORT 2022SUPERLOOP LIMITED & CONTROLLED ENTITIESI I T R O P E R L A C N A N F D E T A D I L O S N O C 2 2 0 2 D E T I M I L P O O L R E P U S Superloop Limited Annual Report FY22 SUPERLOOP.COM 4 9 0 3 6 2 9 6 1 6 9 N B A 

Continue reading text version or see original annual report in PDF format above