SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
ANNUAL REPORT
FOR THE YEAR ENDED
30 JUNE 2019
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
Contents
Chairman’s report
Chief Executive Officer’s report
Director’s 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
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SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
CHAIRMAN’S REPORT
Dear Shareholders,
It gives me pleasure to present the 2019 Annual Report for Swift Media Limited (ASX: SW1, formerly Swift Networks Group
Limited), the first in my new role as Swift’s Non-Executive Chairman. 2019 has been a year of transition for our Company. We
acquired Medical Media in February, appointed a new Chair and CEO in June, and since then we have made further
management changes. Importantly, we have also taken steps to simplify the business, make our products even more fit for
purpose, and improve our customer satisfaction. The new leadership team is taking Swift into its next chapter of growth as a
diversified digital media and technology business with a focus on three large key verticals- Resources, Aged Care and Health and
Wellness.
I joined Swift as a Director in February 2019 before transitioning to the role of Chairman in June 2019, having been on the board
of Medical Media for around two years prior to its acquisition by Swift. I previously spent 16 years working at CHAMP Private
Equity where I was involved with investments including the privatisation and subsequent relisting of outdoor advertising business
oOh!Media Ltd (ASX: OML) which deepened my understanding of the out-of-home digital media industry. I am excited to be in
this new role with Swift and see my responsibility of that and of your directors as working closely with and supporting management
to grow the business in a disciplined and focused manner.
I would like to welcome our new Chief Executive Officer Pippa Leary to her role, which she commenced in July 2019. Pippa comes
to Swift with extensive experience in driving growth, product development, commercial innovation and shareholder value through
senior roles at Nine Entertainment Company, Fairfax Media and APEX Advertising. She takes the reins from Swift’s former
Managing Director and CEO Xavier Kris, who decided to pursue outside business interests. I would like to thank Xavier for his
efforts and contribution.
Pippa inherits a motivated and capable team, together with substantial growth opportunities in the Resources, Aged Care and
also now the Health and Wellness sector following the Medical Media acquisition.
The acquisition of Medical Media was aimed at broadening Swift’s market penetration into the health and wellness sector by
adding its network of more than 2,200 digital screens, delivering content to more than 5 million viewers every month. Medical
Media is performing well and is on track to deliver the previously advised $3 million in cost savings as well to deliver profits on a
full year basis from FY20.
Post financial year end, to boost our Financial Position, in September 2019, Swift secured a financing agreement with L1 Capital
Global Opportunities Fund and Lind Global Macro Fund LP. The funding provides Swift with up to $3.6 million to fund strategic
growth investments including a new CRM system which will benefit the entire business as well as rolling out new screens to the
health and wellness segment. We believe this is a prudent way to provide capital necessary to ensure we can execute on near-
term opportunities to further build our Company.
With a year of development and change behind us, the acquisition of Medical Media completed, and new skills and experience
brought to our Board and Management, Swift is now well positioned to benefit from the substantial size and attractive
fundamentals of its three target verticals. We are committed to building the best product offering to suit the varied needs of these
three key markets.
2
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
CHAIRMAN’S REPORT (CONTINUED)
Our strategic roadmap and key priorities for FY20 include the following:
Upgrade our product offering in residential Aged Care to accelerate growth
Leverage our market leading position in Resources and Mining to increase share
Scale Health and Wellness by improving and expanding the screen network and increase national advertising
We look forward to updating you in future releases on the progress of these priorities.
I would like to thank my fellow Directors for their support ongoing contributions. I’d also like to thank our staff and management
for their efforts throughout a year which has seen much change. I also thank our Shareholders for their continued support and
belief in our Company.
We expect the year ahead to be a busy and productive one for Swift, and I look forward to sharing our successes with you.
Darren Smorgon
Non-Executive Chairman
3
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
CHIEF EXECUTIVE OFFICER’S REPORT
Dear Shareholders,
I’m excited about the opportunity to guide the Swift Media business through its next evolution. Having worked in digital media
for nearly 25 years I have long focused on building products that are both profitable and scalable. At Microsoft, ninemsn, Fairfax
Digital, APEX Advertising and most recently Nine I have had a history of identifying products that are unique and differentiated
and taking them to market in a way that maximises profit and shareholder value.
Having lived through successive waves of innovation, followed by commoditization and ultimately disruption I was attracted by
Swift ‘s high recurring revenues operating in deep verticals with fairly high barriers to entry. Listening to the challenges faced by
Swift I realised many of them played to my strengths – understanding end customers, market segmentation, digital product
development and design, enterprise and media sales and digital marketing. From my initial observations it was clear that Swift
had strong capabilities, scalable technology and a market leading position in Resources and Mining that I felt, with proper focus,
could be extended to other verticals.
Since starting in July, I diagnosed that while Swift had strong capabilities in technology, it had insufficient capabilities in product.
By “product” I mean the ability to assess the requirements of end users, systematically turn these into business rules and
efficiently productize them – be those end user residents in aged care, facility owners, GPs or workers in remote mining camps. I
saw there was a tremendous opportunity for Swift to fill these skills and capability gaps, as well as improving its sales and service
capabilities to ensure that Swift is set up to win in its key target verticals.
Beyond identifying gaps around customer research and product development, I have gained the support of the Board and staff
to focus on only the three most profitable verticals, started to bring in high calibre people beginning with hire of Swift’s first
Chief Customer and Strategy Officer, and committed to an open and transparent ongoing dialogue with investors.
Looking forward FY20 will be a transitional year as we enhance product, make growth investments, upgrade skillsets and
position the business for long term sustainable growth. Now with a solid plan in place that has been communicated both to staff
and the Board I am looking forward to the challenge of taking the Swift Media business to its next phase of growth.
Pippa Leary
Chief Executive Officer
4
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
DIRECTORS’ REPORT
The Board of Directors of Swift Media Limited (“the Group” or “the Company”) submits herewith the financial report of the
Company for the financial year ended 30 June 2019. In order to comply with the provisions of the Corporations Act, the
Directors’ report as follows:
The Directors of the Company in office during the year and at the date of this report are:
Name
Mr Darren Smorgon
Position
Non-Executive Chairman (appointed on 26 June 2019, appointed Non-Executive Director on 12
February 2019)
Non-Executive Director
Non-Executive Director
Executive Director
Mr Robert Sofoulis
Mr Paul Doropoulos
Mr Ryan Sofoulis
The following Directors of the Company resigned during the year:
Mr Carl Clump
Mr Xavier Kris
Non-Executive Chairman (resigned on 15 February 2019)
Executive Interim Chairman and CEO (resigned 26 June 2019)
The Company Secretary is Mr Stephen Hewitt-Dutton.
Principal activities
The principal activities of the Group during the year were the provision of content, communications and advertising on
television screens for out of home environments, with a key focus in the Resources, Aged Care and Health and Wellness
segments.
Review of Operations and Financial Results
Operational review
The FY19 year was a busy year headlined by a push by Swift to broaden the footprint of its flagship digital entertainment
systems in the Resources and Aged Care sectors. The acquisition of Medical Channel Pty Ltd (trading as Medical Media)
has provided Swift with entry into the growing Health & Wellness market providing digital out of home advertising,
targeting both local and national customers. More recently, the key senior leadership appointments announced in June
2019, as well as further appointments already made in FY20, will provide Swift with the direction and focus to execute
the Company’s vision of a profitable and scalable business-to-business provider of telecommunications, content and
advertising services in the Mining, Aged Care and Health & Wellness sectors.
Acquisition of Medical Media
In December 2018, Swift announced its proposed acquisition of Australian digital out of home media business Medical
Media. Medical Media delivers more than 5 million viewers per month across approximately 2,200 digital screens. The
transaction completed in February 2019 for an upfront consideration of $4.5 million, 100% in scrip, with an additional
$20.5 million payable in Performance Shares subject to achieving various advertising revenue targets. The issue price of
all Swift shares was $0.301 per share, a 20% premium to the 30-trading day VWAP up to and including 19 December
2018. The upfront and performance milestone consideration was priced at a discount to recent merger activity in the
digital out of home advertising sector.
The acquisition provides Swift with entry into a new, high growth industry vertical. Integration of the two companies is
on track to unlock cost synergies of approximately $3 million per annum from FY20 onwards and the business is
expected to be profitable on a run rate basis in FY20.
In conjunction with the acquisition, the Company changed its name from Swift Networks Group Limited to Swift Media Limited
on 15 February 2019.
5
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
Leadership changes
DIRECTORS’ REPORT
After Swift’s acquisition of Medical Media, Mr Carl Clump resigned as Non-Executive Chairman and Mr Darren Smorgon was
appointed as a Non-Executive Director. Subsequently in June 2019, Mr Xavier Kris resigned as Chief Executive Officer and Interim
Executive Chairman. Mr Smorgon then transitioned to the role of Non-Executive Chairman and Swift appointed Ms Pippa Leary
as Chief Executive Officer. Both Mr Smorgon and Ms Leary bring extensive media and advertising expertise to Swift which the
Company expects will lead the business through its next phase of growth.
Financial Review
The consolidated net loss after tax for the Group is $6,905,498 (2018: loss of $7,728,812).
In FY19, the Group achieved operating revenue of $24,713,183 (FY18: $22,279,804), delivering year-on-year revenue growth of
11%. Swift’s annualised contracted revenue increased 18% year on year to $18.8 million. Both these increases include the partial
contribution of the Company’s $4.5 million (excluding deferred consideration) acquisition of Medical Media completed in
February 2019. Swift’s integration plan for Medical Mediais ahead of schedule and proceeding favourably. The acquisition is on
track to deliver at least $3 million of cost savings per annum from FY20 in the form of business synergies and improvements and
is expected to be profitable in FY20.
The Company’s cash balance at 30 June 2019 was $422,771 (2018: $3,201,819), following annual cash receipts of $18,111,127
(2018: $20,803,518) and bank borrowings of $2,455,086. At that time, the Company had unused working capital facility available
on its total $4,500,000 Bankwest facility, and is in compliance with all of its loan covenants that govern the facility.
Post year end, the vesting of Class B performance shares (to the former owners of Swift Networks Pty Ltd) 16,666,667 million
shares were issued on 2 August 2019 to settle in full the $3,666,667 Financial Liability, disclosed as current in the Statement of
Financial Position.
During the year, the Company invested $3.2 million in new systems and capital expenditure to build scalability and longevity into
the Swift technology platform, as well as enhance systems and workforce efficiency. This is a substantial investment into the
future of the business and will assist Swift’s ability to constantly improve product quality and customer service. Swift has
continued to enhance its “My Family/My Community” app to allow users to communicate with each other within the facility
they are staying in, and to family and friends in the outside world. The “Swiftville” app has also been added to provide a one-
stop communication forum allowing operators to connect, inform and engage with their guests. All these additional features
provide an important point of differentiation from mainstream “on demand” content streaming providers.
Swift has also invested in improving its internal systems with the implementation of the NetSuite Enterprise Resource Planning
(ERP) tool to improve workforce efficiency. Additionally, it has expanded the capability of its Customer Relations Management
(CRM) system which the Company hopes will increase customer conversion, retention and satisfaction rates. We note that the
benefits of these investments are likely to be extracted in future years.
On 20 September 2019 Swift entered into a financing agreement with L1 Capital Global Opportunities Fund and Lind Global
Macro Fund LP for up to $3.6 million, payable in four tranches of $900,000 every 75 days from 20 September 2019. The funding
will provide the necessary capital to fund strategic initiatives including product development to improve and further tailor our
products to suit our three key target markets, improved customer service and the optimisation and rollout of new screens in the
health and wellness segment.
6
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
DIRECTORS’ REPORT
Under the terms of the financing agreement, L1 Capital Global Opportunities Fund and Lind Global Macro Fund LP will provide
$3.6 million split across 4 tranches every 75 days to Swift for the purchase of convertible notes. The convertible notes will be
issued at a 10% discount to the $4 million face value of the notes, with a 12-month maturity from each tranche’s drawdown. The
conversion price for each tranche is equal to the lower of 92% of an agreed VWAP formula prior to a conversion notice or 130%
of the 5-day VWAP on the day prior to the issuance of the tranche. The terms of the financing agreement also require Swift to
issue 2,000,000 ordinary shares for no consideration as “collateral shares”, which can be used for the conversion of the notes or
may be bought back by the Company for nominal consideration upon maturity.
Noting all of the above, and in conjunction with the Group’s historical ability to raise funds to satisfy its immediate cash
requirements, the Board is comfortable that the Company is adequately funded to pursue its next phase of growth.
In 2019, the Group earned underlying Earnings Before Interest, Tax, Depreciation Amortisation (“EBITDA”) of $2,361,462. A
reconciliation of EBITDA to NPAT is provided below:
A$
Description
Net loss after tax
(6,905,498) Refer to the Consolidated Statement of Profit or loss and
Income tax benefit
Interest costs (net)
Other Comprehensive Income
(181,972) Refer to Note 5
63,107
Incurred in the ordinary course of business
Depreciation & amortisation expenses
3,305,605 Refer to Notes 9 and 10
Amortisation of Right of use assets
832,016 Refer to Note 15
Fair valuation loss on financial liability
1,540,851 Non-cash year end adjustment to the fair value of
financial liabilities in respect of various performance
shares (refer to Note 14)
Share based payments
1,159,591 Share based payments
issued to the executive
management team (refer to Note 20)
Other expenses
2,547,762 Acquisition related integration and restructuring costs
and Other expenses (refer to Note 4)
Underlying EBITDA*
2,361,462
*EBITDA is non IFRS financial information
Outlook
We enter FY20 with momentum and confidence as we execute our clear strategic roadmap. The current year will be one of
transition as we simplify and focus the business on its largest segments and continue to build the business for the long term. Our
priorities are;
Upgrade our product offering in residential Aged Care to accelerate growth
Leverage our market leading position in Resources and Mining to increase share
Scale Health and Wellness by improving and expanding the screen network and increase national advertising
The Directors look forward to updating you on our progress as the year unfolds.
7
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
DIRECTORS’ REPORT
Subsequent events
On 31 July 2019, the Class B performance share milestone was reached, representing revenue generation from more than
53,000 rooms receiving a Swift service as defined in the share purchase agreement executed in November 2015 with the former
owners of Swift Networks Pty Ltd. Accordingly 16.67 million shares were issued to Swift’s founders on 2 August 2019.
On 20 September 2019 Swift entered into a financing agreement with L1 Capital Global Opportunities Fund and Lind Global
Macro Fund LP for up to $3.6 million. The funding will provide the necessary capital to fund strategic initiatives to be rolled out
under the new Swift leadership team. Under the terms of the financing agreement, L1 Capital Global Opportunities Fund and
Lind Global Macro Fund LP will provide $3.6 million split across 4 tranches every 75 days to Swift for the purchase of convertible
notes. The convertible notes will be issued at a 10% discount to the $4 million face value of the notes, with a 12-month maturity
from each tranche’s drawdown. The conversion price for each tranche is equal to the lower of 92% of an agreed VWAP formula
prior to a conversion notice or 130% of the 5-day VWAP on the day prior to the issuance of the tranche. The terms of the
financing agreement also require Swift to issue 2,000,000 ordinary shares for no consideration as “collateral shares”, which can
be used for the conversion of the notes or may be bought back by the Company for nominal consideration upon maturity.
There were no other events subsequent to reporting date to disclose at the date of signing of this report.
Dividends Paid or Recommended
No dividends were paid or recommended during the year (2018: nil).
INFORMATION ON THE DIRECTORS
Darren Smorgon – Non-Executive Chairman (appointed 26 June 2019)
Mr Smorgon has been a Non-Executive Director of Swift’s board since February 2019 after having previously served on the board
of Medical Media for more than two years prior to its acquisition by Swift. He was appointed to Non-Executive Chairman in June.
He is Managing Director of Sandbar Investments, a Sydney based family office. Prior to that, he spent 16 years at CHAMP Private
Equity where he led several deals in the mining services, education and media sectors including the privatisation and subsequent
re-listing of oOh!Media Limited (ASX: OML). He is also a current Non-Executive Director and Chairman of the Remuneration
Subcommittee of oOh!Media, the chairman of co-working facility provider Hub Australia Pty Ltd and a Non-Executive Director of
Total Drain Cleaning Pty Ltd.
Directorships held in other listed companies in the past 3 years: oOh!Media Limited (ASX: OML)
Special responsibilities include member of the Remuneration committee.
Ryan Sofoulis – Executive Director
Ryan has spent the last 14 years working within the various companies owned by the Sofoulis family. Ryan worked at 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
8
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
DIRECTORS’ REPORT
INFORMATION ON THE DIRECTORS (CONTINUED)
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 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 listed on the Singapore Exchange.
Directorships held in other listed companies in the past 3 years: None
Special responsibilities include member of the Remuneration committee.
Paul Doropoulos – Non-Executive Director
Paul Doropoulos has approximately 23 years’ combined experience in an Executive Consultant capacity to ASX listed companies in
the oil and gas and mining services sectors. He was 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 Paul holds a Bachelor of Business Degree with Finance.
Directorships held in other listed companies in the past 3 years: none
Special responsibilities include member of the Remuneration committee.
Carl Clump – Non-Executive Chairman (resigned 15 February 2019)
Carl Clump has been 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. 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
Special responsibilities include member of the Remuneration committee.
Xavier Kris – Executive Director and Chief Executive Officer (resigned 26 June 2019)
Xavier Kris is an international C-level executive with experience as a Chief Executive building global businesses and delivering
results. Xavier has led multiple international businesses within transactional processing companies, the Harpur Group and
International Card Services followed by Motorcharge Australia. 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
9
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
DIRECTORS’ REPORT
INFORMATION ON THE DIRECTORS (CONTINUED)
Stephen Hewitt-Dutton – Company Secretary
Mr Hewitt-Dutton has over 24 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 and a Senior Associate of FinSIA.
Before joining Trident Capital, Mr Hewitt-Dutton was an Associate Director of Carmichael Corporate. He has also held Financial
Controller and Company Secretary positions for both public and private companies for in excess of 18 years.
10
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
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 date of this report were as follows:
Director
Ordinary shares
Options
Rights to deferred
Shares
Performance
Rights
Mr C Clump
Mr X Kris*
Mr P Doropoulos*
Mr Ryan Sofoulis
1,803,689
4,805,300
2,568,670
54,000
Mr Robert Sofoulis**
63,873,334
Mr Darren Smorgon***
-
260,000
820,000
715,000
-
-
-
-
2,696,460
156,174
-
-
-
-
-
-
-
-
750,000
*includes all performance rights and options issued under Swift’s Executive Incentive Plan (refer to Note 20)
**includes performance shares relating to the share sale agreement of Swift Networks Pty Ltd and Wizzie Pty Ltd (refer to Note
14)
***options granted on appointment as Non-Executive Chairman on 26 June 2019, subject to shareholder approval and excludes
ordinary shares and performance shares held indirectly via Sandbar Investments Pty Ltd, an entity controlled by a close family
member that holds an investment in Medical Media Investments Pty Ltd.
DIRECTORS’ MEETINGS
The number of meetings (including meetings of Board committees) of the Company’s Board of Directors held during the year
ended 30 June 2019 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
Mr D Smorgon
Board
Remuneration Committee
Number eligible to
attend
Number Attended
Number eligible
to attend
Number Attended
8
14
14
14
14
6
8
14
13
14
14
6
5
-
6
-
6
1
5
-
6
-
6
1
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.
11
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
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 2019 financial year:
Executive Chairman, Non-Executive Directors and Key Personnel
Name
Position
Mr D Smorgon
Non-Executive Chairman (appointed 26 June 2019)
Mr P Doropoulos
Non-Executive Director
Mr Robert Sofoulis
Non-Executive Director
Mr Ryan Sofoulis
Executive Director
Mr G Nicholls
Chief Financial Officer
Mr C Clump
Non-Executive Chairman (resigned 15 February 2019)
Mr X Kris
Executive Director & Chief Executive Officer (resigned 26 June 2019)
Note: Ms Pippa Leary was appointed Chief Executive Officer on 26 June 2019, commencing after 1 July 2019, she will be a key
management personnel.
Key Management Personnel are those Directors and executives with authority and responsibility for planning, controlling and
directing the affairs of Swift Media Limited.
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
There is direct relationship between key management personnel remuneration and performance. The Board engaged an
independent remuneration consultant (Godfrey Remuneration Group) to advise on a 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, segment and overall
performance of the Group.
Remuneration governance
The Board has Remuneration and Nomination Committee consisting of independent Chairman Mr Darren Smorgon and non-
executive Directors Mr Robert Sofoulis and Mr Paul Doropoulos.
12
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED (CONTINUED)
Statutory Performance Indicators
Below table shows measures of the group’s financial performance over the last 4 years as required by the Corporations Act 2001.
Loss after income tax
Basic earnings/loss (cents per share)
Increase/ (decrease) share price (%)
Dividend payments
2019
(6,905,498)
(5.2)
(35)
-
2018
(7,728,812)
(6.9)
24
-
2017
(1,364,198)
(1.6)
34
-
2016
(5,249,924)
(22.3)
-
-
Key Management Personnel Remuneration
The key management personnel of the Company are the Directors and the Chief Financial Officer. There are no other 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 2019 are as follows:
Salary &
Fees (Cash)
$
37,143
49,000
436,000
436,000
48,000
37,000
145,904
136,000
C Clump4
X Kris5
P
Doropoulos6
Ryan Sofoulis
2019
2018
2019
2018
2019
2018
2019
2018
Short Term
Employee Benefits
Share
Based
Payments2
(Cash
settled)
$
Annual
Leave1
$
Share
Based
Payments2
Post-Employment
Non-
Cash3
Super-
annuation
Other9
Total
%
Perfor-
mance
Related
-
-
-
-
-
-
-
-
-
-
3,191
(2,654)
-
20,100
-
-
$
-
-
366,392
829,138
-
192,073
-
-
$
3,328
4,103
5,324
4,103
5,324
4,103
5,324
4,103
$
-
-
3,420
3,420
4,560
3,515
13,861
12,920
$
-
-
200,000
-
$
40,471
53,103
1,011,136
1,272,661
-
-
-
-
57,884
256,791
168,280
150,369
Robert
Sofoulis
2019
G Nicholls7
D Smorgon8
Total
2018
2019
2018
2019
2019
2018
5,324
4,103
-
-
1,996
26,620
20,515
-
-
-
-
-
-
20,100
48,000
137,500
192,346
180,625
16,000
923,393
976,125
-
-
130,430
73,473
657
497,479
1,094,684
-
-
950
5,462
-
4,141
2,808
1 Movement in annual leave provision (no long service leave provisions during the year)
2 Refer to the below table and Note 20 for further details.
3 Non-Cash benefits include the provision of Directors and Officers liability insurance.
4 FY 2019 figures represent the period 1 July 2018 to the date of resignation (15 February 2019)
5 FY 2019 figures include Share Based Payments of $111,644 relating to FY 2018 and $254,748 for FY 2019
6 FY 2018 figures include Share Based Payments offered whilst in the role of Chief Financial Officer forming part of the FY 2017
salary package
7 FY 2019 figures include Share Based Payments of $53,136 relating to FY 2018 and $77,294 for FY 2019
8 FY 2019 figures represent the period from the date of appointment (15 February 2019)
9 Other includes termination benefit payable to Xavier Kris upon termination of contract, this was paid in July 2019
57,884
177,603
341,999
276,719
20,173
1,697,827
2,187,246
-
-
-
-
-
200,000
-
4,560
36,000
18,273
17,159
1,520
46,194
73,014
13
-
-
36%
65%
-
82%
-
-
-
-
38%
27%
3%
29%
50%
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED (CONTINUED)
Details of Share Based Payments
Remuneration Type
Grant Date
Number
Granted
Grant
Value ($)
Mr G
Nicholls
Mr X Kris
Mr P
Doropoulos
Mr D
Smorgon
Performance Shares (2018 STIP)
Performance Shares (2018 LTIP)
Performance Shares (2019 STIP)
Performance Shares (2019 LTIP)
Class A Performance Rights
(2017 LTIP)
Class B Performance Rights
(2017 LTIP)
Share Appreciation Rights (2017
LTIP)
Deferred Options (2017 STIP)
Performance Shares (2018 STIP)
Performance Shares (2018 LTIP)
Performance Shares (2019 STIP)
Performance Shares (2019 LTIP)
Class A Performance Rights
(2017 LTIP)
Class B Performance Rights
(2017 LTIP)
Share Appreciation Rights
(2017 LTIP)
Cash Settled (2017 STIP)
Ordinary Share Rights
14 December 2017
10 August 2018
30 November 2018
30 November 2018
5 September 2017
205,232
132,839
226,006
339,008
452,841
73,473
53,136
-
77,294
168,046
5 September 2017
452,841
184,483
5 September 2017
452,841
204,405
5 September 2017
14 December 2017
14 November 2018
30 November 2018
30 November 2018
5 September 2017
181,176
507,307
437,818
558,659
1,117,318
156,174
90,588
181,616
111,644
-
254,748
57,955
5 September 2017
156,174
63,624
5 September 2017
156,174
70,494
N/A
26 June 2019
-
750,000
20,100
120,000
As at 30 June 2019
Number
vested and
exercisable
Number
unvested
205,232
-
-
-
452,841
-
132,839
-
339,008
-
-
-
-
-
181,176
507,307
-
-
-
156,174
-
-
437,818
-
1,117,318
-
-
-
-
-
-
-
-
750,000
The amounts paid per ordinary share on the exercise of options at the date of exercise were as follows:
Exercise Date
27 October 2017
Amount paid per share
$0.50
No amounts are unpaid on any shares issued on the exercise of options.
2017 EXECUTIVE INCENTIVE PLAN
The issue of Deferred Options, Performance Rights and Share Appreciation Rights under an Executive Incentive Plan (EIP) to Swift
directors Mr Kris and Mr Doropoulos and other selected senior executives was approved by shareholders at the Group’s Annual
General Meeting (AGM) held on 27 October 2017.
As part of the 2017 EIP, at the discretion of the Board, Mr Doropoulos was granted a short-term incentive cash settlement option
of $20,100, which were applied converting SW1 options to ordinary shares.
Deferred Options
Entitled holders are to receive one share for each option exercised. No consideration is payable on the exercise of the options.
Under the EIP, Deferred Options form part of the bonus pool which may be paid in cash, deferred options or a combination of
both, as determined at the discretion of the Board. Vesting conditions have now been satisfied and fully vested on 1 July 2019.
14
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED (CONTINUED)
Performance rights
Performance rights are rights to receive shares in the event that certain Vesting Conditions are met, and the Performance Rights
are exercised.
The company’s performance period is 3 years from 1 July 2016 to 30 June 2019. The vesting date is 1 July 2019 subject to the
satisfaction of the following vesting conditions:
Class A Performance Rights
Class B Performance Rights
If the Company achieves compound annual growth in Baseline
EBITDA of 268%, then 50% of the PR’s will vest. Management
have attributed a 100% probability of rights vesting.
If the Company’s relative Total Shareholder Return (TSR)
ranking is between P50th of the Small Industrials Index (XSI),
0% of the PR’s will vest
If the Company achieves compound annual growth in Baseline
EBITDA above 268% but less than 532%, then between 50% and
100% of the PR’s will vest. Management have attributed a
100% probability of rights vesting.
If the Company achieves compound annual growth in Baseline
EBITDA above 532%, then 100% of the PR’s will vest.
Management have attributed a 100% probability of rights
vesting.
Vesting conditions for Class A Performance Rights were
satisfied and have now fully vested on 1 July 2019.
If the Company’s relative Total Shareholder Return (TSR)
ranking is P50th of the XSI, 50% of the PR’s will vest
If the Company’s relative Total Shareholder Return (TSR)
ranking is between P50th and P75th of the XSI, between 50%
and 100% of the PR’s will vest
If the Company’s relative Total Shareholder Return (TSR)
ranking is above P75th of the XSI, 100% of the PR’s will vest
Vesting conditions for Class B Performance Rights were not
satisfied and have now been cancelled.
Share Appreciation Rights (SAR)
Are rights to receive the value equal to the increase in the value of the Share above the applicable grant price in the event that
certain vesting conditions are met and the Share Appreciation Rights are exercised. The company’s performance period is 3 years
from 1 July 2016 to 30 June 2019. The vesting date is 1 July 2019 subject to the satisfaction of the following vesting conditions:
If cumulative growth in the grant price is less than 106%, no SARs will vest
If cumulative growth in the grant price is 106%, 50% of the SARs will vest
Share Appreciation Rights
If cumulative growth in the grant price is above 106% but less than 170%, then between 50% and 100% of SARs will vest on a
pro rata basis
If cumulative growth in the grant price is 170% or above, 100% of the SARs will vest
Vesting conditions for Share Appreciation Rights were not satisfied and have now been cancelled.
Note: vesting conditions for the Class B Performance Shares and Share Appreciation Rights were measured against market
related benchmarks have not been satisfied and both rights have been cancelled, however no adjustment to the Profit & Loss
Statement has been made in accordance with AASB2 Share Based Payments.
15
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED (CONTINUED)
Valuation
The fair value of these share-based instruments was calculated as follows:
Deferred Options
Class A Performance
Rights
Method
Spot price
Strike price
Time to maturity
Volatility
Risk free rate
Probability of vesting
Fair value per unit (cents)
Black Scholes
50 cents
0 cents
5 years
75.00%
2.28%
N/a
50.0000
*This is the weighted average of probability
Monte Carlo
50 cents
0 cents
3 years
75.00%
1.87%
75.00%*
37.1093
Class B
Performance
Rights
Hybrid ESO
50 cents
0 cents
5 years
75.00%
1.87%
N/a
40.7390
Share Appreciation
Rights
Hybrid ESO
50 cents
0 cents
5 years
75.00%
1.87%
N/a
45.1383
The Company engaged an independent expert to provide the valuations, which are summarised below:
Recipient
Deferred options
Class A Performance
Rights
Class B Performance
Rights
Share Appreciation
Rights
Total
Number
$ Total
fair
value
Number
$ Total
fair value
Number
$ Total
fair value
Number
$ Total
fair value
$ Total
fair value
Mr X Kris
181,176
90,588
452,841
168,046
452,841
184,483
452,841
204,405
647,522
Mr
-
-
156,174
57,955
156,174
63,624
156,174
70,494
192,073
P Doropoulos
Total
181,176
90,588
609,015
226,001
609,015
248,107
609,015
274,899
839,595
There was no impact on the 2017 Executive Incentive Plan at year ended 30 June 2019.
16
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED (CONTINUED)
2018 EXECUTIVE INCENTIVE PLAN
In December 2017, the Company approved the 2018 Executive Incentive Plan and issued a Participation Offer for its Short-Term
Incentive Plan (STIP). As per the rules of the STIP, awards may be paid in cash or Rights, or a combination of both, as determined
at the discretion of the Board. For each participant the Company will select Key Performance Indicators (KPI’s) by applying the
following steps:
-
-
-
Identifying broad assessment areas that a relevant to the participants
Identifying Key Results Areas (KRA) (for example, EBITDA, strategic objectives, individual contribution)
Selecting KPIs for each KRA
Performance goals are then set at three levels below:
-
-
-
Threshold is achievement of Budgeted non IFRS EBITDA
Target is 20% outperformance of non IFRS Budgeted EBITDA
Stretch is 150% outperformance of Budgeted non IFRS EBITDA
Valuation
At 30 June 2018 the value of individual awards based on the Company’s STIP have been calculated by an independent expert
assessment as at reporting date and are summarised below:
Recipient
Mr X Kris
Mr G Nicholls
Total
Threshold
Award
($)
Exceeded
Exceeded
Target
Award
($)
Exceeded
Exceeded
Stretch Award
($)
No of
Rights
Exceeded
Exceeded
507,307
205,232
712,539
Total
Awarded
($)
181,616
73,473
255,089
Total
Opportunity
($)
200,000
80,910
280,910
Awarded
(%)
91
91
The actual value of these awards has been determined by reference to the volume weighted price at which the Company’s
shares were traded on the ASX over the 10 trading days up to and including 30 June 2018.
There is no impact on 2018 STIP at year ended 30 June 2019.
Vesting conditions for the Company’s FY 2018 STIP were satisfied and the associated entitlements fully vested on 1 July 2019.
In August 2018, the Company issued Participation Offer for its Long-Term Incentive Plan (LTIP). The issue of Performance Rights
under the FY18 LTIP to Mr X Kris was approved by shareholders at the Group’s Annual General Meeting (AGM) held on 14
November 2018. As per the rules of the LTIP, awards may be paid in cash or Rights, or a combination of both, as determined at
the discretion of the Board.
Valuation
At 31 December 2018 the value of individual awards based on the Company’s LTIP have been calculated by an independent
expert assessment as at 14 November 2018 for Mr X Kris and 10 August 2018 for all remaining participants, and are summarised
below:
Recipient
Mr X Kris
Mr G Nicholls
Total
Threshold
Award
($)
Exceeded
Exceeded
Target
Award
($)
Exceeded
Exceeded
No of Rights
437,818
132,839
570,657
Total
Awarded
($)
111,644
53,136
164,780
The share based payment of $164,780 for the 2018 LTIP was expensed at year ended 30 June 2019.
17
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED (CONTINUED)
2019 Executive Incentive Plan
The Company approved the 2019 Executive Incentive Plan and issued Participation Offer for its Short-Term Incentive Plan (STIP)
and Long-Term Incentive Plans (LTIPs) on 5 October 2018. As per the rules of the STIP, awards may be paid in cash or Rights, or a
combination of both, as determined at the discretion of the Board. For each participant the Company will select Key
Performance Indicators (KPI’s) by applying the following steps:
-
-
-
Identifying broad assessment areas that a relevant to the participants
Identifying Key Results Areas (KRA) (for example, EBITDA, strategic objectives, individual contribution)
Selecting KPIs for each KRA
Performance goals are then set at three levels below:
-
-
-
Threshold is achievement of Budgeted non IFRS EBITDA
Target is 20% outperformance of non IFRS Budgeted EBITDA
Stretch is 150% outperformance of Budgeted non IFRS EBITDA
Note: as the performance criteria was not met for the 2019 STIP, no expense is recorded in Profit & Loss Statement for these
entitlements.
Valuation
The fair value of these share-based instruments was calculated as follows:
STI Rights
5 October 2018
LTI Performance Rights
5 October 2018
Method
Spot price
Strike price
Time to maturity
Volatility
Risk free rate
Fair value per unit (cents)
Share Price at grant
date
32.50 cents
0 cents
0.74 years
71.00%
1.87%
32.5000
Monte Carlo
32.50 cents
0 cents
2.74-3.74 years
71.00%
2.03%-2.14%
22.8000
The Company engaged an independent expert to provide the valuations, which are summarised below:
Recipient
FY 19 STI Performance Rights
5 October 2018
FY 19 LTI Performance Rights
5 October 2018
Mr X Kris
Mr G Nicholls
Total
Number
558,659
226,006
784,665
$ Total fair value
Number
$ Total fair value
181,564
73,452
255,016
1,117,318
339,008
1,456,326
254,749
77,294
332,043
There was no share based payment recorded for the 2019 STIP. Share based payment of $332,043 for the 2019 LTIP was
expensed at year ended 30 June 2019.
On 26 June 2019, Darren Smorgon was granted 750,000 ordinary share rights which will be issued following shareholder
approval. The rights will be subject to a vesting period of 2 years. These rights will be forfeited in full and lapse should he not
complete his engagement as Chairman for the 2 years. At 30 June 2019, a share based payment of $657 was recorded.
18
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED (CONTINUED)
Current service agreements
The current service agreements in place between the Company and its Directors and Key Management Personnel set out below:
(i)
The Company has entered into letter agreements for Director Fees as follows:
Mr C Clump
$60,000 per annum plus statutory superannuation
Mr X Kris
$36,000 per annum plus statutory superannuation
Mr P Doropoulos
$48,000 per annum plus statutory superannuation
Mr Ryan Sofoulis
$36,000 per annum plus statutory superannuation
Mr Robert Sofoulis
$48,000 per annum plus statutory superannuation
Mr D Smorgon*
$48,000 per annum plus statutory superannuation*
Mr Clump’s letter agreement was terminated upon the date of his resignation as Non-Executive Chairman (15 February
2019).
*Mr Smorgon’s letter agreement was entered into upon the date of his appointment as Non-Executive Director (15
February 2019). On 26 June 2019, Mr D Smorgon commenced his role as Non-Executive Chairman, refer to note (v) below.
(ii)
(iii)
(iv)
The Company amended its existing employment agreement with Mr Ryan Sofoulis (originally signed on 19 May 2016),
whereby the base remuneration, exclusive of superannuation entitlements, for services provided by Mr Sofoulis as the
Head of Finance of the Company is $120,000 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.
The Company amended its existing employment agreement with Mr Nicholls (signed 16 January 2017), whereby the base
remuneration, exclusive of superannuation entitlements, for services provided by Mr Nicholls as the Chief Financial Officer
of the Company is $200,000 per annum. The Company or Mr Nicholls may terminate the employment agreement at any
time by giving to the other not less than 3 months’ written notice.
In March 2019 the Company and Mr Kris, amended his existing service agreements for the provision of corporate
consultancy services as Chief Executive Officer. The services agreement has a termination date of 31 December 2019. Under
the terms, Mr Kris’ would be engaged as CEO and Interim Executive Chairman until 30 June 2019. Mr Kris would be paid a
Services Completion Fee of 6 times the monthly services fee on 1 July 2019. From 1 July 2019 Mr Kris would provide Interim
Executive Chairman services until the appointment of a new Chairman and continue to provide general commercial
consulting services to the Board and the CEO through until the termination date. Mr Kris will provide services for no less
than 65 hours per month which will be charged at a rate of $300 per hour exclusive of GST. Mr Kris will be paid a Services
Completion Fee of 1.5 times the monthly services fee on the first business day following 31 December 2019.
(v)
In June 2019 the Company entered into an agreement with Mr Darren Smorgon for the role of Non-Executive Chairman
which included a Chairman’s fee of $60,000 per annum and share rights over 750,000 Swift shares. The rights will vest 2
years after the appointment and convert at no cost following the end of the vesting period. The issue of the rights to Mr
Smorgon is subject to shareholder approval.
19
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED (CONTINUED)
Shareholdings of key management personnel
The movement during the reporting period in the number of ordinary shares of Swift Media Limited held directly, indirectly or
beneficially, by each specified Director and key management personnel, including their related entities, is as follows:
Ordinary
Shares Held at
30 June 2018
No.
Received during the
year upon satisfaction
of performance
milestones
Other changes
during the year
Ordinary Shares
Held at
30 June 2019
No.
Directors
Mr C Clump
Mr X Kris
Mr P Doropoulos
Mr Ryan Sofoulis
Mr Robert Sofoulis
Mr D Smorgon*
Mr G Nicholls
1,803,689
4,805,300
2,568,670
54,000
30,185,000
-
-
-
-
-
-
16,666,667
-
-
-
-
-
-
355,000
-
-
1,803,689
4,805,300
2,568,670
54,000
47,206,667
-
-
*excludes ordinary shares and performance shares held indirectly via Sandbar Investments Pty Ltd, an entity controlled by a
close family member that holds an investment in in Medical Media Investments Pty Ltd.
Rights to deferred shares of key management personnel
The movement during the reporting period in the number of deferred shares of Swift Media 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
2018
No.
Performance Rights
granted during the
year
Performance Rights
cancelled during the
year
Held at
30 June 2019
No.
Directors
Mr C Clump
Mr X Kris
Mr P Doropoulos
Mr Ryan Sofoulis
Mr Robert Sofoulis
Mr D Smorgon*
Mr G Nicholls
-
1,412,989
312,348
-
-
-
205,232
-
2,113,795
-
-
-
750,000
697,853
-
(1,011,500)
(156,174)
-
-
-
(226,006)
-
2,515,284
156,174
-
-
750,000
677,079
*excludes ordinary shares and performance shares held indirectly via Sandbar Investments Pty Ltd, an entity controlled by a
close family member that holds an investment in in Medical Media Investments Pty Ltd.
20
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
REMUNERATION REPORT – AUDITED (CONTINUED)
DIRECTORS’ REPORT
Held at 30 June
2018
No.
Share Appreciation
Rights
granted/(cancelled)
during the year
Held at
30 June 2019
No.
-
452,841
156,174
-
-
-
-
-
(452,841)
(156,174)
-
-
-
-
-
-
-
-
-
-
-
Held at 30 June
2018
No.
Deferred Options
granted/(cancelled)
during the year
Held at
30 June 2019
No.
-
181,176
-
-
-
-
-
-
-
-
-
-
-
-
-
181,176
-
-
-
-
-
Directors
Mr C Clump
Mr X Kris
Mr P Doropoulos
Mr Ryan Sofoulis
Mr Robert Sofoulis
Mr D Smorgon
Mr G Nicholls
Directors
Mr C Clump
Mr X Kris
Mr P Doropoulos
Mr Ryan Sofoulis
Mr Robert Sofoulis
Mr D Smorgon
Mr G Nicholls
Option holdings of key management personnel
The movement during the reporting period in the number of issued options of Swift Media 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 2018
No.
Exercised
during the
year
Granted as
compensation
Held at
30 June 2019
No.
Options vested
& exercisable at
year end
Directors
Mr C Clump
Mr X Kris
Mr P Doropoulos
Mr Ryan Sofoulis
Mr Robert Sofoulis
Mr D Smorgon
Mr G Nicholls
260,000
820,000
715,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
260,000
820,000
715,000
260,000
820,000
715,000
-
-
-
-
-
-
-
-
21
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED (CONTINUED)
Loans with key management personnel
During the year, the Company advanced the following funds to the Directors and their related parties:
Funds owed by Xavier Kris
Payments made1
Closing balance
2019
$
275,000
(275,000)
-
2018
$
275,000
275,000
1An unsecured loan was drawn on 30 April 2018 and repayable by no later than 30 April 2019. It is subject to an arm’s length
interest rate, payable within 5 business days of the last day of the month. The loan was repaid in full on 16 August 2018.
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.
2019
$
2018
$
434,261
433,538
-
-
439,523
71,500
(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.
(ii) Amounts received from Wenro Holdings Pty Ltd, a company of
which Robert Sofoulis is a director and Ryan Sofoulis is
associated with, as an incentive for the renewal of an operating
lease
(iii) Amounts received from Wenro Holdings Pty Ltd, a company of
which Robert Sofoulis is a director and Ryan Sofoulis is
associated with, for Project Management Services provided by
the Company in relation to renovation of office premises
Amounts outstanding at reporting date
Aggregate amount payable to Key Management Personnel and
their related entities at reporting date.
Payables
Receivables
36,851
-
57,543
275,000
Robert Sofoulis is entitled to performance shares relating to the share sale agreement of Swift Networks Pty Ltd and Wizzie Pty
Ltd (refer to Note 14)
Medical Media Investments Pty Ltd is entitled to shares in deferred consideration for the acquisition of Medical Channel Pty Ltd,
and performance shares upon achievement of milestones. Darren Smorgon is considered a related party via Sandbar
Investments Pty Ltd, an entity controlled by a close family member that holds an investment in in Medical Media Investments
Pty Ltd. (refer to Notes 14 and 30).
22
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
REMUNERATION REPORT – AUDITED (CONTINUED)
DIRECTORS’ REPORT
Transactions with other related parties
Entities managed by Key Management personnel
Share based payments to KMP - non-cash
Share based payments to KMP - cash settled
Total share-based payments
2019
$
2018
$
497,479
-
497,479
1,094,684
20,100
1,114,784
No other transactions or loans existed during the year and as at reporting date between the Company and with key management
personnel.
Voting and comments made at the Company’s 2018 Annual General Meeting
The approval of the remuneration report was passed as indicated in the results of the Annual General Meeting dated 15 November
2018, with 99% voting in favour. 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.
23
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
DIRECTORS’ REPORT
SHARES UNDER ISSUE
Unissued ordinary shares of Swift Media Limited under option at the date of this report are:
Grant date
19 May 2016
31 May 2017
31 May 2017
Expiry date
Exercise Price
Number
19 May 2021
31 May 2021
31 May 2021
$0.15
$0.35
$0.42
6,133,333
1,000,000
1,000,000
8,133,333
750,000 options exercised during the financial year (refer to Note 17).
INDEMNIFICATION AND INSURANCE OF DIRECTORS
During the financial year, Swift Media Limited paid a premium of $26,620 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 advantage 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, BDO Tax services and BDO Corporate Finance services were
performed for other services in addition to their statutory duties. In the future 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.
Details of the amount paid to the auditors are disclosed in Note 24 to the financial statements.
AUDITORS’ INDEPENDENCE DECLARATION
A copy of the Auditors’ Independence Declaration as required under Section 307C of the Corporations Act 2001 is set out on page
26.
24
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
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 2018 to 30 June 2019 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 30th day of September 2019.
This report is made in accordance with a resolution of the Directors.
Mr Darren Smorgon
Chairman
25
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 DEAN JUST TO THE DIRECTORS OF SWIFT MEDIA LIMITED
As lead auditor of Swift Media Limited for the year ended 30 June 2019, 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 Media Limited and the entities it controlled during the period.
Dean Just
Director
BDO Audit (WA) Pty Ltd
Perth, 30 September 2019
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.
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR
ENDED 30 JUNE 2019
Note
Consolidated
2019
$
2018
$
Continuing Operations
Revenue from contracts with customers
3
24,713,183
22,279,804
Cost of sales
Gross Profit
General & administration expenses
Other income
Depreciation and amortisation expenses
Amortisation expense of right of use assets
Other expenses
Finance costs
Loss before income tax expense
Income tax (expense)/benefit
Loss after income tax (expense)/benefit
Other comprehensive loss for the year
Items that may be reclassified to profit or loss
Other comprehensive loss for the year
(12,519,690)
(13,017,786)
12,193,493
9,262,018
4
3
(9,832,031)
(6,567,204)
159,637
31,474
(3,305,605)
(2,581,170)
(832,016)
-
4
(5,248,204)
(7,591,821)
(222,744)
(112,856)
(7,087,470)
(7,559,559)
5
181,972
(169,253)
(6,905,498)
(7,728,812)
-
-
-
-
Total comprehensive loss for the year
(6,905,498)
(7,728,812)
Loss per share attributable to the members of Swift Media
Limited:
Basic loss per share
Diluted loss per share
29
29
(5.2)
(5.2)
(6.9)
(6.9)
Cents
Cents
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in
conjunction with the accompanying notes.
27
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019
Note
Consolidated
2019
$
2018
$
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventory
Other current assets
Total Current Assets
Non Current Assets
Trade and other receivables
Property, plant and equipment
Right of use assets
Other non current assets
Deferred tax assets
Intangible assets
Total Non Current Assets
Total Assets
Current Liabilities
Trade and other payables
Contract liabilities
Provisions
Borrowings
Financial liabilities
Lease liabilities
Total Current Liabilities
Non Current Liabilities
Provisions
Financial liabilities
Lease liabilities
Contract liabilities
Deferred tax liabilities
Total Non Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
6
7
8
7
9
15
16
5
10
11
16
12
13
14
15
12
14
15
16
5
17
18
19
422,771
5,275,916
531,708
494,569
6,724,964
3,502,557
3,120,664
2,537,528
454,630
3,379,003
19,161,986
32,156,368
38,881,332
8,110,543
1,375,876
639,182
2,455,086
3,666,667
1,222,358
17,469,712
17,816
7,568,522
1,878,067
48,960
1,456,457
10,969,822
28,439,534
3,201,819
3,447,658
1,062,177
605,529
8,317,183
1,079,985
1,886,519
-
-
826,217
13,167,992
16,960,713
25,277,896
5,469,329
254,930
505,650
-
9,350,000
-
15,579,909
311,599
937,500
-
270,400
318,225
1,837,724
17,417,633
10,441,798
7,860,263
47,028,669
3,628,978
38,437,650
2,470,044
(40,215,849)
(33,047,431)
10,441,798
7,860,263
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
28
SWIFT MEDIA LIMITED AND CONTROLLED ENTITIES
(FORMERLY SWIFT NETWORKS GROUP LIMITED)
ABN 54 006 222 395
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2019
Note
Issued
Capital
$
Reserves
Accumulated
losses
$
$
Total
$
For the year ended 30 June
2019
At the beginning of the year
Change in accounting policy
Restated total equity at
beginning of the year
Total comprehensive loss for
the year
Transactions with
shareholders in their
capacity as shareholders:
-Issued in settlement of
liability
- Issue of ordinary shares in
consideration for business
combination
- Issued as equity on
deferred consideration
- Options granted
- Share issue costs net of tax
Share based payments
38,437,650
2,470,044
(33,047,431)
32
-
-
(262,920)
38,437,650
2,470,044
(33,310,351)
7,860,263
(262,920)
7,597,343
-
100,000
4,500,000
3,916,667
112,500
(38,148)
30
14
-
-
-
-
-
-
-
1,158,934
(6,905,498)
(6,905,498)
-
-
-
-
-
-
100,000
4,500,000
3,916,667
112,500
(38,148)
1,158,934
At the end of the year
47,028,669
3,628,978
(40,215,849)
10,441,798
For the year ended 30 June
2018
At the beginning of the year
Total comprehensive loss for
the year
Transactions with
shareholders in their
capacity as shareholders:
- Placement of shares
- Options granted
- Share issue costs (net of
tax)
Share based payments
Prior year tax effect
adjustment
At the end of the year
30,768,966
774,652
(25,402,635)
6,140,983
(7,728,812)
(7,728,812)
-
-
-
-
1,695,392
-
5,724,000
2,307,500
(362,816)
-
-
-
-
-
-
5,724,000
2,307,500
(362,816)
1,695,392
84,016
-
84,016
38,437,650
2,470,044
(33,047,431)
7,860,263
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying
notes.
29
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2019
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
2019
$
2018
$
18,111,127
20,803,518
(20,364,621)
(18,079,477)
(222,744)
(112,856)
159,637
31,474
Net cash inflows/ (outflows) from operating activities
21
(2,316,601)
2,642,659
Cash Flows from Investing Activities
Purchase of property, plant and equipment
Net cash (paid)/acquired on acquisition
Payment for development expenditure
Net cash outflows for investing activities
Cash Flows from Financing Activities
Proceeds from issue of shares
Payment of share issue costs
Proceeds from borrowings
Repayments of borrowings
Repayments of lease liabilities
Net cash inflows from financing activities
(1,151,782)
(1,265,779)
30
751,720
(5,557,257)
(1,827,546)
(1,300,394)
(2,227,608)
(8,123,430)
112,500
(38,148)
6,807,500
(362,816)
3,499,999
3,000,000
(1,044,913)
(3,000,000)
(764,277)
-
1,765,161
6,444,684
Net increase/(decrease) in cash and cash equivalents
Cash at the beginning of the year
Cash at the end of the year
(2,779,048)
963,913
3,201,819
2,237,906
6
422,771
3,201,819
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying
notes.
30
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
Reporting entity
Swift Media 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
Media Limited and controlled entities (the “consolidated Group” or “Group”).
The separate financial statements of the parent entity, Swift Media 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 set 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 statements 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.
Going Concern
The annual report has been prepared on a going concern basis, which contemplates the continuity of normal
business activity and the realisation of assets and the settlement of liabilities in the ordinary course of
business. The Group incurred a loss for the year ended 30 June 2019 of $6,905,498 (2018: loss of $7,728,812)
and net cash outflows from operating activities of $2,316,601 (2018: cash inflow of $2,642,659).
The Group’s net current liability position at year end is due to the current liability classification of bank
borrowings of $2,455,086 and financial liabilities of $3,666,667 relating to issue of performance shares as
partial deferred consideration for the acquisition of the respective business which is expected to be
converted to equity pursuant to the respective acquisition agreement. The Company has $2,044,914 unused
working capital facility available on its total $4,500,000 Bankwest facility, and is in compliance with all of its
loan covenants that govern the facility.
On 20 September 2019 Swift entered into a financing agreement with L1 Capital Global Opportunities Fund
and Lind Global Macro Fund LP for up to $3,600,000. The funding will provide the necessary capital to fund
strategic initiatives under the new Swift leadership team.
The ability of the Group to continue as a going concern is dependent on securing additional funding through
either equity, debt or receipts, or a combination of al, to continue to fund its operational and technology
development activities. These conditions indicate a material uncertainty that may cast a doubt about the
Group’s ability to continue as a going concern and, therefore, that it may be unable to realise its assets and
discharge its liabilities in the normal course of business.
31
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Statement of Significant accounting policies
Basis of Preparation (continued)
The Directors have assessed the likely cash flow for the 12 month period from date of signing this
annual report and its impact on the Group and believe there will be sufficient funds to meet the
Group’s working capital requirements as at the date of this reports, based on the belief that
additional funds can be raised to finance the Group’s activity
The Group has historically demonstrated its ability to raise funds to satisfy its immediate cash
requirements and will consider all funding options as required, for future capital requirements.
The Directors of the Group have reason to believe that in addition to the cash flow currently
available, and expected funding through equity or debt fundraising, with receipts are expected
through commercialisation of the Group’s products and services.
Should the Group not be able to continue as a going concern, it may be required to realise its assets and
discharge its liabilities other than in the ordinary course of business, and at amounts that differ from those
stated in the financial statements or raise additional capital through equity or debts raisings and that the
annual financial report does not include any adjustments relating to the recoverability and classification of
recorded assets and liabilities that might be necessary should the Group not continue as a going concern and
meet its debt as and when they become due and payable.
New and amended standards adopted by Swift Media Limited
The accounting policies applied and methods of computation for the year ended 30 June 2019 are consistent
with those of the annual financial report for the year ended 30 June 2018 with the exceptions of the adoption
of new accounting standards as below:
AASB 9 Financial Instruments
The Company assesses on a forward-looking basis the expected credit losses (ECL) associated with its debt
instruments carried at amortised cost.
The impairment methodology applied depends on whether there has been a significant increase in credit risk.
The Company makes use of a simplified approach in accounting for trade and other receivables as well as
contract assets and records the loss allowance at the amount equal to the expected lifetime credit losses. In
using this practical expedient, the Company uses its historical experience, external indicators and forward-
looking information to calculate the expected credit losses using a provision matrix.
For long term trade receivables, the ECL is based on either the 12-month or lifetime ECL. The 12-month ECL is
the portion of lifetime ECLs that results from default events on a financial instrument that are possible within
12 months after the reporting date. When there has been a significant increase in credit risk since origination,
the allowance will be based on the lifetime ECL. In all cases, the Company considers that there has been a
significant increase in credit risk when contractual payments are more than 30 days past due.
The Company considers a financial asset in default when contractual payment are 90 days past due. However,
in certain cases, the Company may also consider a financial asset to be in default when internal or external
information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before
taking into account any credit enhancements held by the Company.
32
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Statement of Significant accounting policies (continued)
Basis of Preparation (continued)
On the above basis, a loss allowance of $92,314 on initial recognition (refer to Note 32) and a further $163,577
was recognised in the year for trade receivables and contract assets. The Company has determined that for the
long term debtors, the results of applying the expected credit risk model was immaterial so no loss allowance
was recognised.
The Company considered the tax impact of changes arising on adoption of AASB 9, as these were not material,
no adjustments were made.
AASB 15 Revenue from Contracts with Customers
The Company has adopted AASB 15 Revenue from Contracts with Customers from 1 July 2018 which resulted
in changes in accounting policies and adjustments to amounts recognised in the financial statements. In
accordance with the transition provisions in AASB 15, the Company has adopted the cumulative method.
Swift has revenue streams listed below and has applied the following revenue recognition methods:
Software licences
The Group sells royalty-free license key to deploy Swift’s technology across agreed rooms. License is as is,
and there are no future requirements of the Group to update the license or other any services. Customer
is not under any obligation to acquire additional items from Swift. Customer can utilise the license at the
point it has been granted to them.
Revenue is recognised at a point in time when control of the license is passed to the customer (ie when
license is granted to the customer).
Content revenue
The Group provides recurring content and support services to its customers.
Revenue is recognised for provision of recurring content services on a consistent basis as services are
provided to the customers.
Sale of equipment
The Group recognises revenue and invoices customer for payment for the provision of one-off project
related goods & services (Swift system hardware/software, network infrastructure, professional services)
on milestones below:
1. Signing of PO
2. Ordering stock
3. Factory acceptance testing
4. Site acceptance testing
Revenue is recognised at a point in time when the customers obtain control of the goods and are
available for use.
Advertising revenue
Revenue is recognised over time as the customer is provided with streaming and advertising services in
the established network of medical practices.
33
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Statement of Significant accounting policies (continued)
Basis of Preparation (continued)
Incremental costs incurred in obtaining a contract
Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained is
to be recognised as an expense when incurred. Costs directly attributable to obtaining a contract, generating
or enhancing resources and are expected to be on- charged to customer, will continue to be capitalised
The impact of the adoption of AASB 15 is disclosed in note 3 and note 32.
AASB 16 Leases
The Company has early adopted AASB 16 Leases from 1 July 2018. Modified retrospective approach was used,
therefore the comparative information is not restated. The Company will apply the cumulative effect with an
adjustment to opening retained earnings in the current period.
The Company recognises a right of use asset and a lease liability at the lease commencement date. The right of
use asset is initially measure at cost which comprises the initial amount of the lease liability adjusted for any
lease payments made at or before the commencement date plus any initial direct costs incurred.
The right of use asset is subsequently depreciated using the straight-line method from the commencement
date to the earlier of the end of useful life of the right of use asset or the end of the lease term. The estimated
useful lives of the right of use assets are determined on the same basis as those of property and equipment. In
addition, the right of use asset is periodically reduced by impairment losses if any and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or if not readily available,
determined the Company’s incremental borrowing rate. Generally, the Company uses its incremental
borrowing rate.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when
there is a change in future lease payments arising from a change in an index or rate, if there is a change in the
company’s estimate of the amount expected to be payable under a residual value guarantee or if the Company
changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease
liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right of
use asset or is recorded in the profit or loss if the carrying amount of the right of use asset has been reduced
to nil.
Costs associated with the short-term leases and leases of low value assets are recognised as an expense in the
profit or loss.
The impact of the adoption of AASB 16 is disclosed in note 32.
34
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Statement of Significant accounting policies (continued)
(a) Principles of Consolidation
The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by
Swift Media Limited at the end of the reporting period. A controlled entity is any entity over which Swift Media
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 28 to the financial statements.
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, directly
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.
35
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Statement of Significant accounting policies (continued)
(b) Income Tax (continued)
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.
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 tax 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 same 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 significant amounts of
deferred tax assets or liabilities are expected to be recovered or settled.
(c) Financial Instruments
Accounting Policy
The Group has adopted AASB 9 Financial Instruments with a date of initial application of 1 July 2018.
AASB 9 Financial Instruments replaces AASB 139’s Financial Instruments: Recognition and Measurement
requirements. It makes major changes to the previous guidance on the classification and measurement of
financial assets and introduces an ‘expected credit loss’ model for impairment of financial assets. When
adopting AASB 9, the Group elected not to restate prior period. Rather, differences arising from the adoption
of AASB 9 in relation to classification, measurement, and impairment are recognised in opening retained
earnings as at 1 July 2018.
As a result of the adoption of AASB 9, the impairment of financial assets using the expected credit loss model
applies now to the Group’s trade receivable. For contract assets arising from AASB 15 and trade receivables,
the Group applies a simplified model of recognising lifetime expected credit loss as these items do not have a
significant financing component.
36
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Statement of Significant accounting policies (continued)
(c) Financial Instruments (continued)
Recognition and derecognition
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 assets are derecognised when the contractual rights to the cash flows from the financial asset expire,
or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is
derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Financial assets are classified according to their business model and the characteristics of their contractual cash
flows and are initially measured at fair value adjusted for transaction costs (where applicable).
Subsequent measurement
For the purpose of subsequent measurement, financial assets, other than those designated and effective as
hedging instruments, are classified into the following four categories:
Financial assets at amortised cost
Financial assets at fair value through profit or loss (FVTPL)
Debt instruments at fair value through other comprehensive income (FVTOCI)
Equity instruments at FVTOCI
All income and expense relating to financial assets that are recognised in profit or loss are presented within
finance costs, finance income or other financial items, except for impairment of trade receivables which is
presented within other expenses.
Financial assets at amortised cost
Financial assets with contractual cash flows representing solely payments of principal and interest and held
within a business model of ‘hold to collect’ contractual cash flows are accounted for at amortised cost using
the effective interest method. The Group’s trade and most other receivables fall into this category of financial
instruments.
Impairment of financial assets
The Company makes use of a simplified approach in accounting for trade and other receivables as well as
contract assets and records the loss allowance at the amount equal to the expected lifetime credit losses. In
using this practical expedient, the Company uses its historical experience, external indicators and forward
looking information to calculate the expected credit losses using a provision matrix.
For long term trade receivables, the ECL is based on either the 12-month or lifetime ECL. The 12-month ECL is
the portion of lifetime ECLs that results from default events on a financial instrument that are possible within
12 months after the reporting date. When there has been a significant increase in credit risk since origination,
the allowance will be based on the lifetime ECL. In all cases, the Company considers that there has been a
significant increase in credit risk when contractual payments are more than 30 days past due.
37
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2. Statement of Significant accounting policies (continued)
(c) Financial Instruments (continued)
The Company considers a financial asset in default when contractual payment are 90 days past due. However,
in certain cases, the Company may also consider a financial asset to be in default when internal or external
information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before
taking into account any credit enhancements held by the Company.
On the above basis, a loss allowance of $92,314 on initial recognition (refer to Note 32) and a further $163,577
was recognised in the year for trade receivables and contract assets. The Company has determined that for the
long term debtors, the results of applying the expected credit risk model was immaterial so no loss allowance
was recognised.
(d) Financing Element
The Group from time to time enter into contracts where the period between the transfer of the promised goods
to the customer and payment by the customer exceeds one year. This affects the estimate of transaction price
as it will be adjusted for the effects of time value of money as the timing of payment provides the customer
with a significant benefit of financing the transfer of goods to the customer. The difference between the
transaction price and the cash selling price of the goods is recognised as finance income over time.
(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 Income 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 other
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) Share based payments
Share-based compensation benefits are provided to employees via the executive short-term and long-term
incentive plans and to non-executive directors as part of compensation. Information relating to these plans is
set out in note 20.
38
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Statement of Significant accounting policies (continued)
(g) Share based payments (continued)
The Group measures the cost of equity settled transactions by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using various valuation
models (including Black Scholes and Monte Carlo) after taking into account the terms and conditions upon
which the instruments were granted. The accounting estimates and assumptions relating to equity settled
share based payments would have no impact on the carrying amounts of the assets and liabilities within the
next annual reporting period but may impact profit or loss and equity.
The fair value of options at grant date is determined using a Black-Scholes or Binomial option pricing model
that takes into account the exercise price, term of option, the impact of dilution, the share price at grant date
and expected price volatility of the underlying share, the expected dividend yield and the risk free interest
rate for the term of the option.
Non-market vesting conditions are included in assumptions about the number of options that are expected to
become exercisable. At each reporting date, the entity revises its estimate of the number of options that are
expected to become exercisable. The employee benefit expense recognised each period takes into account
the most recent estimate.
Upon the exercise of the options, the balance of the share-based payments reserve relating to those options
is transferred to share capital and the proceeds received are credited to share capital.
Employees and Directors
The Group measure 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 with the recognition of the expense accounted
for over the vesting period. The fair value is determined by an internal valuation using Black-Scholes option
pricing model taking into account he terms and conditions upon which the instruments were granted.
Key inputs to the Black-Scholes options pricing model include the expected price volatility and risk free
interest rate. The expected price volatility is based on the historical volatility adjusted for any expected
changes to future volatility due to publicly available information. The risk interest is the risk free rate of
securities with comparable terms to maturity.
(h) 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.
(i) 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.
39
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Statement of Significant accounting policies (continued)
(j) 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.
(k) Trade and Other Receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected credit losses. Trade receivables are generally due
for settlement within 30-60 days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a
lifetime expected loss allowance. For long term trade receivables, the ECL is based on either the 12 month or
lifetime ECL. To measure the expected credit losses, trade receivables have been grouped based on days
overdue . Other receivables are recognised at amortised cost, less any allowance for ECL.
(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 appropriate 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%
40
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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 of 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 recognises
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 identifiable 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
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.
Practice Sites
Practice Sites acquired as part of a business combination are recognised separately from goodwill. Calculation
is based on costs to supply and install devices at each of the sites at the date of acquisition. This is amortised
over the estimated useful life of 5 years.
41
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Statement of Significant accounting policies (continued)
(o) Intangibles (continued)
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.
(p) Contract Assets
Subscriber acquisition costs directly attributable to obtaining customer contracts, generating or enhancing
resources and are expected to be on-charged to the customer, 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 been made in the prior year
comparatives to recognise an Intangible for deferred subscriber acquisition costs
(q) 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.
(r) Borrowing Costs
Borrowing costs are recognised in the profit or loss in the period in which they are incurred.
(s) 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 these 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.
42
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Statement of Significant accounting policies (continued)
(t) 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 or 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.
(u) Contract Liabilities
Contract Liabilities represent the fair value consideration received from its customer in advance of the Group
meeting its performance obligations to deliver goods or services.
(v) 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 activity 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 transaction costs and transport costs).
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 such 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.
(w) Current and non current classification
Both assets and liabilities are classified as current if the Group expects to realise them within 12 months.
43
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Statement of Significant accounting policies (continued)
(x) 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.
(y) 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.
(z) 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.
(aa) 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.
(ab) 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.
44
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Statement of Significant accounting policies (continued)
(ac) Critical Accounting Estimates and Judgments
i. Revenue from contracts with customer
The Group applied the following judgements that significantly affect the determination of the amount and
timing of revenue from contracts with customers:
Identifying performance obligations
The Group provides software licences and/or equipment which are either sold separately or bundled together
with the provision of ongoing content. The Group determined that the licence and equipment are distinct
performance obligations to the provision of content as content can be used on Swift’s software and equipment
and there is no significant service of integration or interdependency. The fact that the Group regularly sells
both the licence and/or equipment and the content on a standalone basis indicates that the customer can
benefit from both products on their own.
Allocating the transaction price
Where contracts include multiple deliverables that are separate performance obligations, judgement is
required in determining the allocation of the transaction price to each performance obligation based on the
stand-alone selling prices. Where these are not directly observable, they are estimated based on expected cost
plus margin.
Consideration of significant financing component in a contract
Certain contracts allow for deferred payment terms. The Group concluded that there is a significant financing
component for these contracts in accordance with AASB 15. In determining the financing component to be
applied to the amount of consideration, the Group has made judgements with respect to the interest rate used
in this calculation and concluded that the interest rate implicit in the contract is appropriate because this is
commensurate with the rate that would be reflected in a separate financing transaction between the entity
and its customer at contract inception.
Assessing the reversal constraint
Certain contracts with deferred payments terms have a risk of payment forfeiture if the contract is terminated.
The Directors have determined that it is highly improbable that these contracts would be terminated, or that
the parties to these contracts would become insolvent, and accordingly have rebutted this possibility in
recognising revenue.
ii. Contingent consideration
The Directors have assessed the likelihood of reaching various performance share milestones at reporting date
(refer to Note 14) and information regarding contracts related to rooms, revenue and profitability.
iii. Goodwill – impairment assessment
Goodwill impairment testing was undertaken, and no indicators of impairment have been identified. Refer to
Note 10 for details of the assumptions used in these calculations.
45
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Statement of Significant accounting policies (continued)
(ac) Critical Accounting Estimates and Judgments (continued)
iv. 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 are as follows (refer note 10 for further detail):
- Growth rate
- Discount rate
-
-
Terminal value long term growth rate
Capital spend
- Gross margin
No impairment has been recognised in respect of goodwill at the end of the reporting period. Refer to Note
10 for sensitivity analysis of above inputs
v. Share based payment transactions
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 external
valuation using a Monte Carlo performance rights model, taking into account the terms and conditions upon
which the instruments were granted. Refer to Note 20 on Share based expenses for the year.
vi. Allowance for expected credit loss
Loss allowances for financial assets are based on assumptions about risk of default and expected loss rates.
The Group uses judgement in making these assumptions and selecting the inputs to the impairment
calculation, based on the Group’s past history, existing market conditions as well as forward looking
estimates at the end of each reporting period.
vii. Deferred tax assets
Deferred tax assets and liabilities have been brought to account in 2019 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. Refer to Note 5 on breakdown of tax assets and liabilities.
viii. Business combinations
As discussed in Note 30, business combinations are initially accounted for on a provisional basis. The fair value
of assets acquired, liabilities and contingent liabilities assumed are initially estimated by the consolidated entity
taking into consideration all available information at the reporting date. Fair value adjustments on the
finalisation of the business combination accounting is retrospective, where applicable, to the period the
combination occurred and may have an impact on the assets and liabilities, depreciation and amortisation
reported.
46
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Statement of Significant accounting policies (continued)
(ad) New, revised or amending Accounting Standards and Interpretations not yet 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.
Refer to Note 32 for changes in accounting policy.
Note 3. Revenue
(a) Revenue from continuing operations
Sales revenue
(b) Other income
Interest
Consolidated
2019
$
2018
$
24,713,183
22,279,804
24,713,183
22,279,804
159,637
159,637
31,474
31,474
Swift has revenue streams listed below and has applied the following revenue recognition methods:
Software licences
The Group sells royalty-free license key to deploy Swift’s technology across agreed rooms. License is as is,
and there are no future requirements of the Group to update the license or other any services. Customer
is not under any obligation to acquire additional items from Swift. Customer can utilise the license at the
point it has been granted to them.
Revenue is recognised at a point in time when control of the license is passed to the customer (ie when
license is granted to the customer).
Content revenue
The Group provides recurring content and support services to its customers.
Revenue is recognised for provision of recurring content services on a consistent basis as services are
provided to the customers.
Sale of equipment
The Group recognises revenue and invoices customer for payment for the provision of one-off project
related goods & services (Swift system hardware/software, network infrastructure, professional services)
on milestones below:
1. Signing of PO
2. Ordering stock
3. Factory acceptance testing
4. Site acceptance testing
Revenue is recognised at a point in time when the customers obtain control of the goods and are
available for use.
Advertising revenue
Revenue is recognised over time as the customer is provided with streaming and advertising services in
the established network of medical practices.
47
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 3. Revenue (continued)
Disaggregation of revenue:
2019
Revenue recognition
At a point in time1
Over time2
Content &
Technology
Revenue
$
6,778,404
15,366,128
22,144,532
Advertising
Revenue
$
-
2,568,651
2,568,651
Total
$
6,778,404
17,934,779
24,713,183
1 Relating to the sale of equipment and software licenses.
2 Relating to content and advertising revenue.
(a) Revenue from continuing operations
Sales revenue
(b) Other income
Interest
Revenue recognised in relation to contract liabilities
Revenue recognised that was included in the contract liability balance at
transition date 1/7/2018
Content & Technology revenue
Advertising revenue
Revenue recognised from performance obligations satisfied in previous
periods
Content & Technology revenue
Advertising revenue
Unsatisfied long-term Content & Technology and Advertising revenue
Aggregate amount of the transaction price allocated to long term content
and advertising revenue that are partially or fully unsatisfied as at 30 June
Content & Technology revenue
Advertising revenue
Consolidated
2018
$
22,279,804
22,279,804
31,474
31,474
30 June 2019
$
398,430
-
-
-
30 June 2019
$
21,630,775
4,646,802
48
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 3. Revenue (continued)
As of 30 June 2019, the Group expects that 57% of the transaction price allocated to the unsatisfied contracts for
Content & Technology and 82% allocated to Advertising , will be recognised as revenue in the 2020 financial year. The
remaining 43% for Content & Technology and 18% for Advertising will be recognised between 2021 and 2023. As
permitted under the transitional provisions in AASB 15, the transaction price allocated to unsatisfied performance
obligations (partially or fully) as of 30 June 2018 is not disclosed. The Group applies the practical expedient in
paragraph 121 of ASB 15 and does not disclose information about remaining performance obligations that have
original expected durations of one year or less.
Impact of adopting AASB 15 on current period financial statements
(i) Consolidated statement of financial position (extracted)
Non Current Assets
Contract assets
Inventory
Total assets
Current liabilities
Contract liabilities
Non current liabilities
Contract liabilities
Total liabilities
Net assets
Equity
Accumulated losses
Total equity
30 June 2019
$
Adjustments
$
Balances without
adoption of AASB 15
$
454,630
531,708
38,881,332
9,354
(8,097)
1,257
463,984
523,611
38,882,589
1,375,876
(64,964)
1,310,912
48,960
28,439,534
10,441,798
(40,215,849)
10,441,798
-
(64,964)
66,221
66,221
66,221
48,960
28,374,570
10,508,019
(40,166,354)
10,508,019
(ii) Consolidated statement of profit or loss and other comprehensive income (extracted)
Continuing Operations
Revenue from contracts
with customers
Cost of Sales
Gross Profit
General &
Administrative Expenses
Other Expenses
(Loss)/Profit before
income tax expense
30 June 2019
$
Adjustments
$
Totals without
adoption of AASB 15
$
24,713,183
(12,513,960)
38,881,333
(5,248,204)
(7,087,470)
64,964
(8,097)
56,867
9,354
66,221
24,778,147
(12,522,057)
38,938,200
(5,238,850)
(7,021,249)
49
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 4. Expenses
(a) General & administration expenses
Employment costs
Occupancy costs
Professional fees
Bad Debts
General and administration expenses
(b) Other expenses
Share based payments (refer Note 20)
Fair value loss on financial liability (refer Note 14)
Business restructure expenses
Acquisition related expenses
Other expenses
Note 5. Taxation
(a) Income tax benefit
Major components of income tax expense are:
Current tax
Deferred tax
Under/Over
Income tax (expense)/ benefit reported in the income
statement
(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 27.5% (2018: 27.5%)
- Non deductible share based payment
- Fair value loss on financial liability
- Change in corporate tax rate from prior year
- Research and Development benefit recorded against asset
- Deferred movement
- Deferred taxes not recognised
- Under/over
Income tax (expense)/ benefit attributable to entity
Consolidated
2019
$
2018
$
(7,277,738)
(217,485)
(392,194)
(22,339)
(1,922,275)
(9,832,031)
(1,159,591)
(1,540,851)
(1,162,465)
(1,162,605)
(222,692)
(5,248,204)
(4,162,101)
(606,620)
(334,603)
-
(1,463,880)
(6,567,204)
(1,715,492)
(5,683,333)
-
-
(192,996)
(7,591,821)
Consolidated
2019
$
2018
$
-
181,972
-
-
(163,075)
(6,178)
181,972
(169,253)
(7,087,470)
(7,559,559)
1,949,054
2,078,879
(318,707)
-
-
146,709
(1,595,084)
-
181,972
(471,760))
(1,562,917)
(136,866)
(112,409)
41,998
-
(6,178)
(169,253)
50
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 5. Taxation (continued)
(c) Deferred tax asset balances
Amounts recognised in profit or loss:
Lease liability
Share issue costs
Provisions, accruals and section 40-880 deductions
Carried forward tax losses
Deferred tax assets
Movements:
Opening balance
Charged/(credited) to profit or loss
Charged to equity (Note 19)
Additions through business combinations (Note 30)
Closing balance
(d) Deferred tax liabilities balances
Amounts recognised in profit or loss:
Property, plant & equipment
WIP and Inventory
Intangibles
Right to use assets
Deferred tax liabilities
Movements:
Opening balance
Charged/(credited) to profit or loss
Consolidated
2019
$
2018
$
849,388
-
-
2,529,615
3,379,003
-
156,843
221,466
447,908
826,217
826,217
181,972
1,406,658
(664,457)
-
84,016
2,370,814
3,379,003
-
826,217
(113,772)
(35,956)
(608,909)
(697,820)
-
-
(318,225)
-
(1,456,457)
(318,225)
(318,225)
(64,891)
-
(253,334)
Additions through business combinations (Note 30)
(1,138,232)
-
Closing balance
(1,456,457)
(318,225)
51
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 6. Cash and cash equivalent
Cash at bank on hand
Refer to Note 23 on risk exposure analysis for cash and cash equivalents.
Note 7. Trade and Other Receivables
Current
Trade receivables (net of impairment)
Other receivables
Non Current
Trade receivables1
Consolidated
2019
$
2018
$
422,771
422,771
3,201,819
3,201,819
Consolidated
2019
$
2018
$
4,870,122
3,401,497
405,794
46,161
5,275,916
3,447,658
3,502,557
1,079,985
1,079,985
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary
course of business. They are generally due for settlement within 30-60 days and are therefore classified as
current. Movements in the provision for impairment of receivables are disclosed in Note 23(c), including
the risk exposure analysis for Trade and Other receivables.
3,502,557
Due to short term nature of the current receivables, their carrying amount is considered to be the same as
their fair value. For the majority of the non-current receivables, the fair values are also not significantly
different to their carrying amounts.
At 30 June 2019, current trade receivables of $974,776 (2018:$372,173) were past due, but not impaired.
These relate to a number of independent customers for whom there is no recent history of default. Swift
is confident that these receivables are collectable and are active in the management and reduction of these
overdue amounts. Refer to Note 32 for provision made to opening balance under AASB 9.
1Customers on a deferred payment plan, ranging from 2 to 5 years. Revenue has been discounted using
the applicable interest rates, $167,267 interest income was recognised at 30 June 2019.
52
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 8. Inventory
Inventory
- Finished goods
- Work in progress
Consolidated
2019
$
2018
$
400,103
131,605
531,708
345,701
716,476
1,062,177
53
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 9. Property, Plant & Equipment
Motor
Software
Vehicles
$
$
Office it out
&
Equipment
$
Test
Rental
Equipment
Equipment
Total
$
$
$
Year ended 30 June 2019
Opening net book amount
Additions
Acquired upon acquisition of
subsidiaries
Disposals
Depreciation expense &
impairment charges
Closing net book amount
At 30 June 2019
Cost
Accumulated depreciation and
impairment
34,216
88,039
5,640
888,164
767,137
72,097
22,769
27,281
1,056,757
1,886,519
76,199
1,151,780
-
679,642
171,650
(2,500)
-
-
-
-
147,174
998,466
-
(2,500)
(12,097)
(295,126)
(214,338)
(15,555)
(376,485)
(913,601)
107,658
1,278,320
796,546
34,495
903,645
3,120,664
154,748
2,711,477
1,789,302
205,343
5,614,034 10,474,904
(47,090)
(1,433,157)
(992,756)
(170,847)
(4,710,389)
(7,354,240)
Net book amount
107,658
1,278,320
796,546
34,495
903,645
3,120,664
Year ended 30 June 2018
Opening net book amount
45,621
11,444
495,801
Additions
Acquired upon acquisition of
subsidiaries
Disposals
Depreciation expense &
impairment charges
-
-
-
3,059
276,480
2,699
122,220
-
-
31,656
7,496
502,224
1,086,746
978,743
1,265,779
-
-
-
-
124,919
-
(11,405)
(11,562)
(127,364)
(16,383)
(424,210)
(590,924)
Closing net book amount
34,216
5,640
767,137
22,769
1,056,757
1,886,519
At 30 June 2018
Cost
Accumulated depreciation and
impairment
91,143
148,713
1,446,198
178,061
4,198,025
6,062,139
(56,927)
(143,073)
(679,061)
(155,293)
(3,141,268)
(4,175,620)
Net book amount
34,216
5,640
767,137
22,769
1,056,757
1,886,519
54
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Goodwill
Development
Costs
Subscriber
Acquisition
Costs
Brand Loyalty
/ Customer
Contracts
Supplier
Contracts
Practice
Sites
Other
Total
1,570,691
1,827,546
9,891,741
-
-
2,937,425
-
(1,095,963)
12,829,166
12,829,166
2,302,274
3,809,978
-
(517,996)
517,996
706,965
20,602
-
-
-
-
-
-
-
-
-
459,997
13,167,992
-
-
1,827,546
(517,996)
4,139,024
-
7,076,449
(507,481)
(20,602)
(307,962)
(459,997)
(2,392,005)
199,484
-
3,831,062
-
19,161,986
819,865
2,370,434
123,610
4,139,024
520,963
24,613,040
-
-
-
-
Note 10. Intangible Assets
Year ended 30 June 2019
Opening net book amount
Additions
Change in accounting policy (refer to Note 32)
Acquired upon acquisition of subsidiaries (refer
to Note 30)
Amortisation and impairment charge
Closing net book amount
Cost
Accumulated amortisation and impairments
-
(1,507,704)
(819,865)
(2,170,950)
(123,610)
(307,962)
(520,963)
(5,451,054)
Closing net book amount
12,829,166
2,302,274
-
199,484
-
3,831,062
-
19,161,986
Year ended 30 June 2018
Opening net book amount
Additions
Acquired upon acquisition of VOD
Adjustment upon PY acquisition of subsidiaries
5,539,187
-
4,975,554
(315,000)
548,470
741,834
650,000
-
228,107
520,507
-
-
216,304
-
1,271,523
450,000
-
-
123,610
Amortisation and impairment charge
-
(369,613)
(230,618)
(1,230,863)
(103,008)
Closing net book amount
Cost
9,891,741
9,891,741
1,570,691
1,982,432
517,996
819,865
706,965
2,370,434
20,602
123,610
Accumulated amortisation and impairments
-
(411,741)
(301,869)
(1,663,470)
(103,008)
Closing net book amount
9,891,741
1,570,691
517,996
706,965
20,602
-
-
-
-
-
-
-
-
-
478,036
38,083
-
(56,092)
459,997
520,963
6,702,105
1,300,394
7,155,687
135,000
(1,990,194)
13,167,992
15,709,046
(60,966)
(2,541,054)
459,997
13,167,992
55
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 10. Intangible Assets (continued)
On 15 February 2019 the Group acquired 100% of the issued share capital of Medical Channel Pty Ltd including
Goodwill of $2,937,425 and identifiable Practice Sites of $4,139,024 were recognised on acquisition. 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 than
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 to allow smart television and hotel property management system integration
capabilities, as well as Bring Your Own Device (“BYOD”) capabilities allowing user to access the Swift Entertainment
app via Android and IOS smart phones and tablets. These new technology advancements will allow Swift to derive
additional revenue streams from a growing number of different market verticals. Development costs are amortised
over five years.
Customer Contracts consists of existing fixed term customer contracts inherited as part of acquisition. Customer
Contracts are amortised over three years from date of acquisition.
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):
Swift Networks - Intangibles
Medical Channel - Intangibles
Swift Networks - Goodwill
Medical Channel - Goodwill
2019
$
2,501,758
3,831,062
9,891,741
2,937,425
2018
$
3,276,251
-
9,891,741
-
19,161,986
13,167,992
For the purpose of impairment testing, intangibles are allocated to two (2018: one) cash-generating units (CGUs).
Due to the change in business view after the integration of the business acquired, the focus is now on the two
business units profit rather than consolidated profit, effective 15 February 2019, the one existing segment is now
two separate reporting segments. The CGUs and aggregate carrying amounts are structured to fall in line with the
Group operations and cash flows. The Medical Channel operations is separate to the Group from 15 February 2019,
please refer to note 30 Business Combinations for further details.
During the year ending 30 June 2019, there is no impairment of the CGUs (2018: nil). The recoverable amount of the
CGUs are 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 2020
is based on the 2020 budget adopted by the Board. The cash flows are discounted using a pre-tax discount rate of
13.04%.
56
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 10. Intangible Assets (continued)
Significant estimate: key assumptions used for value-in-use calculations
The following table sets out the key assumptions for CGU value-in-use calculations:
2019
Pre-tax discount rate
Growth rate for Years 2 to 5
Terminal value long term growth rate
Swift
Networks
Medical
Channel
13.04%
2.5%
0%
1%1
37%
13.04%
2.5%
0%
1%
79%
Capital spend
Average Gross Margin
1FY 20 spend for Swift Networks, is in line with FY 20 Budget (8% of revenue) whilst FY21 to FY24 has been
estimated as 1% of revenue.
2018
Swift
Networks
Pre-tax discount rate
Growth rate for Years 2 to 5
Terminal value long term growth rate
Capital spend1
Average Gross Margin
1FY 19 spend is in line with FY 19 Budget (5% of revenue) whilst FY20 to FY23 has been estimated as 1% of revenue.
Management has determined the values assigned to each of the above key estimates as follows:
13.04%
2.5%
0%
1%
40%
Assumption
Approach used to determine values
Pre-tax discount rate
Based on average value of observed betas for comparable listed companies.
Growth rate
Capital spend
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.
at Expected costs to maintain assets in current condition.
Average Gross Margin
Based on FY20 budgeted revenue and cost of sales.
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.
57
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 10. Intangible Assets (continued)
Estimated reasonably possible changes in the key assumptions would have the following approximate impact on
impairment of the identified CGU as at 30 June 2019:
Swift Networks
Reasonable
possible
change
+10%/-10%
Pre-tax discount rate
+10%/-10%
Growth rate (Years 2-5)
+10%/-10%
Capital outlay
Average Gross Margin
+10%/-10%
Board Approved Revenue* +10%/-10%
*The movement of 10% of the Board Approved Budget revenue (FY20) with all other inputs held constant would result in the CGU
being fully impaired.
Impact on
recoverable amount
-$1.6m/$1.96m
$0.15m/-$0.15m
-$0.44m/$0.44m
$8.94m/-$8.94m
$24.28m/-$24.28m Nil/-$22.98m
Impact on
recoverable amount
-$0.80m/$0.98m
$0.06m/-$0.06m
-$0.08m/$0.08m
$6.52m/-$6.52m
$8.20m/-$8.20m
Impact on
Impairment
-$0.06m/Nil
Nil
Nil
Nil/-$5.79m
Nil/-$7.46m
Impact on
Impairment
-$0.25/Nil
Nil
Nil
Nil/-$7.59m
Medical Channel
Estimated reasonably possible changes in the key assumptions would have the following approximate impact on
impairment of the CGU as at 30 June 2018:
Pre-tax discount rate
Growth rate (Years 2-5)
Terminal growth rate
Capital outlay
Average Gross Margin
Reasonable
possible
change
+10%/-10%
+10%/-10%
+10%/-10%
+10%/-10%
+10%/-10%
Swift Networks
Impact on
recoverable amount
-$2.91m/$3.56m
$0.19m/-$0.19m
$0.19m/-$0.19m
-$0.20m/$0.20m
$8.97m/-$8.97m
Impact on
Impairment
Nil
Nil
Nil
Nil
Nil
Each of the sensitivities above assumes that the specific assumption moves in isolation, whilst all other
assumptions are held constant
Note 11. Trade and Other Payables
Current
Trade Payables
Other payables and accruals
Consolidated
2019
$
3,926,880
4,183,663
8,110,543
2018
$
3,751,485
1,717,844
5,469,329
Trade payables are unsecured and are usually paid within 30 days of recognition.
The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-term
nature.
58
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 12. Provisions
Current
Lease Incentives for 1 Watts Place Bentley (Transfer from non
current Provisions)
Employee and FBT provisions
Non Current
Employee provisions1
Lease Incentives
1Entitlement to Long Service leave is more than 12 months.
Note 13. Borrowings
Current
Bank overdraft facility
Consolidated
2019
$
2018
$
-
639,182
639,182
17,816
-
17,816
72,643
433,007
505,650
21,006
290,593
311,599
Consolidated
2019
$
2,455,086
2,455,086
2018
$
-
-
The above relates to an overdraft facility from Bankwest which has a total facility limit of $4,500,000.
The Group is in compliance with its bank covenants and expects to continue to meet all covenants at the next
covenant review on 31 December 2019.
59
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 14. Financial Liability at Fair Value through Profit & Loss
Current
Opening balance
Converted to equity1
Less: Fair value through the P&L
Transfer from non current liabilities
Closing balance
Non Current
Opening balance
Amount due under contract of sale - at acquisition (refer to
Note 30)
Add: Fair value through the P&L
Transfer to current liabilities
Closing balance
Consolidated
2019
$
2018
$
9,350,000
(3,916,667)
(1,766,666)
-
-
-
-
9,350,000
3,666,667
9,350,000
937,500
4,604,167
3,323,505
-
3,307,517
5,683,333
-
(9,350,000)
7,568,522
937,500
1On 12 March 2019, the Class A performance share milestone was reached, representing revenue generation from
more than 44,000 rooms receiving a Swift service as defined in the share purchase agreement executed in
November 2015 with the former owners of Swift Networks Pty Ltd. Accordingly 16,666,667 shares have been issued
at $0.24.
The above liability relates to the potential issue of ordinary shares in Swift Media Limited to the vendors of Swift
Networks Pty Ltd and Wizzie Pty Ltd, Web 2 TV and Medical Channel Pty Ltd pursuant to the respective acquisition
agreement.
(a) Acquisition of Swift Networks Pty Ltd and Wizzie Pty Ltd on 19 May 2016
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.
60
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 14. Financial Liability – at Fair Value (continued)
(b) Acquisition of Living Networks on 10 November 2016
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 on 16 November 2016
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
(d) Acquisition of Medical Channel Pty Ltd on 15 February 2019
Under the agreement with vendors of Medical Channel, shares could be issued in the first five years after
completion upon satisfaction of the following milestones:
i.
ii.
iii.
iv.
v.
vi.
Issue of 18,272,425 performance shares upon $10,000,000 gross revenue
Issue of 16,611,296 performance shares upon $11,000,000 gross revenue
Issue of 8,305,648 performance shares upon $11,500,000 gross revenue
Issue of 8,305,648 performance shares upon $12,000,000 gross revenue
Issue of 8,305,648 performance shares upon $12,500,000 gross revenue
Issue of 8,305,648 performance shares upon $13,000,000 gross revenue
61
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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 Ltd1
Living Networks2
At initial
recognition
Milestone 1 – 20%
Milestone 2 – 15%
At 30 June 2018
At 30 June 2019
Milestone 1 – 90%
Milestone 2 – 75%
Milestone 1 – settled
Milestone 2 – 100%
Fair value at 30
June 20191
$3,666,666
Milestone 1 – 50%
Milestone 2 – 50%
Milestone 1 – 50%
Milestone 2 – 50%
Milestone 1 – 0%
Milestone 2 – 0%
-
Web 2 TV2
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%
Medical Channel Pty Ltd1 Milestone 1 – 30%
Milestone 2 – 20%
Milestone 3 – 15%
Milestone 4 – 10%
Milestone 5 – 10%
Milestone 6 – 10%
Total
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%
-
Milestone 1 – 50%
Milestone 2 – 50%
Milestone 3 – 50%
Milestone 4 – 50%
Milestone 5 – 50%
Milestone 6 – 25%
Milestone 7 – 25%
Milestone 8 – 25%
Milestone 9 – 25%
Milestone 1 – 100%
Milestone 2 – 50%
Milestone 3 – 25%
Milestone 4 – 20%
Milestone 5 – 10%
Milestone 6 – 5%
$625,000
$6,943,522
$11,235,188
1 Measured as share price at 30 June 2019 and managements’ probability
2 Measured under partial cash consideration, share price at 30 June 2019, and managements’ probability
62
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 14. Financial Liability – at Fair Value (continued)
(b)
The financial liability is a level 3 financial instrument. The Following summarises quantitative information
about the significant unobservable inputs:
Entity
Description Unobservable
Range of inputs
Relationship of inputs to fair value
Swift
Networks
Pty Ltd /
Wizzie
Pty Ltd
Living
Networks
Contingent
consideration
Contingent
consideration
Web 2
TV
Contingent
consideration
Medical
Channel
Pty Ltd
Contingent
consideration
inputs
Probability of
achieving
Milestones
disclosed
above
Probability of
achieving
Milestones
disclosed
above
Probability of
achieving
Milestones
disclosed
above
Probability of
achieving
Milestones
disclosed
above
Milestone 2 – 100%
If the probability of achieving each
milestone was 10% lower, the fair value
would increase (decrease) by $366,667
Milestone 1 – 0%
Milestone 2 – 0%
If the probability of achieving each
milestone was 10% higher, the fair value
would increase by $25,000
Milestone 1 – 50%
Milestone 2 – 50%
Milestone 3 – 50%
Milestone 4 – 50%
Milestone 5 – 50%
Milestone 6 – 25%
Milestone 7 – 25%
Milestone 8 – 25%
Milestone 9 – 25%
Milestone 1 – 100%
Milestone 2 – 50%
Milestone 3 – 25%
Milestone 4 – 20%
Milestone 5 – 10%
Milestone 6 – 5%
If the probability of achieving each
milestone was 10% higher (or lower), the
fair value would increase (or decrease) by
$31,250
If the probability of achieving each
milestone was 10% higher (or lower), the
fair value would increase (or decrease) by
$694,352
63
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 15. Leases
Right Of Use Assets
Opening net book amount
Change in Accounting Policy (refer to Note
32)
Additions
Acquired upon acquisition of subsidiaries
Amortisation expense
Closing net book amount
Properties
$
Year ended 30 June 2019
Equipment
$
Total
$
-
1,451,603
110,921
133,450
(490,810)
1,205,164
-
-
-
1,673,570
(341,206)
1,332,364
-
1,451,603
110,921
1,807,020
(832,016)
2,537,528
Lease liabilities1
Properties Current
Equipment Current
Total Current
Properties Non current
Equipment Non current
Total Non current
Total
Consolidated
Jun-19
$
Jun-18
$
422,811
799,547
1,222,358
1,154,422
723,645
1,878,067
3,100,425
-
-
-
-
-
-
-
1For adjustments recognised on adoption AASB 16 on 1 July 2018, please refer to Note 32. Following adoption
of AASB 16, net impact in FY 2019 is decrease in Cost of Sales and Overhead Expenses of $951,957, increase in
depreciation expense of $832,016 and increase in interest expenses of $165,908 resulting in net decrease in
P&L impact of $45,967.
Properties
Equipment
$
$
Total
$
The present value of finance lease liabilities is as follows:
Within one year
Later than one year but not later than five years
Later than five years
Total
422,811
1,154,422
799,547
723,645
1,222,358
1,878,067
-
-
-
1,577,233
1,523,192
3,100,425
The Group will not apply AAS16 requirements for any short term leases of 12 months or less and for leases with
low value items.
64
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 16. Contracts Assets and Liabilities
Other Non Current assets1
Contract assets relating to Advertising Revenue
Contract assets relating to Content & Technology Revenue
Current Contract liabilities2
Advertising Revenue Current
Content & Technology Revenue Current
Non Current Contract liabilities1
Advertising Revenue Non current
Content & Technology Revenue Non current
Consolidated
Jun-19
$
1 July 20181
$
200,233
254,397
454,630
555,974
819,902
1,375,876
-
48,960
48,960
-
371,300
371,300
-
254,930
254,930
-
270,400
270,400
1The Group has adopted cumulative effect method, under this method only balances at transition is presented.
2For adjustments recognised on adoption AASB 15 on 1 July 2018, refer to Note 32.
Significant changes in contract assets and liabilities
Contract assets have increased due to the acquisition of Medical Channel Pty Ltd on 15 Feb 2019, refer to
Advertising revenue in the above table
Contract liabilities have increase due to the advance consideration received from customers for project and
recurring based services, for which revenue is deferred until revenue can be recognised on the completion of those
services. In addition, the acquisition of Medical Channel has contributed to the increase, refer to Advertising
Revenue under Contract Liabilities, in the above table
Assets recognised from costs to fulfil a contract
Asset recognised from costs incurred to fulfil a contract
Amortisation recognised as cost of providing services during
the year
Consolidated
Jun-19
$
Jun-18
$
927,415
(472,785)
454,630
In adopting AASB 15, the Group recognised an asset in relation to costs incurred in obtaining Advertising and
Content & Technology contracts. The asset is amortised on a straight-line bases over the term of the specific
contract it relates to, in line with recognition of the associated revenue.
-
-
-
65
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 17. Issued capital
Consolidated
2019
$
2018
$
Issued capital
47,028,669
38,437,650
Movement in Ordinary Share Capital:
30 June 2019
No.
30 June 2018
No.
30 June 2019
$
30 June 2018
$
At the beginning of the year
121,062,903
90,212,903
38,437,650
30,768,966
Placements:
- 12 July 2017
- 18 August 2017
Issue of shares as deferred consideration
(Refer Note 14)
Issue of shares to employees (a):
- 4 January 2019
- 19 March 2019
- 8 April 2019
Issue of shares in lieu of services (b)
Movie Source/VOD acquisition (31
August 2017) (c)
Medical Channel acquisition (15
February 2019) (d)
Options exercised during the year
Share issue costs
8,818,000
9,182,000
-
2,204,500
2,295,500
16,666,667
72,213
133,320
71,551
332,226
-
-
-
-
-
3,916,667
-
-
-
100,000
-
-
-
-
-
-
3,600,000
-
1,224,000
14,950,166
-
4,500,000
-
750,000
9,250,000
112,500
2,307,500
-
-
(38,148)
(362,816)
154,039,046
121,062,903
47,028,669
38,437,650
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.
(a) Issue of shares to employees
Shares issued on conversion of 2018 STI Rights for nil consideration.
(b) Issue of shares in lieu of services
The Group issued shares in lieu of payments for corporate services in relation to the acquisition of Medical
Channel Pty Ltd. The shares were issued at the share price of $0.301.
66
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 17. Issued capital (continued)
(c) Movie Source/VOD acquisition
Under the terms of the Swift Networks acquisition, the Group issued 3,600,000 shares as part of the
consideration paid at fair value of $0.34 per share to the vendors for the acquisition of Movie Source Pty Ltd
and VOD Pty Ltd on 31 August 2017.
(d) Medical Channel acquisition
Under the terms of the Medical Channel Pty Ltd acquisition, the Group issued 14,950,166 shares at fair value of
$0.30 per share as part of the consideration paid to the vendors for the acquisition of Medical Channel Pty Ltd
on 15 February 2019.
Options
At 30 June 2019, there were 8,133,333 options (30 June 2018 – 8,883,333) available for exercise.
Exercise price
Expiry date
Opening balance
15 cents
35 cents
42 cents
Total
19-May-21
31-May-21
31-May-21
6,883,333
1,000,000
1,000,000
Exercised during the year
(750,000)
-
-
Closing balance
6,133,333
1,000,000
1,000,000
Share buy-back
There is no current on-market share buy-back.
Capital risk management
8,883,333
(750,000)
8,133,333
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 relative 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 2018 Annual Financial Statement.
67
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 18. Reserves
Options reserves
Opening balance
Options issued
Closing balance
Options reserve
The reserve is used to recognise the fair value of options granted.
Note 19. Accumulated losses
Consolidated
2019
$
2018
$
2,470,044
1,158,934
774,652
1,695,392
3,628,978
2,470,044
Consolidated
2019
$
2018
$
Accumulated losses at the beginning of the financial year
(33,047,431)
(25,402,635)
Loss after income tax expense for the year
Adoption of new accounting standards (refer to Note 32)
Tax effect adjustment relating to prior year
(6,905,498)
(7,728,812)
(262,920)
-
-
84,016
Accumulated losses at the end of the financial year
(40,215,849)
(33,047,431)
68
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 20. Share based payments
2018 EXECUTIVE INCENTIVE PLAN
In December 2017 The Company approved the 2018 Executive Incentive Plan and issued Participation Offer for its
Short-Term Incentive Plan (STIP). As per the rules of the STIP, awards may be paid in cash or Rights, or a
combination of both, as determined at the discretion of the Board. For each participant the Company will select Key
Performance Indicators (KPI’s) by applying the following steps:
-
-
-
Identifying broad assessment areas that a relevant to the participants
Identifying Key Results Areas (KRA) (for example, EBITDA, strategic objectives, individual contribution)
Selecting KPIs for each KRA
Performance goals are then set at three levels below:
-
-
-
Threshold is achievement of Budgeted non IFRS EBITDA
Target is 20% outperformance of non IFRS Budgeted EBITDA
Stretch is 150% outperformance of Budgeted non IFRS EBITDA
Valuation
At 30 June 2018 the value of individual awards based on the Company’s STIP have been calculated by an
independent expert assessment as at reporting date and are summarised below:
Recipient
Mr X Kris
Mr G Nicholls
Other
Total
Threshold
Award
($)
Exceeded
Exceeded
Exceeded
Target
Award
($)
Exceeded
Exceeded
Exceeded
Stretch
Award
($)
Exceeded
Exceeded
Exceeded
Stretch
Award
($)
170,000
68,774
375,841
614,615
No of
Rights
507,307
205,232
979,407
1,691,946
Total
Awarded
($)
181,616
73,473
401,521
656,610
The actual value of these awards has been determined by reference to the volume weighted price at which the
Company’s shares were traded on the ASX over the 10 trading days up to and including 30 June 2018.
Vesting conditions for the Company’s FY 2018 STIP were satisfied and the associated entitlements fully vested on
1 July 2019.
In August 2018, the Company issued Participation Offer for its Long-Term Incentive Plan (LTIP). The issue of
Performance Rights under the FY18 LTIP to Mr X Kris was approved by shareholders at the Group’s Annual General
Meeting (AGM) held on 14 November 2018. As per the rules of the LTIP, awards may be paid in cash or Rights, or a
combination of both, as determined at the discretion of the Board.
Valuation
At 31 December 2018 the value of individual awards based on the Company’s LTIP have been calculated by an
independent expert assessment as at 14 November 2018 for Mr X Kris and 10 August 2018 for all remaining
participants, and are summarised below:
Recipient
Mr X Kris
Mr G Nicholls
Other
Total
Threshold
Award
($)
Exceeded
Exceeded
Exceeded
Target
Award
($)
Exceeded
Exceeded
Exceeded
No of
Rights
437,818
132,839
542,373
1,113,030
Total
Awarded
($)
111,644
53,136
216,948
381,728
69
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 20. Share based payments (continued)
2019 Executive Incentive Plan
The Company approved the 2019 Executive Incentive Plan and issued Participation Offer for its Short-Term Incentive
Plan (STIP) and Long-Term Incentive Plans (LTIPs) on 5 October 2018. As per the rules of the STIP, awards may be
paid in cash or Rights, or a combination of both, as determined at the discretion of the Board. For each participant
the Company will select Key Performance Indicators (KPI’s) by applying the following steps:
-
-
-
Identifying broad assessment areas that a relevant to the participants
Identifying Key Results Areas (KRA) (for example, EBITDA, strategic objectives, individual contribution)
Selecting KPIs for each KRA
Performance goals are then set at three levels below:
-
-
-
Threshold is achievement of Budgeted non IFRS EBITDA
Target is 20% outperformance of non IFRS Budgeted EBITDA
Stretch is 150% outperformance of Budgeted non IFRS EBITDA
Note: as the performance criteria was not met for the 2019 STIP, no expense is recorded in Profit & Loss
Statement for these entitlements.
Valuation
The fair value of these share-based instruments was calculated as follows:
STI Rights
5 October 2018
LTI Performance Rights
5 October 2018
Method
Spot price
Strike price
Time to maturity
Volatility
Risk free rate
Fair value per unit (cents)
Share Price at grant
date
32.50 cents
0 cents
0.74 years
71.00%
1.87%
32.5000
Monte Carlo
32.50 cents
0 cents
2.74-3.74 years
71.00%
2.03%-2.14%
22.8000
The Company engaged an independent expert to provide the valuations, which are summarised below:
Recipient
FY 19 STI Performance Rights
5 October 2018
FY 19 LTI Performance Rights
5 October 2018
X Kris
G Nicholls
Other
Total
Number
558,659
226,006
1,389,244
2,173,709
$ Total fair value
Number
$ Total fair value
181,564
73,452
451,439
706,455
1,117,318
339,008
2,062,300
3,518,626
254,749
77,294
470,204
802,247
On 26 June 2019, Darren Smorgon was granted 750,000 ordinary share rights which will be issued following
shareholder approval. The rights will be subject to a vesting period of 2 years. These rights will be forfeited in full
and lapse should he not complete his engagement as Chairman for the 2 years. At 30 June 2019, a share based
payment of $657 was recorded.
70
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 20. Share based payments (continued)
Issue of share
Cash settled -KMP
Issue of options -KMP
Issue of options -Equity
Total
2019
$
2018
$
-
497,479
662,112
20,100
1,094,684
600,708
1,159,591
1,715,492
71
Consolidated
2019
$
2018
$
(6,905,498)
(7,728,812)
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 21. Cash flow information
(a) Reconciliation of net loss after tax to net cash flows from operations:
Loss after tax
(a) Non-cash flows in profit:
Depreciation expenses and assets written off
Loss allowance
Share based payments (settled in equity)
Fair value loss on financial liability
Income tax expense/(benefit)
4,349,295
255,891
1,159,591
1,540,850
(181,972)
218,157
(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 contract liabilities
Change in provisions
Cash flow provided from operations
(b) Non-cash financing and investing activities
Issue of 3,600,000 shares at $0.34 upon acquisition of VOD
Pty Ltd
Issue of 14,950,166 shares at $0.30 upon acquisition of
Medical Channel Pty Ltd
Issue of 16,666,667 shares at $0.24 upon completion of
performance share milestone 1
(4,514,166)
650,468
(284,040)
2,446,398
(899,506)
66,088
(2,316,602)
4,500,000
3,916,667
8,416,667
2,581,170
-
1,695,392
5,683,333
169,253
2,400,336
(566,387)
(476,872)
(293,033)
2,008,946
(533,736)
103,405
2,642,659
1,224,000
-
-
1,224,000
72
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 22. 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. Up to 15 February 2019, Board of Directors (Board) monitored the operating results of the Group
distinct business segments, being Swift Pty Ltd, VOD Pty Ltd, Living Networks and Web2TV as one consolidated Group
for the purposes of making decisions about resource allocation and performance assessment. Due to acquisition of
Medical Channel Pty Ltd on 15 February 2019, the focus is now on business unit profit, being the provision of digital
entertainment services in Australia and the provision of advertising revenue in Australia. This internal reporting
framework is the most relevant to assist the Board with making decisions regarding the company and its ongoing
activities.
Year Ended 2019
Swift Networks
Medical Channel
$
Total
$
22,144,532
(2,768,041)
26,075,189
2,568,651
(1,778,625)
12,806,144
24,713,183
(4,546,666)
38,881,333
(13,856,371)
(14,583,164)
(28,439,535)
(2,768,041)
158,032
(1,778,625)
1,605
(4,546,666)
159,637
(1,159,591)
(1,540,850)
-
-
-
-
(1,159,591)
(1,540,850)
-
(5,310,450)
(1,777,020)
(7,087,470)
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
Reportable segment assets
26,075,189
12,806,144
38,881,333
Unallocated
- Cash
- Receivables
- Other assets
Total assets
-
-
-
-
-
-
-
-
-
26,075,189
12,806,144
38,881,333
Reconciliation of reportable segment liabilities
Reportable segment liabilities
(13,856,371)
(14,583,164)
(28,439,535)
Unallocated
- Trade and other payables
Total liabilities
-
(13,856,371)
-
(14,583,164)
-
(28,439,535)
73
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 22. Segment information (continued)
Year Ended 2018
Swift Networks
$
Medical
Channel
$
Total
$
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
Reportable segment assets
Unallocated
Total assets
22,279,804
(212,308)
25,277,896
(17,417,634)
(212,308)
31,474
(1,695,392)
(5,683,333)
-
(7,559,559)
25,277,896
-
25,277,896
Reconciliation of reportable segment liabilities
Reportable segment liabilities
(17,417,634)
Unallocated
- Trade and other payables
Total liabilities
-
(17,417,634)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,279,804
(212,308)
25,277,896
(17,417,634)
(212,308)
31,474
(1,695,392)
(5,683,333)
-
(7,559,559)
25,277,896
-
25,277,896
(17,417,634)
-
(17,417,634)
74
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 23. 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.
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 2019, the Group has no 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.
(c)
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 is monitored on an ongoing basis.
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s
maximum exposure to credit risk at the reporting date was:
75
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 23. Financial risk management (continued)
Carrying amount
Cash and cash equivalents
Trade and other receivables
Consolidated
2019
$
2018
$
422,771
8,778,473
9,201,244
3,201,819
4,527,643
7,729,462
The Group makes use of a simplified approach, under AASB 9, in accounting for short term trade and other
receivables as well as contract assets and records the loss allowance at the amount equal to the expected
lifetime credit losses. In using this practical expedient, the Group uses its historical experience, external
indicators and forward looking information to calculate the expected credit losses using a provision matrix.
The Group has used a general approach, under AASB 9, in accounting for long term trade receivables. Loss
allowance for lifetime expected credit losses is recorded, if there is a significant increase in credit risk since
initial recognition of the financial asset. At 30 June 2019, there was no credit risk on long term receivables.
Loss Allowance
Closing loss allowance as at 30 June 2018 (calculated under AASB 139)
Amounts restated through opening retained earnings (Refer to Note 32)
Opening loss allowance at 1 July 2018 – calculated under AASB 9
Increase in loss allowance recognised in profit or loss during the year
Closing loss allowance as at 30 June 2019
Consolidated
2019
$
-
92,314
92,314
163,577
255,891
30 June 2019
Expected Loss
Rate
Trade
Receivables
Loss
Allowance
Content –
Short term
receivables
1.57%
Content –
Long term
receivables
Advertising –
Local Sales
Debtors
Advertising –
National Sales
Debtors
Total
0%
21.65%
0%
3,100,718
4,481,467
755,422
290,963
8,628,570
(92,314)
-
(163,577)
-
(255,891)
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-.
76
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 23. Financial risk management (continued)
(d)
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
Exposure to liquidity risk
As at reporting date the Group had sufficient 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:
Carrying
amount
Weighted
average
Maturity
interest
rate
6 months
or less
6-12
months
1-2 years
More than
2 years
$
%
$
$
$
$
Total
Contractual
cash flows
$
3,926,880
4,183,663
11,235,189
-
-
-
3,926,880
4,183,663
3,666,667
19,345,732
- 11,777,210
3,751,485
1,717,843
10,287,500
-
-
-
3,751,485
1,717,843
9,350,000
15,756,828
- 14,819,328
-
-
-
-
-
-
-
-
-
-
7,568,522
7,568,522
-
-
937,500
937,500
-
-
-
-
-
-
-
-
3,926,880
4,183,663
11,235,189
19,345,732
3,751,485
1,717,843
10,287,500
15,756,828
Consolidated - 2019
Financial liabilities
Trade payables
Other payables
Financial liability
Closing net book
amount
Consolidated - 2018
Financial liabilities
Trade payables
Other payables
Financial liability
Closing net book
amount
The Group maintains cash flow forecasts for the next 12 months on a rolling basis. This takes into consideration all
projected debt payments.
77
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 23. Financial risk management (continued)
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.
The fair value of deferred consideration is based upon market prices at reporting period.
The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the
reporting period.
Level 1: The fair value of financial instruments trade in active markets (such as policy traded derivatives and equity
securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for
financial assets held by the Group is in the current bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are no traded in an active market (for example, over-the-
counter derivatives) is determined using valuation techniques which maximises the use of observable market data
and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument
are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included
in level 3. This is the case for unlisted equity securities.
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 materiality equates to their fair values at balance date.
Note 24. 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 (Corporate Tax)
Non-audit services provided (Corporate Finance)
Consolidated
2019
$
2018
$
110,237
106,068
35,614
5,000
137,500
-
Total remuneration for audit and non-audit services
283,351
111,068
78
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 25. Parent entity
(a) Statement of Profit or Loss and other
comprehensive income
The individual financial statements for the parent entity
show the following aggregate amounts:
Net loss attributable to equity holders of the Company
(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
Parent entity
2019
$
2018
$
(4,062,851)
(8,702,446)
11,560
17,266
19,929,782
14,548,220
19,941,342
14,565,486
(5,670,862)
-
(5,814,326)
(10,287,500)
(11,485,188)
(10,287,500)
8,456,154
4,277,986
46,546,370
38,305,351
849,652
849,652
(38,939,868)
(34,877,017)
8,456,154
4,277,986
The Parent has Contingent Liabilities as at 30 June 2019 (refer to Note 31) and has entered into an overdraft bank
facility (refer to Note 13).
The Parent has no Contingent assets and no other contractual obligations on behalf of the Group as at 30 June 2019.
79
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 26. Commitments
Operating lease commitments
Office premises
The Group leases office premises under an operating lease
expiring in five 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
Consolidated
2019
$
2018
$
-
-
-
-
525,863
533,745
1,650,123
2,709,731
Lease of office premises is now recorded under Leases (refer to Note 15) at 30 June 2019.
ERP implementation commitments
ERP implementation costs and license fees
The Group entered in a three year payment plan for ERP costs.
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
-
-
-
-
121,200
121,200
121,200
363,600
Note 27. Related party transactions
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 2019.
Short term employee benefits
Share based payments – cash
Share based payments – non cash
Post-employment benefits
Consolidated
2019
$
2018
$
927,534
978,933
-
20,100
497,479
1,094,684
272,814
93,529
1,697,827
2,187,246
80
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 27. Related party transactions (continued)
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.
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
Payments received from Wenro Holdings Pty Ltd, a company of
which Robert Sofoulis is a director and Ryan Sofoulis is associated
with, as an incentive for the renewal of an operating lease
Payments received from Wenro Holdings Pty Ltd, a company of
which Robert Sofoulis is a director and Ryan Sofoulis is associated
with, for Project Management Services provided by the Company in
relation to renovation of office premises
Consolidated
2019
$
2018
$
434,261
433,538
-
-
439,523
71,500
Robert Sofoulis is entitled to performance shares relating to the share sale agreement of Swift Networks Pty Ltd and
Wizzie Pty Ltd (refer to Note 14).
Medical Media Investments Pty Ltd is entitled to shares in deferred consideration for the acquisition of Medical
Channel Pty Ltd, and performance shares upon achievement of milestones. Darren Smorgon is considered a related
party via Sandbar Investments Pty Ltd, an entity controlled by a close family member that holds an investment in in
Medical Media Investments Pty Ltd. (refer to Notes 14 and 30).
Loans to related parties
Opening balance
Funds loaned to Xavier Kris1
Funds repaid
275,000
-
-
275,000
(275,000)
-
Closing balance
1 The unsecured loan was subject to an arm’s length interest rate and repayable by no later than 30 April 2019. The
loan was repaid in full on 16 August 2018.
-
275,000
81
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 27. Related party transactions (continued)
Amounts outstanding at reporting date
(i) Payables
(ii) Receivables
Transactions with other related parties
Entities managed by Key Management personnel
Share based payments to KMP and other non KMP - non cash
Share based payments to KMP and other non KMP - cash
settled
Total share-based payments
Consolidated
2019
$
2018
$
38,851
-
57,543
275,000
1,159,591
1,695,392
-
20,100
1,159,951
1,715,492
No other transactions or loans existed during the year and as at reporting date between the Company and with key
management personnel.
Note 28. Group entity
Ultimate parent entity
The ultimate parent entity in the wholly owned Group is Swift Media Limited.
Name of entity
Parent entity
Swift Media Limited
Controlled entities
Swift Networks Pty Ltd
Medical Channel Pty Ltd
VOD Pty Ltd
Movie Source Pty Ltd
Wizzie Pty Ltd
Stanfield Funds Management Limited
Country of
residence /
establishment
Ownership interest
30 June 2019
%
30 June 2018
%
Australia
100%
100%
Australia
Australia
Australia
Australia
Australia
Hong Kong
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
100%
Of the controlled entities, only Swift Networks Pty Ltd, VOD Pty Ltd and Medical Channel Pty Ltd were
operating during the financial year.
82
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 29. EPS
Consolidated
2019
$
2018
$
Net loss from continuing operations for the year
(6,905,498)
(7,728,812)
Weighted average number of ordinary shares for the purpose of basic
earnings per share
132,219,511
112,000,798
No.
No.
Basic loss per share (cents)
Diluted loss per share (cents)
There are no instruments considered to be dilutive.
(5.2)
(5.2)
(6.9)
(6.9)
83
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 30. Business Combination
Year ended 30 June 2019
Summary of acquisition - Medical Channel Pty Ltd
On 15 February 2019 the Group acquired 100% of the issued share capital of Medical Channel Pty Ltd. 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:
Ordinary shares issued (14,950,166 shares at F.V of
$0.301/share on 15 February 2019)
Deferred consideration (Refer to Note 14)
Adjustment to consideration
Total Purchase Consideration
The assets and liabilities recognised as a result of the acquisition are as follows:
Cash
Trade receivables
Other receivables
Plant & equipment
Intangibles – Practice Sites
Deferred tax asset
Trade payables
Other payables
Provisions
Other current liabilities
Deferred tax liabilities
Other non current liabilities
Net identifiable assets
Add: Goodwill
$
4,500,000
3,323,505
(151,000)
7,672,505
751,720
361,992
36,675
2,858,727
4,139,024
2,370,814
(478,078)
(2,007,975)
(158,041)
(899,316)
(1,138,232)
(1,102,230)
4,735,080
2,937,425
Net assets acquired
(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 is net of ECL, no provision for impairment is required.
(iii) Revenue and net profit before tax of Medical Channel included in the consolidated statement of profit or loss and
other comprehensive income from the acquisition date of 15 February 2019 to 30 June 2019
were $2,568,651 and ($1,777,020), this includes acquisition related costs of $416,605. If acquisition occurred on 1 July
2018, revenue and net profit before tax would be $6,849,736 and ($4,044,378).
7,672,505
Significant accounting estimates and judgements
The fair value of acquired assets was determined using the following key assumptions:
Practice Sites: costs incurred in supply and installation of equipment across all operating sites
Deferred consideration: The Directors have assessed the likelihood of reaching the various performance
share milestones at acquisition date (refer Note 14) based on the share price as at that date and
management’s probability of reaching the milestones.
Deferred tax: Deferred tax assets and liabilities have been brought to account at acquisition 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
84
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 30. Business Combination (continued)
Year ended 30 June 2018
Summary of acquisition - Movie Source Pty Ltd and VOD Pty Ltd
On 31 August 2017 the Group acquired 100% of the issued share capital of Movie Source Pty Ltd and VOD Pty Ltd. The
Group has 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 (3,600,000 shares at F.V of $0.34/share
on 31 August 2017)
Adjustment payment to Vendor (paid in cash)
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
Plant & equipment
Intangibles - Customer Contracts(iii)
Intangibles – Supplier Contracts
Intangibles – Product Development)
Intangibles – Other
Trade & other payables
Provisions
Unearned Income
Deferred tax liabilities
Net identifiable assets
Add: Goodwill
Net assets acquired
$
5,100,000
1,224,000
457,257
6,781,257
255
38,673
1,748,028
1,485
122,220
1,271,523
123,610
650,000
2,699
(441,552)
(259,831)
(836,667)
(614,540)
1,805,903
4,975,354
6,781,257
(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 Movie Source Pty and VOD Pty Ltd included in the consolidated statement of
profit or loss and other comprehensive income from the acquisition date of 1 September 2017 to 30 June 2018
were $2,310,725 and ($625,192).
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
At 30 June 2017, the Group applied the fair value at identifiable assets and liabilities of Web2TV and Living
Networks. At 31 Dec 2017, an adjustment has been made to recognise an intangible asset for customer contracts of
$250,000 and $200,000 for Web2TV and Living Networks respectively, with a comparative net decrease in Goodwill
of $175,000 and $140,000.
85
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 31. Contingencies
Liabilities under guarantees1
Total Contingent liabilities
1 Bank guarantees for key customer contracts, lease premises and equipment
Note 32. Changes in accounting policies
2019
$
2018
$
1,551,878
1,551,878
313,711
313,711
This note explains the impact of the adoption of AASB 9 Financial Instruments, AASB 15 Revenue from Contracts with
Customers and AASB 16 Leases on the Group’s financial statements and discloses the new accounting policies that
have been applied from 1 July 2018, where they are different to those applied in prior periods.
Impact on the Financial Statement
The Company assessed the impact of adoption of new accounting policies. The cumulative method has been
adopted therefore comparatives are not restated.
86
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 32. Changes in accounting policies (continued)
The following tables show the adjustments recognised for each individual line item for Statement of Financial
Position due to the changes in accounting policies:
Statement of
Position (extract):
Financial
Current Assets
Trade and other
receivables
Total Current Assets
Non Current Assets
Right of use assets
Other non current assets
Intangible assets
Total Non Current Assets
Total Assets
Current Liabilities
Provisions
Unearned Revenue
Contract liabilities
Lease liabilities
Total Current Liabilities
Non Current Liabilities
Provisions
Unearned Revenue
Contract liabilities
Lease liabilities
Total Non Current
Liabilities
30 June 2018
($)
AASB 9 (a)
($)
AASB 15 (b)
($)
AASB 16 (c)
($)
1 July 2018
Restated
$
3,447,658
(92,314)
8,317,183
(92,314)
-
-
-
-
3,355,344
8,224,869
-
-
13,167,992
16,960,713
25,277,896
72,643
254,930
-
-
15,919,140
290,593
270,400
-
-
1,498,493
-
-
-
-
(92,314)
-
371,300
(517,996)
(146,696)
(146,696)
1,451,603
-
-
1,451,603
1,451,603
-
(254,930)
254,930
-
-
(72,643)
-
-
321,103
248,460
-
(270,400)
270,400
-
(290,593)
-
-
1,517,645
-
-
-
-
-
-
-
-
-
1,451,603
371,300
12,649,996
18,265,620
26,435,568
-
-
254,930
321,103
16,167,600
-
-
270,400
1,517,645
-
1,227,052
2,725,545
Net Assets
7,860,263
(92,314)
(146,696)
(23,909)
7,597,344
Equity
Accumulated Losses
Total Equity
(33,047,431)
7,860,263
(92,314)
(92,314)
(146,696)
(146,696)
(23,909)
(23,909)
(33,310,350)
7,597,344
87
SWIFT MEDIA LIMITED
AND CONTROLLED ENTITIES
ABN 54 006 222 395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 32. Changes in accounting policies (continued)
(a)
(b)
(c)
Under AASB 9, a revision was made to the impairment methodology on the Group’s trade receivables, impact
shown on trade receivables and retained earnings.
Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained
were previously capitalised under Intangible assets and amortised over the term of the contract. Under AASB
15, these costs are reallocated to retained earnings.
Costs directly attributable to obtaining a contract were previously capitalised under Intangible assets and
amortised over the term of the contract. Under AASB 15, these costs are reclassified as Other Non Current
assets.
Under AASB 16, adjustment was made to recognise all leases in the Statement of Financial Position. Modified
retrospective approach was adopted and adjustment made to the opening retained earnings in the current
period. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities from 1 July
2018 was 5.59%.
Note 33. Events subsequent to reporting date
On 31 July 2019, the Class B performance share milestone was reached, representing revenue generation from more
than 53,000 rooms receiving a Swift service as defined in the share purchase agreement executed in November 2015
with the former owners of Swift Networks Pty Ltd. Accordingly 16.67 million shares were issued to Swift’s founders
on 2 August 2019.
On 20 September 2019 Swift entered into a financing agreement with L1 Capital Global Opportunities Fund and Lind
Global Macro Fund LP for up to $3.6 million. The funding will provide the necessary capital to fund strategic
initiatives to be rolled out under the new Swift leadership team. Under the terms of the financing agreement, L1
Capital will provide $3.6 million split across 4 tranches every 75 days to Swift for the purchase of convertible notes.
The convertible notes will be issued at a 10% discount to the $4 million face value of the notes, with a 12-month
maturity from each tranche’s drawdown. The conversion price for each tranche is equal to the lower of 92% of an
agreed VWAP formula prior to a conversion notice or 130% of the 5-day VWAP on the day prior to the issuance of
the tranche. The terms of the financing agreement also require Swift to issue 2,000,000 ordinary shares for no
consideration as “collateral shares”, which can be used for the conversion of the notes or may be bought back by the
Company for nominal consideration upon maturity.
There were no other events subsequent to reporting date to disclose at the date of signing of this report.
Note 34. Company details
The registered office and principal place of business of the Company is:
Swift Media Limited
1 Watts Place
BENTLEY WA 6102
Australia
88
SWIFT MEDIA 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 27 to 88 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 2019 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 Directors.
Chairman
Darren Smorgon
Dated this 30th day of September 2019
89
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 Media Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Swift Media Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2019, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial 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 2019 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.
Material uncertainty related to going concern
We draw attention to Note 2 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the group’s
ability to continue as a going concern and therefore the group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
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.
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. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Acquisition accounting of Medical Channel Pty Ltd
Key audit matter
How the matter was addressed in our audit
During the financial year ended 30 June 2019, the
Group acquired the business of Medical Channel
Our procedures included, but were not limited to the
following:
Pty Ltd, which has been accounted for on a
provisional basis as disclosed in Note 30 of the
financial report.
·
Reviewing the acquisition agreement to
understand the terms and conditions of the
acquisition and confirming our understanding of
Accounting for acquisitions is complex and involves
the transaction with management;
a number of significant judgements and estimates
as disclosed in Note 2(ac)(viii). The key areas of
significant judgement and estimation in relation to
the transaction was the:
·
Assessing the estimation of the deferred
consideration by challenging the key
assumptions including the probability of
achievement of future revenue targets;
·
Determination of fair value of the
deferred consideration, and accordingly
the total purchase consideration, for the
transaction; and
·
Identification and measurement of the
fair value of assets and liabilities
acquired.
·
Challenging the methodology and assumptions
utilised to identify and determine the fair value
of the assets and liabilities acquired; and
·
Assessing the adequacy of the Group’s
disclosure of the acquisition in Note 2(ac)(viii)
and Note 30 of the financial report.
Recoverability of intangible assets
Key audit matter
How the matter was addressed in our audit
Note 10 to the financial report discloses the
Our procedures included, but were not limited to the
individual intangible assets and the assumptions
following:
used by the Group in testing these assets for
impairment.
·
Assessing the appropriateness of the Group’s
categorisation of Cash Generating Units (CGUs)
This was determined to be a key audit matter as
and the allocation of assets to the carrying
management’s assessment of the recoverability of
value of CGUs based on our understanding of
the intangible assets is supported by a value in use
the Group’s business and the Group’s internal
cash flow forecast which requires estimates and
reporting;
judgements about future performance.
·
Evaluating management’s ability to accurately
These include judgements and estimates over the
forecast cash flows by assessing the precision
expectation of future revenues, anticipated gross
of the prior year forecasts against actual
profit margin, growth rates expected and the
outcomes;
discount rate applied.
·
Challenging key inputs used in the discounted
cash flows calculations including the following:
×
×
×
×
In conjunction with our valuation
specialist, comparing the discount rate
utilised by management to an
independently calculated discount rate;
Comparing growth rates with historical
data and economic and industry growth
forecasts;
Comparing the Group’s forecast cash
flows to the board approved budget;
Performing sensitivity analysis on the
revenue, growth rates, gross profit
margins and discount rates; and
·
Assessing the adequacy of related disclosures in
Note 10 of the financial report.
Revenue recognition
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 2 of the financial report, the
Our procedures included, but were not limited to the
Group has applied AASB 15 “Revenue from
following:
contracts with customers (AASB 15)” from 1 July
2018 using the cumulative approach.
·
Discussing with management and assessing the
financial impact of the new revenue standard
The application and implementation of AASB 15 is
and changes to the Group’s revenue recognition
subject to significant judgements in respect of the
policies on transition 1 July 2018;
identification of separate obligations and the
recognition of revenue at either a point in time or
over time.
Revenue recognition is a key audit matter due to
the quantum of revenue generated from contracts
and the nature of the key estimates and
judgements.
·
Obtaining and reviewing a sample of contracts,
considering the terms and conditions,
performance obligations of these
arrangements, its stand-alone pricing and
assessing the accounting treatment under AASB
15;
·
Challenging management’s assessment of the
performance obligations promised within a
contract;
·
Performing cut-off procedures to assess
whether revenue was captured in the
appropriate financial year;
·
Performing detailed analytical procedures to
identify any revenue trends outside our
expectations; and
·
Assessing the adequacy of the disclosure in
Note 2 and Note 3 in the financial report.
Other information
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 2019, 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 12 to 23 of the directors’ report for the
year ended 30 June 2019.
In our opinion, the Remuneration Report of Swift Media Limited, for the year ended 30 June 2019,
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
Dean Just
Director
Perth, 30 September 2019
Shareholder information
A.
Substantial Shareholders
The following have a relevant interest (>5%) in the capital of Swift Media Limited as at 23 September 2019
Substantial ordinary shareholders
No. of ordinary shares
held
Percentage held of
Issued Ordinary
Capital
MR ROBERT NICHOLAS SOFOULIS & RELATED
ENTITIES
63,873,334
36.49%
MEDICAL MEDIA INVESTMENTS PTY LTD
14,950,166
8.54%
B.
Distribution of Equity Securities
(i)
Analysis of numbers of equity security holders by size of holding as at 20 September 2019
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
63
379
176
421
156
1,195
-
-
-
12
14
26
95
Shareholder information (continued)
C.
Equity Security Holders
Twenty largest quoted equity security holders (23 September 2019)
1
2
3
4
5
6
7
8
9
SOFOULIS HOLDINGS PTY LTD
MEDICAL MEDIA INVESTMENTS PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
TRI-NATION HOLDINGS PTY LTD
MR JOHN COLIN LOSEMORE
SUETONE PTY LTD
ARADHIPPOU GROVE PTY LTD
BNP PARIBAS NOMS PTY LTD
BOTSIS HOLDINGS PTY LTD
PAUL DOROPOULOS
10
11 MR JAMES FLORIAN PEARSON
12
13
14
15 MR RICHARD JAMES GOUDIE
16 MR DAVID WHITEHOUSE & MR ANTHONY KEITH
ROBERT GOUDIE FINANCIAL ADVISERS PTY LTD
SHARIC SUPERANNUATION PTY LTD
BNP PARIBUS NOMINEES PTY LTD
STEPHEN SHADFORTH
17 MR RUSSELL NEIL CREAGH
18
19
CITICORP NOMINEES PTY LTD
L1 CAPITAL GLOBAL OPPORTUNITIES MASTER FUND,
LTD
ALAN SCOTT NOMINEES PTY LTD
20
Total
Balance of register
Grand total
Ordinary shares
Number
held
63,873,334
14,950,166
5,067,199
5,520,252
4,200,000
3,990,000
3,162,386
3,092,776
2,459,383
2,128,889
2,096,787
2,000,000
1,850,000
1,561,298
1,500,000
1,300,000
1,120,350
1,116,341
1,000,000
1,000,000
122,989,161
52,063,107
Percentage
of issued
shares
36.49
8.54
2.89
3.15
2.40
2.28
1.81
1.77
1.40
1.22
1.20
1.14
1.06
0.89
0.86
0.74
0.64
0.64
0.57
0.57
70.26
29.74
175,052,268
100.00
96
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 $0.15 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
STI Rights to Deferred Shares
LTI Rights to Deferred Shares
Performance Shares Class C
Performance Shares Class D
Performance Shares Class E
Performance Shares Class F
Performance Shares Class G
Performance Shares Class H
Number of Options
Number of
Holders
Holders with more
than 20%
5,133,333
1,000,000
1,000,000
3,865,655
7,062,384
18,272,425
16,611,296
8,305,648
8,305,648
8,305,648
8,305,648
24
1
1
14
13
1
1
1
1
1
1
4
-
-
1
2
-
-
-
-
-
-
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 February 2024. The milestones in relation to the Performance Shares are:
Under the agreement with vendors of Medical Channel, shares could be issued in the first five years after
completion upon satisfaction of the following milestones:
i. Milestone 1 - Issue of 18,272,425 performance shares upon $10,000,000 gross revenue
ii. Milestone 2 - Issue of 16,611,296 performance shares upon $11,000,000 gross revenue
iii. Milestone 3 - Issue of 8,305,648 performance shares upon $11,500,000 gross revenue
iv. Milestone 4 - Issue of 8,305,648 performance shares upon $12,000,000 gross revenue
v. Milestone 5 - Issue of 8,305,648 performance shares upon $12,500,000 gross revenue
vi. Milestone 6 - Issue of 8,305,648 performance shares upon $13,000,000 gross revenue
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.
97
Shareholder information (continued)
H.
Securities subject to escrow
The following securities are currently subject to escrow:
Securities
Escrow Period
Fully Paid Shares
18 months from quotation
Release Date
15 June 2020
Number
14,950,166
I.
Statement in relation to Listing Rule 4.10.19
The Directors of Swift Media Limited confirm in accordance with ASX Listing Rule 4.10.19 that during the
period from reinstatement to official quotation to 30 June 2019, the Company has used its cash, and assets
that are readily convertible to cash, in a way consistent with its business objectives.
98
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:
ensuring a good flow of information between the Board, its committees, and Directors;
(a)
(b) monitoring policies and procedures of the Board;
(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:
(e)
(f)
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 2019 there is one woman in senior executive positions in the Company, and 29 women employees
across the Company, representing 27% 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 with the process disclosed in the Company’s Board performance evaluation policy.
99
CORPORATE GOVERNANCE STATEMENT
This policy is to ensure:
(g)
(h)
(i)
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 effectively 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.
Recommendation 1.7
The Chief Executive Officer will be responsible for evaluating the performance of the Company’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 Executive 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.
Following the recent appointment of a new Chief Executive Officer, an evaluation will be conducted during the
current financial year.
Principle 2: Structure the board to add value
Recommendation 2.1
The Board has Remuneration and Nomination Committee consisting of independent Chairman Darren Smorgon and
non-executive Directors Paul Doropoulos and Robert Sofoulis.
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 Nomination Committee and is disclosed on the Company’s website.
The attendance of the members of the Remuneration and Nomination Committee is shown in the Directors' Report.
Recommendation 2.2
The mix of skills and diversity which the Board is looking to achieve in its composition is:
(j)
(k)
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.
100
CORPORATE GOVERNANCE STATEMENT
Currently the Board is structured as follows:
(l)
(m)
(n)
(o)
Darren Smorgon (Independent Chairman, appointed 15 February 2019);
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 Darren Smorgon 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 of 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.
101
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 auditor 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 250S 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:
(p)
(q)
(r)
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 contact and continuous disclosure issues.
It forms part of the Company’s corporate policies and procedures and is available to all staff.
The Chair and the Chief Executive Officer manage 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.
102
CORPORATE GOVERNANCE STATEMENT
Principle 6: Respect the rights of security holders
Recommendation 6.1
information about
The Company provides
its website at
http://www.swiftmedia.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
investors via
itself and
(s)
(t)
(u)
(v)
(w)
(x)
relevant announcements made to the market via ASX;
media releases;
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:
(y)
(z)
(aa)
(bb)
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.
103
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 Risk 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 management 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:
(cc)
(dd)
(ee)
(ff)
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:
(gg) monthly reporting to the Board in respect of operations and the financial position of the Company; and
(hh) 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 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 each of its corporate governance statements.
104
CORPORATE GOVERNANCE STATEMENT
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1
The Board has a Remuneration and Nomination Committee consisting of independent Chairman Darren Smorgon
and non-executive Directors Robert Sofoulis and Paul Doropoulos.
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.
The attendance of the members of the Remuneration and Nomination Committee is shown in the Directors' Report.
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 will 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 Company’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 economic 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:
(ii)
(jj)
(kk)
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.
105
Corporate Directory
Directors
Darren Smorgon
Chairman
Paul Doropoulos
Non-Executive Director
Robert Sofoulis
Non-Executive Director
Ryan Sofoulis
Executive Director
Company Secretary
Stephen Hewitt-Dutton
Chief Executive Officer
Pippa Leary
Chief Financial Officer
George Nicholls
Corporate Details
Swift Media Limited
ACN: 006 222 395
ABN: 54 006 222 395
www.swiftmedia.com.au
Registered Office
1 Watts Place
BENTLEY WA 6102
Telephone: +61 8 6103 7595
+61 8 6103 7594
Facsimile:
Auditor
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
Link Group
Level 12
QV1 Building
PERTH WA 6000
T: +61 8 9211 6650
F: +61 8 9211 6670
W : linkmarketservices.com.au
Stock Exchange Listings
The ordinary shares of Swift Media
Limited are listed on the Australian Stock
Exchange
(Code: SW1)
106