SWIFT MEDIA
LIMITED
ANNUAL REPORT
2020
CONTENTS
FY20 Highlights
Chairman’s Message
CEO’s Report
Directors’ Report
Auditor’s Independence Declaration
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Governance Statement
Corporate Directory
2
3
5
12
27
28
32
84
85
89
93
101
Swift is a specialist technology company that
provides entertainment and communication
solutions to connect and engage
communities
MINING & RESOUCES
Delivering secure closed networks with customised
communications and content.
o Design and construction of networking infrastructure in
o
remote locations
Site managed communications system delivered via TV and
smart device applications
o Movies, TV on Demand, Sport (Foxtel partnership)
Indigenous, mental health and wellbeing content
o
o Remote and onsite technical support
AGED CARE
Making life better by helping residents and their carers
engage, communicate and belong.
o
Time saving, facility managed communications,
noticeboard and live streaming system delivered via TV
o Aged Care specific relaxation and exercise content to
improve quality of life, reduce isolation and support those
living with dementia
In-room access to premium entertainment curated
specifically for Aged Care
Family mobile application to stay connected with loved
ones
o
o
HEALTH & WELLBEING
Australia’s leading DOOH health & wellbeing network in
contextually relevant, captive audience environments
o Digital Out of Home advertising
o Communications tool to help meet Standards
o Health & Wellbeing content designed to inform, educate,
and entertain patients at the point of care
Following strategic review, the Health & Wellbeing network
has been significantly restructured to reduced costs
o Partnership with XTD and Inside Practice to drive national
o
advertising growth
FY20 HIGHLIGHTS
2
FY20 HIGHLIGHTS
Strong overall revenue growth, led by growth in Aged Care and increased project
revenues in Mining and Resources
21.2
23.1
17.9
19.2
Consolidated
Revenue ($m)
Recurring
Revenue ($m)
FY19
13.6
FY20
13.5
FY19
FY20
3.9
3.3
Mining & Resources
Revenue ($m)
Project
Revenue ($m)
FY19
FY20
FY19
FY20
Residential
Aged
Care Revenue ($m)
1.9
2.1
FY19
FY20
290
327
EBITDA ($m)
FY19
FY20
-1.2
40.9
-1.3
41.3
Revenue Per
Room ($)
FY19
FY20
FY19
FY20
Gross Profit (%)
CHAIRMAN’S MESSAGE
Dear Fellow Shareholder,
I am pleased to present the 2020 Annual Report for
Swift Media Limited (ASX: SW1), my second since
becoming the Chairman in June 2019.
Despite numerous challenges and difficult market
conditions, your Leadership Team has continued to
make progress in delivering on the strategy
to simplify the business and to build a stronger and
more streamlined Swift. The business is far better
run, has a clearer go to market strategy and is
closer to fulfilling its potential than ever before.
Your board and management team have worked
incredibly hard and temporarily taken substantial
pay cuts to reduce business costs following the
impact of COVID-19 and I would like to
acknowledge their dedication and commitment
up front.
FY20 revenues were $23.1 million representing a 9% increase over the prior comparable period
after adjusting for one-off items. The business generated an underlying EBITDA1 loss of $1.3
million after adjusting for one-off costs. These results were lower than we had forecasted due
to the impact of COVID-19 and reflect a year in which many changes were made to streamline
and simplify the business.
Highlights of the year worth calling out include:
•
Strategic focus – reducing the number of verticals in which we operate from 11 to 3;
• New customer focussed products – launching Swift Plus specifically to target the Aged
Care vertical. This is a proprietary, fit for purpose communications and entertainment
system developed and built in house based on customer input, and launched on time
and on budget;
• Capability – we strengthened our senior team with a new Sydney based CFO, Geoff
Greenberg, a new Chief Customer and Strategy Officer, Kirsty Davison, and two new
highly capable and committed independent non-executive directors, Katherine Ostin
and Peter Gibbons;
•
Efficiency – following the outbreak of COVID-19 we moved quickly to reduce our cost
base and protect Swift against a protracted downturn. Compared to last year, and
after taking into account the full year impact of the Medical Media acquisition, our
operating cost base decreased 13%;
1 EBITDA (earnings before interest, income tax expense, depreciation and amortisation) is a financial measure which is
not prescribed by Australian Accounting Standards (‘AAS’) and represents the profit/(loss) under AAS which has been
adjusted to eliminate the effects of tax, depreciation and amortisation, fair value adjustments, impairment expenses,
loss on disposal of assets and other one-off items including restructuring costs. In the prior year, underlying EBITDA has
also been adjusted to exclude the impact of non-recurring license revenues. A reconciliation between EBITDA and
statutory net loss after tax is provided the Operating and Financial Review section.
CHAIRMAN’S MESSAGE
4
• New contract wins - despite COVID-19 access restrictions, we won $3.2m in new
contracts with a range of mining companies including Rio Tinto, Mineral Resources
and Atlas Iron, and aged care facilities including Applewood, Rivervue and Adventist
Care Rossmoyne Waters;
•
Funding – we agreed an $8m debt facility with Pure Asset Management
and completed two equity capital raises totalling $5.2m to fund the company’s
strategy. Importantly, we extinguished the convertible loans with Lind and L1 that had
caused frustration for shareholders and materially impacted the share price.
Throughout the pandemic, Swift’s top priority has been to protect the health and wellbeing of
our employees while continuing to support our clients. Your team has proven resilient to the
challenges and demands of the last six months. We have continued to transition Swift to be
able to capitalise on improved market conditions as access returns.
We are clearly living and operating in extraordinary times. COVID-19 has presented some
specific business challenges including restricted access to a significant number of customers in
aged care due to the critical importance of biosecurity, as well as the ability to attract
investment in advertising from SME’s within our health and wellness media network.
As we head into FY 2021, Swift is intensely focused on growing sales revenues while carefully
managing costs. Aside from our confidence in having a great aged care product with good
early interest from customers, the challenges being faced by the aged care sector means we
will focus our efforts on the mining and resources vertical. Swift’s deep domain
expertise and highly competitive products in the mining and resources sector position our
company well. Planned increases in mining site capital expenditure over the next several years
should provide attractive growth opportunities for your company.
I would like to thank our leadership team and staff for their dedication and contribution in these
unsettled times. I would like to thank our Chief Executive Officer, Pippa Leary for her leadership
and my fellow directors for their support and wise counsel.
Finally, I would like to thank our customers for placing their trust in us to deliver and
maintain our market leading communication and entertainment solutions and to all our
shareholders for sharing the common vision to deliver on Swift’s strong potential.
I pragmatically expect the months ahead to remain challenging but look forward to updating
you on several exciting initiatives in the months ahead.
Darren Smorgon
Non-Executive Chairman
CEO’S REPORT
Dear Fellow Shareholder,
It will not surprise you to read that COVID-19
disrupted our year. While our number one
priority is to continue to protect our
people, temporary disruptions to site access at
mining villages and aged care facilities in the
fourth quarter did impact our results.
But that’s not the complete story. When I
came to Swift a year ago, I knew we had to
effectively rebuild the business. Swift had lost
focus and costs were too high. Product
development had slowed, and sales had
become ineffective.
We have been working through the year,
and prior to COVID-19, to make changes to re-
align the focus of the business from several
years of growth by acquisitions and new
partnerships, to reducing the number of
markets in which we compete – but of course
competing much more effectively in our
chosen verticals. This has meant increasing investments in product and people in some areas
and reducing investment and cost in other areas.
The results for FY20 reflect the transition we are making to become a fitter, faster and more
profitable company.
For FY20 Swift reported consolidated revenue growth of +9% over the prior comparable period.
Our project revenues increased 18% and recurring contract revenue was up 7%, remaining
stable at 83% of total revenues.
Underlying EBITDA1 for FY20, which excludes the impact of non-recurring, non-cash items of $9.4
million and one-off restructuring and acquisition related expenses of $1.9 million, was a loss of
$1.3 million or $0.1 million lower than the prior year. Further excluding the impact of the Medical
Media acquisition, which was completed in February 2019, underlying EBITDA increased 20% to
a loss of $0.8 million.
Consolidated operating expenses for the year increased in part due to the full year impact of
absorbing costs associated with the Medical Media acquisition, which was loss making at the
time of acquisition. Excluding the impact of Medical Media, our operating expenses declined
by 13% over the prior corresponding period and are tracking at an even lower run rate following
some post COVID-19 cost outs.
But rather than dwell on the challenges that came with the old Swift, I’d like to focus on what
we have achieved, and our plans for growth for the new Swift.
Let me share with you the foundations for our future success and why I am optimistic Swift can
fulfill its great potential. I joined your company because I could see the opportunity for Swift to
become a much larger and more profitable business that can deliver strong and sustainable
returns for shareholders. I am committed to delivering on that promise.
1 Refer to Page 3 (Chairman’s message for definition).
CEO’S REPORT
6
Our greatest strength is our people. Through COVID-19 our people have been exceptional. They
have quickly moved to remote working, have adapted to a more streamlined organisational
structure and have gone above and beyond to care for clients during this difficult period. Let
me say upfront, I am proud of their contribution and dedicated efforts in these anxious times.
We continue to strengthen our team. As Darren mentioned Geoff Greenberg, Kirsty Davison,
Katherine Ostin and Peter Gibbons joined us this year. They have tremendous experience,
capabilities and connections. We can leverage these assets to drive growth. As I like to say, the
value of our team far exceeds our market capitalisation.
We have the leading domain expertise in our markets. We know what our clients’
communication and engagement needs are, and what their customers want to watch. We
curate the content specifically for them. We also know how to deliver it cost effectively.
Technology is in our DNA. We design and build our own technology solutions in house. We
launched Swift Plus first in the Aged care market. Swift Plus is our new in house designed and
built communication and entertainment system. It solves both the social isolation problems for
residents and their families that COVID-19 is highlighting, as well as helping the facilities meet
their OHS compliance requirements across multiple sites. Even with the lockdown we are
making sales and have installed our proprietary new system in 800 rooms across five aged care
facilities. We also evolved the “My Family My Community” app to better enable providers to
keep families updated and remain in contact with loved ones in aged care facilities. For those
of you that have a loved one in such a facility, you’ll understand how important this is.
Our business model is another strength. As a specialist technology company, we provide closed
loop entertainment and communications solutions to connect and engage with communities.
Think of us like the entertainment system on an airline – but with far more customer specific
expertise, curated content and the ability to allow the airline to communicate and engage with
you directly. Closed loop is an important point too. It enables access to early release content
and provides some protection from commoditisation. We source content for our specific
audiences from all over the world – including live sport and blockbuster movies.
Our revenue model is resilient. We engage with clients on 3-5 year contracts where the
facility pays the fee to view. These contracts generate recurring revenue with very high levels of
customer retention. We are not driven by cyclical advertising revenues in our two key businesses
– once the system is installed it’s a recurring subscription model. These high levels of recurring
revenues give us the ability to plan and invest for growth.
Swift is a far more focused and streamlined company with a better balance sheet. We have
reduced the number of verticals we operate in from 11 down to three:
• Mining and Resources, where we have our largest business accounting for around 58%
of group revenues, is in full production. We are a leader in iron ore, and we are
beginning to serve other mine sites in gold, lithium and copper. There will be plenty of
opportunity for growth for us. We have tailored our Aged Care product, Swift Plus, to
Mining and Resource clients. It enables us to engage the mine site at the
exploration stage in the mine life cycle and we are having success in being at the
camp from the beginning. These are long duration relationships. Importantly, the sector
is in growth mode. We want to make sure we are well placed to fully capitalise on the
upcoming $50bn mining camp capex boom.
• Aged Care is our second largest business where we serve over 12,000 rooms. The sector
is changing. We fully support the Royal Commission in setting new, higher standards of
care. We are part of that new world solution. Our entertainment and communications
systems have real benefits for aged care operators and residents. The average age of
residents is 85 years old with basic free to air TV in 85% of rooms. About 50% of residents
are living with dementia, depression or suffering isolation and carers have limited time to
service their needs. Lockdown has further shone a light on the need for a solution to
social isolation. Our product does that.
We have specially curated content for residents, easy to use communication platform
for facilities and a mobile application for families. We have completed a deep dive on
the customer demographic and changing requirements in this vertical and while there
are restrictions on access to facilities as they prioritise biosecurity, COVID-19 also creates
an excellent long-term growth tailwind. We are well placed to grow as access resumes.
• Our last vertical is Health and Wellbeing (formerly Medical Media). When we acquired
the business, it was burning cash. It had an unsustainable cost structure. We have now
fixed that. In June, we announced our partnership with XTD Ltd (ASX: XTD). In a nutshell
we have outsourced national sales while we focus on our strength in local sales. In
exchange we get a share of revenue with a good guaranteed minimum for the next
three years. We continue to explore ways to leverage further value in this part of the
business.
As COVID-19 first hit we also moved quickly to streamline our cost base. We took out an initial
$8m of annualised costs. Job keeper was announced after the cuts and it does provide more
flexibility. We have since selectively and carefully reinvested a portion of these savings given our
outlook has improved since March/April. But we are disciplined and we are maintaining a lower
cost base.
We also had to address our balance sheet. We had a legacy equity loan facility that damaged
our share price. We got rid of that. We needed to make sure we can endure what could be a
protracted downturn and have the funds available to capitalise on the new significant
commercial opportunities ahead. We successfully raised over $5m of new equity funds and
completed an $8m loan agreement.
So while Q4 was clearly an extraordinary period with COVID-19, I am pleased to report we did
make progress towards building a fitter, faster and more profitable Swift. As I said at the start,
this is a transition year. Even with the distractions we will continue to focus on building a stronger
business with a better growth outlook - that’s why I am excited about the future.
In conclusion, I would like to thank the Directors for their support and wise counsel as well as our
Leadership Team and Staff for the impressive amount of effort and dedication they have
provided over the past year.
I thank all of our existing and new shareholders who share our common vision and enthusiasm.
The next twelve months promises to be exciting and I look forward to updating you as we
progress.
Pippa Leary
Chief Executive Officer
CEO’S REPORT
8
MINING & RESOUCES: IN FOCUS
MARKET SIZE
REVENUE IN A$M
140,000
ROOMS IN
VILLAGES*
250+
VILLAGES
SWIFT PRESENCE
10.0
8.0
6.0
4.0
2.0
-
5.9
0.6
2.3
5.4
1.7
5.1
1.5
4.8
2.1
29,858
EXISITING
ROOMS
64
VILLAGES
DYNAMICS
1H 2019
2H 2019
1H 2020
2H 2020
Licensing Revenue Project Revenue
Recurring Revenue
o Delivering on $3.2m contract wins in 2H FY20 including Rio Tinto Western Turner, Atlas Iron
Ltd Corunna Downs, Mineral Resources Ltd – majority of revenue in FY21
o Growth in project revenue through re-focus on Mining and Resources
o Well placed to capitalise on $50bn Capex boom
o Strong positions in high demand commodities: Iron Ore and Gold
o Scope for increased market share growth
o Swift – solution to social isolation and enables mine camps to meet OHS compliance
o Swift Plus for Mining: mobile, rail, exploration camps – opportunities earlier in mine
lifecycle
OPPORTUNITY
Leverage and grow market leadership position to increase room share and build recurring
revenue
EXECUTION
1
2
3
4
Innovate product offering to better meet customer needs and
changing behaviour
Target new revenue opportunities in Tier 2-3 mines to grow market
share
Partner with facility managers, builders and miners to win
construction jobs with recurring revenue
Productise Design/Construct and Support Services to create an end
to-end competitive advantage and operational efficiencies
*Source: Management estimate in collaboration with AMMA, Australian Resources and Energy
RESIDENTIAL AGED CARE: IN FOCUS
MARKET SIZE
223,000
RESIDENTIAL AGED
CARE PLACES*
2,700
RESIDENTIAL AGED
CARE FACILITIES
SWIFT PRESENCE
12,777
ROOMS
121
FACILITIES
DYNAMICS
1.4
1.2
5.0
1.0
0.8
4.0
0.6
3.0
0.4
2.0
0.2
-
1.0
-
REVENUE IN A$M
REVENUE IN A$M
1.0
1.0
1.0
0.8
4.1
0.3
0.2
2.6
2.8
0.1
1H 2019
2H 2019
1H 2020
0.1
2.0
2H 2020
1H 2019
2H 2019
Project Revenue
1H 2020
Recurring Revenue
2H 2020
o Ensure we are well placed to drive new sales growth when access restrictions to
facilities begin to lift – biosecurity priority during COVID-19
Leverage structural growth trends to drive sales growth and recurring revenues
o Successfully launched with positive market response fit for purpose product – some
encouraging sales and installs in 800 rooms across 5 facilities despite COVID-19,
including Adventist Care (WA), Applewood and Rivervue (VIC)
o COVID-19 highlights the need for communication and social isolation solutions
o Positive structural trend of ageing population and Royal Commission raising standards
o Multiple adjacent growth opportunities over time
OPPORTUNITY
Leverage structural growth trends to drive sales growth and recurring revenues
EXECUTION
1
2
Continue to evolve product suite to become vital for providers
Continue to evolve product suite to become vital for providers
Expand usage among existing customers
Expand usage among existing customers
3
Target and convert new prospects to grow market share
Target and convert new prospects to grow market share
*Source: 2018-2019 Report on the Operation of Aged Care Act 1997, Department of Health
CEO’S REPORT
10
HEALTH AND WELLBEING: IN FOCUS
MARKET SIZE
7,500
498,000
REVENUE IN A$M
5.0
4.0
3.0
2.0
1.0
-
4.1
2.6
2.8
2.0
1H 2019
2H 2019
1H 2020
2H 2020
GP PRACTICES ADDRESSABLE SMES*
SWIFT PRESENCE
2,000
SCREENS
1,400
SITES
DYNAMICS
o Full year contribution of loss making Medical Media business (remediation
complete)
o New profitable local sales model supported by CRM and retention focus
o Well placed as small businesses rebuild their presence post COVID
o Costs reduced including outsourcing National Advertising sales
o National franchise opportunity for hyperlocal geo-targeting in contextually relevant
sectors, e.g. pharmacies
o Health sector has positive structural tailwinds
o Competitive differentiator: broader content and local advertising
OPPORTUNITY
Improve profitably through retention focus, targeted local sales strategy and partnering for
national sales
EXECUTION
Hyperlocal territory sales prioritising Tier 1-2 sites to increase conversion of new
customers profitably
Focused retention program to increase customer lifetime value
Optimise screen network to reduce costs and improve quality
Drive national advertising revenue through partnerships – XTD and others
1
2
3
4
*Vs. Swift Network footprint. Source: Aust. Small Business and Family Enterprise Ombudsman - Small Business Counts 2019
Our Mission
Connecting and
engaging communities
through entertainment
and communications
solutions
Our
Vision
Making life
better by
helping
people
engage,
communicate,
and belong
One Team
Customer first
Our team works together
proactively and collaboratively
across boundaries. We
challenge and support each
other and have fun while doing it
Our customers are at the heart
of everything we do. We listen
and deliver exceptional
experience with empathy,
always
Integrity
Own it
We are open, honest and
ethical in everything we say
and do
We are empowered,
accountable and never
give up
Be the
change
We have an endless appetite
for learning. We drive
innovation and move fast for
commercial success
s
e
u
a
V
l
r
u
O
DIRECTORS’ REPORT
12
DIRECTORS’ REPORT
The Board of Directors of Swift Media Limited (“the Group” or “the Company”) submits its report in
respect of the year ended 30 June 2020.
The Directors of the Company in office during the year and at the date of this report are:
Name Position
Mr Darren Smorgon Independent Non-Executive Chairman
Mr Robert Sofoulis Non-Executive Director
Mr Ryan Sofoulis Executive Director
Ms Katherine Ostin Independent Non-Executive Director (appointed 1 October 2019)
Mr Peter Gibbons Independent Non-Executive Director (appointed 22 June 2020)
The following Directors of the Company resigned during the year:
Mr Paul Doropoulos Non-Executive Director (resigned 1 October 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.
REVIEW OF OPERATIONS AND FINANCIAL RESULTS
Operational Review
AGED CARE
MINING &
RESOURCES
HEALTH &
WELLBEING
HOSPITALITY &
OTHER
Developed new Swift Plus
product from idea to
launch in 5 months
Renewed $3.4m in
contracted revenue
Won 5 jobs in Q4 worth
$3.2m including Rio Tinto
Western Turner, Atlas Iron
Ltd Corunna Downs,
Mineral Resources Ltd
Installed COVID
quarantine camp
Adapted Swift Plus for
mobile, road and rail
camps
Refocused delivery team
Installed Swift Plus in 800
rooms across 5 providers
during COVID including
Adventist Care,
Applewood and Rivervue
Established an Account
management function
My Family My Community
app evolution - video,
photo and text messaging
to families without
requiring onsite installation
Developed Aged Care
brand
Hibernation through
COVID and establishment
of new profitable local
sales model
Implemented CRM to
enable increased local
sales retention
Moved content
production inhouse and
outsourced ad production
XTD partnership for
national advertising sales
Inside Practice partnership
for sales of Connect
Network
Assessing strategic options
following inbound interest
Hibernation through
COVID
Negotiated reduced
content rates during
COVID
$300k in cost savings by
exiting underutilised
content suppliers
Offered clients relief on
their accounts for three
months to retain them
Response to COVID-19
Swift acted proactively to implement measures to ensure the Company was
well capitalised, right-sized and focussed on growth opportunities.
In late March 2020, Swift implemented cost savings measures to respond to the COVID-19
environment, extracting permanent cost savings from non-essential operating and administrative
costs and a workforce rationalisation. This included a 40% reduction in remuneration for the
board, management and staff. Subsequent to these measures being implemented, Swift
successfully accessed the Federal Government’s Job Keeper assistance program to further shore
up retention of core intellectual property and enable a quick scale-up in the face of returning
demand.
Most pleasingly in the face of widespread disruptions caused by COVID-19 to the broader
macro environment, in April 2020 Swift announced the award of 5 new contracts wins
totalling $3.2 million highlighting the value of Swift’s offering.
FINANCIAL REVIEW
On a statutory basis, the Group achieved operating revenue of $23,080,174 (FY19: $24,713,183)
and a consolidated net loss after tax of $21,647,091 (2019: loss of $6,905,498). The FY
2020 financial performance reflects the material adverse impact of COVID-19 on the business for
the last four months of FY 2020 and includes associated impairment write-downs of $13,613,483 for
FY 2020.
After normalising for one-off licensing revenues earned in the prior fiscal year, the group achieved
revenue growth of 9% for the FY20 year and an underlying EBITDA loss of $1.3m, a decrease of
$0.1m or 8% over the prior comparable period. Revenue was driven by strong project revenue
increases, mainly in the Mining and Resources vertical. EBITDA was stable from FY20 vs FY19 as the
business took actions to protect profit in the second half of the year from the impact of COVID-19.
Gross profit margin was up 0.4 percentage points driven by an increasing mix of aged care
recurring revenues and the full year impact of the Medical Media acquisition.
Operating expenses for the year increased in part due to the full year impact of absorbing costs
associated with the Medical Media acquisition, which was loss making at the time of acquisition.
One-off, non-cash items contributed $9.4 million to statutory operating expenses relating to the
impairment of historic acquired goodwill, the provision for doubtful debtors and net of fair value
gains on deferred acquisition performance payments. While the business did invest in core
resources to support its future direction, it simultaneously rationalised costs associated with non-
core market verticals. These undertakings resulted in one-off cash costs of $1.9 million relating to
business restructuring and acquisition charges.
The following table provides a year on year comparative analysis of the key profit and loss items
normalised for one-off, non-recurring and non-cash items.
($ millions)
Revenue(1)
Project
Recurring
COGS
Gross profit
Gross profit %
Employee expenses
Other expenses
Operating expenses
EBITDA(2)
FY19
FY20
Change
21.2
3.3
17.9
(12.5)
8.7
40.9%
(7.3)
(2.5)
(9.8)
(1.2)
23.1
3.9
19.2
(13.5)
9.5
41.3%
(8.7)
(2.1)
(10.8)
(1.3)
9%
18%
7%
(8%)
9%
0.4% points
(19%)
16%
(10%)
(8%)
Notes:
1. Adjusted for non-recurring licensing revenue in the prior year
Reconciliation of FY19 Consolidated Revenue to FY19 Statutory Revenue
Total revenue by vertical
Non-recurring licensing
Statutory revenue
21.2
3.5
24.7
2.
EBITDA (earnings before interest, income tax expense, depreciation and amortisation) is a financial measure which is not
prescribed by Australian Accounting Standards (‘AAS’) and represents the profit/(loss) under AAS which has been adjusted to
eliminate the effects of tax, depreciation and amortisation, fair value adjustments, impairment expenses, loss on disposal of
assets and other one-off items including restructuring costs. In the prior year, underlying EBITDA has also been adjusted to exclude
the impact of non-recurring license revenues.
DIRECTORS’ REPORT
14
Swift acquired the Medical Media business in February 2019. At the time Medical Media was loss
making and as a result it is informative to present in the following tables the disaggregated view
of the FY20 summary results (and comparative to FY19), down to EBITDA, separating Medical
Media from the rest of the business. Note the Medical Media acquisition was completed on 15
February 2019 and its contribution to the FY19 results are only for that part of the year
consolidated into the results of Swift Media.
Excluding the results of the Medical Media acquisition, the underlying Swift business increased
EBITDA by 20%. During FY20, and in part due to the impact of COVID-19 on local media revenues,
approximately $4 million in annualised costs were rationalised out of the former Medical Media
business, setting it up for a more profitable outlook. The benefits of these cost cuts were partially
realised during the second half of FY20 and expect to be realised during the entirety of FY21.
($ millions)
SWIFT M edia excluding M edical M edia
FY19
FY20
Change
Revenue
Gross Profit
GP %
Opex
EBITDA
M edical M edia Results
Revenue
Gross Profit
GP %
Opex
EBITDA
18.6
6.7
36%
(7.7)
(1.0)
2.6
2.0
77%
(2.2)
(0.2)
18.1
5.9
33%
(6.7)
(0.8)
5.0
3.6
72%
(4.1)
(0.5)
(3%)
13%
20%
92%
(86%)
(150%)
The following table provides a reconciliation of the net loss after tax to EBITDA.
($ millions)
EBITDA
Depreciation & amortisation
Non-cash items
Restructuring & acquisition related expenses
One-off license revenue(1)
Other items
Net interest expenses
Income tax (expense)/benefit
Net loss after tax
FY19
(1.2)
(3.7)
(3.3)
(2.3)
3.5
0.0
(0.1)
0.2
(6.9)
FY20
(1.3)
(6.2)
(9.4)
(1.9)
-
0.0
(0.9)
(1.9)
(21.6)
Change
(8%)
(213%)
Notes:
1. Reconciliation of FY19 underlying EBITDA as reported in the FY19 annual report to the FY20 annual report. Prior
year one-off licensing contracts adjusted to improve year on year performance comparability
FY19 underlying EBITDA per FY19 audited financial statements
2.4
Prior year non-recurring license revenue
FY19 underlying EBITDA per FY20 AFS
(3.5)
(1.2)
Non-cash items include impairment of goodwill and right of use asset balances ($13.6 million), fair
value gains on deferred acquisition amounts ($7.0 million), share based payments ($0.1 million),
and an increase in provisions for recoverability of debtor balances ($2.6 million). The business
incurred cash restructuring expenses in FY20 related to streamlining the business for a more
focused set of strategic verticals and tactical measures taken in response to COVID trading
impact.
Balance sheet and liquidity
The Company’s cash balance increased from $0.4m at the end of FY2019 to $2.4m at the end of
FY20 reflecting a series of capital restructuring actions designed to strengthen the balance sheet
and streamline funding arrangements. These actions included:
• November 2019 – completed equity capital raise for $1.9 million (before costs);
• December 2019 – secured a four-year, $8m debt facility with PURE Asset Management Ltd
to replace a $4.5m debt facility;
• April 2020 - as a response to Covid-19 further strengthened its balance sheet, obtaining
approximately $3.3million (before costs) of equity funding via a private placement and
fully subscribed non-renounceable rights issue. The successful raise facilitated the full buy-
back of outstanding loan notes issued by L1 Capital and Lind Partners simplifying the
Company’s capital structure.
As a result of these actions the Company’s current asset position increased from $6.7m to $8.1m
and current liabilities decreased from $17.5m to $11.5m.
Long term borrowings ended FY20 at $6.9m. Swift has negotiated covenant waivers with its senior
secured debt provider through to the end of the 2020 calendar year.
Swift will continue to investigate opportunities to further strengthen its balance sheet and access
growth capital.
Events Since the End of the Financial Year
0n 2 July 2020, Mr Geoff Greenberg was appointed Chief Financial Officer of the Company.
On 15 August 2020, 14,950,166 Ordinary Shares were released from Escrow. There were no other
events subsequent to reporting date to disclose at the date of signing this report.
The COVID-19 pandemic has developed rapidly in 2020, with a significant number of cases.
Measures taken by various governments to contain the virus have affected economic activity. We
have taken a number of measures to monitor and mitigate the effects of COVID-19, such as safety
and health measures for our people (such as social distancing and working from home) and
securing the supply of material that are essential to our production process.
We refer you to Note 2 for a summary of the impact of COVID-19 on the results of the business. We
will continue to follow various government policies and advice, and in parallel, we will do our utmost
to continue our operations in the best and safest way possible without jeopardising the health of
our people.
DIVIDENDS PAID OR RECOMMENDED
No dividends were paid or recommended during the year (2019: nil).
DIRECTORS’ REPORT
16
INFORMATION ON THE DIRECTORS
Darren Smorgon – Independent Non-Executive Chairman
Darren has been a Non-Executive Director of Swift since February 2019 after having previously
served on the board of Medical Media for three years prior to its acquisition by Swift. He is
Managing Director of Sandbar Investments, a Sydney based family office, and prior to that, spent
16 years at CHAMP Private Equity where he led several deals including the privatisation and
subsequent re-listing of oOh!Media Limited (ASX: OML). He is also a current Non-Executive Director
and Chair of the Remuneration Subcommittee of oOh!Media Limited, 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 15 years working within the various companies owned by the Sofoulis
family. Ryan worked in the accounts department with the ASTIB Group until it was sold in 2011, at
which time he became the Company Secretary of Swift Networks. In 2012, Ryan became the
Company Secretary of the newly created EITS Global Group and oversaw the establishment of an
international structure spanning over the USA, UK, Ireland and Australia.
Directorships held in other listed companies in the past 3 years: None
Robert Sofoulis – Non-Executive Director
Robert is the founder of Swift Networks and Wizzie TV. Robert has an engineering background in
instrumentation and worked in the mining and oil and gas industries for 20 years before becoming
an entrepreneur in 1995. Initially concentrating in the two-way radio rental business, Robert soon
expanded the business to include sales and engineering services and created ASTIB Group,
consisting of various radio and communications subsidiaries. Most of the ASTIB Group was divested
in January 2011 for approximately $50 million to CSE Global, a multinational organisation of the
Singapore Exchange.
Directorships held in other listed companies in the past 3 years: None
Special responsibilities include member of the Remuneration committee.
Katherine Ostin – Independent Non-Executive Director (appointed 1 October 2019)
Kathy has deep experience in the Aged Care and Healthcare sectors having established and led
KPMG’s NSW Health, Ageing and Human Services practice since 2006 until her departure in
December 2018. Kathy was also an audit partner since 2005 where her responsibilities covered
Aged Care, Media and Technology companies. She as broad international experience having
worked in Asia, the USA and UK throughout her 24 years at KPMG. She is also a current Non-
Executive Director and Chair of the Audit and Risk Subcommittees of Capral Limited, Dusk Group
Ltd and eftpos Payments Australia Ltd.
Directorships held in other listed companies in the past 3 years: Capral Limited (ASX: CAA)
Special responsibilities include member of the Remuneration committee
Peter Gibbons – Independent Non-Executive Director (appointed 22 June 2020)
Peter has a proven background in building growth businesses, deep experience and extensive
networks in the Aged Care and Mining & Resources sectors in Western Australia. Based in Perth,
Peter is the co-founder and Managing Director of Open Negotiations, one of Australia’s leading
online property auction sites for real estate agents. Prior to that Peter created App Lord
Technologies. He worked at Grant Samuel and Macquarie Bank. Peter is the Chairman of
Bethanie Group, Western Australia’s largest not-for-profit Aged Care provider and is Chairman of
the Vukelic Family Office. He was previously a Director of Silver Chain, Western Australia’s largest
provider of in-home residential aged care, and also served as a Commissioner of the Western
Australian Football Commission.
Directorships held in other listed companies in the past 3 years: none
Paul Doropoulos – Non-Executive Director (resigned 1 October 2019)
Paul has approximately 25 years combined experience in an Executive Consultant capacity to
ASX listed companies in the oil and gas and mining services sectors. Paul holds a Bachelor of
Business Degree with Finance.
Directorships held in other listed companies in the past 3 years: none
Stephen Hewitt-Dutton – Company Secretary
Mr Hewitt-Dutton has over 25 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. Before joining Trident Capital, Mr Hewitt-Dutton was an Associate Director of
Carmichael Corporate where he assisted clients by providing equity market, IPO and M&A advice
and assistance. He has also held Financial Controller and Company Secretary positions for both
public and private companies for in excess of 20 years.
DIRECTORS’ INTERESTS
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
Mr Ryan Sofoulis
Mr Robert Sofoulis
Mr D Smorgon
Ms K Ostin
Mr P Gibbons
Mr P Doropoulos*
2,555,288
94,923,625
6,009,657
373,138
-
2,568,670
-
-
-
-
-
715,000
*represents holdings up to the date of resignation (1 October 2019)
DIRECTORS’ MEETINGS
Rights to deferred
Shares
-
-
750,000
600,000
600,000
156,174
The number of meetings (including meetings of Board committees) of the Company’s Board of
Directors held during the year ended 30 June 2020 and the number of meetings attended by
each Director was:
Director
Mr P Gibbons
Ms K Ostin
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
2
32
4
36
36
36
2
32
4
34
35
35
-
-
-
-
-
-
-
-
-
-
-
-
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.
DIRECTORS’ REPORT
18
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 2020 financial year:
Position
Directors and Key Management Personnel
Name
Directors
Mr D Smorgon
Mr P Doropoulos
Mr Robert Sofoulis
Mr Ryan Sofoulis
Ms K Ostin
Mr P Gibbons
Key Management
Ms P Leary
Mr G Nicholls
Mr G Greenberg
Independent Non-Executive Chairman
Non-Executive Director (resigned 1 October 2019)
Non-Executive Director
Executive Director
Independent Non-Executive Director (appointed 1 October 2019)
Independent Non-Executive Director (appointed 22 June 2020)
Chief Executive Officer (appointed 26 June 2019)
Chief Financial Officer (resigned 2 July 2020)
Chief Financial Officer (appointed 2 July 2020)
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 did not engage an independent remuneration consultant during the
year.
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 non-
executive Chairman Mr Darren Smorgon and non-executive Directors Mr Robert Sofoulis and Ms
Katherine Ostin.
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
2020
(21,647,091)
(9.5)
(82)
-
2019
(6,905,498)
(5.2)
(35)
-
2018
(7,728,812)
(6.9)
24
-
2017
(1,364,198)
(1.6)
34
-
REMUNERATION REPORT – AUDITED (continued)
Key Management Personnel Remuneration
The key management personnel of the Company are the Directors, Chief Executive Officer 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 2020 are as follows:
Year
Salary & Fees
(Cash)
Annual
Leave1
Share
Based
Payments2
Non-
Cash3
Super
Other4
Total
Perf. Related
$
$
$
$
$
$
$
%
Director
C Clump5
X Kris6
P Doropoulos7
Ryan Sofoulis
Robert Sofoulis
D Smorgon8
K Ostin9
P Gibbons10
Key
Management
P Leary11
G Nicholls
Totals
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2020
2020
2020
2019
2020
2019
-
37,143
36,333
436,000
17,783
48,000
-
-
-
-
-
-
154,500
2,516
145,904
3,191
48,000
48,000
57,000
16,000
28,202
-
-
-
-
-
-
-
-
-
-
-
3,328
-
-
-
285
366,392
5,324
3,420
-
-
-
-
-
-
2,166
-
5,324
4,560
8,556 14,677
5,324 13,861
8,556
4,560
5,324
4,560
48,759
8,556
657
1,996
29,277
6,390
309
151
5,415
1,520
2,679
-
312,823
9,909
27,225
191,690
8,536
-
192,346
845,331
923,393
950
130,430
20,961
4,141
105,570
497,479
- 21,003
- 18,210
- 18,273
66,829
46,194
34,375
26,620
-
-
40,471
-
167,000
203,618
200,000 1,011,136
-
-
-
-
-
-
-
-
-
-
-
-
-
19,949
57,884
180,249
168,280
61,116
57,884
119,730
20,173
66,548
460
370,960
218,436
341,999
167,000
200,000
1,240,066
1,697,827
0%
0%
0%
36%
0%
0%
0%
0%
0%
0%
0%
3%
0%
0%
0%
0%
38%
0%
29%
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 Other benefits include amounts paid out to Mr X Kris in FY 2019 and FY 2020 in accordance with the termination clauses of
his service agreement and consulting fees.
5 FY 2019 figures represent the period 1 July 2018 to the date of resignation (15 February 2019)
6 FY 2019 figures represent the period 1 July 2018 to the date of resignation (28 June 2019)
7 FY 2020 figures represent the period 1 July 2019 to the date of resignation (1 October 2019)
8 FY 2019 figures represent the period from the date of appointment (15 February 2019)
9 FY 2020 figures represent the period from the date of appointment (1 October 2019)
10 FY 2020 figures represent the period from the date of appointment (22 June 2020)
11 FY 2020 figures represent the period from the commencing as key management as of 16 July 2019.
DIRECTORS’ REPORT
20
REMUNERATION REPORT – AUDITED (continued)
Details of Share Based Payments
Remuneration Type
Grant Date
Number
Granted
Total P&L
expense in
the period
($)
As at 30 June 2020
Number
vested and
exercisable
Number
unvested
Mr D Smorgon Ordinary Share Rights
(A)
Ordinary Share Rights
(B)
Ms K Ostin
26 June 2019
750,000
48,759
1 October 2019
600,000
29,277
Mr P Gibbons Ordinary Share
22 June 2020
600,000
309
Ms P Leary
Rights (C)
Incentive options (A) 26 June 2019
1,000,000
27,225
-
-
-
-
750,000
600,000
600,000
1,000,000
On 26 June 2019, Darren Smorgon was granted 750,000 ordinary share rights which were
subsequently approved by shareholders at the Annual General Meeting of the Company held on
15 November 2019. 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. A share-based payment expense in relation to this arrangement of $49,416 was
recorded of which $48,759 was recorded in FY 2020 (FY2019: $657).
On 26 June 2019, Pippa Leary was granted 1,000,000 incentive options which were
subsequently approved by shareholders at the Annual General Meeting of the Company held on
15 November 2019. The rights will be subject to a vesting period of 3 years. These rights will be
forfeited in full and lapse should she not complete her engagement as Chief Executive Officer for
the 3 years. A share-based payment in relation to this arrangement of $27,225 was recorded in FY
2020.
On 1 October 2019, Katherine Ostin was granted 600,000 ordinary share rights which were
subsequently approved by shareholders at the Annual General Meeting of the Company held on
15 November 2019. The rights will be subject to a vesting period of 2 years. These rights will be
forfeited in full and lapse should she not complete her engagement as Non-Executive Director for
the 2 years. A share-based payment expense in relation to this arrangement of $29,277 was
recorded in FY 2020.
On 22 June 2020, Peter Gibbons was granted 600,000 ordinary share rights which are subject
to 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 Non-Executive
Director for the 2 years. A share-based payment expense in relation to this arrangement of
$309 was recorded.
Valuation
The fair value of these share-based instruments was calculated as follows:
Method
Spot price
Strike price
Expiry date
Volatility
Risk free rate
Fair value per unit
(cents)
Ordinary Share Rights
(A)
Share price at grant
date
13 cents
Ordinary Share
Rights (B)
Share price at grant
date
13 cents
Ordinary Share Rights
(C)
Share price at grant
date
4.7 cents
Incentive Options (A)
Black Scholes
13 cents
0 cents
0 cents
0 cents
30-60 cents
25 June 2021
29 September 2021
21 June 2022
1 July 2020- 2022
N/a
N/a
13.0
N/a
N/a
13.0
N/a
N/a
4.7
80%
0.79%
2.45-4.26
REMUNERATION REPORT – AUDITED (continued)
All other pre-existing incentive plans previously in place and that have been expensed in full in
previous years have been cancelled or lapsed due to the vesting criteria not being achieved.
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 Contract of Employment agreements for Director Fees as
follows:
Current directors
Mr D Smorgon
Ms K Ostin
Mr P Gibbon
Mr Ryan Sofoulis
Mr Robert Sofoulis
Former directors
Mr C Clump
Mr X Kris
Mr P Doropoulos
$60,000 per annum plus statutory superannuation
$40,000 per annum plus statutory superannuation (date of commencement 1 October 2020)
$40,000 per annum plus statutory superannuation (date of commencement 22 June 2020)
$36,000 per annum plus statutory superannuation
$48,000 per annum plus statutory superannuation
$60,000 per annum plus superannuation (date of cessation 15 February 2019)
$36,000 per annum plus superannuation (date of cessation 26 June 2019)
$48,000 per annum plus superannuation (date of cessation 1 October 2019)
(ii) In April 2020, as part of cost saving measures announced in responses to Covid-19 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 $111,000 per annum.
The term of the employment agreement commenced on 19 May 2016 until such time as the
agreement is terminated in accordance with the terms of the agreement. The Company or Mr
Sofoulis may terminate the employment agreement at any time by giving to the other not less
than 9 months’ written notice.
(iii) In April 2020, as part of cost saving measures announced in responses to Covid-19 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 $159,000 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. On 1 July 2020 Mr Nicholls gave the Company formal
notice of his resignation from the position of Chief Financial Officer.
(iv) In June 2019, the Company entered into an agreement with Ms Pippa Leary for the role of
Chief Executive Officer whereby the base remuneration, exclusive of superannuation entitlements
for services provided by Ms Leary as the Chief Executive Officer of the Company is $365,000 per
annum and 1,000,000 performance rights in three tranches (Tranche 1: 5000,000 at $0.30/share,
Tranche 2: 250,000 at $0.45/share, Tranche 3: 250,000 at $0.60/share) exercisable at
yearly intervals over a 3-year period. The issue of the rights to Ms Leary was approved by
shareholders at the Annual General Meeting of the Company held on 15 November 2019. The
Company or Ms Leary may terminate the employment agreement at any time by giving to the
other not less than 6 months’ written notice. In April 2020 as part of cost saving measures
announced in responses to Covid-19 the Company amended the above existing employment
agreement with Ms Leary, whereby the base remuneration, exclusive of superannuation
entitlements is $258,000 per annum.
(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 was approved by
shareholders at the Annual General Meeting of the Company held on 15 November 2019.
DIRECTORS’ REPORT
22
REMUNERATION REPORT – AUDITED (continued)
(vi) In September 2019, the Company entered into an agreement with Ms Katherine Ostin for the
role of Non-Executive Director which included a Director’s fee of $40,000 per annum and share
rights over 600,000 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 Ms Ostin was approved by shareholders at the Annual
General Meeting of the Company held on 15 November 2019.
Current service agreements
(vii) In June 2020, the Company entered into an agreement with Mr Peter Gibbons for the role of
Non-Executive Director which included a Director’s fee of $40,000 per annum and share rights
over 600,000 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 Gibbons is subject to
shareholder approval.
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
2019
No.
Received during the
year upon satisfaction of
performance milestones
Other changes
during the year
Ordinary Shares Held at
30 June 2020
No.
2,568,670
54,000
47,206,667
-
-
-
2,501,288
16,666,667
31,050,291
-
-
-
-
-
-
-
-
-
205,231
6,009,657
373,138
-
3,843,723
2,539,659
2,568,670
2,555,288
94,923,625
6,009,657
373,138
-
3,843,723
2,744,890
Directors
Mr P Doropoulos*
Mr Ryan Sofoulis
Mr Robert Sofoulis
Mr D Smorgon**
Ms K Ostin
Mr P Gibbons
Key Management
Ms P Leary
Mr G Nicholls
*represents the shareholding up to the date of resignation (1 October 2019)
**excludes ordinary shares and performance shares held indirectly via Sandbar Investments Pty Ltd in connection with the
acquisition of Medical Channel Pty Ltd by Swift Media Limited. Sandbar Investments Pty Ltd is an entity controlled by a
close family member.
REMUNERATION REPORT – AUDITED (continued)
Rights to deferred shares of Directors and 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
2019
No.
Ordinary share rights
granted during the year
Performance
Rights cancelled during
the year
Held at
30 June 2020
No.
Directors
Mr P Doropoulos*
156,174
Mr Ryan Sofoulis
Mr Robert Sofoulis
-
-
Mr D Smorgon**
750,000
Ms K Ostin
Mr P Gibbons***
Key Management
Ms P Leary
Mr G Nicholls
-
-
-
677,079
-
-
-
-
600,000
600,000
-
-
-
-
-
-
-
-
-
677,079
156,174
-
-
750,000
600,000
600,000
-
-
*represents the shareholding up to the date of resignation (1 October 2019)
**excludes ordinary shares and performance shares held indirectly via Sandbar Investments Pty Ltd in connection with the
acquisition of Medical Channel Pty Ltd by Swift Media Limited. Sandbar Investments Pty Ltd is an entity controlled by a
close family member.
***subject to shareholder approval
Option holdings of Directors and 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 2019
No.
Exercised
during the
year
Granted as
compensation
Held at
30 June 2020
No.
Options vested &
exercisable at
year end
715,000
715,000
Directors
Mr P Doropoulos*
Mr Ryan Sofoulis
Mr Robert Sofoulis
Mr D Smorgon
Ms K Ostin
M P Gibbons
Key Management
Ms P Leary
Mr G Nicholls
715,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
-
1,000,000
-
*represents the shareholding up to the date of resignation (1 October 2019)
-
-
-
-
-
-
-
DIRECTORS’ REPORT
24
REMUNERATION REPORT – AUDITED (continued)
The Company was advanced the following funds by the Directors and their related parties:
Funds owed to Robert Sofoulis
Payments made
Closing balance
2020
$
2019
$
325,000
(325,000)
-
-
-
-
An unsecured loan was drawn in October 2019 and repayable by no later than 31 December
2019, subject to an arm’s length interest rate of 12% and payable within 7 days of the date of
invoice. The loan was repaid in full in December 2019.
Other transactions with Directors and Key Management Personnel
Transactions with Directors and 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 provision of
office premises, pursuant to operating lease.
Underwriting fees paid to Sofoulis Holdings Pty Ltd, a company of which
Robert Sofoulis is a director and Ryan Sofoulis is associated with, in
connection with the April 2020 non-renounceable rights issue.
Interest paid to Sofoulis Holdings Pty Ltd, a company of which Robert
Sofoulis is a director and Ryan Sofoulis is associated with, in connection
with a loan advanced to the Company.
Payments made to oOH!Media Limited, a company of which Darren
Smorgon is a Director, for the provision of news and light entertainment
content for the health and wellbeing media screen business, pursuant to
an arm’s length contract
Amounts outstanding at reporting date
Aggregate amount payable to Key Management Personnel and their
related entities at reporting date:
2020
$
2019
$
500,515
434,261
20,467
6,238
154,050
-
-
-
167,820
36,851
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 Medical Media
Investments Pty Ltd. (Refer to Note 14 and Note 29).
On March 31, 2020 Swift Media entered into a variation deed with Medical Media Investments Pty
Ltd to vary the terms of the performance shares issued in respect of the Medical Channel
acquisition such that the 68,106,313 outstanding performance shares (Refer Note14) would
convert into 18,875,034 ordinary shares. The agreement is subject to the Company receiving
appropriate statutory and regulatory approvals, which have yet to be received.
Transactions with other related parties
Share based payments to Directors and KMP
(non-cash settled)
Total share-based payments
2020
$
2019
$
105,570
497,479
105,570
497,479
REMUNERATION REPORT – AUDITED (continued)
No other transactions or loans existed during the year and as at reporting date between the
Company and with Directors and or Key Management Personnel.
Voting and comments made at the Company’s 2019 Annual General Meeting
The approval of the remuneration report was passed as indicated in the results of the Annual
General Meeting dated 15 November 2019, with 98% voting in favour. The Company did not
receive specific feedback at the AGM or throughout the year on its remuneration practices.
End of the Audited Remuneration 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
30 April 2020
15 November 2019
15 November 2019
15 November 2019
Total
Expiry date
19 May 2021
31 May 2021
31 May 2021
30 April 2025
31 December 2021
31 December 2021
31 December 2021
Exercise Price
$0.15
$0.35
$0.42
$0.05
$0.30
$0.45
$0.60
Number
5,133,333
1,000,000
1,000,000
2,000,000
500,000
250,000
250,000
10,133,333
INDEMNIFICATION AND INSURANCE OF DIRECTORS
During the financial year, Swift Media Limited paid a premium of $34,376 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 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 27.
DIRECTORS’ REPORT
26
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 2019 to 30 June 2020 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 29th day of September 2020
This report is made in accordance with a resolution of the Directors.
Mr Darren Smorgon
Chairman
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 2020, 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, 29 September 2020
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.
CONSOLIDTED FINANCIAL STATEMENTS
28
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME FOR THE YEAR ENDED 30 JUNE 2020
Note
Consolidated
2020
$
2019
$
Continuing Operations
Revenue from contracts with customers
3(a)
23,080,174
24,713,183
Cost of Sales
Gross Profit
General & administration expenses
Other Income
Impairment expenses
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
4(a)
3(b)
9,10
15
4(b)
(13,549,342)
(12,519,690)
9,530,832
12,193,493
(13,974,523)
(9,832,031)
7,956,966
(13,613,483)
159,637
(629,064)
(3,311,149)
(2,676,541)
(1,601,289)
(832,016)
(3,716,333)
(5,248,204)
(995,565)
(222,744)
(19,724,545)
(7,087,470)
5
(1,922,546)
181,972
(21,647,091)
(6,905,498)
-
-
-
-
Total comprehensive loss for the year
(21,647,091)
(6,905,498)
Loss per share attributable to the members of Swift
Media Limited:
Basic loss per share
Diluted loss per share
28
28
(9.5)
(9.5)
(5.2)
(5.2)
Cents
Cents
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in
conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020
Note
Consolidated
2020
$
2019
$
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
Contract 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
Borrowings
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
13
14
15
16
5
17
18
19
2,448,079
3,748,687
993,430
952,925
8,143,121
1,348,280
3,566,690
1,789,901
514,648
1,527,596
4,754,027
13,501,142
21,644,263
8,589,514
1,177,233
478,452
-
-
1,297,741
11,542,940
45,553
6,923,434
250,000
1,837,650
197,156
1,527,596
10,781,389
22,324,329
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
(680,066)
10,441,798
56,814,749
4,368,125
47,028,669
3,628,978
(61,862,940)
(40,215,849)
(680,066)
10,441,798
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying
notes.
CONSOLIDTED FINANCIAL STATEMENTS
30
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30
JUNE 2020
Note
Issued
Capital
Reserves
Accumulated
losses
$
$
$
Total
$
For the year ended 30 June
2020
At the beginning of the year
47,028,669
3,628,978
(40,215,849)
10,441,798
Total comprehensive loss for the
year
Transactions with shareholders
in their capacity as
shareholders:
-
Issued in settlement of liability
823,000
Capital raised from placements
& non-renounceable
entitlements offer
Issued as equity on deferred
consideration
5,274,043
14
4,000,000
Options exercised
Share issue costs net of tax
Share based payments &
Warrants issued
150,000
(460,963)
20
-
739,147
(21,647,091)
(21,647,091)
-
-
-
-
-
-
823,000
5,274,043
4,000,000
150,000
(460,963)
739,147
At the end of the year
56,814,749
4,368,125
(61,862,940)
(680,066)
38,437,650
2,470,044
(33,310,351)
7,597,343
-
(6,905,498)
(6,905,498)
For the year ended 30 June
2019
At the beginning of the year
Total comprehensive loss for
the year
Transactions with shareholders
in their capacity as
shareholders:
Issued in settlement of liability
100,000
Issued as consideration for
acquisition
Issued as equity on deferred
consideration
Options exercised
Share issue costs net of tax
29
14
4,500,000
3,916,667
112,500
(38,148)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
4,500,000
3,916,667
112,500
(38,148)
1,158,934
10,441,798
Share based payments
20
-
1,158,934
At the end of the year
47,028,669
3,628,978
(40,215,849)
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying
notes.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2020
Note
Consolidated
2020
$
2019
$
Cash Flows from Operating Activities
Cash receipts in the course of operations
Cash payments in the course of operations
Government grants received
Finance costs
Interest received
Net cash (outflows) from operating activities
Cash Flows from Investing Activities
Purchase of property, plant and equipment
Cash placed on deposit to secure Bank Guarantees
Net cash paid/acquired on acquisition
Payment for development and new subscribers
Net cash outflows for investing activities
Cash Flows from Financing Activities
Proceeds from issue of shares
Proceeds from convertible note
Payment of share issue costs
Proceeds from borrowings
Repayments of borrowings
Payment of Debt establishment costs
Repayments of lease liabilities
Net cash inflows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash at the beginning of the year
Cash at the end of the year
21
9
29
17
24,449,017
18,111,127
(28,524,899)
(20,364,621)
168,000
(727,967)
137,542
(222,744)
159,637
(4,498,307)
(2,316,601)
(1,727,878)
(1,151,782)
(249,293)
-
-
751,720
(702,921)
(1,827,546)
(2,680,092)
(2,227,608)
5,362,243
900,000
(276,950)
8,000,000
112,500
-
(38,148)
3,499,999
(2,455,086)
(1,044,913)
(739,323)
(1,587,177)
9,203,707
-
(764,277)
1,765,161
2,025,308
(2,779,048)
422,771
3,201,819
6
2,448,079
422,771
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying
notes.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
32
Note 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.
Note 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 after tax for the year ended 30 June
2020 of $21,647,091 (2019: loss of $6,905,498) and net cash outflows from operating activities of
$4,350,578 (2019: cash outflow of $2,316,601).
At reporting date, the Company obtained covenant waiver from senior lender and therefore is in
compliance with all of its loan covenants that govern the facility.
The COVID-19 pandemic has developed rapidly during 2020. The resulting impact of the virus on
the operations and the measures taken by various governments to contain the virus have
negatively impacted the group results during the reporting period. The current known impacts of
COVID-19 on the group are:
- A decline in revenue of 47% for the last quarter of FY2020, compared to the same period of
-
-
2019
Increasing loss provisions for Receivables by $2,642,663 in anticipation of higher credit losses
due to customer collection issues
Impact on the Group’s forward-looking forecasts has resulted in a $13,613,483 impairment
write downs
Furthermore, the Company expects to see slower than forecast revenue growth due to
anticipated delays in the roll out of the Company’s “Swift Plus” bespoke Aged Care product, the
result of the adoption of stricter biosecurity measures by Aged Care facility operators limiting
Swift’s ability to undertake installations of its system hardware.
Note 2. Statement of Significant accounting policies (continued)
As a result of these matters, there is a material uncertainty that may cast significant doubt upon
the Group’s ability as a going concern and whether the group will realise its assets and settle it
liabilities in the ordinary course of business at the amounts recorded in the financial statements.
In a response to these matters, the Company has taken the following actions:
-
Raised $3.3million (before costs) via a placement and non-renounceable entitlement offer in
April 2020 to strengthen the Balance Sheet
- Obtained covenant waivers from our senior lenders for the remainder of the 2020 calendar
-
-
-
year such that the next covenant test point will be 30 June 2021
Sought permission from our senior lenders to capitalise interest payments due in Q4 FY 2020
Introduced cost rationalisation measures to significantly reduce its operating costs including
workforce wide salary cuts and discretionary speeding freezes and
Successfully applied for the federal government Job Keeper assistance grant and rent relief
under state government legislation
However, if government-imposed restrictions on citizen’s movement were to remain in place
throughout the remainder of the 2020 calendar year and beyond, continuing to adversely impact
customer collections and Swift’s ability to obtain new revenues, it may be necessary to raise
additional capital or additional debt from financiers or lenders.
Although it is not certain that these efforts will be successful, management has determined that
the actions taken are sufficient to mitigate the uncertainty and has therefore prepared the
financial reports on a going concern basis.
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 report, 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, additional funds from
receipts are expected through commercialisation of the Group’s products and services.
Noting all of the above, and in conjunction with the Group’s historical ability to raise funds to
satisfy its immediate cash requirements the Directors are satisfied the Group is a going concern
and therefore have prepared the financial statements on the basis the Group will continue to
meet its commitments and can therefore continue normal business activities and realise its assets
and settle liabilities in the normal course of the business.
The accounting policies applied and methods of computation for the year ended 30 June 2020
are consistent with those of the annual financial report for the year ended 30 June 2019.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
34
Note 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 27 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.
Note 2. Statement of Significant accounting policies (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.
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
36
Note 2. Statement of Significant accounting policies (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 expected credit loss is based on either the 12-month or
lifetime expected credit loss. The 12-month expected credit loss is the portion of lifetime expected
credit losses 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 expected credit loss. 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.
Note 2. Statement of Significant accounting policies (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 $2,642,663 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 such that a loss allowance of $1,224,691
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
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
38
Note 2. Statement of Significant accounting policies (continued)
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.
(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.
Note 2. Statement of Significant accounting policies (continued)
(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 expected
credit loss is based on either the 12 month or lifetime expected credit loss. 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 expected credit loss.
(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:
Software
• Motor Vehicles
•
• Office Equipment, Fit Out & Furniture
•
• Rental Equipment – Digital Entertainment
Test Equipment & Tools
System
(n) Business combinations
25%
25% - 66.66%
10% - 100%
10% - 66.66%
20% - 100%
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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
40
Note 2. Statement of Significant accounting policies (continued)
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 lives of 5 years.
Research and development costs
Research costs are expensed as incurred. Costs incurred on development projects are recognised
as intangible assets when it is probable that the project will, after considering its commercial and
technical feasibility, be completed and generate future economic benefits and its costs can be
reliably measured. Expenditure capitalised comprises all directly attributable costs including costs
of materials, services and direct labour. Other development expenditure that do not meet these
criteria are recognised as an expense as incurred. Amortisation is calculated using the straight-line
method to allocate the cost of intangible over its estimated useful life (1-5 years) commencing
when the intangible is available for use. The carrying value of an intangible asset arising from
development expenditure is tested for impairment when an indication of impairment arises during
the period.
Note 2. Statement of Significant accounting policies (continued)
(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.
(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) Financing Costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance
costs are expensed 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.
(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.
Convertible Notes
Convertible notes were issued by the Group during the period, which include embedded
derivatives (option to convert the security to variable number of shares in the Group). This
convertible note is initially recognised as financial liabilities at fair value on initial recognition, fair
value of the convertible note equates to the proceeds received and subsequently, the note is
measured at fair value. The movements are recognised on the statement of profit or loss as
transaction costs except to the extent the movement is attributable to changes in the Group’s
own credit status, in which case the movement is recognised in other comprehensive income.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
42
Note 2. Statement of Significant accounting policies (continued)
(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.
(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.
Note 2. Statement of Significant accounting policies (continued)
(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.
(ac) Critical Accounting Estimates and Judgments
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:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
44
Note 2. Statement of Significant accounting policies (continued)
(ac) Critical Accounting Estimates and Judgments (continued)
Identifying performance obligations
The Group provides software licences and 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 other 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.
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.
Goodwill – impairment assessment
Goodwill impairment testing was undertaken, and indicators of impairment have been identified.
An impairment expense of $12,630,944 has been recognised in the Profit and Loss Statement.
Refer to Note 10 for details of the assumptions used in these calculations.
Sensitivity to possible changes in key assumptions
Management have made judgements and estimates in respect of impairment testing of goodwill
which management deem to be best estimates. Should the judgements and estimates not occur,
the resulting goodwill may vary in carrying amount. The key assumptions are as follows (refer note
10 for further detail):
• Growth rate
• Discount rate
•
• Capital expenditure
• Gross margin
Terminal value long term growth rate
Note 2. Statement of Significant accounting policies (continued)
(ac) Critical Accounting Estimates and Judgments (continued)
Impairment expenses totalling $12,630,944 has been recognised in respect of goodwill at the end
of the reporting period. Refer to Note 10 for sensitivity analysis of above inputs.
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.
Allowance for expected credit loss
The allowance for expected credit losses assessment requires a degree of estimation and
judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and
makes assumptions to allocate an overall expected credit loss rate for each group. These
assumptions include recent sales experience, historical collection rates, the impact of the
Coronavirus (COVID-19) pandemic and forward-looking information that is available. The
allowance for expected credit losses, as disclosed in note 7, is calculated based on the
information available at the time of preparation. The actual credit losses in future years may be
higher or lower.
Business combinations
As discussed in Note 29, 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.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the consolidated
entity considers it is probable that future taxable amounts will be available to utilise those
temporary differences and losses.
Fair value measurement hierarchy
The consolidated entity is required to classify all assets and liabilities, measured at fair value, using
a three level hierarchy, based on the lowest level of input that is significant to the entire fair value
measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date; Level 2: Inputs other than quoted
prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly; and Level 3: Unobservable inputs for the asset or liability. Considerable judgement is
required to determine what is significant to fair value and therefore which category the asset or
liability is placed in can be subjective.
The fair value of assets and liabilities classified as level 3 is determined by the use of valuation
models. These include discounted cash flow analysis or the use of observable inputs that require
significant adjustments based on unobservable inputs.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
46
Note 2. Statement of Significant accounting policies (continued)
(ac) Critical Accounting Estimates and Judgments (continued)
Estimation of useful lives of assets
The consolidated entity determines the estimated useful lives and related depreciation and
amortisation charges for its property, plant and equipment and finite life intangible assets. The
useful lives could change significantly as a result of technical innovations or some other event.
The depreciation and amortisation charge will increase where the useful lives are less than
previously estimated lives, or technically obsolete or non-strategic assets that have been
abandoned or sold will be written off or written down.
Goodwill and other indefinite life intangible assets
The consolidated entity tests annually, or more frequently if events or changes in circumstances
indicate impairment, whether goodwill and other indefinite life intangible assets have suffered
any impairment, in accordance with the accounting policy stated in note 1. The recoverable
amounts of cash-generating units have been determined based on value-in-use calculations.
These calculations require the use of assumptions, including estimated discount rates based on
the current cost of capital and growth rates of the estimated future cash flows. Refer to note 23
for further information.
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and
lease liability. Judgement is exercised in determining whether there is reasonable certainty that
an option to extend the lease or purchase the underlying asset will be exercised, or an option to
terminate the lease will not be exercised, when ascertaining the periods to be included in the
lease term. In determining the lease term, all facts and circumstances that create an
economical incentive to exercise an extension option, or not to exercise a termination option,
are considered at the lease commencement date. Factors considered may include the
importance of the asset to the consolidated entity's operations; comparison of terms and
conditions to prevailing market rates; incurrence of significant penalties; existence of significant
leasehold improvements; and the costs and disruption to replace the asset. The consolidated
entity reassesses whether it is reasonably certain to exercise an extension option, or not exercise
a termination option, if there is a significant event or significant change in circumstances.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental
borrowing rate is estimated to discount future lease payments to measure the present value of
the lease liability at the lease commencement date. Such a rate is based on what the
consolidated entity estimates it would have to pay a third party to borrow the funds necessary to
obtain an asset of a similar value to the right-of-use asset, with similar terms, security and
economic environment.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19)
pandemic has had, or may have, on the consolidated entity based on known information. This
consideration extends to the nature of the products and services offered, customers, supply
chain, staffing and geographic regions in which the consolidated entity operates. Other than as
addressed in specific notes, there does not currently appear to be either any significant impact
upon the financial statements or any significant uncertainties with respect to events or conditions
which may impact the consolidated entity unfavourably as at the reporting date or subsequently
as a result of the Coronavirus (COVID-19) pandemic.
Note 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.
Australian Accounting Standards and Interpretations that have recently been issued or amended
but are not yet mandatory, have not been early adopted by the consolidated entity for the
annual reporting period ended 30 June 2020. The consolidated entity's assessment of the impact
of these new or amended Accounting Standards and Interpretations, most relevant to the
consolidated entity, are set out below.
Conceptual Framework for Financial Reporting (Conceptual Framework)
The revised Conceptual Framework is applicable to annual reporting periods beginning on or
after 1 January 2020 and early adoption is permitted. The Conceptual Framework contains new
definition and recognition criteria as well as new guidance on measurement that affects several
Accounting Standards. Where the consolidated entity has relied on the existing framework in
determining its accounting policies for transactions, events or conditions that are not otherwise
dealt with under the Australian Accounting Standards, the consolidated entity may need to
review such policies under the revised framework. At this time, the application of the Conceptual
Framework is not expected to have a material impact on the consolidated entity's financial
statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
48
Note 3. Revenue
(a) Revenue from continuing operations
Sales revenue
(b) Other income
Interest
Fair value gain on financial liabilities
14
Government grants
Profit on disposal of assets
Consolidated
2020
$
2019
$
23,080,174
24,713,183
23,080,174
24,713,183
137,543
7,318,522
498,000
2,901
159,637
-
-
-
7,956,966
159,637
Swift has one performance obligation for each of the revenue streams listed below and has
applied the following revenue recognition methods:
•
Software licences: Revenue is recognised at a point in time on transfer of the licence
to the user
• Content revenue: Revenue is recognised over time as the customer is provided with
•
the service
Sale of equipment: 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 the service
Disaggregation of revenue:
2020
Revnue recognition
At a point in time1
Over time2
2019
Revenue recognition
At a point in time1
Over time2
Content & Technology
Revenue
Advertising Revenue
$
$
Total
$
3,924,804
14,177,032
18,101,836
6,778,404
15,366,128
22,144,532
-
4,978,338
4,978,338
-
2,568,651
2,568,651
3,924,804
19,155,370
23,080,174
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.
Geographical information
All revenue is derived in Australia.
Note 3. Revenue (continued)
Revenue recognised in relation to contract liabilities
Revenue recognised that was included in the contract liability balance at 1 July:
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 on 30 June:
Content & Technology revenue
Advertising revenue
Consolidated
2020
$
2019
$
361,811
394,830
-
-
361,181
394,830
20,793,435
21,630,775
3,978,716
4,646,802
24,772,151
26,277,577
As of 30 June 2020, the Group expects that 57% of the transaction price allocated to the unsatisfied
contracts for Content & technology and 67% allocated to Advertising will be recognised as revenue
in the 2021 financial year.
The remaining 43% for Content & Technology and 33% for Advertising will be recognised between
2022 and 2024.
The Group applies the practical expedient in paragraph 121 of AASB 15 and does not disclose
information about remaining performance obligations that have original expected durations of one
year or less.
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
Business restructure expenses
Acquisition related expenses
Fair value loss on financial liabilities
Other expenses
Consolidated
2020
$
2019
$
(9,181,048)
(267,639)
(382,702)
(2,642,663)
(1,500,471)
(13,974,523)
(124,725)
(1,875,538)
(64,478)
(333,333)
(1,318,259)
(3,716,333)
(7,277,738)
(217,485)
(392,194)
(22,339)
(1,922,275)
(9,832,031)
(1,159,591)
(1,162,465)
(1,162,605)
(1,540,850)
(222,692)
(5,248,203)
23
20
14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
50
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
Consolidated
2020
$
2019
$
-
(1,922,546)
-
(1,922,546)
-
181,972
-
181,972
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% (2019: 27.5%)
Non-deductible share-based payments
Other permanents
(19,724,545)
(7,087,470)
(5,424,250)
(1,949,054)
(124,726)
(1,615,777)
(318,707)
-
Changes to income tax expense due to:
Deferred movement
Deferred Taxes not recognised
Derecognition of deferred tax balances
Income tax (expense)/ benefit attributable to entity
-
3,683,746
1,922,546
(1,922,546)
146,709
(1,595,084)
-
181,972
Note 5. Taxation (continued)
(c) Deferred tax asset balances
Lease liabilities
Carried forward tax losses
Deferred tax assets
Movements
Opening balance
Charged/(credited) to the profit or loss
Additions through Business Combinations (refer to Note 29)
Closing balance
(d) Deferred tax liabilities balances
Amounts recognised in the profit or loss:
Property, plant and equipment
WIP and Inventory
Intangibles
Right to Use Asset
Deferred tax liabilities
Movements
Opening balance
Charged/(credited) to the profit or loss
Consolidated
2020
$
2019
$
753,052
849,388
774,544
2,529,615
1,527,596
3,379,003
3,379,003
826,217
(1,851,407)
181,972
-
2,370,814
1,527,596
3,379,003
-
(113,772)
(33,802)
(35,956)
(1,002,571)
(608,909)
(492,223)
(697,820)
(1,527,596)
(1,456,457)
(1,456,457)
(318,225)
(71,139)
-
Additions through Business Combinations (refer to Note 29)
-
(1,138,232)
Closing balance
(1,527,596)
(1,456,457)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
52
Note 6. Cash and cash equivalents
Cash at bank and on hand
Consolidated
2020
$
2019
$
2,448,079
2,448,079
422,771
422,771
Refer to Note 23 on risk exposure analysis for cash and cash equivalents.
Note 7. Trade and other receivables
Current
Trade receivables1
Other receivables2
Loss allowance
Non-Current
Trade receivables3
Loss allowance
Consolidated
2020
$
2019
$
5,125,902
296,648
(1,673,863)
3,748,687
2,572,971
(1,224,691)
1,348,280
5,419,520
112,288
(255,891)
5,275,917
3,502,557
-
3,502,557
Trade and other receivables are non-interest bearing and are generally on 30-60 day terms. An
Expected Credit Loss is made when there is objective evidence that a trade receivable is
impaired. A loss allowance totalling $2,898,554 has been provided for Trade Receivables on 30
June 2020 of which $2,642,663 have been recorded as an expense in the Profit & Loss
Statement.
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 2020, current trade receivables of $471,762 (2019: $ 974,776) 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 23 Financial Risk Management for risk exposure analysis for Trade and other
receivables.
1 Trade receivables includes $483,124 (30 June 2019: $196,111) of current contract assets which relate to work
performed at 30 June 2020 but not yet invoiced. All services are for a period of one year or less and are generally billed
based on time incurred. As permitted by AASB 15, the transaction price allocated to these unsatisfied contracts is not
disclosed
2 Other receivables includes an amount of $249,293 relating to bank guarantees for key customer contracts, lease
premises and equipment previously held under a senior debt facility with Bankwest are now secured with cash on
deposit.
3 Customers on a deferred payment plan, ranging from 2 to 5 years. Revenue has been discounted using the
applicable interest rates, $137,542 interest income was recognised at 30 June 2020 (refer to Note 3b).
Note 8. Inventory
Inventory:
Finished goods
Provision for Obsolescence
Work in progress
Consolidated
2020
$
2019
$
652,024
(97,803)
439,209
993,430
400,103
-
131,605
531,708
Note 9. Property, plant and equipment
Motor
Software
Vehicles
Office
Fit-out
& Equipment
Test
Rental
Equipment
Equipment
Total
$
$
$
$
$
$
Year ended 30 June 2020
Opening net book amount
107,658
1,278,320
Additions
Disposals
5,998
1,520,628
-
-
796,546
43,978
-
34,495
7,851
-
903,645
3,120,664
149,423
1,727,878
-
-
Depreciation expense
(23,449)
(626,991)
(194,506)
(11,532)
(425,374)
(1,281,852)
Closing net book amount
90,207
2,171,957
646,018
30,814
627,694
3,566,690
At 30 June 2020
Cost
Accumulated depreciation
and impairment
160,746
4,232,105
1,833,282
213,192
5,763,457
12,202,782
(70,539)
(2,060,148)
(1,187,264)
(182,378)
(5,135,763)
(8,636,092)
Net book amount
90,207
2,171,957
646,018
30,814
627,694
3,566,690
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
54
Note 9. Property, plant and equipment (continued)
Motor
Software
Vehicles
Office
Fit-out
& Equipment
Test
Rental
Equipment
Equipment
Total
$
$
$
$
$
$
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
Year ended 30 June 2019
Opening net book amount
Additions
Acquired upon acquisition
of subsidiaries
Disposals
(2,500)
-
-
-
679,642
171,650
-
-
141,174
998,466
-
(2,500)
Depreciation expense &
impairment charges
(12,097)
(295,126)
(214,338)
(15,555)
(376,485)
(913,601)
Closing net book amount
107,658
1,278,320
796,546
34,495
903,645
3,120,664
At 30 June 2019
Cost
Accumulated depreciation
and impairment
154,748
2,711,477
1,789,302
205,343
5,614,034
10,747,904
(42,090)
(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
Note 10. Intangible Assets
Goodwill
$
Development
Costs
$
Subscriber
Acquisition
Costs
$
Brand Loyalty /
Customer
Contracts
$
Supplier
Contracts
$
Practice
Sites
$
Other
$
Total
$
Year ended 30 June 2020
Opening net book amount
12,829,166
2,302,274
Additions
-
702,921
Adjustment upon PY acquisition of subsidiaries
(198,222)
-
Amortisation charge
Impairment charge
Closing net book amount
Cost
-
(1,030,741)
(12,630,944)
(242,834)
-
1,731,620
12,630,944
4,133,211
Accumulated amortisation and impairments
(12,630,944)
(2,401,591)
Closing net book amount
-
1,731,620
-
-
-
-
-
-
-
-
-
199,484
-
-
-
(180,334)
-
19,150
2,370,434
(2,351,284)
19,150
-
-
-
-
-
-
-
-
3,831,062
-
-
(827,805)
-
3,003,257
4,139,024
(1,135,767)
3,003,257
-
-
-
-
-
-
-
-
-
19,161,986
702,921
(198,222)
(2,038,880)
(12,873,778)
4,754,027
23,273,613
(18,519,586)
4,754,027
Year ended 30 June 2019
Opening net book amount
Additions
Change in accounting policy
9,891,741
1,570,690
517,996
706,965
20,602
-
-
-
-
-
-
-
-
-
4,139,024
459,997
13,167,992
-
-
-
1,827,546
(517,996)
7,076,449
-
-
1,827,546
-
-
-
(517,996)
-
-
-
Acquired upon acquisition of subsidiaries
2,937,425
Amortisation and impairment charge
-
(1,095,963)
Closing net book amount
12,829,166
2,302,274
(507,481)
(20,602)
(307,962)
(459,997)
(2,392,005)
199,484
-
3,831,062
-
19,161,986
Cost
12,829,166
3,809,978
819,865
2,370,434
123,610
4,139,024
520,963
24,613,040
Accumulated amortisation and impairments
-
(1,507,703)
(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
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 $2,739,203 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. More recently Swift
has invested to develop its “Swift Plus” product, a bespoke offering for its Aged Care customers. 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
2020
$
1,750,770
3,003,257
-
-
2019
$
2,501,758
3,831,062
9,891,741
2,937,425
4,754,027
19,161,986
For the purpose of impairment testing, intangibles are allocated to two (2019: two) consolidated cash-
generating units (CGU). Due to a review and refinement of the business strategy following the
integration of the acquired Medical Channel business, the focus is now on managing profitability
across two business units profit rather than a single consolidated unit, effective 15 February 2019. The
CGUs and aggregate carrying amounts are structured to fall in line with the Group operations and
cash flows. The Medical Channel operations are substantially separate from the Group from 15
February 2019. Refer to note 29, Business Combinations, for further details.
During 2020, revenue streams across Swift Networks and Medical Channel were disrupted due to the
restructuring of the Medical Channel business and the impact of COVID-19. The effect of these factors
was to delay the award of construction projects, reduce activity in the Aged Care sector, and drive a
softer advertising market resulting in a decline in revenue and operating cash flow. The subsequent
impairment testing exercise determined the amount of intangibles and goodwill exceeded their
recoverable amount (implied business value) and an impairment was recognised. It was concluded
that fair value in use less cost of disposal did not exceed value in use.
During the year ending 30 June 2020, impairment of $9,891,741 and $2,739,203 were recognised for
Swift Networks and Medical Channel respectively (2019: nil).
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
57
Note 10. Intangible Assets (continued)
The recoverable amount of the CGUs is determined based on value-in-use calculations. Value-in-use
calculations use cash flow projections based on financial budgets covering a projected five-year
period and then estimating a terminal value. The cash flow for FY2021 is based on the FY2021 budget
adopted by the Board. The cash flows are discounted using a pre-tax discount rate of 13.35%.
Note: in FY 2020 adjustment of $198,222 was made to the provisional accounting for the acquisition Medical Channel
Pty Ltd which had the effect of reducing the amount of goodwill recognised on acquisition by $198,222.
Significant estimate: key assumptions used for value-in-use calculations
The following table sets out the key assumptions for CGU value-in-use calculations:
2020
Pre-tax discount rate
Growth rate for Years 2 to 5
Average gross margin
Terminal value long term growth rate
Capital spend1
Swift
Networks
Medical
Channel
13.35%
13.35%
3.5%
35%
0%
1%
4.0%
69%
0%
0.5%
1 FY21 to FY25 spend for Swift Networks has been estimated as 1% of revenue and 0.5% for Medical Channel.
2019
Pre-tax discount rate
Growth rate for Years 2 to 5
Average gross margin
Terminal value long term growth rate
Capital spend1
Swift
Networks
Medical
Channel
13.04%
13.04%
2.5%
37%
0%
1%
2.5%
79%
0%
0.5%
1FY 20 spend is in line with FY 20 Budget (8% of revenue) whilst FY21 to FY24 has been estimated as 1% of revenue.
Management has determined the values assigned to each of the above key estimates as follows:
Assumption
Approach used to determine values
Pre-tax discount rate
Based on average value of observed betas for comparable listed companies.
Growth rate
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.
Capital spend
at Expected costs to maintain assets in current condition.
Average Gross Margin
Based on FY20 budgeted revenue and cost of sales.
COVID-19
Uncertainties around COVID-19 has been considered in detail through our impairment
assessment
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.
Estimated reasonable possible changes in the key assumptions would have the following approximate
impact on impairment of the CGU as at 30 June 2020:
Note 10. Intangible Assets (continued)
Reasonable
possible change
Pre-tax discount rate
Revenue growth rate
Capital outlay
Average Gross Margin
+10%/-10%
+10%/-10%
+10%/-10%
+10%/-10%
Swift Networks
Medical Channel
Impact on
Impact on
Impact
Impact on
recoverable amount
Impairment
Impairment
-$0.82m/+$1.01m
-$0.40m/Nil
-$0.57m/+$0.57m
-$0.29m/Nil
$1.72m/-$1.72m
Nil/-$1.31m
+$0.21m/-$0.21m Nil/-$0.13m
-$0.2m/+$0.2m
Nil
-$0.01m/$0.01m
Nil
$6.3m/-$6.3m
Nil/-$5.8m
$1.82m/-$1.82m Nil/-$1.65m
Board Approved Revenue*
+10%/-10%
$16.86. m/-$16.86m
Nil/-$16.4m
$2.62m/-$2.62m Nil/-$2.45m
Each of the sensitivities above assumes that the specific assumption moves in isolation, whilst all other assumptions are he5.8ld
constant.
Estimated reasonable possible changes in the key assumptions would have the following approximate
impact on impairment of the CGU as at 30 June 2019:
Reasonable
possible
change
+10%/-10%
+10%/-10%
+10%/-10%
Swift Networks
Medical Channel
Impact on
recoverable amount
Impact on
Impairment
Impact on
recoverable amount
Impact on
Impairment
-$1.6m/$1.96m
-$0.25/Nil
-$0.80m/$0.98m
-$0.06m/Nil
$0.15m/-$0.15m
-$0.44m/$0.44m
Nil
Nil
$0.06m/-$0.06m
-$0.08m/$0.08m
Nil
Nil
Pre-tax discount rate
Revenue growth rate
Capital outlay
Average Gross Margin
+10%/-10%
$8.94m/-$8.94m
Nil/-$7.59m
$6.52m/-$6.52m
Nil/-$5.79m
Board Approved Revenue* +10%/-10%
$24.28m/-$24.28m
Nil/-$22.98m
$8.20m/-$8.20m
Nil/-$7.46m
Each of the sensitivities above assumes that the specific assumption moves in isolation, whilst all other assumptions are held
constant.
Note 11. Trade Payables
Current
Trade Payables
Other payables and accruals
Consolidated
2020
$
2019
$
5,105,968
3,483,546
8,589,514
3,926,880
4,183,663
8,110,543
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
Note 12. Provisions
Current
Employee and FBT provisions
Non-Current
Employee provisions1
1Entitlement to Long Service leave is more than 12 months
Consolidated
2020
$
2019
$
478,452
478,452
45,553
45,553
639,182
639,182
17,816
17,816
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
59
Note 13. Borrowings
Current
Bank overdraft facility
Convertible note1
Total current borrowings
Non-Current
Pure Asset Management Loan2
Less: transaction costs
Total non-current borrowings
Consolidated
2020
$
-
-
-
2019
$
2,455,086
-
2,455,086
8,000,000
(1,076,566)
6,923,434
-
-
-
1 During FY 2020 the Company entered into a convertible note with LI Capital and Lind Partners on a
12-month term, issued at a 10% discount. No interest is payable, other than if an event of default
occurs. 1,000,000 shares were issued to the Noteholders in consideration for entering this agreement.
On 1 May 2020, the balance of the convertible note was repaid at 25% premium to the balance owing
at that date. During the period from first draw down to full repayment, $463,000 of the convertible note
was converted to equity.
2 Pure Facility over a 4-year term with 10% interest rate, interest payable every 3 months. Transaction
costs are costs that are directly attributable to the loan and include loan origination fees, legal fees
and warrants. 26,666,666 detached warrants were issued to Pure on 29 January 2020 with exercise
price of $0.30 each. These have been included in transaction costs and have been valued using a
Black-Scholes option pricing model. The balance of unamortised transaction cost of $1,076,566 is offset
against the borrowings of $8,000,000. Total capitalised transaction costs relating to the facility
agreement are $1,262,260. The security of the facility is a first-ranking general security over all assets of
Swift Media Limited and its subsidiaries.
The Group is in compliance with its loan covenants and expects to continue to meet all covenants at
the next review on 30 June 2021. The Company has obtained covenant waivers from our senior
lenders for the remainder of the 2020 calendar year such that the next covenant test point will be 30
June 2021.
Note 14. Financial Liability At Fair Value through Profit & Loss
Current
Opening balance
Converted to Equity1, 2
Fair value through the P&L
Closing balance
Non-Current
Opening balance
Amount due under contract of sale at acquisition
(refer to Note 29)
Fair value through the P&L (net)
Closing balance
Consolidated
2020
$
2019
$
3,666,667
(4,000,000)
333,333
-
9,350,000
(3,916,667)
(1,766,666)
3,666,667
7,568,522
937,500
-
3,323,505
(7,318,522)
250,000
3,307,517
7,568,522
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 were issued at $0.235.
2On 2 August 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,
16,666,667 shares were issued at $0.24.
The above liability relates to the potential issue of ordinary shares in Swift Networks Group Limited to
the vendors of 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
61
Note 14. Financial Liability – at Fair Value through Profit & Loss (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 (until 13 November 2021) 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 on 15 February 2019
Under the agreement with vendors of Medical Channel, shares could be issued in the first five years
(until 14 February 2024) after completion upon satisfaction of the following milestones:
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
i.
ii.
iii.
iv.
v.
vi.
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:
Fair value at
30 June 20201
At initial
recognition
At 30 June 2020
At 30 June 2019
Entity
Swift Networks Pty
Ltd / Wizzie Pty Ltd1
Milestone 1 – 20%
Milestone 2 – 15%
Milestone 1 –settled
Milestone 2 – 100%
Milestone 1 – settled
Milestone 2 – settled
Living Networks
Milestone 1 – 50%
Milestone 2 – 50%
Milestone 1 – 0%
Milestone 2 – 0%
Milestone 1 – expired
Milestone 2 – expired
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%
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 – 50%
Milestone 2 – 0%
Milestone 3 – 0%
Milestone 4 – 0%
Milestone 5 – 0%
Milestone 6 – 0%
Milestone 7 – 0%
Milestone 8 – 0%
Milestone 9 – 0%
Medical Channel
Pty Ltd2
Milestone 1 – 30%
Milestone 2 – 20%
Milestone 3 – 15%
Milestone 4 – 10%
Milestone 5 – 10%
Milestone 6 – 10%
Milestone 1 – 100%
Milestone 2 – 50%
Milestone 3 – 25%
Milestone 4 – 20%
Milestone 5 – 10%
Milestone 6 – 5%
Milestone 1 – 0%
Milestone 2 – 0%
Milestone 3 – 0%
Milestone 4 – 0%
Milestone 5 – 0%
Milestone 6 – 0%
Total
-
-
$250,000
-
$250,000
1 Measured under cash consideration, share price at reporting date and managements’ probability
2 Measured under partial cash considerations, share price at 30 June 2020 and managements’ probability
Note 14. Financial Liability – at Fair Value through Profit & Loss (continued)
b) The financial liability is a level 3 financial instrument. The Following summarises quantitative
information about the significant unobservable inputs:
Entity
Description
Unobservable inputs
Range of inputs
Relationship of inputs to
fair value
Swift Networks
Pty Ltd &
Wizzie Pty Ltd
Living Networks Contingent
Contingent
consideration
Web 2 TV
consideration
Contingent
consideration
Probability of
achieving Milestones
disclosed above
Probability of
achieving Milestones
disclosed above
Probability of
achieving Milestones
disclosed above
Medical
Channel Pty Ltd
Contingent
consideration
Probability of
achieving Milestones
disclosed above
Milestone 2 – vested
N/a
Milestone 1 – expired
Milestone 2 –expired
N/a
Milestone 1 – 50%
Milestone 2 – 0%
Milestone 3 – 0%
Milestone 4 – 0%
Milestone 5 – 0%
Milestone 6 – 0%
Milestone 7 – 0%
Milestone 8 – 0%
Milestone 9 – 0%
Milestone 1 – 0%
Milestone 2 – 0%
Milestone 3 – 0%
Milestone 4 – 0%
Milestone 5 – 0%
Milestone 6 – 0%
If the probability of
achieving each milestone
was 10% higher (or lower)
the fair value would
increase (decrease) by
$50,000
If the probability of
achieving each
milestone was 10%
higher (or lower) the fair
value would increase
(decrease) by $245,183
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
63
Note 15. Leases
Year ended 30 June 2020
Opening net book amount
Additions
Impairment expense
Amortisation expense
Closing net book amount
Year ended 30 June 2019
Opening net book amount
Additions
Acquired upon acquisition of subsidiaries
Amortisation expense
Closing net book amount
Lease liabilities
Properties Current
Equipment Current
Total current lease liabilities
Properties Non-current
Equipment Non-current
Total non-current lease liabilities
Total Lease liabilities
Properties
$
Right Of Use Assets
Equipment
$
Total
$
1,205,164
1,418,176
(789,517)
(807,247)
1,026,576
1,451,603
110,921
133,450
(490,810)
1,205,164
Jun-20
$
1,332,364
225,003
-
(794,042)
763,325
-
-
1,673,570
(341,206)
1,332,364
2,537,528
1,643,179
(789,517)
(1,601,289)
1,789,901
1,451,603
110,921
1,807,020
(832,016)
2,537,528
Consolidated
Jun-19
$
765,540
532,201
1,297,741
1,411,489
426,161
1,837,650
3,135,391
422,812
799,547
1,222,359
1,154,421
723,645
1,878,066
3,100,425
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
765,540
1,411,489
532,201
426,161
1,297,741
1,837,650
-
-
-
2,177,029
958,362
3,135,391
During FY20, the Company impaired a right of use commercial property lease asset due to
excessive and underutilized space within the premises, compared to the ongoing requirements
of the Company. The impairment value was determined by estimating the underutilized
physical space as a percentage of the total leased space and applying the ratio to future lease
commitments.
Note 16. Contracts Assets and Liabilities
Non-Current Contract assets
Contract assets relating to Advertising Revenue
Contract assets relating to Content & Technology
Revenue
Total
Assets recognised from costs to fulfil a contract
Amortisation recognised as a cost of providing services
during the year
Total
Consolidated
Jun-20
$
Jun-19
$
367,396
147,252
514,648
1,378,443
(863,795)
514,648
200,233
254,397
454,630
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 basis
over the term of the specific contract it relates to, in line with recognition of the associated
revenue.
Current Contract liabilities
Advertising Revenue Current
Content & Technology Revenue Current
Total
Non-Current Contract liabilities
Advertising Revenue Non-current
Content & Technology Revenue Non-current
Total
95,505
1,081,728
1,177,233
-
197,156
197,156
555,974
819,902
1,375,876
-
48,960
48,960
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
65
Note 17. Issued capital
Consolidated
2020
$
2019
$
Issued capital
56,814,749
47,028,669
Movement in Ordinary Share Capital:
30 June 2020
No.
30 June 2019
No.
30 June 2020
$
30 June 2019
$
At the beginning of the period
Issue of shares as deferred
consideration
(refer to Note 14)
Issue of shares to employees:
4 January 2019
19 March 2019
8 April 2019
5 July 2019
11 July 2019
9 September 2019
15 October 2019
18 February 2020
27 May 2020
Medical Channel acquisition (a)
Issue of shares on conversion of
convertible notes
Issued shares in lieu services
Issue of shares as per Placement and
Share Purchase Plan
Issue of shares as per Placement and
Non-Renounceable Entitlement Offer
Options exercised during the year
Share issue costs (b)
(a) Medical Channel acquisition
154,039,046
121,062,903
47,028,669
38,437,650
16,666,667
16,666,667
4,000,000
3,916,667
-
-
-
205,231
507,307
634,017
237,893
208,038
167,411
72,213
133,320
71,551
-
-
-
-
-
-
14,950,166
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,500,000
30,172,223
-
823,000
-
-
332,226
-
100,000
13,262,243
223,402,842
-
-
1,923,000
3,351,043
1,000,000
750,000
150,000
-
-
(460,963)
-
-
112,500
(38,148)
440,502,918
154,039,046
56,814,749
47,028,669
Under the terms of the Medical Channel acquisition, the Group issued 14,950,166 shares as part of the
consideration paid to the vendors for the acquisition of Medical Channel Pty Ltd on 15 February 2019.
(b) Share Issue Costs
Included in share issue costs are underwriting fees totalling $61,800 paid by the issue of 4,120,000 shares
at the $0.015 issue price to the underwriters of the Non-Renounceable Entitlement Offer and
Placement undertaken in April 2020.
Note 17. Issued capital (continued)
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.
Options
On 30 June 2020, there were 10,133,333 options (30 June 2019: 8,133,333) available for exercise.
Exercise price
Expiry date
Opening balance
Issued during the year
Expired during the year
15 cents
19 May
2021
35 cents
31 May
2021
42 cents
31 May
2021
5 cents
31 May
2021
30-60 cents
31 December
2021
Total
6,133,333
1,000,000
1,000,000
-
-
8,133,333
-
-
-
-
-
-
-
-
2,000,000
1,000,000
3,000,000
-
-
-
-
-
(1,000,000)
Exercised during the year
(1,000,000)
Closing balance
5,133,333
1,000,000
1,000,000
2,000,000
1,000,000
10,133,333
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
Exercised during the year
Closing 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
(750,000)
-
-
8,883,333
(750,000)
6,133,333
1,000,000
1,000,000
8,133,333
Warrants
26,666,666 detached warrants were issued to Pure Asset Management on 29 January 2020 with
exercise price of $0.30 each and have been valued at $614,422 using a Black-Scholes option pricing
model. These costs have been included in capitalised transaction costs offset against the associated
borrowings of $8,000,000 (refer to Note 13).
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going
concern, so that it can provide returns for shareholders and benefits for other stakeholders and to
maintain an optimum capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares or sell to reduce debt.
The Group will look to raise capital when an opportunity to make investments is seen as value adding
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 2019 Annual Financial Statement.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
67
Note 18. Reserves
Options & Warrant reserves
Opening balance
Warrants issued (note 20)
Options issued (note 20)
Closing balance
Consolidated
2020
$
2019
$
3,628,978
2,470,044
614,422
124,725
4,368,125
-
1,158,934
3,628,978
The reserve is used to recognise the fair value of options & warrants granted.
Note 19. Accumulated losses
Accumulated losses at the beginning of the financial year
(40,215,849)
(33,047,431)
Loss after income tax expense for the year
Adoption of new accounting standards
(21,647,091)
(6,905,498)
-
(262,920)
Accumulated losses at the end of the financial year
(61,862,940)
(40,215,849)
Consolidated
2020
$
2019
$
Note 20. Share based payments
(i)Details of Share Based Payments issued to Key Management Personnel and other employees
Remuneration Type
Grant Date
Number
Granted
Total P&L
expense in
the period
Mr D Smorgon Share Rights (A)
15 November 2019
750,000
$48,759
Ms K Ostin
Share Rights (B)
15 November 2019
600,000
$29,277
Mr P Gibbons
Share Rights (C)
22 June 2020
600,000
$309
Ms P Leary
Incentive options (A) 15 November 2019
1,000,000
$27,225
Other non-KMP
staff
Incentive options (B) 6 January 2020
277,778
$2,181
As at 30 June 2020
Number
vested and
exercisable
-
-
-
-
-
Number
unvested
750,000
600,000
600,000
1,000,000
277,778
On 26 June 2019, Darren Smorgon was granted 750,000 share rights (conversion to 1 ordinary share for
1 right) which were subsequently approved by shareholders at the Annual General Meeting of the
Company held on 15 November 2019. 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. A share-based payment expense in relation to this arrangement of which $48,759 was recorded
in FY 2020 (FY2019: $657).
On 26 June 2019, Pippa Leary was granted 1,000,000 incentive options which were
subsequently approved by shareholders at the Annual General Meeting of the Company held on 15
November 2019. The rights will be subject to a vesting period of 3 years. These rights will be forfeited in
full and lapse should she not complete her engagement as Chief Executive Officer for
the 3 years. A share-based payment in relation to this arrangement of $27,225 was recorded in FY
2020.
On 1 October 2019, Katherine Ostin was granted 600,000 share rights (conversion to 1 ordinary share
for 1 right) which were subsequently approved by shareholders at the Annual General Meeting of the
Company held on 15 November 2019. The rights will be subject to a vesting period of 2 years. These
rights will be forfeited in full and lapse should she not complete her engagement as Non-Executive
Director for the 2 years. A share-based payment expense in relation to this arrangement of
$29,277 was recorded in FY 2020.
On 22 June 2020, Peter Gibbons was granted 600,000 share rights (conversion to 1 ordinary share for 1
right) which are subject to 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 Non-
Executive Director for the 2 years. A share-based payment expense in relation to this arrangement of
$309 was recorded in FY2020.
Valuation
The fair value of these share-based instruments was calculated as follows:
Method
Spot price
Strike price
Ordinary Share Rights
(A)
Share price at grant
date
13 cents
Ordinary Share Rights
(B)
Share price at grant
date
13 cents
Ordinary Share Rights
(C)
Share price at grant
date
4.7 cents
Incentive
Options (A)
Black Scholes
Incentive
Options (B)
Black Scholes
13 cents
10.5 cents
0 cents
0 cents
0 cents
30-60 cents
30-45 cents
Expiry date
25 June 2021
29 September 2021
21 June 2022
Volatility
Risk free rate
Fair value per unit
(cents)
N/a
N/a
13.0
N/a
N/a
13.0
N/a
N/a
4.7
1 July 2020- 2022 5 January 2021-
5 January 2022
80%
80%
0.79%
0.75%
2.45-4.26
0.61-1.05
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
69
Note 20. Share based payments (continued)
(ii) Other Options Issued
During FY2020, 2,000,000 options valued at $16,974 were issued to brokers in connection with future
and past services provided to Swift Networks Group Limited (refer to Note 17). These options could not
be valued due to the fact that they represented consideration for past and future services provided
by the broker to the Company.
The fair value of these options granted was calculated as 0.85 cents by using the Black Scholes option
valuation methodology and applying the following inputs:
Underlying share price
Exercise price
Valuation date
Expiry date
Exercise period
Volatility
Risk free rate
No. of options
$0.019
$0.05
1 May 2020
30 April 2025
5 years
80%
0.40%
2,000,000
Summary of options granted as a share-based payment:
Issue of options to KMP
Issue of options (Other)
Closing balance
2020
$
105,570
19,155
124,725
2019
$
497,379
662,112
1,159,591
Note: included in share issue costs are underwriting fees totalling $61,800 paid by the issue of 4,120,000 shares at the
$0.15 issue price to the underwriters of the Non-Renounceable Entitlement Offer and Placement undertaken in April 2020.
Warrants
26,666,666 detached warrants were issued to Pure Asset Management on 29 January 2020 with
exercise price of $0.30 each and have been valued at $614,422 using a Black-Scholes option pricing
model. These costs have been included in capitalised transaction costs offset against the associated
borrowings of $8,000,000 (refer to Note 13).
Note 21. Cash flow information
Consolidated
2020
$
2019
$
(a) Reconciliation of net profit/(loss) after tax to net cash flows from operations:
(21,647,091)
(6,905,498)
(Loss) after tax
(a) Non-cash flows in profit:
Impairment expenses
Depreciation & amortisation expenses
Amortisation expense for debt establishment cost and
cost to fulfill contract
Bad debt expenses
Share based payments (settled in equity)
Fair value loss on financial liability
Income tax expense/(benefit)
13,613,483
4,912,438
1,339,550
2,642,663
124,725
(6,985,188)
1,922,546
(4,076,874)
(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
1,038,843
(461,722)
(458,356)
(356,758)
(50,447)
(132,993)
Cash flow provided from operations
(4,498,307)
(2,316,602)
(b) Non-cash financing and investing activities
Issue of 14,950,166 shares upon acquisition of Medical Channel
Pty Ltd
Capital raising underwriting fees settled in shares
Issue of 16,666,667 shares upon completion of Class A & B
Performance Share milestones
-
61,800
4,000,000
4,061,800
4,500,000
-
3,916,667
8,416,667
Non-cash investing and financing activities disclosed in other notes are:
• Acquisition of right-of-use assets – Note 15
•
Issue of Shares on conversion of convertible notes – Note 17
629,064
3,437,684
282,547
255,891
1,159,591
1,540,850
(181,972)
218,157
(4,514,166)
650,468
(284,040)
2,446,398
(899,506)
66,088
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
71
Note 21. Cash flow information (continued)
(c) Changes in Liabilities from financing activities
Balance as at 1 July 2018
Net cash from (used in) financing activities
Leases – recognised on adoption of AASB 16
Acquired on acquisition of subsidiaries
Balance as at 30 June 2019
Consolidated
Short Term
Borrowings
$
Long Term
Borrowings
$
Lease
Liabilities
$
Total
$
-
2,455,086
-
-
2,455,086
-
-
-
-
-
-
-
(764,277)
1,890,809
2,057,682
2,057,682
1,087,020
1,807,020
3,100,425
5,555,511
Net cash from (used in) financing activities
(1,555,086)
8,000,000
(1,590,114)
4,854,800
Conversion of notes to Shares (refer Note 17)
Acquisition of leases
(823,000)
-
-
-
-
(823,000)
1,625,080
1,625,080
Debt establishment costs capitalised
(77,000)
(1,076,566)
-
(1,153,566)
Balance as at 30 June 2020
-
6,923,434
3,125,391
10,058,825
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 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.
Note 22. Segment information (continued)
Year Ended 2020
Swift Networks
Medical Channel
$
$
Total
$
Revenue from external sources
18,101,836
4,978,338
23,080,174
Reportable segment loss
Reportable segment assets
(18,742,073)
(9,765,481)
(28,507,554)
15,543,107
6,121,156
21,644,263
Reportable segment liabilities
(6,326,172)
(15,998,157)
(22,324,329)
Reconciliation of reportable segment loss
Reportable segment loss
(18,742,073)
(9,765,481)
(28,507,554)
Other revenue
Unallocated:
Share based payments
Fair value loss on financial liability
7,318,522
(124,725)
(333,334)
-
-
-
7,318,522
(124,725)
(333,334)
Loss before tax
(11,881,610)
(9,765,481)
(21,647,091)
Reconciliation of reportable segment assets
Reportable segment assets
15,543,107
6,121,156
21,644,263
Unallocated:
Cash
Receivables
Other assets
Total assets
-
-
-
-
-
-
-
-
-
15,543,107
6,121,156
21,644,263
Reconciliation of reportable segment liabilities
Reportable segment liabilities
(6,326,172)
(15,998,157)
(22,324,329)
Unallocated:
Trade and other payables
Total liabilities
-
-
-
(6,326,172)
(15,998,157)
(22,324,329)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
73
Note 22. Segment information (continued)
Year Ended 2019
Swift Networks
Medical Channel
$
$
Total
$
Revenue from external sources
Reportable segment loss
Reportable segment assets
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
Reportable segment liabilities
(13,856,371)
(14,583,164)
(28,439,535)
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
(2,768,041)
158,032
(1,159,591)
(1,540,850)
-
(1,778,625)
1,605
-
-
-
(4,546,666)
159,637
(1,159,591)
(1,540,850)
-
(5,310,450)
(1,777,020)
(7,087,470)
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)
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
Market risk
Market risk is analysed as market price risk, interest rate risk and currency risk.
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.
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. Management
mitigates this risk by entering into fixed interest rate contracts.
Exposure to interest rate risk
As at the reporting date the interest rate risk was considered to be immaterial.
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 2020, 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.
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:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
75
Note 23. Financial risk management (continued)
Carrying amount
Cash and cash equivalents
Trade and other receivables
Consolidated
2020
$
2019
$
2,448,079
5,096,967
422,771
8,778,473
7,545,046
9,201,244
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 2020, a loss allowance of
$1,224,691 was made for long term receivables.
Loss Allowance
Opening loss allowance at 1 July (calculated under AASB 9)
Increase in loss allowance recognised in profit or loss during the
year
Closing loss allowance as at 30 June
Consolidated
2020
$
2019
$
255,891
92,314
2,642,663
163,577
2,898,554
255,891
30 June 2020
Content Short
Content
Advertising
Advertising
Total
term
Long term
Local Sales
National Sales
receivables
receivables
receivables
receivables
Expected Loss Rate
28%
48%
81%
0%
38%
Trade Receivables
4,680,476
2,572,971
431,868
13,558
7,698,873
Loss Allowance
(1,325,309)
(1,224,691)
(348,544)
-
(2,898,554)
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-.
Note 23. Financial risk management (continued)
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
$
Consolidated - 2020
Financial liabilities
Trade payables
Other payables
5,105,968
2,017,583
-
-
5,105,968
-
1,482,385
535,198
Loan
6,923,434
10%
-
-
-
-
-
-
-
5,105,968
2,017,583
8,466,667
8,466,667
Lease liabilities
3,135,391
7.37%
657,915
639,826
1,122,702
714,948
3,135,391
-
-
250,000
-
250,000
7,246,268
1,175,024
1,372,702
9,181,615
18,975,609
Financial liability
250,000
Closing net book
amount
17,432,376
Consolidated - 2019
Financial liabilities
Trade payables
Other payables
3,926,880
3,363,323
-
-
-
-
3,926,880
3,363,323
-
-
-
-
-
-
-
-
3,926,880
3,363,323
2,455,086
Loan
2,455,086
5.6%
-
2,455,086
Lease Liabilities
3,100,425
7.18%
621,182
601,180
1,297,741
580,322
3,100,425
Financial liability
11,235,189
Closing net book
amount
24,080,903
-
-
3,666,667
-
7,568,522
-
11,235,189
11,578,052
3,056,266
8,866,263
580,322
24,080,903
The Group maintains cash flow forecasts for the next 12 months on a rolling basis. This takes into
consideration all projected debt payments.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
77
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.
Equity investments traded on organised markets have been valued by reference to market prices
prevailing at balance date. For non-traded equity investments, the fair value is an assessment by the
Directors based on the underlying net assets, future maintainable earnings and any special
circumstances pertaining to a particular investment.
The carrying amounts of financial assets and liabilities equates to their fair values at balance date.
Note 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:
Taxation advice and preparation of income tax returns
Corporate Finance advice
Consolidated
2020
$
2019
$
148,062
110,237
44,573
35,614
-
137,500
Total remuneration for audit and non-audit services
192,635
283,351
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 gain/(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
SHAREHOLDERS’ EQUITY
Share capital
Reserves
Accumulated losses
Total shareholders’ equity
Parent entity
2020
$
2019
$
(21,504,919)
(4,062,851)
1,816,172
11,560
-
19,929,782
1,816,172
19,941,342
(122,213)
(5,670,862)
(4,342,221)
(5,814,326)
(4,464,434)
(11,485,188)
(2,648,262)
8,456,154
56,332,451
46,546,370
1,464,074
849,652
(60,444,787)
(38,939,868)
(2,648,262)
8,456,154
The Parent has Contingent Liabilities as at 30 June 2020 (refer to Note 30) and has entered into a senior
secured debt facility (refer to Note 13), (2019: Nil).
The Parent has no Contingent assets and no other contractual obligations on behalf of the Group as
at 30 June 2020 (2019: Nil).
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
79
Note 26. 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 2020.
Short term employee benefits
Share based payments (non-cash)
Post-employment benefits
Consolidated
2020
$
2019
$
900,666
105,570
233,829
927,534
497,479
272,814
1,240,065
1,697,827
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.
Loans with Directors and Key Management Personnel
The Company was advanced the following funds by the Directors and their related parties:
Funds owed to Robert Sofoulis:
Payments made
Closing balance
2020
$
2019
$
325,000
(325,000)
-
-
-
-
An unsecured loan was drawn in October 2019 and repayable by no later than 31 December 2019,
subject to an arm’s length interest rate of 12% and payable within 7 days of the date of invoice. The
loan was repaid in full in December 2019.
Note 26. Related party transactions (continued)
Other transactions with Directors and Key Management Personnel
Transactions with Directors and 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
provision of office premises, pursuant to operating lease.
Underwriting fees paid to Sofoulis Holdings Pty Ltd, a company of
which Robert Sofoulis is a director and Ryan Sofoulis is associated
with, in connection with the April 2020 non-renounceable rights issue.
Interest paid to Sofoulis Holdings Pty Ltd, a company of which Robert
Sofoulis is a director and Ryan Sofoulis is associated with, in
connection with a loan advanced to the Company.
Payments made to oOH!Media Limited, a company of which Darren
Smorgan
light
entertainment content for the health and wellbeing media screen
business, pursuant to an arms length contract.
is a Director, for the provision of news and
2020
$
2019
$
500,515
434,261
20,467
6,238
154,050
-
-
-
Amounts outstanding at reporting date
Aggregate amount payable to Key Management Personnel and
their related entities at reporting date:
167,820
36,851
Other related party agreements with Directors and Key Management Personnel
On March 31 2020, Swift Media entered into a variation deed with Medical Media Investments, a
company associated with Darren Smorgon, to vary the existing terms of the performance shares issued
in respect of the Medical Channel acquisition such that the 68,106,313 outstanding performance
shares would be converted into 18,875,034 ordinary shares. The agreement is subject to the Company
receiving appropriate statutory and regulatory approvals, which have yet to be received.
No other transactions or loans existed during the year and as at reporting date between the Company
and with key management personnel.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
81
Note 27. 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 2020
%
30 June 2019
%
Australia
100%
100%
Australia
Australia
Australia
Australia
Australia
Hong Kong
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Of the controlled entities, only Swift Networks Pty Ltd, Medical Channel Pty Ltd and VOD Pty
Ltd were operating during the financial year.
Note 28. EPS
Consolidated
2020
$
2019
$
Net profit / (loss) from continuing operations for the year
(21,647,091)
(6,905,498)
Weighted average number of ordinary shares for the purpose of basic
earnings per share
Basic earnings / (loss) per share (cents)
Diluted earnings / (loss) per share (cents)
There are no instruments considered to be dilutive.
No.
No.
227,021,974
132,219,511
(9.5)
(9.5)
(5.2)
(5.2)
Note 29. Business Combination
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 had 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 $0.30/share on 15 February 2019)
Deferred consideration (refer to Note 14)
Adjustment to consideration
Total Purchase Consideration
1The assets and liabilities recognised as a result of the acquisition are as follows:
Cash
Trade and other receivables1
Other receivables
Plant & Equipment
Intangibles – Practice Sites
Deferred tax asset
Trade payables
Other payables1
Provisions
Other current liabilities
Deferred tax liability
Other non-current liabilities
Net identifiable assets
Add: Goodwill
Net Assets
$
4,500,000
3,323,505
(151,000)
7,672,505
751,720
195,015
36,675
2,858,727
4,139,024
2,370,814
(478,078)
(1,642,776)
(158,041)
(899,316)
(1,138,232)
(1,102,230)
4,933,302
2,739,203
7,672,505
(i) The goodwill is attributable to the forecast profitability of the acquired business. It will not be
deductible for tax purposes.
(ii) As at reporting date the directors believe a provision for impairment of goodwill for $2,739,203 is
required. (Note 10)
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
1In the FY2020 accounts an adjustment has been made to the fair identifiable assets and liabilities of
Medical Channel Pty Ltd acquired in February 2019 to decrease trade receivables by $166,977 and
reduce other payables by $365,199 with a comparative net decrease in Goodwill of $198,222.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
83
Note 30. Contingencies
Liabilities under guarantees1
Total Contingent liabilities
Consolidated
2020
$
2019
$
-
-
1,238,167
1,238,167
1 Bank guarantees for key customer contracts, lease premises and equipment previously held under a
senior debt facility with Bankwest are now secured with cash on deposit and an amount of $249,293 is
recorded as “Restricted Cash” in Other Receivables (Note 7).
Note 31. Commitments
NetSuite ERP licence Fees
The Group entered into a five year payment plan for NetSuite ERP Licence fees. Minimum
commitments under the arrangement are as follows:
Not later than 1 year
Later than 1 year but not later than 2 years
Later than 2 years and not later than 5 years
Total Commitments
Consolidated
2020
$
2019
$
151,238
140,105
256,859
548,202
-
-
-
-
Note 32. Events subsequent to reporting date
On 2 July 2020, Mr Geoff Greenberg was appointed Chief Financial Officer of the Company.
On 15 August 2020, 14,950,166 Ordinary Shares were released from Escrow.
The COVID-19 pandemic has developed rapidly in 2020, with a significant number of cases. Measures
taken by various governments to contain the virus have affected economic activity. We have taken a
number of measures to monitor and mitigate the effects of COVID-19, such as safety and health
measures for our people (such as social distancing and working from home) and securing the supply
of material that are essential to our production process.
At this stage the impact on our business and results has not been significant. We will continue to follow
various government policies and advice, and in parallel, we will do our utmost to continue our
operations in the best and safest way possible without jeopardising the health of our people.
There are no other matters or circumstances that have arisen since 30 June 2020 that have or may
significantly affect the operations, results, or state of affairs of the Group in future financial periods.
Note 33. Company details
The registered office and principal place of business of the Company is:
Swift Media Limited
1 Watts Place
BENTLEY WA 6102 Australia
DIRECTORS’ DECLARATION
The Directors of the Company declare that the financial statements and notes, as set out on
pages 28 to 83 are in accordance with the Corporations Act 2001 and:
a.
b.
c.
d.
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 2020 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
e.
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 29th day of September 2020
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 2020, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial 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 2020 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 (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
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.
Recoverability of intangible assets
Key audit matter
How the matter was addressed in our audit
Note 10 in 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.
(cid:127)
Evaluating the Group’s categorisation of Cash
Generating Units (“CGUs”) and the allocation of
Management’s assessment of the recoverability
goodwill to the carrying value of CGUs based on our
of the intangible assets is supported by a value in
understanding of the Group’s business;
use cash flow forecast, which requires estimates
and judgements about future performance.
These include judgements and estimates over the
expectation of future revenues, anticipated
budgeted costs, growth rates expected and the
discount rate applied.
Given the extent of judgement involved in light
of the impact of the COVID-19 pandemic and the
financial significance of the impairment
recognised, we considered this to be a key audit
matter.
(cid:127)
Challenging key inputs used in the value in use
calculations including the following:
(cid:127)
(cid:127)
(cid:127)
Assessing the discount rate used by involving
internal valuation experts and comparing them to
market data and industry research;
Comparing growth rates with historical data and
economic and industry growth forecasts;
Assessing the Group’s forecast cash flows is
consistent with our knowledge of the business,
board approved budget, incorporating any
potential impact of the COVID-19 pandemic and
corroborating our work with external information
where possible;
(cid:127)
Performing sensitivity analysis on the revenue,
growth rates, gross profit margins, discount rates
and impact of COVID-19; and
(cid:127)
Assessing the adequacy of the related disclosures in the
financial report.
Recoverability of trade receivables
Key audit matter
How the matter was addressed in our audit
Refer to Note 2(c) and Note 2(ac) of the financial
Our procedures included, but were not limited to the
report for a description of the accounting policy
following:
and significant estimates and judgements applied
to these assets.
In accordance with AASB 9 Financial Instruments,
at the end of each reporting period, management
are required to assess whether there is any
objective evidence that these assets are
impaired. Under the impairment requirements of
the standard, losses are recognised on an
expected credit loss (‘ECL’) basis and is required
to incorporate forward-looking information,
reflecting the Group’s view of potential future
economic scenarios.
Due to the subjectivity involved in determining
whether there is any objective evidence of
impairment on these assets, we have determined
that the recoverability of trade and receivables is
a key audit matter.
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
Reviewing the terms and conditions of the contractual
arrangements of the receivables;
Challenging management’s assumptions regarding the
level of provisioning against the ageing of receivables;
Holding discussions with management as to the credit
risk of the counterparty, and whether this information
is consistent with management’s impairment
assessment position;
Considering whether any other data exists which would
constitute indicators of impairment including the
impact of COVID-19; and
Assessing the adequacy of the related disclosures 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 2020, 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 at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.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 18 to 25 of the directors’ report for the
year ended 30 June 2020.
In our opinion, the Remuneration Report of Swift Media Limited, for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Dean Just
Director
Perth, 29 September 2020
SHAREHOLDER INFORMATION
89
SHAREHOLDER INFORMATION
A.
Substantial Shareholders
The following have a relevant interest (>5%) in the capital of Swift Media Limited as at 21st
September 2020:
Substantial ordinary shareholders
No. of ordinary shares
held
Percentage held of
Issued Ordinary
Capital
Mr Robert Sofoulis and related entities
94,923,655
21.60%
Pure Asset Management Pty Ltd ATF The
Income and Growth Fund
41,895,074
9.51%
Medical Media Investments Pty Ltd
27,616,833
6.20%
Cyan Investment Management
23,283,817
5.29%
B.
Distribution of Equity Securities
(i) Analysis of numbers of equity security holders by size of holding as at 21st September
2020.
Number of Holders - Ordinary Shares
Category (Size of Holdings)
Issued Shares
Unlisted
Options
Unlisted
Warrants
Unlisted Ordinary
Share Right
Conversion
-
-
-
-
-
1,000
5,000
10,000
100,000
and over
1
1,001
5,001
10,001
100,001
Total
64
267
138
483
294
1,246
-
-
-
12
12
24
-
-
-
-
8
8
-
-
-
-
2
2
C. Equity Security Holders
Twenty largest quoted equity security holders (21st September 2020)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
SOFOULIS HOLDINGS PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
MEDICAL MEDIA INVESTMENTS PTY LTD
SANDHURST TRUSTEES LTD
SUETONE PTY LTD
MR JOHN COLIN LOOSEMORE & MRS SUSAN MARJORY LOOSEMORE
HSBC CUSTODY NONINEES (AUSTRALIA) LIMITED
BOTSIS SUPER PTY LTD
CINTELL PTY LTD
TRI-NATION HOLDINGS PTY LTD
WINGATE DIRECT INVESTMENTS PTY LTD
SANDBAR INVESTMENTS PTY LTD
FARR PTY LTD
HAMMERFEST INVESTMENTS PTY LTD
MR TONY LE FERVE
PATNER PTY LTD
TRI-NATION HOLDINGS PTY LTD
NVNG INVESTMENTS PTY LTD
SHARIC SUPERANNUATION PTY LTD
MR DAVID WHITEHOUSE & MR ANTHONY KEITH STEPHEN SHADFORTH
Total
Balance of Register
Grand Total
Ordinary Shares
Number Held
Percentage
of Issued
Shares
92,142,246
48,233,815
27,616,833
26,588,286
9,040,176
8,400,000
7,826,609
7,180,178
6,759,060
5,565,785
4,975,175
4,975,175
4,975,175
4,145,962
4,026,256
4,000,000
3,400,839
3,170,786
3,040,000
3,000,000
279,062,356
161,440,360
440,502,716
20.92%
10.95%
6.27%
6.04%
2.06%
1.91%
1.78%
1.63%
1.53%
1.26%
1.13%
1.13%
1.13%
0.94%
0.91%
0.91%
0.77%
0.72%
0.69%
0.68%
63.36%
36.64%
100.00%
SHAREHOLDER INFORMATION
91
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
Options exercisable at $0.30 on or before 31
December 2022
Options exercisable at $0.45 on or before 31
December 2022
Options exercisable at $0.60 on or before 31
December 2022
Options exercisable at $0.05 on or before 30
April 2025
Ordinary share rights (conversion to 1 ordinary
share for 1 right) exercisable after 20 June 2021
Ordinary share rights (conversion to 1 ordinary
share for 1 right) exercisable after 1 October
2021.
2018 Short Term Incentive conversion to 1
ordinary share for 1 right exercisable on or
before 1 October 2021.
Warrants exercisable at $0.30 on or before 4
December 2023.
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
Securities
Number of
Holders
Holders with
more than 20%
5,133,333
24
1,000,000
1,000,000
500,000
250,000
250,000
2,000,000
750,000
600,000
525,427
26,666,666
18,272,425
16,611,296
8,305,648
8,305,648
8,305,648
8,305,648
1
1
1
1
1
1
1
1
5
8
1
1
1
1
1
1
4
1
1
1
1
1
1
1
1
1
1
-
-
-
-
-
-
Details of Performance Shares
Each Performance Shares converts to one (1) fully paid ordinary share upon satisfaction of
the relevant milestone on or before 15 February 2023. 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 $12,500,000 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.
H.
Securities subject to escrow
There are no securities currently subject to escrow
CORPORATE GOVERNANCE STATEMENT
93
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;
- monitoring policies and procedures of the Board;
- 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:
-
-
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 2020, there are three (3) women in senior executive positions in the Company,
and 22 women employees across the Company, representing 37% of the whole organisation.
There is one (1) 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.
This policy is to ensure:
-
-
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, however a review is currently underway.
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. 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 Katherine Ostin 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.
CORPORATE GOVERNANCE STATEMENT
95
Recommendation 2.2
The mix of skills and diversity which the Board is looking to achieve in its composition is:
- 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.
Currently the Board is structured as follows:
- Darren Smorgon (Independent Chairman, appointed 15 February 2019);
-
-
-
-
Katherine Ostin (Independent Non-Executive Director, appointed 1 October 2019);
Peter Gibbons (Independent Non-Executive Director, appointed 22 June 2020)
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 majority of the board
are 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.
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.
CORPORATE GOVERNANCE STATEMENT
97
Principle 5: Make timely and balanced disclosure
Recommendation 5.1
The Company is committed to:
- 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 Chief Executive Officer manages the policy. The policy will develop over time as best
practice and regulations change and the Company Secretary will be responsible for
communicating any amendments. This policy will be reviewed by the Board annually.
Principle 6: Respect the rights of security holders
Recommendation 6.1
The Company provides information about itself and its governance to investors via 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:
-
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:
-
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.
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.
CORPORATE GOVERNANCE STATEMENT
99
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:
- 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:
- monthly reporting to the Board in respect of operations and the financial position of the
Company; and
- 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.
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 Katherine Ostin.
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:
- 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
(www.swiftmedia.com.au).
CORPORATE
DIRECTORY
Directors
Darren Smorgon
Chairman
Peter Gibbons
Non-Executive Director
Robert Sofoulis
Non-Executive Director
Ryan Sofoulis
Executive Director
Ms Katherine Ostin
Non-Executive Director
Company Secretary
Stephen Hewitt-Dutton
Chief Executive Officer
Philippa Leary
Chief Financial Officer
Geoff Greenberg
Corporate Details
Auditor
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
Facsimile: +61 8 6103 7594
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)
SWIFTMEDIA.COM.AU