Thursday, 31 August 2017
Swift Annual Report – A Transformational Year
ASX: SW1
Leading telecommunications and content solutions provider Swift Networks Group Limited
(ASX: SW1, “Swift” or “the Company”) is pleased to provide its financial results for the year
ending 30 June 2017.
In what proved a transformational year for the Company, Swift achieved healthy growth in
its key markets in FY17. The Company expanded promisingly in attractive new sectors and
delivered a strong financial turnaround.
Revenue growth year on year: In FY17, the Group achieved operating revenue of
$17,005,143, which represents growth of 18% compared to the previous full financial year
of operations under the previously privately held Swift Networks Pty Ltd and Wizzie Pty Ltd.
This significant increase in revenue generation, coupled with a resolute focus on
constraining costs and overheads, has driven a substantial uplift in the Group’s profitability.
Remarkable EBITDA turnaround: In FY17, Swift achieved Earnings Before Interest, Tax,
Depreciation Amortisation (“EBITDA”) of $1,005,844. This reflects an EBITDA growth of
approximately $2.5 million and a remarkable turnaround when compared to the normalised
EBITDA loss reported in FY16 of ($1.5 million).
Strong cash position: The company’s cash balance at 30 June 2017 was $2.24 million,
noting that due to the timing of receivables the cash balance was $2.63 million 3 business
days later.
Organic and acquisitive growth: Swift experienced significant growth in its target market
verticals, namely resources, hospitality, aged care and lifestyle villages and FY17 saw the
company leverage the acquisitions of Living Networks and Web2TV resulting in significant
wins in the Aged Care sector with contracts with Rosewood, McKenzie Aged Care Group
and BlueCross among others.
Organically Swift continued to win new contracts in the Resources sectors with Rio Tinto,
Shell Prelude and Inpex. Swift ended FY17 with the announcement of its upcoming
acquisition of Video on Demand, a leading digital entertainment services provider in the
hospitality sector.
Swift Networks Group Limited ABN 54 006 222 395
1 Watts Place, Bentley WA 6069
W: www.swiftnetworks.com.au E: investor@swiftnetworks.com.au
P: +61 (8) 6103 7595 F: +61 (8) 6103 7594
1
Swift Chief Executive Officer, Xavier Kris, said:
“FY17 was a seminal year for Swift resulting in strong revenue growth and an exceptionally
strong EBITDA turnaround.”
“We are very pleased with the way Swift has transformed its business in accordance with its
strategic plan. Swift’s offering for the resources, aged care and hospitality markets and its
expanded content library means that the company is primed to continue its growth through
FY18.”
For more information, please contact:
Xavier Kris
Chief Executive Officer
+61 8 6103 7595 / investor@swiftnetworks.com.au
Tim Dohrmann
Investor and Media Relations
+61 468 420 846 / tim@nwrcommunications.com.au
About Swift Networks Group Limited
Swift Networks Group Limited (ASX: SW1) is a diversified telecommunications and content
solutions provider, entertaining guests and connecting them to the world.
Swift’s connectivity and content delivery platform empowers guests to watch, play, connect and
interact. Swift brings accommodation providers opportunities to generate additional revenue and
offers meaningful data insights to retain existing and drive new business.
Swift sources premium multi-lingual content from around the world and curates, packages and
distributes it to clients’ guests through its cloud-based platform. The company’s services include
free-to-air television, pay television, telecommunications, Internet, data, wireless networks and
streaming video on demand with content from some of Hollywood’s largest studios.
Running in more than 150 sites across the mining, oil, gas, aged care, retirement village and
hospitality sectors, Swift’s fully integrated platform is deployed in some of the world’s harshest
regions, where reliability, flexibility and scalability are critical success factors.
Swift Networks Group Limited ABN 54 006 222 395
1 Watts Place, Bentley WA 6069
W: www.swiftnetworks.com.au E: investor@swiftnetworks.com.au
P: +61 (8) 6103 7595 F: +61 (8) 6103 7594
2
Appendix 4E
Preliminary final report
Swift Networks Group Limited
Rules 4.3A
Appendix 4E
Preliminary Final Report
Name of entity
Swift Networks Group Limited and its controlled entities (“the Group”)
ACN
Reporting Period
Previous Corresponding Period
006 222 395
Year ended 30 June 2017
Year ended 30 June 2016
Results for announcement to the market
Revenues from continuing operations
Loss from continuing operations after tax
Loss for the year attributable to members
Up
Up
Up
$A’000
901%
to
17,005
126%
to
(1,364)
126%
to
(1,364)
Dividends (distributions)
Amount per
security
Franked amount per
security
Final and interim dividend
None
- ¢
Record date for determining entitlements to the
dividend
N/A
C:\Users\George.Nicholls\Documents\SW1_2017 Appendix 4E Preliminary Report (draft) GN.docx
Appendix 4E Page 1
Appendix 4E
Preliminary final report
Swift Networks Group Limited
Commentary on the results for the year
The consolidated net loss after tax for the Group is $1,364,198 (2016: loss of $5,249,924). The 2017 financial year
represented the first full 12 months of trading for the Group, as on 19 May 2016 the Company acquired Swift
Networks Pty Ltd and Wizzie TV Pt Ltd.
In 2017 the Group achieved an operating revenue of $17,005,143, which represents growth of 18% compared to the
previous full financial year of operations under the previously privately held Swift Networks Pty Ltd and Wizzie Pty Ltd.
This growth reflects the strong momentum continuing to build across the Group’s key markets with multiple new
contract wins secured during the year. This in combination with a resolute focus on constraining costs and overheads,
coupled with a significant increase in revenue generation, has driven a substantial uplift in the Group’s financial
performance.
The Group had Earnings Before Interest, Tax, Depreciation Amortisation (“EBITDA”) of $1,005,844. A reconciliation of
Net Profit/(loss) after tax to EBITDA is provided below:
Net loss after tax
Income tax benefit
Interest costs (net)
A$
Description
(1,364,198)
Refer to accounts
(1,001,757)
Refer to accounts
(6,609)
Refer to accounts
Depreciation and amortisation
1,121,925
Refer to accounts
Fair valuation loss on financial liability
1,929,167
Impairment of available for sale assets
83,350
Share based payments
Other expenses
192,182
51,784
EBITDA
1,005,844
Non-cash year end adjustment to the fair value
of financial liabilities in respect of various
performance shares
Non-cash year end adjustment to the fair value
of available for sale assets
One-off option issue by SW1 to Company
advisors
incurred
One-off expenses
in respect to
acquisitions and negotiations to exit an
onerous contract
The Company’s cash balance at 30 June 2017 was $2,237,906 with the Company achieving increasing cash flow
positivity throughout the second half of the financial year, a consequence of a strong focus on increasing recurring
revenues to drive higher cash receipts. The Group’s cash reserves have been further strengthened since the end of the
period, through the raising of $4.5million (before costs) through a share placement and entering into a debt facility
with Bankwest for a further $3 million to fund the Company’s transformational acquisition of Video of Demand.
At the end of the financial year the Company carried no outstanding borrowings.
Appendix 4E Page 2
Appendix 4E
Preliminary final report
Swift Networks Group Limited
Events Since the End of the Financial Year
On 7 July 2017 Swift Networks Group Limited entered into a binding share purchase agreement for the acquisition of
VOD Pty Ltd and its parent Movie Source Pty Ltd. The acquisition will complete, upon satisfaction of certain conditions
precedent, which is likely to occur at or around the date of signing of this report. The purchase price payable by the
Company to the Sellers for the Acquisition is:
•
•
$5,100,000 in cash (subject to adjustment for prepaid liabilities, trade debts, trade credits, employee
entitlements and prepayments); and
3,600,000 fully paid ordinary shares at $0.25 per share in the Company.
In order to fund the Acquisition, the Company has completed a placement to raise $4.5 million (before costs) via the
issue of 18 million fully paid ordinary shares to sophisticated and institutional investors at $0.25 per share and has
entered into debt facility with Bankwest to raise a further $3 million ("Facility").
The Placement occurred in 2 tranches, with the initial tranche of up to $2.2 million settled on 12 July 2017, and the
balance of up to $2.3 million, settled on 18 August 2017 after receiving approval of shareholders at a General Meeting
held on 11 August 2017.
The Facility has a term of 3 years, during which the Company will make quarterly repayments with a final bullet
repayment to be made at the end of the term. In addition, the Company has negotiated access to a debt facility of up
to $350,000 to fund general working capital requirements. Both facilities will be secured by a first ranking general
security of all present and future assets of the Company and its subsidiaries, and are subject to other terms which are
considered customary for such agreements.
There are no other matters or circumstances that have arisen since 30 June 2017 that have or may significantly affect
the operations, results, or state of affairs of the Group in future financial periods.
Appendix 4E Page 3
Appendix 4E
Preliminary final report
Swift Networks Group Limited
OTHER APPENDIX 4E INFORMATION
1.
NTA backing
Net tangible asset backing per ordinary share
($0.006)
$0.011
30 June 2017
30 June 2016
2.
Dividends
There were no dividends declared during the year and the directors do not recommend that any dividend be paid.
3.
Dividend reinvestment plans
N/A.
4.
Details of entities over which control has been gained or lost during the period
N/A.
5.
Details of associates and joint ventures
The carrying value of interests in associated entities is nil.
6.
Audit
The attached Annual Report has been prepared in accordance with the Australian Accounting Standards issued
by the Australian Accounting Standards Board and has been based on accounts that have been audited. Please
refer to the Independent Audit Report contained in the Annual Report.
Sign here:
Print name:
(Director)
Xavier Kris
Date: 31 August 2017
Appendix 4E Page 4
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
ANNUAL REPORT
FOR THE YEAR ENDED
30 JUNE 2017
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
Contents
Chairman’s report
Directors’ report
Auditor’s independence declaration
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 statements
Directors’ declaration
Independent audit report
Shareholder information
Corporate governance statement
Corporate directory
2
4
20
21
22
23
24
25
69
70
73
77
85
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
CHAIRMAN’S REPORT
Dear Fellow Shareholder,
It gives me great pleasure to present the 2017 Annual Report for Swift Network Limited, in which we are delighted
to announce that some 13 months after coming to market, we have achieved a major turnaround in the
performance of the company. This has been brought about by a focus on organic growth, the execution of
keystone acquisitions, vigilance with regards to our costs and the determination to build a world class team.
Now let me give a little bit of detail behind this important headline.
Last year, we shared with you that the group had transitioned to being a diversified telecommunications and
digital entertainment provider. In 2017, Swift continued its evolution with additional focus on it being a
preeminent content solutions provider.
Having already established a market leading presence in the resources sector, Swift, as promised last year moved
into related verticals, such that we would no longer be reliant on just a single vertical.
To this end, your board supported management’s plan to acquire two established businesses which provide
entertainment and connectivity services to the aged care and lifestyle village sectors. The acquisition of Web2TV,
took us into the growing aged care and lifestyle villages sector. Living Networks, a provider of mobil e, fixed line
and internet services targeted at the affluent baby boomer generation was acquired in November 2016 .
These acquisitions, as planned, launched Swift’s strong growth in the aged care sector, where we now have more
than 100 new client sites under negotiation.
At the same time, we signed several major new contracts in resources, with the likes of mining giant Rio Tinto.
Swift also has made gains in the hospitality and government/defence sectors, as well as strengthening our
partnerships with content providers to offer a superior service to our customers. We achieved strong quarterly
year-on-year growth to close out the 2017 financial year, with a revenue of $17,005,143, which represents an 18%
increase on the previous full financial year of trading of the Swift Networks Pty Ltd and Wizzie TV businesses
acquired on 19 May 2016. Meanwhile, annual contracted revenues compared to one year earlier increased by
28%.
Throughout the year, Swift remained focused on minimising content costs and co ntaining overheads at an
appropriate level. With this approach to cost control, the company increased gross margins and achieved a
significant turnaround in performance. This is a commendable result given that the company is early stage and in
growth mode.
We enter the 2018 financial year with a strong cash position, and subsequently further strengthened the
Company’s financial position by raising $4.5 million (before costs) through a share placement.
This capital raising will fund Swift’s transformational acquisition of Video on Demand, a successful Australian
provider of IPTV and on-demand services. Integrating VOD will increase Swift’s market share dramatically, with
site numbers to rise by more than 67% once the acquisition is complete, driving our gro wth in 2018 and beyond.
Having worked with large and small companies, it has been my experience that large companies tend to have a
momentum which alone can help carry them forward for a while. Small companies, on the other hand only make
progress as a result of the effort of every single member of staff, each day, so I am incredibly proud of what our
company has achieved in just 12 months.
Of course, this could not have been achieved without you, our shareholders, who have supported and trusted the
company through this period of growth, transition and value creation.
We must also recognise my fellow directors for their support and counsel through the year.
2
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
CHAIRMAN’S REPORT
Finally, I would like to thank Swift’s management and staff, and of cours e, our Chief Executive, Xavier Kris who
work tirelessly to build a company of which we can be rightfully proud.
Having laid good foundations during 2017, we look forward to seeing Swift reap the benefits of its recent
acquisitions, a continued focus on growth in its new verticals, as well as organic and acquisitive growth in 2018 .
Carl Clump
Chairman
31 August 2017
3
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
DIRECTORS’ REPORT
Your Directors present their report together with the financial statements of the Group, being Swift Networks Group
Limited (the Company) and its controlled entities, for the financial year ended 30 June 201 7.
CHAIRMAN AND DIRECTORS
Name
Position
Mr Carl Clump
Non-Executive Chairman
Mr Xavier Kris
Chief Executive Officer
Mr Paul Doropoulos
Non-Executive Director
Mr Robert Sofoulis
Non-Executive Director
Mr Ryan Sofoulis
Executive Director
PRINCIPAL ACTIVITIES
The principal activities of the consolidated Group during the financial year were the provision of fully integrated
digital entertainment solutions for the Resource, Hotel, Lifestyle village and Aged Care sectors .
REVIEW OF OPERATIONS AND FINANCIAL REVIEW
Review of Operations
Throughout 2017, Swift Networks focused on entrenching its strong position in the resources accommodation
sector while also expanding into new markets in line with its strategic plan.
Swift bolstered its content library to drive significant inbound interest across industry sectors, helping to maintain
recurring revenue at high levels and supporting a healthily growing subscriber base, which by year -end reached
150 contracted site instal lations across Australia.
Resources
Swift expanded its presence in the resources sector by signing contracts with new and existing clients throughout
the year.
Rio Tinto contracted Swift to retrofit the entire village consisting of 420 rooms across 105 accommodation
buildings and six support buildings at Jerriwah Village, and provide ongoing remote management, monitoring and
support of TV systems for a minimum 12-month term at Brockman 2 in the Pilbara region of WA which has more
than 600 rooms housing iron ore, as well as management and support of internet services, installation of
equipment onsite and 36 months of ongoing services to more than 1,000 new rooms at Rio’s Ha il Creek mine in
Queensland. Later in the year, Swift won a key contract to design, construct and deploy elements of its systems
with Rio Tinto at Amrun Village in far north Queensland, covering 528 rooms, offices and common areas.
Swift further built on its strong relationship with Rio Tinto, winning a material contract to design and construct a
remote networking solution to the mining giant’s Hope Downs 1 Village, extending across 1,064 residences,
upgrading and providing communications and entertainment.
4
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
REVIEW OF OPERATIONS AND FINANCIAL REVIEW (continued)
DIRECTORS’ REPORT
Compass Group signed a deal with Swift to provide Wi -Fi and internet services to 800 active rooms as well as a 36-
month support and services agreement at Gateway Village in Port Hedland, WA.
Through agreements with Shell and NOKIA, Swift will deliver a broad suite of design, construction, entertainment,
telecommunications, maintenance and support services to the Prelude LNG project offshore Western Australia,
the world’s largest offshore floating facility, for an initial period of five years.
Swift will supply and manage digital entertainment, connectivity and related support and maintenance for the
Ichthys LNG project offshore Western Australia for at least the next three years.
Swift also signed a contract with Sea Trucks, which owns and operates a fleet of more tha n 180 vessels and barges
through which it provides offshore accommodation, construction facilities and maritime support to the oil and gas
industry to provide content and telecommunications services initially to a 355 -man barge, with significant scope
for international expansion.
The Company was proud to renew its long-standing support of Sandfire Resources with a new three-year contract
to provide entertainment and connectivity to Sandfire’s Doolgunna copper/gold project in central Western
Australia.
Also in the resources sector, Pacific Offshore awarded Swift a contract to provide content to its Arcadia vessel,
which supports 750 crew members and its supporting the final stages of commissioning at Shell’s Prelude FLNG
facility in WA’s Browse Basin. The contract is for up to 12 months, dependent on the commissioning timeframe.
Aged Care and Lifestyle Villages
A key business development for Swift was its acquisition of two established businesses which provide
entertainment and connectivity services to the aged care and lifestyle village sectors. In acquiring Web2TV, which
delivers customisable TV services to aged care facilities and lifestyle villages, and Living Networks, which provides
mobile, fixed line and internet services tailored with benefits for users aged 50+, Swift gained access to
established relationships with 27 aged care and retirement village operators, and opened significant new lines of
revenue growth.
Swift’s integration of these businesses proceeded to plan, with a focus on cross-selling its existing entertainment
and connectivity services to Web2TV and Living Networks’ strong customers base, with the acquisitions opening
multiple new opportunities to boost revenue.
Residential accommodation and aged care provider Elderbloom Community Care, which operates four facilities
with three different styles of living, engaged Swift to deliver managed IT services for an initial term of three years.
Swift won a material contract to provide its entertainment and connectivity solution to McKenzie Aged Care
Group, comprising 16 aged care facilities with 1,700 bed licenses across the Australian east coast. Swift is bringing
its extensive design, construct and delivery experience to bear in the deployment of systems and services to
McKenzie Aged Care Group’s facilities, commencing with McKenzie’s new 128-room Seaton Place Aged Care
facility in Cleveland, Queensland.
Swift will also provide its aged care entertainment system (free-to-air TV, movies on demand, Swift Aged Care
curated content, My Family and My Community) to the 120 guests at Rosewood’s new five-star aged care facility
in Leederville, Perth.
5
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
REVIEW OF OPERATIONS AND FINANCIAL REVIEW (Continued)
DIRECTORS’ REPORT
In another win in the aged care sector, Swift won a three-year contract with BlueCross Community and Residential
Services, which operates 24 sites with more than 2,000 rooms across Victoria. As a first step, Swift is providing its
Aged Care Entertainment system, including free-to-air TV, movies on demand, aged care curated content and it’s
My Family and My Community applications to the 178 residents at BlueCross’ new Ivanhoe residence in
Melbourne’s north-eastern suburbs.
Hospitality
In the hospitality sector, Swift won a five-year contract to deploy its entertainment solution to 179 of the Seashell
Hospitality Group’s waterside serviced apartments in Scarborough, Broome, Mandurah and Yallingup.
The Company’s hospitality sector resale agreement with Freedom Internet continued to bring new business,
including a three-year service agreement to the 300-room Beachcomber Resort in Surfer’s Paradise, Queensland.
Post year-end, Swift announced the acquisition of Video on Demand (VOD) and its parent Movie Source Pty Ltd.
VOD is a market leader in the provision of IPTV and video-on-demand services, with more than 15 years of
industry experience in the hospitality sector and material agreements in the growing student accommodation
sector. Swift funded the acquisition through a $4.5 million (before costs) placement to institutional investors and
entering a $3 million debt facility with Bankwest.
Government & Defence
Swift won a contract with NT Link at Delamere Range, a government facility in the Northern Territory, supplying
TV and Wi-Fi services. The initial contract covered 36 rooms but this subsequently expanded to cover 212 rooms.
Building on this, Swift won a multi -year contract to provide entertainment and communications services to
Lendlease Corporation. The Company’s engagement with Lendlease’s facility manager Northern Rise will see Swift
support staff and contractors conducting major construction activities at a government defence facility southeast
of Katherine in Australia’s Northern Territory.
In addition, Swift signed a preferred supplier agreement with Lockheed Martin Australia to provide support and
maintenance services.
Content
The Company strengthened its content offering, partnering with Optus Networks to supply live English Premier
League football to commercial customers across all sectors.
Swift further strengthened its content library, securing a license to distribute and promote millennial -focused
video on demand from The QYOU.
Subsequent to year-end, acquiring VOD will bring Swift access to a range of attractive new content partners,
including Telstra, Sony, Village Roadshow, Universal, Paramount, MGM, Miramax and Triple Play. These
partnerships have come to Swift along with a significant reduction in content costs as the Company has moved
further up the content supply chain.
6
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
DIRECTORS’ REPORT
REVIEW OF OPERATIONS AND FINANCIAL REVIEW (Continued)
Senior Management appointments
Swift appointed Paul House to its team as Chief Strategy Officer. Paul is a seasoned executive manager with deep
advisory experience on corporate strategy, mergers and acquisitions, market entry and international expansion. A
former senior manager in Arthur Andersen’s business consulting group, Paul has worked as Chief Operating
Officer for an ASX-listed telecommunications company and worked most recently as Managing Director of SGS, a
diversified industrial services firm and the world’s largest in testing, inspection and certification, in its South Asian
region.
Subsequent to year-end, Swift appointed George Nicholls as Chief Financial Officer. George joined Swift in January
2017 after a career spanning almost 20 years as a finance professional. He has held positions in professional
practice across multiple industries for private and public companies in Austra lia and the United Kingdom. George
is a fully qualified member of the Charted Accountants of Australia and New Zealand and the Governance Institute
of Australia.
Financial overview
The consolidated net loss after tax for the Group is $1,364,198 (2016: loss of $5,249,924). The 2017 financial year
represented the first full 12 months of trading for the Group, as on 19 May 2016 the Company acquired Swift
Networks Pty Ltd and Wizzie TV Pt Ltd.
In 2017 the Group achieved an operating revenue of $1 7,005,143, which represents growth of 18% compared to the
previous full financial year for Swift Pty Ltd. This growth reflects the strong momentum continuing to build across the
Group’s key markets with multiple new contract wins secured during the year. This in combination with a resolute focus
on constraining costs and overheads, coupled with a significant increase in revenue generation, has driven a substantial
turnaround in the Group’s financial performance.
7
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
DIRECTORS’ REPORT
The Group had underlying Earnings Before Interest, Tax, Depreciation Amortisation (“EBITDA”) of $1,005,844. A
reconciliation of EBITDA is provided below:
Net loss after tax
Income tax benefit
Interest costs (net)
A$
(1,364,198)
Description
Refer to the Consolidated Statement of Profit
or loss and Other Comprehensive Income
(1,001,757)
Refer to Note 5
(6,609)
Refer to Note 3 and Note 4
Depreciation and amortisation
1,121,925
Fair valuation loss on financial liability
1,929,167
Impairment of available for sale assets
83,350
Share based payments
192,182
Other expenses
51,784
Underlying EBITDA
1,005,844
Refer to the Consolidated Statement of Profit
or loss and Other Comprehensive Income
Non-cash year end adjustment to the fair value
of financial liabilities in respect of various
performance shares (refer to Note 14)
Non-cash year end adjustment to the fair value
of available for sale assets (refer to Note 4)
One-off option issue by SW1 to Company
advisors (refer to Note 18)
in respect to
One-off expenses
acquisitions and negotiations to exit an
onerous contract (refer to Note 4)
incurred
The Company’s cash balance at 30 June 2017 was $2,237,906 with the Company achieving increasing cash flow
positivity throughout the second half of the financial year, a consequence of a strong focus on increasing recurring
revenues to drive higher cash receipts. The Group’s cash reserves have been further strengthened since the end
of the period, through the raising of $4.5million (before costs) through a share placement and entering into a debt
facility with Bankwest for a further $3 million to fund the Company’s transformational acquisition of Video on
Demand.
At reporting the Company carried no outstanding borrowings.
OUTLOOK
The Company will look to build on the significant turnaround in 2017 and strive to continue to execute on its
strategy of expanding into new markets and geographies through organic and inorganic pursuits. The Company
has developed a robust sales pipeline across the maritime, resources, hospitality, aged care and lifestyle village
sectors, and this is expected to grow revenue and EBITDA further in the coming 2018 financial year. The Company
expects to accelerate its rate of new business development in these large, fast-growing sectors in the coming
months.
SIGNIFICANT CHANGE IN STATE OF AFFAIRS
There has been no significant change in the state of affairs of the company during the financial year.
8
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
DIRECTORS’ REPORT
REVIEW OF OPERATIONS AND FINANCIAL REVIEW (Continued)
EVENTS SINCE THE END OF THE FINANCIAL YEAR
On 7 July 2017 Swift Networks Group Limited entered into a binding share purchase agreement for the acquisition
of VOD Pty Ltd and its parent Movie Source Pty Ltd. The acquisition will complete, upon satisfaction of certain
conditions precedent, which is likely to occur at or around the date of signing of this report. The purchase price
payable by the Company to the Sellers for the Acquisition is:
$5,100,000 in cash (subject to adjustment for prepaid liabilities, trade debts, trade credits, employee
entitlements and prepayments); and
3,600,000 fully paid ordinary shares at $0.25 per share in the Company.
In order to fund the Acquisition, the Company has received bindi ng commitments to raise $4.5 million (before
costs) via a placement of 18 million fully paid ordinary shares to sophisticated and institutional investors at $0.25
per share and has entered into debt facility with Bankwest to raise a further $3 million.
The Placement occurred in 2 tranches, with the initial tranche of up to $2.2 million settled on 12 July 2017, and
the balance of up to $2.3 million, settled on 18 August 2017 after receiving approval of shareholders at an
Extraordinary General Meeting held on 11 August 2017.
The Facility has a term of 3 years, during which the Company will make quarterly repayments with a final bullet
repayment to be made at the end of the term. In addition, the Company has negotiated access to a debt facility of
up to $350,000 to fund general working capital requirements. Both facilities will be secured by a first ranking
general security of all present and future assets of the Company and its subsidiaries, and are subject to other
terms which are considered customary for s uch agreements.
There are no other matters or circumstances that have arisen since 30 June 2017 that have or may significantly affect
the operations, results, or state of affairs of the Group in future financial periods.
DIVIDENDS PAID OR RECOMMENDED
No dividends were paid or recommended during the year (2016: nil).
9
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
DIRECTORS’ REPORT
INFORMATION ON THE DIRECTORS
Carl Clump – Non-Executive Chairman
Carl Clump has experience of being the CEO of a public listed company on the London Stock Exchange, an AIM listed
company, a private equity backed company and two start-ups, as well as being Group Managing Director for a VC
backed entity. He holds a number of Non-Executive and advisory roles. Until July 2014, he was the Chairman of the
cards and payment division of a European Private Bank.
He is a special advisor to Jacanda Capital, a boutique advisory company headquartered in Sydney. He has been
working with an Asia-Pacific organization on the launch of a specialist payment product, and working with other
companies in Singapore, Malaysia, and UK. In 2000, Carl founded Retail Decisions, an international card issuing and
fraud prevention company, with many of the world’s leading brands as customers. Its customers include Banks,
Payment Service Providers, Retailers and Airlines. He was the Chief Executive from 2000 until 2011. The Company
was listed on the London Stock Exchange until 2006, when Carl took the c ompany private. He retired as the
company’s Group Chairman in March 2013.
Prior to Retail Decisions, Carl was the Chief Executive of Card Clear plc., an AIM listed company involved in payments,
card issuing, loyalty, currency exchange and fraud prevention. From 1993 to 1998, he served as the Group Managing
Director of the Harpur Group, an issuer of specialist payment cards. Based in France, he was the President- Directeur
General of TEPAR a consortium of European card issuing companies from 1989 to 1993. He spent some 13 years
with Texaco, where he served as European Marketing Coordinator, Manager of the UK’s Marketing and Planning
Division, as well as a series of roles in Retail Management, Logistics and Finance and Economics.
Carl has an MBA from the Cranfield School of Management, a post-graduate diploma in Management Studies and a
University of London Degree in Physics.
Directorships held in other listed companies in the past 3 years: None
Xavier Kris – Executive Director and Chief Executive Officer
Xavier Kris is an accomplished and innovative, international C-level executive with early experience as a Chief
Executive and a proven track record in building global businesses and delivering results. With over 21 years’
experience as a Director of service based information technology businesses in the UK, France, USA, South East Asia
and Australia, Xavier specialises in providing acquisition, integration and business development services for
companies seeking to expand their operations internationally.
Xavier has led multiple international businesses within transactional processing companies, the Harpur Group and
International Card Services followed by Motorcharge Australia. In 2001, he joined the data and information
technology firm, Retail Decisions Ltd, a company listed on the London Stock Exchange as part of the small executive
management team as Head of Global Business Development based in London and subsequently Chief Executive
Officer of the Americas based in Palo Alto, California.
In addition to being a director of PLUS 8, a hospitality labour hire and management consulting group, Xavier is a
founding partner of Boardroom Capital, a boutique corporate advisory firm based in Perth, Western Australia. Xavier
holds an English Law and French Degree and a Master of Business Administration.
Directorships held in other listed companies in the past 3 years: None
10
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
DIRECTORS’ REPORT
INFORMATION ON THE DIRECTORS (continued)
Paul Doropoulos – Non-Executive Director (resigned as Chief Financial Officer on 30 June 2017)
Paul Doropoulos has approximately 21 years’ combined experience in an Executive Consultant capacity to ASX listed
companies in the oil and gas and mining services sectors. Further has an understanding of business fundamentals
through multiple start-ups in the hospitality industry. Instrumental in overseeing the successful ASX listing of junior
gold explorer Metaliko Resources Ltd in 2010 and Kinetiko Energy Limited in 2011. In addition, he also held
simultaneously the position of Chief Financial Officer in both companies. Paul is a founding participant to the
establishment of the philanthropic Jackman Furness Foundation for the Performing Arts in Western Australia.
Established and oversees financial aspects of Cirrena Pty Ltd a software solutions business with offices in Perth and
Manila in the role of Chief Financial Officer. Paul also advises to the Board of Ageus Limited an enterprise developer.
Paul was appointed in 2014 as an Executive Advisor to Boardroom Capital, a boutique corporate advisory firm based
in Perth, Western Australia. Paul holds a Bachelor of Business Degree with Finance.
During the year ended 30 June 2017 Paul Doropoulos gave the Company notice of resignation as Chief Financial
Officer effective 30 June 2017. He will remain a Non-Executive Director of the Company.
Directorships held in other listed companies in the past 3 years: None
Ryan Sofoulis – Executive Director and Head of Finance appointed 19 May 2016
Ryan has spent the last 12 years working within the various companies owned by the Sofoulis family. Ryan worked
in the accounts department with the ASTIB Group until it was sold in 2011, at which time he became the Company
Secretary of Swift Networks.
In 2012, Ryan became the Company Secretary of the newly created EITS Global Group and oversaw the
establishment of an international structure spanning over the US, UK, Ireland and Australia.
Directorships held in other listed companies in the past 3 years: None
Robert Sofoulis – Non-Executive Director
Robert is the founder of Swift Networks and Wizzie TV. Robert has an engineering background in instrumentation
and worked in the mining and oil and gas industries for 20 years before becoming an entrepreneur in 1995.
Initially concentrating in the two-way radio rental business, Robert soon expanded the business to include sales and
engineering services and created ASTIB Group, consisting of various radio and communications subsidiaries. Most of
the ASTIB Group was divested in January 2011 for approximately $50 million to CSE Global, a multinational
organisation of the Singapore Exchange.
Directorships held in other listed companies in the past 3 years: None
Stephen Hewitt-Dutton – Company Secretary
Mr Hewitt-Dutton has over 23 years of experience in corporate finance, accounting and company secretarial
matters. He is an Associate Director of Trident Capital and holds a Bachelor of Business from Curtin University, and
is an affiliate of the Institute of Chartered Accountants a nd a Senior Associate of FinSIA.
Before joining Trident Capital, Mr Hewitt-Dutton was an Associate Director of Carmichael Corporate where he
assisted clients by providing equity market, IPO and M&A advice and assistance. He has also held Financial Controller
and Company Secretary positions for both public and private companies for in excess of 16 years.
11
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
DIRECTORS’ INTERESTS
DIRECTORS’ REPORT
The interests of each Director in the shares and options of the Group as notified by the Directors to the ASX in
accordance with s205G(1) of the Corporations Act 2001 as at the 30 June 2017 were as follows:
Director
Mr C Clump
Mr X Kris
Mr P Doropoulos
Mr Ryan Sofoulis
Mr Robert Sofoulis
DIRECTORS’ MEETINGS
Ordinary shares
1,259,879
3,580,833
2,456,437
39,000
30,120,000
Options
740,000
1,980,000
795,000
-
-
The number of meetings (including meetings of Board committees) of the Company’s Board of Directors held during
the year ended 30 June 2017 and the number of meetings attended by each Director was:
Director
Mr C Clump
Mr X Kris
Mr P Doropoulos
Mr Ryan Sofoulis
Mr Robert Sofoulis
Board
Remuneration Committee
Number eligible to
attend
Number Attended
Number eligible
to attend
Number Attended
12
12
12
12
12
12
12
12
11
11
2
-
-
-
2
2
-
-
-
2
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
Additional comments on expected results of operations of the Group are included in this report under the review
of operations and significant changes in the state of affairs.
12
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
DIRECTORS’ REPORT
REMUNERATION REPORT - AUDITED
Introduction
This Remuneration Report (“The Report”) has been prepared in accordance with section 300A of the Corporations
Act and associated regulations. The Remuneration Report has been audited by the Group’s Auditor.
The Report provides details of the remuneration arrangements for the following Key Management Personnel* of
the Group and the Company for the 2017 financial year:
Executive Chairman, Non-Executive Directors and Key Personnel
Name
Mr C Clump
Mr X Kris
Mr P Doropoulos
Mr Ryan Sofoulis
Mr Robert Sofoulis
Position
Non-Executive Chairman
Executive Director – Chief Executive Officer
Non-Executive Director
Executive Director
Non-Executive Director
* Key Management Personnel are those Directors and executives with authority and responsibility for planning,
controlling and directing the affairs of Swift Networks Group Limited.
Subsequent to year end, on 1 July 2017 the Group appointed Mr. George Nicholls as Chief Financial Officer. It is
acknowledged that Mr. Nicholls will be a key management personnel in future reporting periods .
Remuneration Policy
Compensation levels for key management personnel and secretaries of the Company and key management
personnel of the Group are competitively set to attract and retain appropriately qualified and experienced Directors
and executives.
The compensation structures explained below are designed to attract suitably qualified candidates, reward the
achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders. The
compensation structures take into account:
the capability and experience of the key management personnel
the key management personnel’s ability to control the relevant segment’s performance
Currently there is no direct relationship between key management personnel remuneration and performance.
However, following the engagement of an independent remuneration consultant (BDO Reward), the Board may
seek to adopt compensation packages that will include a mix of fixed and variable compensation, and short- and
long-term performance-based incentives.
Fixed compensation
Fixed compensation consists of base compensation (which is calculated on a total cost basis), as well as employer
contributions to superannuation funds.
Compensation levels are reviewed annually by the Board through a process that considers individual, seg ment and
overall performance of the Group.
Remuneration governance
The Board has Remuneration and Nomination Committee consisting of independent Chairman Carl Clump and non-
executive Director Robert Sofoulis. Due to the size of the Board, the Company ha s not appointed a third member
to the committee.
13
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
REMUNERATION REPORT – AUDITED (CONTINUED)
Key Management Personnel Remuneration
DIRECTORS’ REPORT
The key management personnel of the Company are the Directors. There are no executives, other than Directors,
who have the authority and responsibility for planning, directing and controlling the activities of the Company.
The emoluments for each director and key management personnel of the Company for the year ended 30 June
2017 are as follows:
Short Term
Employee Benefits
Post-Employment
Salary & Fees
(Cash)
Mr X Kris
Mr C Clump
Mr Ryan Sofoulis
Mr P Doropoulos
Mr Robert Sofoulis 3
$
2017
48,000
2016
65,893
2017
351,886
2016
236,063
2017
164,262
2016
185,197
2017
120,308
2016
15,700
2017
150,917
2016
16,661
2017
-
2016
86,895
2017
-
2016
15,000
2017
-
2016
6,900
2017
835,373
2016
628,309
1 Refer to the below table and Note 18 for further details.
Mr J Pearson
(resigned 19/5/16)
Mr W Ng
(resigned 19/5/16)
Mr T Sargant
(resigned 19/5/16)
Total
Share
Based
Payments1
$
-
123,587
-
422,884
-
372,974
-
-
-
-
-
383,111
-
-
-
-
-
1,302,556
Non-
Cash2
$
3,660
6,807
3,660
6,807
3,660
6,807
3,660
6,807
3,660
6,806
-
6,807
-
6,806
-
6,807
18,300
54,454
Superannuation
Total
$
-
-
3,420
570
3,420
855
11,429
-
35,218
-
-
-
-
-
-
-
53,487
1,425
$
51,660
196,287
358,966
666,324
171,342
565,833
135,397
22,507
189,795
23,467
-
476,813
-
21,806
-
13,707
907,160
1,986,744
2 Non-Cash benefits include the provision of Directors and Officers liability insurance.
3 Fees paid to Mr Robert Sofoulis is in relation to a related party service contract.
Details of Share Based Payments
Mr C Clump
Mr X Kris
Mr P Doropoulos
Remuneration
Type
Shares
Options
Grant Date
19/05/2016
19/05/2016
Number
Granted
693,333
260,000
Grant Value $
$103,307
$20,280
Shares
Options
Shares
Options
19/05/2016
19/05/2016
2,408,889
820,000
$358,925
$63,960
19/05/2016
19/05/2016
2,128,889
715,000
$317,204
$55,770
14
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
REMUNERATION REPORT – AUDITED (CONTINUED)
The shares and options granted to Directors were in consideration for services provided to the Company in
connection with the acquisition of Swift Networks Pty Ltd and Wizzie Pty Ltd. All options are escrowed for 24
months, exercisable at 15 cents and are due to expire on 19 May 2021 if not exercised earlier. All shares and options
vested immediately upon grant. The fair value of options granted was determined using the Black -Scholes option
pricing model using the following key inputs:
Key Management Personnel Remuneration (continued)
Weighted average exercise price (cents)
Weighted average life of the options (years)
Weighted average underlying share price (cents)
Expected share price volatility
Risk free-interest rate
Grant date
0.15
5
0.15
60%
2.13%
19 May 2016
The size of the Company has resulted in the Board assuming the roles of key management personnel for the
purposes of executive remuneration reporting.
Current service agreements
The agreements related to remuneration for the year ended 30 June 2017 are set out below:
(i)
The Company has entered into letter agreements for Director Fees as follows:
Carl Clump
Xavier Kris
$48,000 per annum plus statutory superannuation
$36,000 per annum plus statutory superannuation
Paul Doropoulos
$36,000 per annum plus statutory superannuation
Ryan Sofoulis
$36,000 per annum plus statutory superannuation
Robert Sofoulis
$36,000 per annum plus statutory superannuation
The agreements for the above Directors commenced upon completion of the acquisitio n of Swift Networks
Pty Ltd and Wizzie Pty Ltd on 19 May 2016.
(ii)
into an employment agreement with Ryan Sofoulis, whereby the base
The Company has entered
remuneration, exclusive of superannuation entitlements, for services provided by Mr Sofoulis as the
Head of Finance of the Company is $100,000 per annum. The term of the employment agreement
commenced on 19 May 2016 until such time as the agreement is terminated in accordance with the
terms of the agreement. The Company or Mr Sofoulis may terminate the employment agreement at
any time by giving to the other not less than 9 months’ written notice.
(iii)
The Company has entered into a service agreement with Xavier Kris, for the provision of corporate
consultancy services as Chief Executive Officer. The Company has agreed to pay a base remuneration of
$16,465 per month ($197,585 per annum), and any additional payments for hours of services performed
over and above the required minimum capped at a maximum of $10,000 per month.
The term of the agreement is for a minimum period of 6 months commencing on 19 May 2016 with 3 months’
written notice by either party at any time after the first 6 months.
15
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED (CONTINUED)
Current service agreements (continued)
(iv)
The Company has entered into a service agreement with Paul Doropoulos, whereby the Company has agreed
to pay NVNG Investments Pty Ltd, a Company in which Mr Doropoulos is the sole director, for the provision
of consultancy services as Chief Financial Officer. The Company has agreed to pay a base remuneration of
$8,233 per month ($98,792 per annum), and any additional payments for hours of services performed over
and above the required minimum capped at a maximum of $5,000 per month.
The term of the agreement is for a minimum period of 6 months commencing on 19 May 2016 with 3 months’
written notice by either party at any time after the first 6 months. During the year ended 30 June 2017 Paul
Doropoulos gave the Company notice of resignation as Chief Financial Officer effective 30 June 2017. He will
remain a Non-Executive Director of the Company.
(v)
The Company has entered into a service agreement with Sofoulis Holdings Pty Ltd, a Company in which
Robert Sofoulis is a director of and has a controlling interest in, for the provision of consultancy services and
has agreed to pay $12,500 per month ($150,000 per annum). The term of the agreement is fixed for 24
months commencing on 19 May 2016. In the event of the Company terminating the service agreement within
the fixed term, the Company is liable to pay for the remainder of the term of the service agreement.
Shareholdings of key management personnel
The movement during the reporting period in the number of ordinary shares of Swift Networks Group Limited held
directly, indirectly or beneficially, by each specified Director and key management personnel, including their related
entities, is as follows:
Directors
C Clump
X Kris
P Doropoulos
Ryan Sofoulis
Robert Sofoulis
Held at 30 June
2016
No.
Held at
30 June 2017
No.
1,259,879
3,580,833
2,456,437
39,000
1,259,879
3,580,833
2,456,437
39,000
30,120,000
30,120,000
Option holdings of key management personnel
The movement during the reporting period in the number of issued options of Swift Networks Group Limited held
directly, indirectly or beneficially, by each specified Director and key management personnel, including their related
entities, is as follows:
Held at
30 June
2016
No.
Held at
30 June
2017
No.
Options
vested &
exercisable
at year end
740,000
1,980,000
795,000
740,000
1,980,000
795,000
740,000
1,980,000
795,000
-
-
-
-
-
-
Directors
C Clump
X Kris
P Doropoulos
Ryan Sofoulis
Robert Sofoulis
16
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED (CONTINUED)
Loans with key management personnel
Loans
During the year, the directors and their related parties advanced the following funds to the Company:
Funds owed to Sentinel Gardens Pty Ltd, a related party of Ryan a nd
Robert Sofoulis, by Wizzie Pty Ltd, upon the acquisition of Swift
Networks Pty Ltd and Wizzie Pty Ltd1
Funds repaid
Closing balance
2017
$
2016
$
909,308
1,309,308
(909,308)
(400,000)
-
909,308
1 The loan was interest free and repayable at call. In 2017 the loan was repaid in full.
Other transactions with key management personnel
Transactions with key management personnel related parties are on normal commercial terms and conditions no
more favourable than those available to other parties unless otherwise stated.
(i)
Payments made to Wenro Holdings Pty Ltd, a company of which
Robert Sofoulis is a Director and Ryan Sofoulis is associated with,
for provision of office premises, pursuant to operating lease.
Amounts outstanding at reporting date
Aggregate amount payable to Key Management Personnel and
their related entities at reporting date.
2017
$
2016
$
473,360
44,202
Payables
(i)
(ii) Borrowings – refer to Note 13 for further details
188,205
-
557,483
909,308
No other transactions or loans existed during the year and as at reporting date between the Company and with key
management personnel.
Use of remuneration consultants
BDO Reward were engaged by the Remuneration Committee during the financial year to provide independent
advice to the Committee on incentive plan consideration, which the Board will consider adopting ahead of the next
Annual General Meeting. BDO Reward were paid a total of $23,500 for these services by the Company for the 2017
financial year.
Voting and comments made at the Company’s 2016 Annual General Meeting
The approval of the remuneration report was passed as indicated in the results of the Annual General Meeting
dated 8 November 2016. The Company did not receive specific feedback at the AGM or throughout the year on its
remuneration practices.
This is the end of the Audited Remuneration Report.
17
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
DIRECTORS’ REPORT
SHARES UNDER ISSUE
Unissued ordinary shares of Swift Networks Group Limited under option at the date of this report are:
Grant date
30 April 2015
19 May 2016
31 May 2017
31 May 2017
Expiry date
Exercise Price
Number
30 April 2018
19 May 2021
31 May 2021
31 May 2021
$0.25
$0.15
$0.35
$0.42
9,440,000
6,933,333
1,000,000
1,000,000
18,373,333
On 5 August 2016, 205,220 unlisted options granted on 5 August 2015 expired unexercised.
There were no shares issued on the exercise of options during the financial year.
INDEMNIFICATION AND INSURANCE OF DIRECTORS
During the financial year, Swift Networks Group Limited paid a premium of $18,300 to insure the Directors and
Officers of the Company and its wholly owned subsidiaries.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be
brought against the officers in their capacity as officers of any entity in the Group, and any other payments arising
from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise
out of conduct involving a wilful breach of the duty by the officers or the improper use by the officers of their
position or of information to gain an advanta ge for themselves or someone else to cause detriment to the Company.
It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those
relating to other liabilities.
NON-AUDIT SERVICES
BDO Audit (WA) Pty Ltd is the Group’s auditor. During the year, non-audit services of $23,500 were performed for
other services in addition to their statutory duties. The Group may decide to employ the auditor on assignments
additional to their statutory audit duties where the auditor’s expertise and experience with the Company is
important.
The board of directors has considered the position and is satisfied that the provision of the non-audit services is
compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The
directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise
the auditor independence requirements of the Corporations Act 2001 for the fo llowing reasons:
all non-audit services have been reviewed by the Board 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.
Details of the amount paid to the auditors are disclosed in Note 22 to the financial statements.
AUDITORS’ INDEPENDENCE DECLARATION
A copy of the Auditors’ Independence Declaration as required under Section 307C of the Corp orations Act 2001 is
set out on page 20.
18
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
DIRECTORS’ REPORT
ENVIORNMENTAL REGULATIONS
The Directors have considered compliance with the National Greenhouse and Energy Reporting Act 2007 which
requires entities to report greenhouse gas emissions and energy use. For the measurement period 1 July 2016 to
30 June 2017 the directors have assessed that there are no current reporting requirements, but the Group may be
required to do so in the future.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for
all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Dated at Perth this 31st day of August 2017
This report is made in accordance with a resolution of the Directors:
Carl Clump
Chairman
19
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY JARRAD PRUE TO THE DIRECTORS OF SWIFT NETWORKS GROUP
LIMITED
As lead auditor of Swift Networks Group Limited for the year ended 30 June 2017, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Swift Networks Group Limited and the entities it controlled during the
period.
Jarrad Prue
Director
BDO Audit (WA) Pty Ltd
Perth, 31 August 2017
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN
77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK
company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under
Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR
THE YEAR ENDED 30 JUNE 2017
Continuing Operations
Revenue
Cost of Sales
Gross Profit
Note
Consolidated
2017
$
2016
$
3
17,005,143
1,699,076
(11,610,317)
(1,670,527)
5,394,826
28,549
General & administration expenses
4
(4,388,981)
(2,046,670)
Other Income
Depreciation and amortisation expenses
Other expenses
Finance costs
Profit/(loss) before income tax expense
Income tax (expense)/benefit
Profit/(loss) after income tax expense
Other comprehensive income/(loss) for the period
Items that may be reclassified to profit or loss
Other comprehensive income/(loss) for the period
12,521
29,959
(1,121,925)
(170,225)
4
(2,256,483)
(3,186,617)
(5,913)
-
(2,365,955)
(5,345,004)
5
1,001,757
95,080
(1,364,198)
(5,249,924)
-
-
-
-
Total comprehensive (loss)/profit for the period
(1,364,198)
(5,249,924)
Loss per share attributable to the members of Swift Networks
Group Limited:
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
28
28
(1.6)
(1.6)
(22.3)
(22.3)
Cents
Cents
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in
conjunction with the accompanying notes.
21
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventory
Available for sale financial assets
Other current assets
Total Current Assets
Non Current Assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Total Non Current Assets
Total Assets
Current Liabilities
Trade and other payables
Unearned revenue
Provisions
Deferred tax liabilities
Loans and borrowings
Total Current Liabilities
Non Current Liabilities
Financial liabilities
Total Non Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
Note
Consolidated
2017
$
2016
$
6
7
8
9
5
10
11
12
5
13
2,237,906
3,208,352
2,189,478
1,415,446
666,631
-
191,012
470,454
83,350
195,274
5,285,027
5,372,876
1,086,747
1,385,804
1,406,658
453,385
6,702,105
4,685,098
9,195,509
6,524,287
14,480,537
11,897,163
3,448,098
2,983,911
222,399
-
64,890
-
-
569,393
194,673
909,308
3,735,387
4,657,285
14
4,604,167
1,900,000
4,604,167
1,900,000
8,339,554
6,557,285
6,140,983
5,339,878
15
16
17
30,768,966
28,727,663
774,652
650,652
(25,402,635)
(24,038,437)
6,140,983
5,339,878
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying
notes.
22
SWIFT NETWORKS GROUP LIMITED AND CONTROLLED ENTITIES
ABN 54 006 222 395
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2017
Note
Issued
Capital
$
Reserves
Accumulated
losses
$
$
Total
$
For the year ended 30 June 2017
At the beginning of the year
28,727,663
650,652
(24,038,437)
5,339,878
Total comprehensive loss for the year
-
-
(1,364,198)
(1,364,198)
Transactions with shareholders in their
capacity as shareholders:
- Placement of shares
- Options granted
2,175,000
-
-
124,000
- Share issue costs (net of tax)
(133,697)
-
-
-
-
2,175,000
124,000
(133,697)
At the end of the year
30,768,966
774,652
(25,402,635)
6,140,983
For the year ended 30 June 2016
At the beginning of the year
19,677,822
109,852
(18,788,513)
999,161
Total comprehensive loss for the year
-
-
(5,249,924)
(5,249,924)
Transactions with shareholders in their
capacity as shareholders:
- Placement of shares
- Options granted
- Share issue costs
At the end of the year
9,700,000
-
-
540,800
(650,159)
-
-
-
-
-
9,700,000
540,800
(650,159)
28,727,663
650,652
(24,038,437)
5,339,878
The above Consolidated Statement of Changes in Equity should be read in conjunction with the
accompanying notes.
23
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2017
Cash Flows from Operating Activities
Cash receipts in the course of operations
Cash payments in the course of operations
Finance costs
Interest received
Note
Consolidated
2017
$
2016
$
16,179,792
2,453,462
(16,316,481)
(3,216,141)
(5,913)
12,521
-
25,222
Net cash used in operating activities
19
(130,081)
(737,457)
Cash Flows from Investing Activities
(Acquisition)/redemption of convertible notes
Purchase of property, plant and equipment
-
300,000
(272,009)
-
Payment for acquisition of business, net of cash acquired
29
(399,130)
(67,216)
Proceeds on sale of available for sale financial assets
Payment for development and new subscribers
Net cash (used in)/provided for investing activities
-
52,907
(1,064,866)
-
(1,736,005)
285,691
Cash Flows from Financing Activities
Proceeds from issue of shares
Payment of share issue costs
Repayments of borrowings
Net cash flows from financing activities
2,000,000
4,008,000
(195,052)
(432,302)
(909,308)
(400,000)
895,640
3,175,698
Net increase/(decrease) in cash and cash equivalents
Cash at the beginning of the year
Cash at the end of the year
(970,446)
2,723,932
3,208,352
484,420
6
2,237,906
3,208,352
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying
notes.
24
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
1.
Reporting entity
Swift Networks Group Limited (the ‘Company’) is a Company domiciled in Australia and a for-profit entity for the
purpose of preparing financial statements . The consolidated financial statements and notes represent those of
the Swift Networks Group Limited and controlled entities (the “consolidated Group” or “Group”).
The separate financial statements of the parent entity, Swift Networks Group Limited, have not been presented
within this financial report as permitted by the Corporations Act 2001.
2.
Statement of Significant accounting policies
Basis of Preparation
The financial statements are general purpose financial statements that have been prepared in accordance with
Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of
the Australian Accounting Standards Board (AASB) and the Corporations Act 2001.
Australian Accounting Standards s et out accounting policies that the AASB has concluded would result in
financial statements containing relevant and reliable information about transactions, events and conditions.
Compliance with Australian Accounting Standards ensures that the financial s tatements and notes also comply
with International Financial Reporting Standards as issued by the IASB. Material accounting policies adopted in
the preparation of these financial statements are presented below and have been consistently applied unless
otherwise stated.
The financial statements have been prepared on an accruals basis and are based on historical costs, modified,
where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial
liabilities.
The accounts have been prepared on the going concern basis, which contemplates continuity of normal business
activities and the realisation of assets and settlement of liabilities in the ordinary course of business.
The consolidated financial statements were approved by the Board of Directors on the 31st of August 2017.
(a) Principles of Consolidation
The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by Swift
Networks Group Limited at the end of the reporting period. A controlled entity is any entity over which Swift
Networks Group Limited has the ability and right to govern the financial and operating policies so as to obtain
benefits from the entity’s activities. Control will generally exist when the parent owns, directly or indirectly
through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the
existence and effect of holdings of actual and potential voting rights are also considered.
Where controlled entities have entered or left the Group during the year, the financial performance of those
entities are included only for the period of the year that they were controlled. A list of controlled entities is
contained in Note 27 to the financial statements.
25
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2.
Statement of Significant accounting policies (continued)
(a) Principles of Consolidation (continued)
In preparing the consolidated financial statements, all inter -Group balances and transactions between entities
in the consolidated Group have been eliminated in full on consolidation. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with those adopted by the parent entity.
Non-controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent, are
reported separately within the Equity section of the Consolidated Statement of Financial Position and Statement
of Profit or Loss and Other Comprehensive Income. The non-controlling interests in the net assets comprise their
interests at the date of the original business combination and their share of changes in equity since that date.
Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, di rectly
or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
In assessing control, potential voting rights that presently are exercisable or convertible are taken into account.
The financial statements of subsidiaries are included in the consolidated financial statements from the date that
control commences until the date that control ceases.
Investments in subsidiaries are carried at amortised cost in the Company’s financial statements.
Transactions eliminated on consolidation
Intra-Group balances, and any unrealised gains and losses or income and expenses arising from intra -Group
transactions are eliminated in preparing the consolidated financial statements.
(b) Income Tax
The income tax expense / (benefit) for the year comprises current income tax expense (income) and deferred
tax expense / (benefit).
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using
applicable income tax rates enacted, or substantially enacted, as at the end of the reporting period. Current tax
liabilities / (assets) are therefore measured at the amounts expected to be paid to / (recovered from) the relevant
taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during
the year as well unused tax losses.
Current and deferred income tax expense / (benefit) is charged or credited directly to equity instead of the profit
or loss when the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result
where amounts have been fully expensed but future tax deductions are available. No deferred income tax will
be recognised from the initial recognition of an asset or liability, excluding a business combination, where there
is no effect on accounting or taxable profit or loss.
26
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2.
Statement of Significant accounting policies (continued)
(b) Income Tax (continued)
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when
the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at the end of
the reporting period. Their measurement also reflects the manner in which management expects to recover or
settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent
that it is probable that future taxable profit will be available against which the benefits of the deferred ta x asset
can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint
ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary
difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended
that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur.
Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax
assets and liabilities relate to income taxes levied by the sa me taxation authority on either the same taxable
entity or different taxable entities where it is intended that net settlement or simultaneous realisation and
settlement of the respective asset and liability will occur in future periods in which significan t amounts of
deferred tax assets or liabilities are expected to be recovered or settled.
(c) Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but
not the legal ownership that is transferred to entities in the consolidated Group, are classified as finance leases.
Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair
value of the leased property or the present value of the minimum lease payments, including any guaranteed
residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest
expense for the period.
Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease
term.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are
charged as expenses in the periods in which they are incurred.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over
the life of the lease term.
27
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2.
Statement of Significant accounting policies (continued)
(d) Financial Instruments
Recognition and Initial measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual
provisions to the instrument. For financial assets, this is equivalent to the date that the Company commits itself
to either the purchase or sale of the asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is
classified ‘at fair value through profit or loss’, in which case transaction costs are expensed to profit or loss
immediately.
Classification and subsequent measurement
Finance instruments are subsequently measured at either of fair value, amortised cost using the effective
interest rate method, or cost. Fair value represents the amount for which an asset could be exchanged or a
liability settled, between knowledgeable, willing parties. Where available, quoted prices in an active market are
used to determine fair value. In other circumstances, valuation techniques are adopted.
Amortised cost is calculated as:
(a) the amount at which the financial asset or financial liability is measured at initial recognition;
(b) less principal repayments;
(c) plus or minus the cumulative amortisation of the difference, if any, between the amount initially
recognised and the maturity amount calculated using the effective interest method; and
(d) less any reduction for impairment.
The effective interest method is used to allocate interest income or interest expense over the relevant period
and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees,
transaction costs and other premiums or discounts) through the expec ted life (or when this cannot be reliably
predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or
financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying
value with a consequential recognition of an income or expense in profit or loss.
The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject
to the requirements of accounting standards specifically applicable to financial instruments.
i. Financial assets at fair value through profit or loss
Financial assets are classified at ‘fair value through profit or loss’ when they are either held for trading for the
purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as
such to avoid an accounting mismatch or to enable performance evaluation where a Group of financial assets is
managed by key management personnel on a fair value basis in accordance with a documented risk management
or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being
included in profit or loss .
28
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2.
Statement of Significant accounting policies (continued)
(d) Financial Instruments (continued)
Classification and subsequent measurement (continued)
ii. Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market and are subsequently measured at amortised cost.
Loans and receivables are included in current assets, except for those which are not expected to mature within
12 months after the end of the reporting period. (All other loans and receivables are classified as non -current
assets.)
iii. Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either not suitable to be classified
into other categories of financial assets due to their nature, or they are designated as such by management.
They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or
determinable payments.
Available-for-sale financial assets are included in non-current assets, except for those which are expected to
mature within 12 months after the end of the reporting period. (All other financial assets are classified as current
assets.)
Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied
to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to
similar instruments and option pricing models.
Impairment
At the end of each reporting period, the Group assesses whether there is objective evidence that a financial
instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the
value of the instrument is considered to determine whether impairment has arisen. Impairment losses are
recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income. Also, any
cumulative decline in fair value previously recognised in other comprehensive income is classified to profit or
loss at this point.
De-recognition
Financial assets are de-recognised where the contractual rights to receipt of cash flows expires or the asset is
transferred to another party whereby the entity no longer has any significant continuing involvement in the risks
and benefits associated with the asset. Financial liabilities are de-recognised where the related obligations are
discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished
or transferred to another party and the fair value of consideration paid, including the transfer of non -cash assets
or liabilities assumed, is recognised in profit or loss.
29
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2.
Statement of Significant accounting policies (continued)
(e) Impairment of Assets
At each the end of each reporting period, the Group assesses whether there is any indication that an asset may
be impaired. The assessment will include the consideration of external and internal sources of information
including dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-
acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the
recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, to
the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to
the Consolidated Statement of Profit or Loss and Other Comprehensive I ncome unless the asset is carried at a
relevant amount in accordance with another standard (e.g. in accordance with the revaluation model in AASB
116). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that oth er
standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
(f) Functional and presentation currency
These consolidated financial statements are presented in Australian dollars, which is the Company’s functional
currency and the functional currency of the majority of the Group.
(g) Employee Benefits
Wages, salaries and annual leave
Liabilities for wages and salaries and annual leave are recognised, and are measured as the amount unpaid at
the reporting date at current pay rates in respect of employees’ services up to that date.
Superannuation
Contributions to employee superannuation plans are charged as an expense as the contributions are paid or
become payable.
(h) Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for
which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of
the reporting period.
(i) Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on
demand and form an integral part of the Group’s cash management are included as a component of cash and
cash equivalents for the purpose of the statement of cash flows. Cash held on reserve to meet collateral
requirements, lease bonds and for regulatory purposes are not included in cash and cash equivalents, but
classified as cash deposits not available for use by the Group.
30
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2.
Statement of Significant accounting policies (continued)
(j) Trade and Other Receivables
Trade receivables, which generally have 30-60 day terms, are recognised and carried at original invoice amount
less an allowance for any uncollectible amounts.
An allowance for doubtful debts is made when there is objective evidence that the Company will not be able to
collect the debts. Bad debts are written off when identified.
(k) Revenue Recognition
Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax
(GST) payable to the taxation authority. Exchanges of goods or services of the same nature and value without
any cash consideration are not recognised as revenues. Revenue is recognised on an accruals basis in accordance
with the timing in which services are rendered.
The gross proceeds of non-current asset sales are recognised as revenue at the date control of the asset passes
to the buyer, usually when an unconditional contract of sale is signed.
The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time
of disposal and the net proceeds on disposal (including incidental costs).
Interest revenue is recognised using the effective interest rate method.
Management fees are recognised once all conditions have been satisfied to recognise the services provided.
Where uncertainty exists as to the recoverability of the management fees that have been earned an impairment
of the amount due will be taken to Consolidated Statement of Profit or Loss and Other Comprehensive Income.
(l) Inventories
Inventories are measured at the lower of coast and net realisable value. The cost of manufactured products
includes direct materials, direct labour and an a ppropriate portion of variable and fixed overheads. Overheads
are applied on the basis of normal operating capacity. Costs are assigned on the basis of weighted average costs.
(m) Property, Plant & Equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any
accumulated depreciation. The carrying amount of plant and equipment is reviewed annually by directors to
ensure it is not in excess of the recoverable amount from these assets.
Depreciation
The depreciable amount of all fixed assets is depreciated on a diminishing value basis over their useful lives to
the Group commencing from the time the asset is held ready for use. The depreciation rates used for each class
of depreciable assets are:
Motor Vehicles
Software
Office Equipment, Fit Out & Furniture
Test Equipment & Tools
Rental Equipment – DES
25%
25% - 66.66%
10% - 100%
10% - 66.66%
20% - 100%
31
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2. Statement of Significant accounting policies (continued)
(n) Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether
equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary
comprises the
fair values of the assets transferred
liabilities incurred to the former owners of the acquired business
equity interests issued by the group
fair value of any asset or liability resulting from a contingent consideration arrangement, and
fair value of any pre-existing equity interest in the subsidiary
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with
limited exceptions, measured initially at their fair values at the acquisition date. The group recognis es any non-
controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the
non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the
consideration transferred,
amount of any non-controlling interest in the acquired entity, and
acquisition-date fair value of any previous equity interest in the acquired entity
over the fair value of the net identifia ble assets acquired is recorded as goodwill. If those amounts are less than
the fair value of the net identifiable assets of the subsidiary acquired, the difference is recognised directly in
profit or loss as a bargain purchase.
(o) Intangibles
Goodwill
Goodwill represents the excess of the purchase consideration over the fair value of the identifiable net assets
at the time of acquisition of a combination. When the excess is negative (bargain purchase), it is recognize
immediately in profit or loss.
Goodwill is not amortised. Instead, Goodwill is tested for impairment at each reporting date or more
frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less
accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of
Goodwill relating to the entity sold.
Goodwill is allocated to each of the cash-generating units for the purpose of impairment testing. Impairment is
determined by assessing the recoverable amount of the cash- generating unit to which the goodwill relates
(refer note 10). Impairment losses on goodwill cannot be reversed.
Identifiable intangible assets
Intangible assets acquired separately or in a business combination are initially measured at the lower of cost or
fair value cost at the time of acquisition when it is probable that the future economic benefits arising as a
result of the costs incurred will flow to the Group. The Group assesses identifiable intangible assets as having
either finite or indefinite useful lives.
32
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2.
Statement of Significant accounting policies (continued)
(o) Intangibles (continued)
Intangible assets with finite lives are amortised over the useful life and assessed for impairment at least twice a
year or whenever there is an indication that the intangible asset may be impaired. The amortisation period and
amortisation method are reviewed at least each financial year end. Changes in the expected useful life or flow
of economic benefits intrinsic in the asset are an accounting estimate. The amortisation charge on intangible
assets with finite lives is recognised in the statement of profit or loss and other comprehensive income.
Customer contracts
Customer contracts acquired as part of a business combination are recognised separately from goodwill. The
customer contracts are carried at their fair value at the date of acquisition less accumulated amortisation and
any impairment losses. Where customer contracts useful lives are assessed as finite, the customer contracts
are amortised over their estimated useful lives of 1 to 2 years
Subscriber acquisition costs
Subscriber acquisition costs in relation to customer contracts are recognised as an asset when it is probable
that the future economic benefits arising as a result of the costs incurred will flow to the Group. Other
subscriber acquisition costs that do not meet these criteria are recognised as an expense as incurred.
Amortisation is calculated using the straight-line method to allocate the cost of intangible over its estimated
useful life (contract life) commencing when the intangible is available for use. The carrying value of an
intangible asset arising from subscriber acquisition costs is tested for impairment when an indication of
impairment arises during the period.
Note: historically all expenses relating to activities undertaken to acquire new subscribers have been expensed
as incurred, however no adjustment has been made to prior year comparatives as at the time of the
acquisition organisational structure in place prior to the date of acquisition whereby fixed resources were
allocated to the business as a whole, therefore the costs incurred to win new subscribers could not be easily
separately identified nor measured reliably and accordingly no adjustment has b een made in the prior year
comparatives to recognise an Intangible for deferred subscriber acquisition costs
Research and development costs
Research costs are expensed as incurred. Costs incurred on development projects are recognised as intangible
assets when it is probable that the project will, after considering its commercial and technical feasibility, be
completed and generate future economic benefits and its costs can be reliably measured. Expenditure
capitalised comprises all directly attributable costs including costs of materials, services and direct labour.
Other development expenditure that do not meet these criteria are recognised as an expense as incurred.
Amortisation is calculated using the straight-line method to allocate the cost of intangible over its estimated
useful life (1-5 years) commencing when the intangible is available for use. The carrying value of an intangible
asset arising from development expenditure is tested for impairment when an indication of impairment arises
during the period.
Note: historically all expenses pertaining to product development has been expensed as incurred. When SW1
was acquired in June 2016 it was estimated that the previous owners had spent approx. $3.6m in product
development costs, the majority in relati on to developing the Digital Entertainment System (DES) which, due to
its high cost and low suitability in sectors outside of the resources industry, has now been superseded by the
On Demand (OD) system, and therefore hold nominal carrying value. Accordingly, there is no impact on prior
year comparatives.
33
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2. Statement of Significant accounting policies (continued)
(p) Trade and Other Payables
Trade and other payables represent the liability outstanding at the end of the reporting period for goods and
services received by the Group during the reporting period which remains unpaid. The balance is recognised as
a current liability with the amount being normally paid within 30 days of recognition of the liability.
(q) Borrowing Costs
Borrowing costs are recognised in the profit or loss in the period in which they are incurred.
(r) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Tax Office. In thes e circumstances, the GST is recognised as part of the cost
of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of
financial position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of
investing and financing activities, which are disclosed as operating cash flows.
(s) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in the profit and loss over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities, which are not incremental costs relating to the actual draw-
down of the facility, are recognised as prepayments and amortised on a straight-line basis over the term of the
facility.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting date.
(t) Fair value of assets and liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis,
depending on the requirements of the applicable Accounting Standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an
orderly (i.e. unforced) transaction between independent, knowledgeable and willing market participants at the
measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used
to determine fair value. Adjustments to market values may be made having regard to the characteristics of the
specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are
determined using one or more valuation techniques. These valuation techniques maximise, to the extent
possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or
liability (i.e. the market with the greatest volume and level of acti vity for the asset or liability) or, in the
absence of such a market, the most advantageous market available to the entity at the end of the reporting
period (i.e. the market that maximises the receipts from the sale of the asset or minimises the payments made
to transfer the liability, after taking into account transacti on costs and transport costs).
34
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2.
Statement of Significant accounting policies (continued)
(t) Fair value of assets and liabilities (continued)
For non-financial assets, the fair value measurement also takes into account a market participant's ability to
use the asset in its highest and best use or to sell it to another market participant that would use the asset in
its highest and best use.
The fair value of liabilities and the entity's own equity instruments (excluding those related to share- based
payment arrangements) may be valued, where there is no observable market price in relation to the transfer
of such financial instruments, by reference to observable market information where s uch instruments are held
as assets. Where this information is not available. other valuation techniques are adopted and, where
significant, are detailed in the respective note to the financial statements.
(u) Contributed Equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
(v) Earnings Per Share
Basic earnings per share is calculated as a net profit attributable to members, adjusted to exclude any costs of
servicing equity (other than dividends) and preference share dividends, divided by the weighted average number
of ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit attributable to members, adjusted for:
costs of servicing equity (other than dividends) and preference share dividends;
the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have
been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the
dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and
dilutive potential ordinary shares, adjusted for any bonus element.
(w) Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
When the Group applies an accounting policy retrospectively, makes a retrospective restatement or reclassifies
items in its financial statements, a statement of financial position as at the beginning of the earliest comparative
period will be disclosed.
(x) Critical Accounting Estimates and Judgments
The Directors evaluate estimates and judgments incorporated into the financial statements based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events
and are based on current trends and economic data, obtained both externally and within the Group.
35
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2.
Statement of Significant accounting policies (continued)
Key Estimates
Share based payment transactions
Employees and Directors
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined by an internal valuation
using a Black-Scholes option pricing model taking into account the terms and conditions upon whi ch the
instruments were granted.
External Consultants
The Group measures the cost of equity-settled transactions with external consultants through the issuance of
Options which could not be valued due to the fact that they represented consideration for pas t and future
services provided by the broker to the Company. The fair value is determined by an internal valuation using the
up and in share price barrier model taking into account the terms and conditions upon which the instruments
were granted.
Significant Judgement
Deferred tax assets
Deferred tax assets and liabilities have been brought to account in 2017 after considering the level of tax losses
carried forward and available to the Company against future taxable profits and the probability within the future
that taxable profits will be available against which the benefits of the deductible temporary difference can be
claimed. The Company believes that it is probable that sufficient future taxable profits will be available against
which unused tax losses can be utilised.
Goodwill – impairment testing
Goodwill is tested for impairment annually. The Board has determined the most appropriate method for
determining the recoverable amount of the goodwill attributable to the acquisition of Swift Networks, Living
Networks and Web 2 TV by assessing the carrying value through a value in use model. Refer Note 10 for details
of the assumptions used in these calculations.
Sensitivity to possible changes in key assumptions
Management have made judgements and estimates in respect of impairment testing of goodwill which
management deem to be best estimates. Should the judgements and estimates not occur, the resulting
goodwill may vary in carrying amount. The key assumptions ar e as follows (refer note 10 for further detail):
-
-
-
-
Growth rate
Discount rate
Terminal value long term growth rate
Capital spend
No impairment has been recognised in respect of goodwill at the end of the reporting period.
Contingent consideration
The Directors have assessed the likelihood of reaching various performance share milestones at reporting date
(refer to Note 14) based on internal budgeting and information regarding contracts related to rooms and
revenues.
36
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2.
Statement of Significant accounting policies (continued)
(y) Segment Information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the Chief Executive Officer.
(z) Government Grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the
grant will be received and the Group satisfies all attached conditions.
When the grant relates to an expense item, it is recognised as income over the periods necessary to match the
grant on a systematic basis to the costs that it is intended to compensate.
When the grant relates to an asset, the fair value is credited against the asset and is released to the Statement
of Profit or Loss and Other Comprehensive Income over the expected useful life of the relevant asset by equal
annual instalments.
Where a grant is received in relation to the tax benefit of research and development costs, the grant shall be
credited to income tax expense in the Statement of Profit or Loss and Other Comprehensive Income in the year
of receipt.
(aa) New, revised or amending Accounting Standards and Interpretations adopted
The 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.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not
been early adopted.
Any significant impact on the accounting policies of the Company from the adoption of these Accounting
Standards and Interpretations are disclosed below. The adoption of these Accounting Standards and
Interpretations did not have any significant impact on the financial performance or position of the Company.
The following Accounting Standards and Interpretations are most releva nt to the Company.
AASB 9 Financial Instruments – Recognition and Measurement (Effective 1 January 2018)
37
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2.
Statement of Significant accounting policies (continued)
(aa) New, revised or amending Accounting Standards and Interpretations adopted (continued)
AASB 9 introduces new requirements for the classification and measurement of financial assets and liabilities.
Financial assets that are debt instruments will be classified based on (i) the objective of the entity’s
business model for managing the financial assets; and (ii) the characteristics of the contractual cash
flows.
Allows an irrevocable election on initial recognition to present gains and losses on investments in equity
instruments that are not held for trading in other comprehensive i ncome (instead of in profit or loss).
Dividends in respect of these investments that are a return on investment can be recognised in profit
or loss and there is no impairment or recycling on disposal of the instrument.
Financial assets can be designated and measured at fair value through profit or loss at initial recognition
if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would
arise from measuring assets or liabilities, or recognising the gains and losses on them, on different
bases.
Where the fair value option is used for financial liabilities the change in fair value is to be accounted for
as follows:
- The change attributable to changes in credit risk are presented in other comprehensive income
(OCI);
- The remaining change is presented in profit or loss.
Otherwise, the following requirements have generally been carried forward unchanged from AASB 139 into
AASB 9:
- Classification and measurement of financial liabilities; and
- De-recognition requirements for financial assets and liabilities.
AASB 9 requirements regarding hedge accounting represent a substantial overhaul of hedge accounting that will
enable entities to better reflect their risk management activities in the financial statements.
Consequential amendments arising from AASB 9 are contained in AASB 2010 -7 Amendments to Australian
Accounting Standards arising from AASB 9 (December 2010), AASB 2010 -10 Further Amendments to Australian
Accounting Standards – Removal of Fixed Dates for First-time Adopters, AASB 2012-6 Amendments to Australian
Accounting Standards – Mandatory Effective Date of AASB 9 and Transition Disclosures, AASB 2013 -9
Amendments
to Australian Accounting Standards – Conceptual Framework, Materiality and Financial
Instruments and AASB 2014-1 Amendments to Australian Accounting Standards.
The introduction of AASB 9 is not expected to have a significant impact on the operations of the Group when
implemented.
38
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2.
Statement of Significant accounting policies (continued)
(aa) New, revised or amending Accounting Standards and Interpretations adopted (continued)
AASB 15 Revenue from Contracts with Customers (Effective 1 January 2018)
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard
provides a single standard for revenue recognition. The core principle of the standard is that an entity will
recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard
will require: contracts (either written, verbal or implied) to be identified, together with the separate
performance obligations within the contract; determine the transaction price, adjusted for the time value of
money excluding credit risk; allocation of the transaction price to the separate performance obligations on a
basis of relative stand-alone selling price of each distinct good or service, or estimation approach if no distinct
observable prices exist; and recognition of revenue when each performance obligation is satisfied. Credit risk
will be presented separately as an expense rather than adjusted to revenue. For goods, the performance
obligation would be satisfied when the customer obtains control of the goods. For services, the performance
obligation is satisfied when the service has been provided, typically for promises to transfer services to
customers. For performance obligations satisfied over time, an entity would select an appropriate measure of
progress to determine how much revenue should be recognised as the performance obligation is satisfied.
Contracts with customers will be presented in an entity's statement of financial position as a contract liability, a
contract asset, or a receivable, depending on the relationship between the entity's performance and the
customer's payment. Sufficient quantitative and qualitative disclosure is required to enable users to understand
the contracts with customers; the significant judgments made in applying the guidance to those contracts; and
any assets recognised from the costs to obtain or fulfil a contract with a customer. The impact of this adoption
is currently in the process of being assessed by the Group, however the impact has yet to be quantified. The
Group will adopt this standard from 1 July 2018.
AASB 16 Leases (Effective 1 January 2019)
This standard is appl icable to annual reporting periods beginning on or after 1 January 2019. The standard
replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases.
Subject to exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position, measured
as the present value of the unavoidable future lease payments to be made over the lease term. The exceptions
relate to short-term leases of 12 months or less and leases of low-value assets (such as personal computers and
small office furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised
or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised leas e
will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred
and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense
recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and an
interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease,
the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under
AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be
improved as the operating expense is replaced by interest expense and depreciation in profit or los s under AASB
16. For classification within the statement of cash flows, the lease payments will be separated into both a
principal (financing activities) and interest (either operating or financing activities) component. For lessor
accounting, the standard does not substantially change how a lessor accounts for leases. The i mpact of this
a doption is currently i n the process of being assessed by the Group, however the i mpact has yet to be quantified. The Group
wi l l a dopt thi s s ta nda rd from 1 Jul y 2019.
39
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 3. Revenue
(a) Revenue from continuing operations
Sales revenue
(b) Other income
Interest
Other income
Note 4. Expenses
(a) General & administration expenses
Employment costs
Occupancy costs
Professional fees
Provision for doubtful debts
General and administration expenses
(b) Other expenses
Impairment of available for sale assets
Loss on assets written off
Loss on sale of available for sale assets
Share based payments
Fair valuation loss on financial liability
Business restructure expenses
Other expenses
Consolidated
2017
$
2016
$
17,005,143
1,699,076
17,005,143
1,699,076
12,521
-
12,521
25,222
4,737
29,959
Consolidated
2017
$
2016
$
(2,364,945)
(931,213)
(583,293)
(44,202)
(424,695)
(678,942)
-
(66,083)
(1,016,048)
(326,230)
(4,388,981)
(2,046,670)
(83,350)
(53,663)
-
-
(232,487)
(132,267)
(192,182)
(1,522,200)
(1,929,167)
(1,025,000)
-
(221,000)
(51,784)
-
(2,256,483)
(3,186,617)
40
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 5. Taxation
(a) Income tax benefit
Major components of income tax expense are:
Current tax
Deferred tax
Under/Over
Impact of provisional accounting
Consolidated
2017
$
2016
$
-
(879,860)
(250,415)
128,518
-
(95,080)
-
-
Income tax benefit reported in the income statement
(1,001,757)
(95,080)
(b) Numerical reconciliation
The prima facie tax on loss from ordinary activities before income tax
is reconciled to the income tax as follows:
Prima facie tax payable on loss from ordinary activities before income
tax at 30% (2016: 30%)
- Non deductible share based payments
- Fair value loss on financial liability
- Goodwill amortisation
- Other
Changes to income tax expense due to:
- Under/over
- Impact of provisional accounting
- Effect of enacted tax rate reduction to 27.5% (on carried forward tax
losses only)
- Capital raising costs allowable
- Movement in unrecognised timing differences
- Impairment of available-for-sale-assets
- Unused tax losses not recognised as a deferred tax asset
- Unused tax losses recognised as a deferred tax asset
Income tax benefit attributable to entity
(2,365,955)
(5,345,004)
(709,786)
(1,603,501)
57,655
578,750
35,476
801
456,660
-
-
-
(37,105)
(1,146,841)
(250,415)
128,518
27,330
-
-
-
-
(37,025)
195,167
25,005
(7,437)
16,099
-
1,080,124
(1,090,256)
-
(1,001,757)
(95,080)
41
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 5. Taxation (continued)
(c) Deferred tax asset balances
Contractual obligations
Consolidated
2017
$
2016
$
-
195,167
Provisions, accruals and section 40-880 deductions
167,215
258,218
Carried forward tax losses
Other
Changes to income statement:
Share issue costs
(d) Deferred tax liabilities balances
Intangibles
1,090,256
2,927
146,260
-
-
-
1,406,658
453,385
64,890
64,890
194,673
194,673
(e) Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or
loss or other comprehensive income but directly debited or credited to equity.
Current tax
Net deferred tax
Note 6. Cash and cash equivalent
Cash at bank on hand
57,299
57,299
-
Consolidated
2017
$
2016
$
2,237,906
3,208,352
2,237,906
3,208,352
Cash at bank on hand includes an amount of $405,028 being restricted cash not readily convertible to
cash (2016 - $190,028). Refer to Note 21 Financial Risk Management for risk exposure analysis for Cash
and cash equivalents.
42
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 7. Trade and other receivables
Current
Trade receivables
Other receivables
Consolidated
2017
$
2016
$
1,975,087
1,252,128
214,391
163,318
2,189,478
1,415,446
Trade and other receivables are non-interest bearing and are generally on 30-day terms. An allowance
for doubtful debts is made when there is objective evidence that a trade receivable is impaired. None of
the above receivables are past due or impaired. Refer to Note 21 Financial Risk Management for risk
exposure analysis for Trade and other receivables.
Note 8. Inventory
Inventory
- Finished goods
- Work in progress
Consolidated
2017
$
2016
$
220,901
445,730
666,631
156,254
314,200
470,454
43
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 9. Property, Plant & Equipment
Motor
Software Office fit out
Test
Rental
Vehicles
& Equipment
Equipment
Equipment
Total
$
$
$
$
$
$
Year ended 30 June 2017
Opening net book amount
60,828
36,849
545,910
50,071
692,146
1,385,804
Additions
Acquired upon acquisition of
subsidiaries
Disposals
Depreciation expense & impairment
charges
-
-
-
1,600
29,954
-
-
-
-
-
-
-
240,455
272,009
-
-
-
-
(15,207)
(27,005)
(80,063)
(18,414)
(430,377)
(571,066)
Closing net book amount
45,621
11,444
495,801
31,657
502,224
1,086,747
At 30 June 2017
Cost
Accumulated depreciation and
impairment
91,143
142,955
1,047,497
170,566
3,219,281
4,671,442
(45,522)
(131,511)
(551,696)
(138,909)
(2,717,057)
(3,584,695)
Net book amount
45,621
11,444
495,801
31,657
502,224
1,086,747
Year ended 30 June 2016
Opening net book amount
Additions
Acquired upon acquisition of
subsidiaries
-
-
-
-
-
-
-
-
-
-
1,910
1,910
64,220
43,268
562,727
55,141
1,061,250
1,786,606
Disposals
-
-
-
-
(232,487)
(232,487)
Depreciation expense & impairment
charges
(3,392)
(6,419)
(16,817)
(5,070)
(138,527)
(170,225)
Closing net book amount
60,828
36,849
545,910
50,071
692,146
1,385,804
At 30 June 2016
Cost
Accumulated depreciation and
impairment
91,143
141,356
1,017,376
170,566
3,282,680
4,703,121
(30,315)
(104,507)
(471,466)
(120,495)
(2,590,534)
(3,317,317)
Net book amount
60,828
36,849
545,910
50,071
692,146
1,385,804
44
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 10. Intangible assets
Goodwill
Development
Subscriber
Customer
Other
Total
costs
$
$
Acquisition
Costs
Contracts
Intangibles
$
$
$
$
Year ended 30 June 2017
Opening net book amount
4,036,187
-
-
648,911
-
4,685,098
Additions
Acquired upon acquisition of
subsidiaries
Amortisation and impairment
charge
-
590,598
299,358
1,503,000
-
-
-
-
174,910
1,064,866
-
1,503,000
-
(42,127)
(71,251)
(432,607)
(4,874)
(550,859)
Closing net book amount
5,539,187
548,471
228,107
216,304
170,036
6,702,105
Cost
5,539,187
590,598
299,358
648,911
174,910
7,252,964
Accumulated amortisation and
impairments
-
(42,127)
(71,251)
(432,607)
(4,874)
(550,859)
Closing net book amount
5,539,187
548,471
228,107
216,304
170,036
6,702,105
Year ended 30 June 2016
Opening net book amount
Additions
Acquired upon acquisition of
subsidiaries
Amortisation and impairment
charge
-
-
4,036,187
-
Closing net book amount
4,036,187
Cost
Accumulated amortisation and
impairments
4,036,187
-
Closing net book amount
4,036,187
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
648,911
-
648,911
648,911
-
648,911
-
-
-
-
-
-
-
-
-
-
4,685,098
-
4,685,098
4,685,098
-
4,685,098
In June 2016, the Group acquired Swift Networks Pty Ltd and Wizzie Pty Ltd as a going concern and Goodwill of $ 4,036,187 and
identifiable Customer Contracts of $648,911 were recognised on acquisition. In November 2016, the Group acquired the Web 2
TV and Living Networks businesses as going concerns and Goodwill of $953,000 and $550,000 respectively was recognised.
Goodwill is recognised initially as the excess over the aggregate of the consideration transferred, the fair value of any non -
controlling interests, and the acquisition date fair value of the acquirer’s previously held equity interests, less tha n fair value of
the identifiable assets acquired and liabilities consumed.
Development costs consists of amounts spent developing product enhancements to the Group's "On Demand" digital
entertainment system and "My Family / My Community" application that will derive a future income stream. Development
costs are amortised over five years.
Subscriber acquisition costs consists of amounts spent obtaining and retaining new contracts. Subscriber acquisition costs ar e
amortised over the life of the individual contract.
45
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 10. Intangible assets (continued)
Other intangible assets include costs incurred in order to establish content agreements with suppliers, which the company will
offer to customers as part of its entertainment content offering. These costs are amortised over the average term of the
supplier content agreements.
Assessment of carrying value
The aggregate carrying amount of intangibles allocated to the Group’s separably identifiable cash-generating units (CGU) is:
Swift Networks
Web 2 TV
Living Networks
Total
2017
$
5,199,105
953,000
550,000
6,702,105
2016
$
4,685,098
-
-
4,685,098
For the purpose of impairment testing, intangibles are allocated to three (2016: one) cash -generating units (CGU). The CGU and
aggregate carrying amounts are structured to fall in line with the Group operations and cash flows. The Living Networks and
Web 2 TV operations became part of the Group from 16 November 2016, please refer to note 29 Business Combinations for
further details.
During the year ending 30 June 2017, there is no impairment of any CGU (2016: nil). The recoverable amount of each CGU is
determined based on value-in-use calculations. Value-in-use calculations use cash flow projections based on financial budgets
covering a projected five-year period and then estimating a terminal value. The cash flow for 2018 is based on the 2018 budget
adopted by the Board. The cash flows are discounted using a pre-tax discount rate of 13.04%.
Significant estimate: key assumptions used for value-in-use calculations
The following table sets out the key assumptions for CGU value-in-use calculations:
2017
Pre-tax discount rate
Growth rate
Terminal value long term growth rate
Capital spend (1)
Swift
Networks
13.04%
5%
0%
1%
Web 2 TV
13.04%
3.1%
0%
1%
Living
Networks
13.04%
3.1%
0%
1%
(1) Reflects capital spend as a percentage of revenue calculated as the 5 year average of forecast spend.
Management has determined the values assigned to each of the above key estimates as follows:
Assumption
Growth rate
Capital spend
Approach used to determine values
Growth rates have been determined with reference to external sources including
industry specific forecasts, adjusted for management’s best estimate of growth
achievable in the current economic and competitive environment.
Expected costs to maintain assets in current condition.
Sensitivity to change in assumptions
The Directors and management have considered and assessed reasonably possible changes to key assumptions that result in a
change to the recoverable amount for each CGU. With regard to the assessment, management recognises that the actual time
value of money may vary from the estimated and the discount rate used.
46
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 10. Intangible assets (continued)
Estimated reasonably possible changes in the key assumptions would have the following approximate impact on impairment of
each CGU as at 30 June 2017:
Pre-tax discount rate
Growth rate
Terminal growth rate
Capital outlay
Reasonable
possible change
+10%/-10%
+10%/-10%
+10%/-10%
+10%/-10%
Swift Networks
Web 2 TV
Living Networks
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Each of the sensitivities above assumes that the specific assumption moves in isolation, whilst all other assumptions are hel d
constant.
Note 11. Trade and Other Payables
Current
Trade payables
Contractual liabilities
Other payables and accruals
Note 12. Provisions
Current
Onerous contracts
Other
Note 13. Borrowings
Unsecured – current
Loans payable
Consolidated
2017
$
2016
$
2,533,303
1,732,276
-
914,795
650,556
601,079
3,448,098
2,983,911
Consolidated
2017
$
2016
$
348,393
221,000
569,393
-
-
-
Consolidated
2017
$
2016
$
-
-
909,308
909,308
The loans payable for the year ended 30 June 2016 represent funds advanced by Sentinel Gardens Pty Ltd, a related
party of Robert and Ryan Sofoulis, prior to the acquisition of Swift Networks Pty Ltd and Wizzie Pty Ltd. The was
interest free and repayable at call. During the year ended 30 June 2017 the loan was repaid in full.
47
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 14. Financial Liability – at Fair Value
Non current
Opening balance
Amount due under contract of sale - at acquisition
Add: Fair value through the P&L
Closing balance
Consolidated
2017
$
2016
$
1,900,000
-
775,000
875,000
1,929,167
1,025,000
4,604,167
1,900,000
The above liability relates to the potential issue of ordinary shares in Swift Network Group Limited to the vendors of
Swift Networks Pty Ltd and Wizzie Pty Ltd, Living Networks and Web 2 TV pursuant to the respective acquisition
agreement.
(a) Acquisition of Swift Networks Pty Ltd and Wizzie Pty Ltd
Under the agreement, a total of 33,333,334 shares could be issued upon the satisfaction of the following milestones:
Milestone 1 – 16,666,667 Performance Shares
The earlier to occur of:
i.
ii.
the Company reaching 44,000 rooms with a revenue generating service from Swift Networks; and
the Company reaching consolidated revenue of $24,000,000 in any rolling 12-month period commencing after
completion.
Milestone 2 – 16,666,667 Performance Shares
The earlier to occur of:
i.
ii.
the Company reaching 53,000 rooms with a revenue generating service from Swift Networks; and
the Company reaching consolidated revenue of $29,000,000 in any rolling 12-month period commencing after
completion.
Note: only new business won as a direct result of providing a Swift product or service can be counted towards these
performance milestones.
(b) Acquisition of Living Networks
Under the agreement with vendors of Living Networks up to $500,000 in cash and shares in the Group in equal
proportions in the first three years after completion upon satisfaction of the following milestones:
i.
ii.
a payment of $300,000 upon $800,000 gross revenue; and
a payment of $200,000 upon $1,100,000 gross revenue
(c) Acquisition of Web 2 TV
Under the agreement with vendors of Web 2 TV up to $1,500,000 in cash and shares in the Group in equal
proportions in the first five years after completion upon satisfaction of the following milestones:
i.
ii.
payment of $500,000 upon $2,000,000 gross revenue;
Eight (8) payments of $125,000 each upon every additional $500,000 of gross revenue up to a total of
$6,000,000
48
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 14. Financial Liability – at Fair Value (continued)
Significant Judgement
(a)
Based on internal budgeting and information regarding contracts signed relating to rooms and revenue the
Directors have assessed the likelihood of reaching these milestones to be as follows:
Entity
Swift Networks Pty Ltd /
Wizzie Pty Ltd
Living Networks
Web 2 TV
At initial
recognition
Milestone 1 – 20%
Milestone 2 – 15%
At 30 June 2016
At 30 June 2017
Milestone 1 – 30%
Milestone 2 – 25%
Milestone 1 – 50%
Milestone 2 – 30%
Fair value at 30
June 2017
$3,666,667
Milestone 1 – 50%
Milestone 2 – 50%
Milestone 1 – N/a
Milestone 2 – N/a
Milestone 1 – 50%
Milestone 2 – 50%
$250,000
$687,500
Milestone 1 – 50%
Milestone 2 – 45%
Milestone 3 – 40%
Milestone 4 – 35%
Milestone 5 – 30%
Milestone 6 – 25%
Milestone 7 – 20%
Milestone 8 – 15%
Milestone 9 – 10%
Milestone 1 – N/a
Milestone 2 – N/a
Milestone 3 – N/a
Milestone 4 – N/a
Milestone 5 – N/a
Milestone 6 – N/a
Milestone 7 – N/a
Milestone 8 – N/a
Milestone 9 – N/a
Milestone 1 – 75%
Milestone 2 – 60%
Milestone 3 – 50%
Milestone 4 – 40%
Milestone 5 – 30%
Milestone 6 – 25%
Milestone 7 – 20%
Milestone 8 – 15%
Milestone 9 – 10%
(b)
The financial liability is a level 3 financial instrument. The Following summarises quantitative information about
the significant unobservable inputs:
Entity
Description
Swift Networks
Pty Ltd / Wizzie
Pty Ltd
Living Networks
Contingent
consideration
Contingent
consideration
Web 2 TV
Contingent
consideration
Unobservable
inputs
Probability of
achieving
Milestones
disclosed above
Probability of
achieving
Milestones
disclosed above
Probability of
achieving
Milestones
disclosed above
Relationship of inputs to fair
value
If the probability of achieving
each milestone was 10% higher
(or lower) the fair value would
increase (decrease) by $916,667
If the probability of achieving
each milestone was 10% higher
(or lower) the fair value would
increase (decrease) by $50,000
If the probability of achieving
each milestone was 10% higher
(or lower) the fair value would
increase (decrease) by $150,000
Range of inputs
Milestone 1 – 50%
Milestone 2 – 30%
Milestone 1 – 50%
Milestone 2 – 50%
Milestone 1 – 75%
Milestone 2 – 60%
Milestone 3 – 50%
Milestone 4 – 40%
Milestone 5 – 30%
Milestone 6 – 25%
Milestone 7 – 20%
Milestone 8 – 15%
Milestone 9 – 10%
49
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 15. Issued capital
Consolidated
2017
$
2016
$
Issued capital
30,768,966
28,727,663
Movement in Ordinary Share Capital:
30 June 2017
No.
30 June 2016
No.
30 June 2017
$
30 June 2016
$
At the beginning of the period
80,825,054
16,158,387
28,727,663
19,677,822
Placements:
- 19 May 2016
- 8 November 2016
Swift Networks acquisition (19 May 2016)
Advisor/broker offer (19 May 2016)
Living Networks acquisition (16 November 2016)
Advisor offer (24 May 2017)
Share issue costs (net of tax)
-
26,666,667
-
4,000,000
8,695,653
-
2,000,000
-
-
-
30,000,000
8,000,000
-
-
4,500,000
1,200,000
407,997
284,199
-
-
-
-
100,000
75,000
-
-
(133,697)
(650,159)
90,212,903
80,825,054
30,768,966
28,727,663
(c)
Swift Networks acquisition
Under the terms of the Swift Networks acquisition, the Group issued 30,000,000 shares at $0.15 upon the acquisition
of Swift Networks Pty Ltd and Wizzie Pty Ltd.
(b)
Living Networks acquisition
Under the terms of the Living Networks acquisition, the Group issued $100,000 worth of shares upon the acquisition of
the Living Networks business.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, shall have one vote and
upon a poll each share shall have one vote.
50
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 15. Issued capital (continued)
Options
At 30 June 2017, there were 18,373,333 options (30 June 2016 - 16,578,553) available for exercise.
Exercise price
Expiry date
Opening balance
Issued during the year
Expired during the year
Exercised during the year
Closing balance
20 cents
25 cents
15 cents
35 cents
42 cents
Total
5-Aug-16
30-Apr-18
19-May-21
31-May-21
31-May-21
205,220
9,440,000
6,933,333
-
-
16,578,553
-
(205,220)
-
-
-
-
-
-
-
-
1,000,000
1,000,000
-
-
-
-
2,000,000
(205,220)
-
9,440,000
6,933,333
1,000,000
1,000,000
18,373,333
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can
provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell to reduce debt.
The Group will look to raise capital when an opportunity to make investments is seen as value adding rel ative to the
current parent entity’s share price at the time of the investment.
The Group is not subject to externally imposed capital requirements.
The capital risk management policy remains unchanged from the 2016 Annual Financial Statement.
51
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 16. Reserves
Options reserves
Opening balance
Options issued
Closing balance
Consolidated
2017
$
2016
$
650,652
124,000
774,652
109,852
540,800
650,652
Options reserve
The reserve is used to recognise the fair value of options granted.
During the year, 2,000,000 options exercisable at $0.35 and $0.42 respectively were issued to brokers and advisers in
connection to future and past services provided to Swift Networks Group Limited. Refer to Note 18 (ii) for details
regarding the issue.
Note 17. Accumulated losses
Accumulated losses at the beginning of the financial year
(24,038,437)
(18,788,513)
Profit / (loss) after income tax expense for the year
Accumulated losses at the end of the financial year
(1,364,198)
(5,249,924)
(25,402,635)
(24,038,437)
Consolidated
2017
$
2016
$
Note 18. Share based payments
(i) Share Issue
During the financial year ended 30 June 2017, $75,000 was recognised as a share based payment made in consideration
of services provided to the Company by an executive consultant.
(ii) Options Issued
During the financial year ended 30 June 2017 two tranches of 1,000,000 options each valued at $69,000 a nd $55,000
respectively were issued to brokers in connection with future and past services provided to Swift Networks Group
Limited (refer to Note 16). The value of the services could not be reliably determined and therefore, were measured at
their fair value using the up and in share price barrier model.
52
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 18. Share based payments (continued)
The fair value of these options granted was calculated as 6.9 cents and 5.5 cents respectively each by using the “up and
in share price barrier model” option valuation methodology and applying the following inputs:
Underlying share price
Exercise price
VWAP barrier
Valuation date
Expiry date
Exercise period
Volatility
Risk free rate
No. of options
Tranche A
$0.2667
$0.35
$0.35
Tranche B
$0.2667
$0.42
$0.42
31 March 2017
31 March 2017
31 May 2021
31 May 2021
4.17
40%
2.21%
4.17
40%
2.21%
1,000,000
1,000,000
(iii) Expenses arising from share based payment transactions
Total expenses arising from share-based payment transactions recognised during the period were as follows:
Consolidated
2017
$
2016
$
68,182
1,192,000
124,000
330,200
192,182
1,522,200
Issue of shares
Issue of options
Closing balance
(iv) Additional disclosures
Summary of options granted as a share based payment:
2017
2016
Average
exercise
price per
option
No. of
options
Value of
options
Average
exercise
price per
option
No. of
options
Value of
options
$0.15
4,233,333
$330,200
-
-
-
$0.39
2,000,000
$124,000
$0.15
4,233,333
$330,200
$0.23
6,233,333
$454,200
$0.15
4,233,333
$330,200
As at 1 July
Granted during the
year
As at 30 June 2017
53
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 18. Share based payments (continued)
Share options outstanding at the end of the year have the following expiry date and exercise prices:
Grant Date
19 May 2016
31 March 2017
31 March 2017
Total
Expiry Date
Exercise Price
30 June 2017
30 June 2016
Share options
Share options
19 May 2021
31 May 2021
31 May 2021
$0.15
$0.35
$0.42
6,933,333
1,000,000
1,000,000
8,933,333
6,933,333
-
-
6,933,333
Weighted average remaining contractual life of options
4.17 years
Outstanding at end of year
Nil
As at 30 June 2017, none of the above options have vested and are exercisable.
Note 19. Cash flow information
Consolidated
2017
$
2016
$
(a) Reconciliation of net profit/(loss) after tax to net cash flows from operations:
(Loss) after tax
(a) Non cash flows in profit:
Depreciation expenses and assets written off
Net fair value movement off available for sale financial assets
Loss on sale of available for sale financial assets
Share based payments
Fair value loss on financial liability
Income tax benefit
(1,364,198)
(5,249,924)
1,121,925
402,712
83,350
53,663
-
132,267
192,182
1,522,200
1,929,167
1,025,000
(1,001,757)
-
960,669
(2,114,082)
(b) Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries
Change in trade and other receivables
Change in inventories
Change in other current assets
Change in trade and other payables
Change in unearned revenue
Change in provisions
Cash flow used in operations
(774,032)
(215,057)
4,846
327,497
151,708
650,569
820,729
-
196,988
-
(585,712)
(291,661)
(130,081)
(737,457)
54
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 19. Cash flow information (continued)
(b) Non-cash financing and investing activities
Issue of 30,000,000 shares at $0.15 upon acquisition of Swift Networks
Pty Ltd and Wizzie Pty Ltd
Liability raised for the possible future issue of ordinary shares pursuant
to the acquisition of Swift Networks Pty Ltd and Wizzie Pty Ltd
Share based payment via issue of shares to related parties for services
in connection with the acquisition of Swift Networks Pty Ltd and Wizzie
Pty Ltd
Share based payment via issue of options to advisors and brokers in
connection with the acquisition of Swift Networks Pty Ltd and Wizzie
Pty Ltd
Issue of 407,997 shares at $0.23 upon acquisition of Living Networks
Liability raised for the possible future issue of ordinary shares pursuant
to the acquisition of Living Networks and Web 2 TV (refer to Note 14)
Consolidated
2017
$
2016
$
-
-
-
-
4,500,000
875,000
1,192,000
210,600
100,000
775,000
-
-
875,000
6,777,600
Note 20. Segment information
Activities in the operating segments are identified by management based on the manner in which resources are
allocated, the nature of the resources provided and the identity of service line manager and area of income and
expenditure. Discrete financial information about each of these areas is reported to the executive management team
on a monthly basis. Management has determined that the Group has one operating segment being the provision of
digital entertainment services in Australia. Prior to 19 May 2016 no reportable segments were identified. This
segment meets aggregating criteria and are aggregated into one reporting sector. This internal reporting framework is
the most relevant to assist the Board with making decisions regarding the company and its o ngoing activities.
55
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 20. Segment information (continued)
Revenue from external sources
Reportable segment loss
Reportable segment assets
Reportable segment liabilities
Reconciliation of reportable segment loss
Reportable segment loss
Other revenue
Unallocated
- Share based payments
- Fair value loss on financial liability
- Other
Loss before tax
Reconciliation of reportable segment assets
Consolidated
2017
$
2016
$
17,005,143
1,703,973
(173,777)
(1,185,951)
14,480,537
8,299,500
(8,339,555)
(5,184,286)
(173,777)
(1,185,951)
12,521
25,062
(192,182)
(1,522,200)
(1,929,167)
(1,025,000)
(83,350)
(1,636,915)
(2,365,955)
(5,345,004)
Reportable segment assets
14,480,537
8,299,500
Unallocated
- Cash
- Receivables
- Other assets
Total assets
Reconciliation of reportable segment liabilities
Reportable segment liabilities
Unallocated
- Trade and other payables
Total liabilities
-
-
-
2,729,634
146,537
178,426
14,480,537
11,354,097
(8,339,555)
(5,184,286)
-
(829,933)
(8,339,555)
(6,014,219)
56
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 21. Financial risk management
Introduction and overview
The Group activities expose it to various types of risk that are associated with the financial instruments and markets in
which it invests. The most important types of financial risk to which the Group is exposed are market risk, credit risk
and liquidity risk.
Risk management framework
(a) Market risk
Market risk is analysed as market price risk, interest rate risk and currency risk.
(i) Market price risk
Market price risk is the risk that changes in market prices (other than changes due to currency or interest rate
risk) will affect the Group’s income or value of its holdings of financial instruments. The objective of market risk
management is to manage and control market risk exposures.
The investments are carried at fair value with cha nges in fair value recognised in the Consolidated Statement of
Profit or Loss and Other Comprehensive Income; all changes in market conditions will directly affect net
investment.
As at balance date the exposure to market price risk related to financial instruments was considered to be
immaterial.
(ii)
Interest rate risk
Interest rate risk consists of cash flow interest rate risk (the risk that future cash flows of a financial instrument
will vary due to changes in market interest rates) and fair value interest rate risk (the risk that the value of a
financial instrument will vary due to changes in market interest rates).
Management of interest rate risk
Interest rate risk is the risk of financial loss and / or increased costs due to adverse movements in the values of
the financial assets and liabilities as a result of changes in interest rates.
Exposure to interest rate risk
As at the reporting date the interest rate risk was considered to be immaterial.
(iii) Currency risk
Currency risk is the risk that the value of assets and liabilities denominated in a foreign currency will fluctuate
due to adverse movements in exchange rates.
As at 30 June 2017, the Group has exposure to currency risk relating to an operating lease and contractual
commitments denominated in $US. A 10% movement in exchange rate would not have a material impact for the
Group.
(d)
Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations.
Management of credit risk
Management has a credit policy in place and the exposure to credit risk i s monitored on an ongoing basis.
57
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 21. Financial risk management (continued)
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exp osure. The Group’s
maximum exposure to credit risk at the reporting date was:
Carrying amount
Cash and cash equivalents
Trade and other receivables
Consolidated
2017
$
2016
$
2,237,906
3,208,352
2,189,478
1,415,446
4,427,384
4,623,798
Trade and other receivables that are neither past due nor impaired are considered to be of high credit quality.
Credit risk related to balances with banks and other financial institutions is managed in accordance with
approved board policy. Such policy requires that surplus funds are only invested with counterparties with a
Standard & Poor’s rating of at least A-.
(e)
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
Management of liquidity risk
The Group’s policy is to ensure that, as far as possible, it will always have sufficient liquidity to meet its financial
liabilities when due, under both normal and stressed conditions.
Exposure to liquidity risk
As at reporting date the Group had suffici ent cash reserves to meet its requirements. The Group has no access
to credit standby facilities or arrangements for further funding or borrowings in place.
The financial liabilities the Group had at reporting date were trade payables incurred in the normal course of the
business. These were non-interest bearing and were due within the normal 30-60 days terms of creditor
payments.
The following table sets out the carrying amounts, by maturity, of the financial instruments including exposure
to interest rate risk:
58
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 21. Financial risk management (continued)
Carrying
amount
Weighted
average
interest
rate
Maturity
6 months
or less
6-12
months
1-2 years
More than
2 years
$
%
$
$
$
$
Consolidated - 2017
Financial assets
Cash and cash equivalents
2,237,906
1.25%
1,832,878
Trade receivables
Other receivables
1,975,087
214,391
Closing net book amount
4,427,384
Financial liabilities
Trade payables
2,533,303
Other payable and accruals
914,795
Loan
-
Financial liability
4,604,167
Closing net book amount
8,052,265
Consolidated - 2016
Financial assets
-
-
-
-
-
-
-
1,975,087
214,391
4,022,356
2,533,303
914,795
-
-
3,448,098
Cash and cash equivalents
3,208,352
1.4%
3,208,352
Trade receivables
Other receivables
Financial liabilities
1,252,128
358,592
4,819,072
Trade payables
1,732,276
Other payable and accruals
1,251,635
Loan
Financial liability
909,308
1,900,000
5,793,219
-
-
-
-
-
-
-
1,252,128
358,592
4,819,072
1,732,276
1,251,635
909,308
-
- 1,900,000
3,893,219
- 1,900,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
190,028
215,000
-
-
-
-
190,028
215,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,604,167
4,604,167
-
-
-
-
-
-
-
-
-
59
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 21. Financial risk management (continued)
The Group maintains cash flow forecasts for the next 12 months on a rolling basis. This takes into consideration
all projected debt payments.
Fair value of financial assets and liabilities
The fair value of cash and cash equivalents and non-interest bearing monetary financial assets and financial
liabilities of the Group approximates their carrying amounts.
The fair value of other monetary financial assets and financial liabilities is based upon market prices where a
market exists or by discounting the expected future cash flows by the current interest rates for assets and
liabilities with similar risk profiles. Non-interest bearing related party receivables and loans are repayable on
demand, thus face value equates to fair value.
Equity investments traded on organised markets have been valued by reference to market prices prevailing at
balance date. For non-traded equity investments, the fair value is an assessment by the Directors based on the
underlying net assets, future maintainable earnings and any special circumstances pertaining to a particular
investment.
The carrying amounts of financial assets and liabilities equates to their fair values at balance date.
Note 22. Auditors’ Remuneration
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:
Auditors of the Company
BDO Audit (WA) Pty Ltd
Audit and review of financial statements
Non-audit services provided (BDO Reward)
Consolidated
2017
$
2016
$
90,558
23,500
64,964
26,550
Total remuneration for audit and non-audit services
114,058
91,514
BDO Reward were engaged by the Remuneration Committee during the financial year to provide independent
advice to the Committee on incentive plan consideration. BDO Reward were paid a total of $23,500 for these
services by the Company for the 2017 financial year.
60
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 23. Parent entity
Parent entity
2017
$
2016
$
(a) Statement of Profit or Loss and other comprehensive income
The individual financial statements for the parent entity show the following
aggregate amounts:
Net profit/(loss) attributable to equity holders of the Company
(3,322,085)
(4,063,973)
(b) Statement of financial position
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Other reserves
Accumulated losses
Total equity
-
2,959,517
9,915,915
6,296,245
9,915,915
9,255,762
-
(829,933)
(4,604,167)
(1,900,000)
(4,604,167)
(2,729,933)
5,311,748
6,525,829
30,636,667
28,727,663
849,652
650,652
(26,174,571)
(22,852,486)
5,311,748
6,525,829
The Parent has not entered into any Guarantees on behalf of the Group as at 30 June 2017.
The Parent has Contingent Assets or Contingent Liabilities as at 30 June 2017.
The Parent has no contractual obligations on behalf of the Group as at 30 June 2017.
61
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 24. Commitments
Operating lease commitments
Office premises
The Group leases office premises under an operating lease expiring in
two years. Minimum commitments under the lease are as follows:
Not later than 1 year
Later than 1 year and not later than 2 years
Later than 2 years and not later than 5 years
Satellite content services
The Group leases satellite content services under a lease expiring in
July 2017. Minimum commitments are as follows:
Not later than 1 year
Later than 1 year and not later than 2 years
Later than 2 years and not later than 5 years
There are no other operating lease commitments.
Consolidated
2017
$
2016
$
420,691
393,713
-
-
393,713
-
420,691
787,426
-
-
-
1,186,000
138,000
-
-
1,324,000
Note 25. Key management personnel compensation disclosures
Refer to the Remuneration Report contained in the Directors' Report for details of the remuneration paid or payable to
each member of the Company's Key Management Personnel (KMP) for the year ended 30 June 2017.
Short term employee benefits
Share based payments
Post-employment benefits
Consolidated
2017
$
2016
$
853,673
682,763
-
1,302,556
53,487
1,425
907,160
1,986,744
62
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 26. Related party transactions
Key management personnel
Disclosures relating to key management personnel are set out in the remuneration report of the Directors' report.
Transactions with related parties
Transactions with key management personnel related parties are on normal commercial terms and conditions no
more favourable than those available to other parties unless otherwise stated.
Consolidated
2017
$
2016
$
Payments made to Wenro Holdings Pty Ltd, a company of which
Robert Sofoulis is a Director and Ryan Sofoulis is associated with, for
the provision of office premises, pursuant to operating lease
472,360
44,202
Amounts outstanding at reporting date
(i) Payables
(ii) Borrowings
188,205
557,483
-
909,308
No other transactions or loans existed during the year and as at reporting date between the Company
and its key management personnel.
Loans from related parties
Opening balance
Funds owed to Sentinel Gardens Pty Ltd, a related party of Robert and
Ryan Sofoulis, by Wizzie Pty Ltd, upon acquisition of Swift Networks Pty
Ltd and Wizzie Pty Ltd
Funds repaid to directors and related parties
Closing balance
909,308
-
-
1,309,308
(909,308)
(400,000)
-
909,308
No other transactions or loans existed during the year and as at reporting date between the Company and with key
management personnel.
63
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 27. Group entity
Ultimate parent entity
The ultimate parent entity in the wholly owned Group is Swift Networks Group Limited.
Name of entity
Parent entity
Swift Networks Group Limited
Controlled entities
Swift Networks Pty Ltd
Wizzie Pty Ltd
Stanfield Funds Management Limited
Country of
residence /
establishment
Ownership interest
30 June 2017
%
30 June 2016
%
Australia
100%
100%
Australia
Australia
Hong Kong
100%
100%
100%
100%
100%
100%
Of the controlled entities, only Swift Networks Pty Ltd and Wizzie Pty Ltd were operating during the
financial year.
Note 28. EPS
Consolidated
2017
$
2016
$
Net profit / (loss) from continuing operations for the year
(1,364,198)
(5,249,924)
Weighted average number of ordinary shares for the purpose of basic
earnings per share
86,690,176
23,579,152
Basic earnings / (loss) per share (cents)
Diluted earnings / (loss) per share (cents)
(1.6)
(1.6)
(22.3)
(22.3)
No.
No.
64
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 29. Business Combination
(a) Summary of acquisition - Swift Networks Pty Ltd and Wizzie Pty Ltd
On 19 May 2016 Swift Networks Group Limited acquired 100% of the issued share capital of Swift Networks Pty Ltd
and Wizzie Pty Ltd. The Group has recognised the fair values of the ass ets and liabilities as follows:
Purchase consideration:
Cash paid
Ordinary shares issued
Shares to be issued upon successfully meeting performance hurdles, pursuant to the
acquisition agreement (refer to Note 14)
Total Purchase Consideration
The assets and liabilities recognised as a result of the acquisition are as follows:
Cash
Inventory
Trade and other receivables
Other assets
Deferred tax assets
Plant & equipment
Intangibles - Customer Contracts (iii)
Trade & other payables
Unfavourable operating lease
Provision for onerous contract (iii)
Other liabilities
Loans
Deferred tax liabilities
Net identifiable assets
Add: Goodwill
Net assets acquired
$
500,000
4,500,000
875,000
5,875,000
432,784
178,793
2,083,888
315,717
299,685
1,786,606
648,911
(463,934)
(650,556)
(348,393)
(940,707)
(1,309,308)
(194,673)
1,838,813
4,036,187
5,875,000
(i) The goodwill is attributable to the forecast profitability of the acquired business. It will not be deductible for tax
purposes.
(ii) The directors believe the receivables are fully recoverable and no provision for impairment is required.
(iii) At 30 June 2016, provisional accounting was applied to the fair value at the identifiable assets and liabilities
acquired. At 30 June 2017, as a result of the finalisation of the subsidiary’s position, an adjustment has been made to
recognise an intangible asset for customer contracts and a provision for an onerous contract (net of tax) with a
comparative net decrease in Goodwill of $210,363.
Significant accounting estimates and judgements
The fair value of acquired assets was determined using the following key assumptions:
Customer contracts: assumed level of future revenue and assumed EBITDA margin
65
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 29. Business Combination (continued)
(b) Summary of acquisition - Web 2 TV
On 16 November 2016 the Group acquired the Web 2 TV business. The Group has provisionally
recognised the fair values of the assets and liabilities based on the best available information available
at reporting date. Details of the purchase consideration and the net assets acquired are as follows:
Purchase consideration:
Cash paid
Shares to be issued upon successfully meeting performance hurdles, pursuant to the
acquisition agreement (refer to Note 14)
Total Purchase Consideration
The assets and liabilities recognised as a result of the acquisition are as follows:
Inventory
Other current assets
Trade and other payables
Unearned revenue
Provisions
Net identifiable assets
Add: Goodwill
Net assets acquired
$
240,519
525,000
765,519
18,880
(7,833)
(140,155)
(42,054)
(16,319)
(187,481)
953,000
765,519
(i) The goodwill is attributable to the forecast profitability of the acquired business. It will not be
deductible for tax purposes.
(ii) The directors believe the receivables are fully recoverable and no provision for impairment is
required.
(iii) Revenue and net profit before tax of Livings Networks included in the consolidated statement of
profit or loss and other comprehensive income from the acquisition date of 16 November 2016 to 30
June 2017 were $319,863 and $55,185.
66
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 29. Business Combination (continued)
(c) Summary of acquisition - Living Networks
On 16 November 2016 the Group acquired the Living Networks business. The Group has provisionally
recognised the fair values of the assets and liabilities based on the best available information available
at reporting date. Details of the purchase consideration and the net assets acquired are as follows:
Purchase consideration:
Cash paid
Ordinary shares issued
Shares to be issued upon successfully meeting performance hurdles, pursuant to the
acquisition agreement (refer to Note 14)
Total Purchase Consideration
The assets and liabilities recognised as a result of the acquisition are as follows:
Other current assets
Trade and other payables
Unearned revenue
Net identifiable assets
Add: Goodwill
Net assets acquired
$
158,611
100,000
250,000
508,611
7,249
(20,000)
(28,638)
(41,389)
550,000
508,611
(i) The goodwill is attributable to the forecast profitability of the acquired business. It will not be
deductible for tax purposes.
(ii) The directors believe the receivables are fully recoverable and no provision for impairment is
required.
(iii) Revenue and net profit before tax of Livings Networks included in the consolidated statement of
profit or loss and other comprehensive income from the acquisition date of 16 November 2016 to 30
June 2017 were $615,327 and $132,132.
(d) Purchase Consideration - Cash outflow
Swift Networks Pty Ltd/ Wizzie TV
Living Networks
Web2TV
Total
Consolidated
2017
$
-
158,611
240,519
2016
$
67,216
-
-
399,130
67,216
67
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 30. Contingencies
There are no contingent assets or contingent liabilities as at 30 June 2017.
Note 31. Events subsequent to reporting date
On 7 July 2017 Swift Networks Group Limited entered into a binding share purchase agreement for the acquisition of
VOD Pty Ltd and its parent Movie Source Pty Ltd. The acquisition will complete, upon satisfaction of certain conditions
precedent, which is likely to occur at or around the date of signing of this report. The purchase price payable by the
Company to the Sellers for the Acquisition is:
$5,100,000 in cash (subject to adjustment for prepaid liabilities, trade debts, trade credits, employee
entitlements and prepayments); and
3,600,000 fully paid ordinary shares at $0.25 per share in the Company.
In order to fund the Acquisition, the Company has received bindi ng commitments to raise $4.5 million (before costs)
via a placement of 18 million fully paid ordinary shares to sophisticated and institutional investors at $0.25 per share
and has entered into debt facility with Bankwest to raise a further $3 million.
The Placement occurred in 2 tranches, with the initial tranche of up to $2.2 million settled on 12 July 2017, and the
balance of up to $2.3 million, settled on 18 August 2017 after receiving approval of shareholders at an Extraordinary
General Meeting held on 11 August 2017.
The Facility has a term of 3 years, during which the Company will make quarterly repayments with a final bullet
repayment to be made at the end of the term. In addition, the Company has negotiated access to a debt facility of up
to $350,000 to fund general working capital requirements. Both facilities will be secured by a first ranking general
security of all present and future assets of the Company and its subsidiaries, and are subject to other terms which are
considered customary for s uch agreements.
There are no other matters or circumstances that have arisen since 30 June 2017 that have or may significantly affect
the operations, results, or state of affairs of the Group in future financial periods.
Note 32. Company details
The registered office and principal place of business of the Company is:
Swift Networks Group Limited
1 Watts Place
BENTLEY WA 6102
Australia
68
SWIFT NETWORKS GROUP LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
Directors’ declaration
The Directors of the Company declare that:
the financial statements and notes, as set out on pages 21 to 68 are in accordance with the Corporations Act 2001
and:
a.
b.
c.
d.
e.
comply with Accounting Standards, which as stated in accounting policy Note 2 to the financial
statements, constitutes explicit and unreserved compliance with International Financial Reporting
Standards (IFRS); and
give a true and fair view of the financial position as at 30 June 2017 and of the performance for the year
ended on that date of the consolidated Group;
the financial records of the Company for the financial year have been properly maintained in
accordance with s 286 of the Corporations Act 2001;
the financial statements and notes for the financial year comply with the Accounting Standards; and
the financial statements and notes for the financial year give a true and fair view;
in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable as disclosed in Note 2 to the financial statements.
This declaration is made in accordance with a resolution of the Board of Di rectors.
Chairman
Carl Clump
Dated this 31st day of August 2017
69
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Swift Networks Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Swift Networks Group Limited (the Company) and its
subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30
June 2017, 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 report, including a summary of significant accounting policies
and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current 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.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN
77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK
company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under
Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
Recoverability of intangible assets
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 10, the Group has $6,702,105
Our procedures included, but were not limited to the following:
of intangible assets comprising goodwill,
development costs, subscriber acquisition costs,
customer contracts and other intangible assets.
•
Considering whether the methodology in the models was
consistent with the basis required by Australian Accounting
Standards and checking the mathematical accuracy of the
As detailed in Note 10, management’s assessment
models;
of the recoverability of intangible assets is
supported by a value in use cash flow model and
the key assumptions used in this model.
The assessment of impairment for intangible assets
within the relevant cash generating units (CGUs) is
a key audit matter due to the significant degree of
estimations and assumptions made by management
in the cash flow forecasts including future
operating and financial performance, expectation
of future growth rates, anticipated cost
assumptions, the discount rate applied and the
terminal value.
•
•
•
•
•
Comparing the cash flow forecasts for future periods in the
models to those in the latest Board approved budgets;
Performing sensitivity analysis on the key assumptions
including discount rate and growth rate inputs;
Assessing whether the growth rate assumptions in the
models' forecasts were consistent with our understanding
of the industry and the Group;
Using our internal valuation specialists to assess the
appropriateness of the discount rate applied; and
Assessing the appropriateness of the Group's disclosures in
respect of the assessment of carrying values for intangibles
(refer note 10).
Finalisation of provisional accounting (Swift Networks Pty Ltd & Wizzie TV Pty Ltd)
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 29(a), the Group finalised its
Our procedures included, but were not limited to the
provisional accounting for the acquisition of Swift
following:
Networks Pty Ltd and Wizzie TV Pty Ltd during the
year.
• Evaluating the assumptions and methodology used in
management's determination of the fair value of assets
The finalisation of the provisional accounting of this
and liabilities acquired;
acquisition is a key audit matter given its financial
significance to the Group and because significant
judgement was involved in assigning a fair value to the
assets and liabilities acquired and the equity
instruments issued by the Group.
• Performing substantive testing on fair value
adjustments, including agreeing to supporting
documentation on a sample basis, as part of the
finalisation of provisional fair value accounting; and
• Assessing the appropriateness of the Group's
disclosures in respect of the finalisation of acquisition
accounting (refer note 29(a)).
Recognition and measurement of deferred tax assets
Key audit matter
How the matter was addressed in our audit
Refer Note 5 in the financial report.
Our procedures included, but were not limited to the
The Group recognised $1,406,658 of deferred tax assets
following:
of which $1,090,256 arises from tax losses carried
•
Using our internal tax specialists to evaluate the
forward. Australian Accounting Standards require
availability of these losses given the change in control
deferred tax assets to be recognised only to the extent
as a result of recent acquisitions;
that it is probable that sufficient future taxable profits
will be generated in order for the benefits of the
deferred tax assets to be realised. These benefits are
realised by reducing tax payable on future taxable
profits.
The recognition and measurement of these deferred tax
assets was a key audit matter given the quantum of
accumulated losses, the judgement in assessing
availability of tax losses being recognised by the Group
from recent business acquisitions and the judgement in
assessing whether there will be enough future taxable
profits to utilise the existing tax losses.
Other information
•
Reviewing management’s key assumptions in the cash
flow budget and forecasts and assessing whether
deferred tax assets had been appropriately based on
the extent to which they can be recovered by future
taxable profits; and
•
Assessing the appropriateness of the Group's
disclosures in respect of the recognition and
measurement of deferred tax assets (refer note 5).
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2017, but does not include the
financial report and the 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 from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_files/ar2.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 13 to 17 of the directors’ report for the
year ended 30 June 2017.
In our opinion, the Remuneration Report of Swift Networks Group Limited, for the year ended 30 June
2017, 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.
BDO Audit (WA) Pty Ltd
Jarrad Prue
Director
Perth, 31 August 2017
Shareholder information
A.
Substantial Shareholders
The following have a relevant interest (>5%) in the capital of Swift Networks Group Limited as at 28 August
2017
Substantial ordinary shareholders
No. of ordinary shares
held
Percentage held of
Issued Ordinary
Capital
MR ROBERT NICHOLAS SOFOULIS & RELATED
ENTITIES
30,185,000
27.89%
WILSON ASSET MANAGEMENT GROUP &
RELATES ENTITIES
10,057,236
9.29%
B.
Distribution of Equity Securities
(i)
Analysis of numbers of equity security holders by size of holding as at 28 August 2017.
Category (Size of Holdings)
Number of Holders
Unlisted Options
Ordinary Shares
1
1,001
5,001
10,001
100,001
-
-
-
-
-
1,000
5,000
10,000
100,000
and over
23
225
103
357
135
562
-
-
-
15
28
43
74
Shareholder information (continued)
C.
Equity Security Holders
Twenty largest quoted equity security holders (28 August 2017)
1
2
3
4
5
6
7
8
9
10
SOFOULIS HOLDINGS PTY LTD
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
BNP PARIBAS NOMS PTY LTD
SUETONE PTY LTD
TRI-NATION HOLDINGS PTY LTD
JAMES FLORIAN PEARSON
PAUL DOROPOULOS
JOHN COLIN & SUSAN MARJORY LOOSEMORE
BURRWOOD INVESTMENTS PTY LTD
11 MR RUSSELL NEIL CREAGH
12 MR JAMES FLORIAN PEARSON
13 MR GEORGE STEPHEN PEMBERTON
14
TRI-NATION HOLDINGS PTY LTD
15
16
17
18
19
BOND STREET CUSTODIANS LTD
SUNSET CAPITAL MANAGEMENT PTY LTD
BWD ADVISORY PTE LTD
SKYLINE ENTERTAINMENT HOLDING LIMITED
SUETONE PTY LTD
20
KIM WALKER
Total
Ordinary shares
Number
held
Percentage
of issued
shares
30,000,000
27.72%
10,057,236
9.29%
5,071,883
3,039,291
4.69%
2.81%
2,481,096
2.29%
2,408,889
2.23%
2,222,223
2.05%
2,128,889
1,400,000
1.97%
1.29%
981,110
0.91%
918,277
902,115
831,262
825,572
0.85%
0.83%
0.77%
0.76%
800,000
0.74%
793,887
0.73%
693,333
625,000
598,544
546,666
67,325,273
0.64%
0.58%
0.55%
0.51%
62.22%
75
Shareholder information (continued)
D.
Voting Rights
The voting rights, upon a poll, are one vote for each share held.
E.
Unquoted securities
Securities
Options exercisable at $0.25 on or before
30 April 2018
Options exercisable at $0.15 on or before
19 May 2021
Options exercisable at $0.35 on or before
31 May 2021
Options exercisable at $0.42 on or before
31 May 2021
Class A Performance Shares
Class B Performance Shares
Number of
Options
Number of
Holders
Holders with more
than 20%
9,440,000
6,933,333
1,000,000
1,000,000
16,666,667
16,666,667
19
24
1
1
1
1
1
1
-
-
1
1
Details of Performance Shares
Each Performance Shares converts to one (1) fully paid ordinary share upon satisfaction of the relevant
milestone on or before 15 November 2020. The milestones in relation to the Performance Shares are:
Milestone 1 – 16,666,667 Performance Shares
The earlier to occur of:
(i)
the Company reaching 44,000 rooms with a revenue generating service from Swift Networks; and
(ii) the Company reaching consolidated revenue of $24,000,000 in any rolling 12-month period
commencing after completion.
Milestone 2 – 16,666,667 Performance Shares
The earlier to occur of:
(i)
the Company reaching 53,000 rooms with a revenue generating service from Swift Networks; and
the Company reaching consolidated revenue of $29,000,000 in any rolling 12-month period
(ii)
commencing after completion.
No Performance Shares were converted or cancelled during the period.
No performance milestones were met during the period.
F.
On-market buyback
There is no current on-market buy-back
G.
Stock Exchange listing
Quotation has been granted for the Company’s Ordinary Shares.
76
Shareholder information (continued)
H.
Securities subject to escrow
The following securities are currently subject to escrow:
Securities
Escrow Period
Release Date
Number
Fully Paid Shares
24 months from quotation
1 June 2018
38,000,000
12 months from quotation
22 November 2017
407,997
Fully paid shares
Unlisted Options, 15c
(expiry 19 May 2021)
24 months from quotation
Class A Performance Shares
24 months from quotation
Class B Performance Shares
24 months from quotation
1 June 2018
1 June 2018
1 June 2018
6,933,333
16,666,667
16,666,667
I.
Statement in relation to Listing Rule 4.10.19
The Directors of Swift Networks Group confirm in accordance with ASX Listing Rule 4.10.19 that during the
period from reinstatement to official quotation to 30 June 201 7, the Company has used its cash, and assets
that are readily convertible to cash, in a way consistent with its business objectives.
77
CORPORATE GOVERNANCE STATEMENT
The Board is responsible for establishing the Company’s corporate governance framework, the key features of
which are set out below. In establishing its corporate governance framework, the Board has referred to the 3 rd
edition of the ASX Corporate Governance Councils’ Corporate Governance Principles and Recommendations.
The corporate governance statement discloses the extent to which the Company follows the recommendations.
The Company will follow each recommendation where the Board has considered the recommendation to be an
appropriate benchmark for its corporate governance practices. Where the Compa ny’s corporate governance
practices will follow a recommendation, the Board has made appropriate statements reporting on the adoption of
the recommendation. In compliance with the “if not, why not” reporting regime, where, after due consideration,
the Company’s corporate governance practices will not follow a recommendation, the Board has explained its
reasons for not following the recommendation and disclosed what, if any, alternative practices the Company will
adopt instead of those in the recommendation.
following governance-related documents
The
http://www.swiftnetworks.com.au, under the section marked “Corporate Governance”:
found on
can be
the
Company’s website
at
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
Board Charter
Board Performance Evaluation Policy;
Code of Conduct;
Audit Committee Charter;
Remuneration and Nomination Committee Charter;
Security Trading Policy;
Continuous Disclosure Policy;
Shareholder Communication and Investor Relations Policy;
Risk Management Policy; and
Diversity Policy.
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1
The Company has established the respective roles and responsibilities of its Board and management, and those
matters expressly reserved to the Board and those delegated to management, and has documented this in its Board
Charter.
The responsibilities of the Board include but are not limited to:
(a)
(b)
(c)
(d)
setting and reviewing strategic direction and planning;
reviewing financial and operational performance;
identifying principal risks and reviewing risk management strategies; and
considering and reviewing significant capital investments and material transactions.
In exercising its responsibilities, the Board recognises that there are many stakeholders in the operations of the
Company, including employees, shareholders, co-ventures, the government and the community.
The Board has delegated responsibility for the business operations of the Company to the Chief Executive Officer.
The Chief Executive Officer is accountable to the Board.
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CORPORATE GOVERNANCE STATEMENT
Recommendation 1.2
The Company undertakes appropriate checks before appointing a person, or putting forward to shareholders a
candidate for election as a director and provides shareholders with all material information in its possession
relevant to a decision on whether or not to elect a director.
The checks which are undertaken, and the information provided to shareholders, are set out in the Company’s
Remuneration and Nomination Committee Charter.
Recommendation 1.3
The Company has a written agreement with each of the Directors and senior executives setting out the terms of
their appointment. The material terms of any employment, service or consultancy agreement the Company, or any
of its child entities, has entered into with its Chief Executive Officer, any of its directors, and any other person or
entity who is a related party of the Chief Executive Officer or any of its directors will be disclosed in accordance with
ASX Listing Rule 3.16.4 (taking into consideration the exclusions from disclosure outlined in that rule).
Recommendation 1.4
The Company Secretary is accountable directly to the Board, through the Chair, on all matters to do with the proper
functioning of the Board. The Company Secretary is responsible for the application of best practice in corporate
governance and also supports the effectiveness of the Board by:
(a)
ensuring a good flow of information between the Board, its committees, and Directors;
(b) monitoring policies and procedures of the Boa rd;
(c)
(d)
advising the Board through the Chairman of corporate governance policies; and
conducting and reporting matters of the Board, including the despatch of Board agendas, briefing papers
and minutes.
Recommendation 1.5
The Company has a Diversity Policy, the purpose of which is:
(a)
(b)
to outline the Company’s commitment to creating a corporate culture that embraces diversity and, in
particular, focuses on the composition of its Board and senior management; and
to provide a process for the Board to determine measurable objectives and procedures which the Company
will implement and report against to achieve its diversity goals.
As at 30 June 2017 there is one woman in senior executive positions in the Company, and 6 women employees
across the Company, representing 17% of the whole organisation. There are no women on the Board at this time.
The Board maintains full transparency of board processes, reviews and appointments and encourages gender
diversity.
Given the Company’s size the Board does not consider it appropriate to set quantitative objectives regarding gender
diversity at this time. As the operations grow, the Board will give consideration to the setting of such objectives and
their achievement through the appointment of appropriate candidates to the Board and senior executive positions
as they become available
Recommendation 1.6
The Chair will be responsible for evaluating the performance of the Board, Board committees and individual
directors in accordance wi th the process disclosed in the Company’s Board performance evaluation policy.
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CORPORATE GOVERNANCE STATEMENT
This policy is to ensure:
(a)
(b)
(c)
individual Directors and the Board as a whole work efficiently and effectively in achieving their functions;
the executive Directors and key executives execute the Company’s strategy through the efficient and
effective implementation of the business objectives; and
committees to which the Board has delegated responsibilities are performing efficiently and effectivel y in
accordance with the duties and responsibilities set out in the board charter.
This policy will be reviewed annually.
During the current reporting period, the Company has not conducted an evaluation of the Board, its committees
and individual directors. The Board has committed to conducting an evaluation during the December quarter 2017
following integration of the Company's recent acquisitions.
Recommendation 1.7
The Chief Executive Officer will be responsible for evaluating the performance of the Co mpany’s senior executives
in accordance with the process disclosed in the Company’s Process for Performance Evaluations, which is currently
being developed by the Board.
The Chair will be responsible for evaluating the performance of the Company’s Chief Ex ecutive Officer in accordance
with the process disclosed in the Company’s Process for Performance Evaluations, which is currently being
developed by the Board.
During the current reporting period, the Company has not conducted an evaluation of its Chief Executive Officer.
The Board has committed to conducting an evaluation during the December quarter 2017 following integration of
the Company's recent acquisitions.
Principle 2: Structure the board to add value
Recommendation 2.1
The Board has Remuneration and Nomination Committee consisting of independent Chairman Carl Clump and non-
executive Director Robert Sofoulis. Due to the size of the Board, the Company has not appointed a third member
to the committee.
The duties of the committee are set out in the Company’s Remuneration and Nomination Committee Charter which
is available on the Company’s website.
The Board has adopted a Remuneration and Nomination Committee Charter which describes the role, composition,
functions and responsibilities of a Nominati on Committee and is disclosed on the Company’s website.
During the financial year the committee met twice and both members attended both meetings.
Recommendation 2.2
The mix of skills and diversity which the Board is looking to achieve in its composition i s:
(a)
(b)
a broad range of business experience; and
technical expertise and skills required to discharge duties.
Recommendation 2.3
The Board considers the independence of directors having regard to the relationships listed in Box 2.3 of the
Principles and Recommendations.
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CORPORATE GOVERNANCE STATEMENT
Currently the Board is structured as follows:
(a)
(b)
(c)
(d)
(e)
Carl Clump (Independent Chairman, appointed 6 October 2014);
Xavier Kris (Chief Executive Officer, appointed 6 October 2014);
Paul Doropoulos (Non-Executive Director, appointed 6 October 2014);
Ryan Sofoulis (Executive Director, appointed 19 May 2016); and
Robert Sofoulis (Non-Executive Director, appointed 19 May 2016).
Recommendation 2.4
Currently, the Board considers that membership weighted towards relevant expertise is appropriate at this stage
of the Company’s operations. Accordingly, the Board does not have a majority of independent directors.
Recommendation 2.5
Mr Carl Clump is an independent Chairman.
Recommendation 2.6
It is a policy of the Company, that new Directors undergo an induction process in which they are given a full briefing
on the Company.
In order to achieve continuing improvement in Board performance, all Directors are encouraged to undergo
continual professional development. Specifically, Directors are provided with the resources and training to address
skills gaps where they are identified.
Principle 3: Act ethically and responsibly
Recommendation 3.1
The Company is committed to promoting good corporate conduct grounded by strong ethics and responsibility. The
Company has established a Code of Conduct (Code), which addresses matters relevant to the Company’s legal and
ethical obligations to its stakeholders. It may be amended from time to time by the Board, and is disclosed on the
Company’s website.
The Code applies to all Directors, employees, contractors and officers of the Company.
The Code will be formally reviewed by the Board each year.
Principle 4: Safeguard integrity in corporate reporting
Recommendation 4.1
Due to the size of the Board, the Company does not have a separate Audit Committee. The roles and responsibilities
of an audit committee are undertaken by the Board.
The full Board in its capacity as the audit committee is responsible for reviewing the integrity o f the Company’s
financial reporting and overseeing the independence of the external auditors. The duties of the full Board in its
capacity as the audit committee are set out in the Company’s Audit Committee Charter which is available on the
Company’s website.
When the Board meets as an audit committee it carries out those functions which are delegated to it in the
Company’s Audit Committee Charter. Items that are usually required to be discussed by an Audit Committee are
marked as separate agenda items at Board meetings when required.
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CORPORATE GOVERNANCE STATEMENT
The Board is responsible for the initial appointment of the external auditor and the appointment of a new external
auditor when any vacancy arises. Candidates for the position of external audi tor must demonstrate complete
independence from the Company through the engagement period. The Board may otherwise select an external
auditor based on criteria relevant to the Company's business and circumstances. The performance of the external
auditor is reviewed on an annual basis by the Board.
The Board has adopted an Audit Committee Charter which describes the role, composition, functions and
responsibilities of the Audit Committee and is disclosed on the Company’s website.
Recommendation 4.2
Before the Board approves the Company financial statements for each financial period it will receive from the Chief
Executive Officer and the Chief Financial Officer or equivalent a declaration that, in their opinion, the financial
records of the Company for the relevant financial period have been properly maintained and that the financial
statements for the relevant financial period comply with the appropriate accounting standards and give a true and
fair view of the financial position and performance of the Company and the consolidated entity and that the opinion
has been formed on the basis of a sound system of risk management and internal control which is operating
effectively.
Recommendation 4.3
Under section 250RA of the Corporations Act, the Company’s auditor is required to attend the Company’s annual
general meeting at which the audit report is considered, and does not arrange to be represented by a person who
is a suitably qualified member of the audit team that conducted the audit and is in a position to answer questions
about the audit. Each year, the Company will write to the Company’s auditor to inform them of the date of the
Company’s annual general meeting. In accordance with section 25 0S of the Corporations Act, at the Company’s
annual general meeting where the Company’s auditor or their representative is at the meeting, the Chair will allow
a reasonable opportunity for the members as a whole at the meeting to ask the auditor (or its representative)
questions relevant to the conduct of the audit; the preparation and content of the auditor’s report; the accounting
policies adopted by the Company in relation to the preparation of the financial statements; and the independence
of the auditor in relation to the conduct of the audit. The Chair will also allow a reasonable opportunity for the
auditor (or their representative) to answer written questions submitted to the auditor under section 250PA of the
Corporations Act.
Principle 5: Make timely and balanced disclosure
Recommendation 5.1
The Company is committed to:
(a)
(b)
(c)
ensuring that shareholders and the market are provided with full and timely information about its activities;
complying with the continuous disclosure obligations contained in the Listing Rules and the applicable
sections of the Corporations Act; and
providing equal opportunity for all stakeholders to receive externally available information issued by the
Company in a timely manner.
The Company has adopted a Disclosure Policy, which is disclosed on the Company’s website. The Disclosure Policy
sets out policies and procedures for the Company’s compliance with its continuous disclosure obligations under the
ASX Listing Rules, and addresses financial markets communication, media c ontact and continuous disclosure issues.
It forms part of the Company’s corporate policies and procedures and is available to all staff.
The Chief Executive Officer manages the policy. The policy will develop over time as best practice and regulations
change and the Company Secretary will be responsible for communicating any amendments. This policy will be
reviewed by the Board annually.
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CORPORATE GOVERNANCE STATEMENT
Principle 6: Respect the rights of security holders
Recommendation 6.1
information about
The Company provi des
investors via its website at
http://www.swiftnetworks.com.au. The Company is committed to maintaining a Company website with general
information about the Company and its operations and information specifically targeted at keeping the Company’s
shareholders informed about the Company. In particular, where appropriate, after confirmation of receipt by ASX,
the following will be posted to the Company website:
its governance to
itself and
relevant announcements made to the market via ASX;
(a)
(b) media releases;
(c)
(d)
(e)
(f)
investment updates;
Company presentations and media briefings;
copies of press releases and announcements for the preceding three years; and
copies of annual and half yearly reports including financial statements for the preceding three years.
Recommendation 6.2
The Company has a Shareholder Communication and Investor Relations Policy which aims to ensure that
Shareholders are informed of all major developments of the Company. The policy is disclosed on the Company’s
website.
Information is communicated to Shareholders via:
(a)
(b)
(c)
(d)
reports to Shareholders;
ASX announcements;
annual general meetings; and
the Company website.
This Shareholder Communication and Investor Relations policy will be formally reviewed by the Board each year.
While the Company aims to provide sufficient information to Shareholders about the Company and its activities, it
understands that Shareholders may have specific questions and require additional information. To ensure that
Shareholders can obtain all relevant information to assist them in exercising their rights as Shareholders, the
Company has made available a telephone number and relevant contact details (via the website) for Shareholders
to make their enquiries.
Recommendation 6.3
The Board encourages full participation of Shareholders at meetings to ensure a high level of accountability and
identification with the Company’s strategies and goals.
However, due to the size and nature of the Company, the Board does not consider a policy outlining the policies
and processes that it has in place to facilitate and encourage participating at meetings of shareholders to be
appropriate at this stage.
Recommendation 6.4
Shareholders are given the option to receive communications from, and send communication to, the Company and
its share registry electronically. To ensure that shareholders can obtain all relevant information to assist them in
exercising their rights as shareholders, the Company has made available a telephone number and relevant contact
details (via the website) for shareholders to make their enquiries.
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CORPORATE GOVERNANCE STATEMENT
Principle 7: Recognise and manage risk
Recommendation 7.1
Due to the size of the Board, the Company does not have a separate Risk Committee. The Board is responsible for
the oversight of the Company’s risk management and control framework.
When the Board meets as a risk committee is carries out those functions which are delegated to it in the Company’s
Audit Committee Charter. Items that are usually required to be discussed by a Ris k Committee are marked as
separate agenda items at Board meetings when required.
The Board has adopted an Audit Committee Charter which describes the role, composition, functions and
responsibilities in relation to the risk management system of the Audit Committee and is disclosed on the
Company’s website.
The Board has adopted a Risk Management Policy, which is disclosed on the Company’s website. Under the policy,
responsibility and control of risk management is delegated to the appropriate level of man agement within the
Company with the Chief Executive Officer having ultimate responsibility to the Board for the risk management and
control framework.
The risk management system covers:
(a)
(b)
(c)
(d)
operational risk;
financial reporting;
compliance / regulations; and
system / IT process risk.
A risk management model is also being developed and will provide a framework for systematically understanding
and identifying the types of business risks threatening the Company as a whole, or specific business activities within
the Company.
Recommendation 7.2
The Board will review the Company’s risk management framework annually to satisfy itself that it continues to be
sound, to determine whether there have been any changes in the material business risks the Company faces and to
ensure that the Company is operating within the risk appetite set by the Board.
Arrangements put in place by the Board to monitor risk management include, but are not limited to:
(a) monthly reporting to the Board in respect of operations and the financial po sition of the Company; and
(b)
quarterly rolling forecasts prepared;
Recommendation 7.3
The Company does not have, and does not intend to establish, an internal audit function. To evaluate and
continually improve the effectiveness of the Company’s risk management and internal control processes, the Board
relies on ongoing reporting and discussion of the management of material business risks as outlined in the
Company’s Risk Management Policy.
Recommendation 7.4
Given the speculative nature of the Company’s business, it will be subject to general risks and certain specific risks.
The Company will identify those economic, environmental and/or social sustainability risks to which it has a material
exposure, and disclose how it intends to manage those risks in ea ch of its corporate governance statements.
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CORPORATE GOVERNANCE STATEMENT
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1
The Board has Remuneration and Nomination Committee consisting of independent Chairman Carl Clump and non-
executive Director Robert Sofoulis. Due to the size of the Board, the Company has not appointed a third member
to the committee.
The duties of the committee are set out in the Company’s Remuneration and Nomination Committee Charter which
is available on the Company’s website
The Board has adopted a Remuneration and Nomination Committee Charter which describes the role, composition,
functions and responsibilities of the Remuneration Committee and is disclosed on the Company’s website.
During the financial year the committee met twice and both members attended both meetings.
Recommendation 8.2
Details of the Company’s policies on remuneration will be set out in the Company’s” Remuneration Report” in each
Annual Report published by the Company. This disclosure wil l include a summary of the Company’s policies
regarding the deferral of performance-based remuneration and the reduction, cancellation or clawback of the
performance-based remuneration in the event of serious misconduct or a material misstatement in the Co mpany’s
financial statements.
Recommendation 8.3
The Company’s Security Trading Policy includes a statement on the Company’s policy on prohibiting participants in
the Company’s Employee Incentive Plan entering into transactions (whether through the use of derivatives or
otherwise) which limit the economi c risk of participating in the Employee Incentive Plan.
Security Trading Policy
In accordance with ASX Listing Rule 12.9, the Company has adopted a trading policy which sets out the following
information:
(a)
(b)
(c)
closed periods in which directors, employees and contractors of the Company must not deal in the
Company’s securities;
trading in the Company’s securities which is not subject to the Company’s trading policy; and
the procedures for obtaining written clearance for trading in exceptional circumstances.
The Company’s Security Trading Policy is available on the Company’s website.
85
Corporate Directory
Directors
Carl Clump
Chairman
Xavier Kris
Executive Director – Chief Executive
Officer
Paul Doropoulos
Non-Executive Director
Robert Sofoulis
Non-Executive Director
Ryan Sofoulis
Executive Director
Company Secretary
Stephen Hewitt-Dutton
Chief Financial Officer
George Nicholls
Corporate Details
Auditor
Swift Networks Group Limited
ACN: 006 222 395
ABN: 54 006 222 395
www.swiftnetworks.com.au
Registered Office
1 Watts Place
BENTLEY WA 6102
Telephone: +61 8 6103 7595
+61 8 6103 7594
Facsimile:
BDO Audit (WA) Pty Ltd
38 Station Street
SUBIACO WA 6008
Bankers
Bank West Ltd
Bank West Place
300 Murray Street
WA 6000
Share Registry
Automic Registry Services
Level 1
7 Ventnor Avenue
WEST PERTH WA 6005
PO Box 223, West Perth WA 6872
T: 1300 288 664
F: +61 8 9321 2337
E : info@automic.com.au
Stock Exchange Listings
The ordinary shares of Swift Networks
Group Limited are listed on the Australian
Stock Exchange
(Code: SW1)
86