Annual Report 2021
ABN 73 158 957 889
2
UNITI GROUP LIMITED ANNUAL REPORT 2021
About this Report
The Annual Report 2021 is a summary of Uniti’s
operations, activities and financial position for the 12
month period to 30 June 2021.
Uniti Group Limited is the parent company of the Uniti
group of companies. In this report, unless otherwise
stated, references to “Uniti”, “the Group”, “the
Company”, “we”, “our” and “us” refer to Uniti Group
Limited and its controlled entities.
In this report, references to the financial year refer to
the period 1 July to 30 June unless otherwise stated.
All dollar figures are expressed in Australian dollars,
unless otherwise stated.
Our Corporate Governance Statement, detailing our
compliance with the ASX Corporate Governance
Council’s “Corporate Governance Principles &
Recommendations – 4th Edition” can be found online
at our website via www.unitigrouplimited.com.
REPORT OBJECTIVES
This report meets our governance and compliance
requirements and has been written to provide
shareholders and interested parties with clear, easy
to understand information on the Company and its
performance in FY21.
ADDITIONAL INFORMATION
This report can also be found online via
www.unitigrouplimited.com
KEY DATES
Financial Year End - 30 June 2021
Annual General Meeting - 26 November 2021
Given the continued uncertainty and potential
health risks created by the COVID-19 pandemic,
we expect we may have to conduct the 2021 Annual
General Meeting of Uniti Group Limited as a virtual
meeting, to be conducted online. Further details will
be published once available. Please refer to our website
www.unitigrouplimited.com for further details.
IMPORTANT INFORMATION
This report contains certain forward looking statements, which may be identified by the use of terminology including ‘expects’, ‘believes’,
‘targets’, ‘likely’, ‘should’, ‘could’, ‘intends’, ‘aims’ or similar expressions. Indicators of and guidance on future earnings and financial
position are also forward looking statements. These forward looking statements are not guarantees or predictions of future performance
and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Uniti, and which may
cause actual results to differ materially from those expressed or implied in such statements. Further information on important factors
that could cause actual results to differ materially from those projected in such statements is included in the Material Business Risks
section of the Operating and Financial Review. Readers are cautioned not to place undue reliance on forward looking statements.
UNITI GROUP LIMITED ANNUAL REPORT 2021
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Contents
About Us
4
Key Highlights
5
Letter from the Chairman and MD & CEO
6
Operating and Financial Review
12
Sustainability
23
Directors’ Report
26
Remuneration Report (Audited)
34
Auditor’s Independence Declaration
56
Financial Report
57
Shareholder Information
122
Corporate Directory
124
UNITI GROUP LIMITED ANNUAL REPORT 2021
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About Us
Uniti is a market-leading constructor, owner and vertically integrated operator of privileged fibre infrastructure,
and a provider of value-added telecommunications services in identified profitable niche markets.
Since mid-2019 Uniti has consolidated the majority of the "challenger" participants in the greenfield residential
fibre broadband networks market, to make Uniti today the definitive challenger private fibre operator.
At the core of Uniti Group is a commitment to deliver high quality, high speed telecommunications networks
and associated services to its customers, in order to produce strong and growing annuity earnings and, in turn,
exceptional long term returns to its shareholders.
Our main brands
250+
employees located
across Australia
State
Number of Uniti
Communities
NSW
507
QLD
286
VIC
246
WA
112
SA
24
ACT
20
NT
4
TOTAL
1,199
> 501,000
Total Secured premises
(excluding Velocity)
UNITI GROUP LIMITED ANNUAL REPORT 2021
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Key highlights for FY21
Rapid Growth Since Listing
Significant growth in revenue, earnings and free cash since listing
Revenue
Excluding dividend income
FY21
Exit Run
Rate
$159.9m
+175% on pcp
$218.0m
Based on Jun 21
performance
Underlying
EBITDA
FY21
Exit Run
Rate
$93.7m
+254% on pcp
$133.4m
Based on Jun 21
performance
Operating Free
Cash Flow (FCF)
FY21
Exit Run
Rate
$64.2m
FCF conversion: 68%
of Underlying EBITDA
$90.7m
Applying FY21 free cash
flow conversion at 68%
Secured premises
(ex Velocity)
Dec ’20
Jun ’21
438,024
501,198
+15% on Dec 20
Underlying
EBITDA
Operating
Free Cash Flow
$m
90
80
70
60
50
40
30
20
10
0
Reported
Exit Run Rate
0.3
2.5
21.6
40.0
64.2
90.7
+1500%
+127%
FY19
FY20
FY21
$m
160
140
120
100
80
60
40
20
0
(20)
Reported
Exit Run Rate
(0.6)
6.0
26.5
41.0
93.7
133.4
+583%
+225%
FY19
FY20
FY21
UNITI GROUP LIMITED ANNUAL REPORT 2021
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Letter from the
Chairman and MD & CEO
To all Uniti Group shareholders:
It is with immense pride we present to you, on behalf of
all the team at Uniti, the Annual Report for Uniti Group
Limited for the year ended 30 June 2021.
When we delivered our annual report last year, we
highlighted how FY20 had been a transformational year,
having transitioned the Company to positive operating
profits and cash flow. We set the platform for sustainable
growth in shareholder returns through the acquisition
and integration of digital fibre infrastructure businesses
in the greenfield residential market, acquisition and
consolidation of businesses acquired in the CPaaS
market segment and the continued growth in our retail
operations.
Well, it is wonderful to now tell you, your team at Uniti
Group have delivered again during FY21!
We have delivered outstanding shareholder
returns through share price accretion of 133%. But
more importantly, FY21 has been an even more
transformational year for your Company as we have
now executed on our merger and acquisition strategy to
build a company of scale, with the potential to continue
to generate substantial and sustainable shareholder
returns well into the future.
During FY21, we have also transitioned to a company
with a significant contracted forward order book, which
will now deliver superior organic growth to underpin
future shareholder returns.
We have acquired and integrated the businesses, which
we originally identified more than 2 years ago as we
defined our strategy to build a core fibre infrastructure
platform, a platform that is poised to deliver strong
organic growth in revenues, earnings and free cash from
building and connecting existing contracted business and
winning new business in current and adjacent markets.
The original retail operations of Uniti Group have
continued to increase the proportion of overall users
on-net to our core infrastructure. This will be a clear
goal for Uniti as we enter the enterprise & business
market and we expand our core infrastructure into
adjacent market opportunities.
Our relentless focus is now to significantly lift our
market share of core Fibre to the Premise (FTTP) &
technology infrastructure network ownership in the
greenfield residential sector and to expand our data
infrastructure ownership across all property classes
such as lifestyle, retirement community, commercial,
industrial, retail and increase market share of FTTP
network ownership in all these asset classes.
We will bring a retail capability to this expanded market
as well.
We will expand our products and services with a
continued focus on infrastructure ownership.
During the FY20 year, we acquired businesses in the
CPaaS market segment with economics very similar
to our core infrastructure business, annuity revenues
with high cash conversion and with the opportunity to
grow earnings and most importantly contribute cash to
the Group. During FY21, the CPaaS business delivered
the promised earnings accretion and significant free
cash flow. CPaaS customers are increasingly becoming
infrastructure customers as addressable markets expand
and Uniti has the opportunity to sell both wholesale and
retail services physically and virtually as a service across
this combined infrastructure.
Our platform is in place for continued growth.
We are excited by the market’s response to our product,
services and customer offerings and we are confident
of winning significant new business in market with the
scale and proven capabilities now at our disposal. In this
sense, we are only just beginning.
FY21
Acquisitions delivering above expectations
In the first half of FY21 we significantly expanded
our fibre business to create a substantial core
telecommunications and technology infrastructure
business through the acquisition of two prominent FTTP
businesses in Australia: OptiComm Limited (OptiComm)
and the Telstra Velocity network including the South
Brisbane Exchange assets (Velocity).
The successful acquisition of OptiComm came after
a long and hard-fought public market battle with one
of Australia’s largest superannuation investors, Aware
Super, and required your Company to pay $703.4m,
which was more than had been originally agreed
with the OptiComm board in the initial Scheme of
Arrangement Implementation Agreement or intended
UNITI GROUP LIMITED ANNUAL REPORT 2021
7
by us. Your board remained resolute in this battle as
this acquisition was fundamental to our strategy to
become the largest private FTTP owner in greenfield
developments, and fundamental to the future returns
we saw for shareholders.
The addition of Telstra’s Velocity assets for a purchase
consideration of $140m, which included a commitment
that Telstra will become a retailer across our owned fibre
network that we consider to be highly strategic, means
we have established Uniti as the largest challenger to
NBN Co in the FTTP market with more than 565,000
premises connected, ready to connect, in construction
or contracted, including Velocity, at 30 June 2021.
The financial results that have been delivered for the year
to 30 June 2021, and in particular the second half of the
financial year which benefited from the ownership of both
the OptiComm and Velocity businesses for the whole
6-month period, fully vindicates the decisions taken by
your Board to position Uniti to be able to successfully
complete the OptiComm acquisition at the $703.4m
purchase price. Whilst many commentators questioned
our reasoning in matching the purchase price offered by
Aware, we clearly saw immense value in the then existing
contracted order book held by OptiComm and the
opportunity to create the platform we now own with the
addition of OptiComm and Velocity to our existing FTTP
infrastructure business.
In the first half of FY21, we also acquired HarbourISP,
a fast-growing retail service provider (RSP) specialising
in the delivery of super-fast retail broadband services
in greenfield residential developments. This acquisition
more than doubled Uniti’s retail customers which
exceeded 60,000 by year end. This acquisition brought
scale and operational efficiency. By the end of Q3, we
had completed the integration of HarbourISP within
our existing retail business delivering the forecast cost
synergies and earnings accretion for shareholders.
During the year, and prior to its acquisition of HarbourISP,
Uniti entered into a functional separation undertaking
with ACCC that enables our C&B business unit to offer
high speed broadband services to residential customers
where Uniti owns the FTTP network used to deliver high
speed broadband connectivity. This is the first approved
functional separation undertaking granted by the ACCC
since passage of legislation in late FY20 enabling a FTTP
network owner connecting residential premises to also
provide broadband services as an RSP to those consumers.
This will be important in the future to increase the
overall number of active services on our owned
infrastructure and, where Uniti wins the retail customer,
to benefit both from the enhancement to earnings
by acquiring new wholesale activations and also from
incremental retail margin from the supply of broadband
to consumers.
Importantly, our retail business is an enabler of our
growth ambitions in owning and operating core
infrastructure in other adjacent property markets
beyond residential FTTP network operations. In these
adjacent markets, where the fibre connections are being
delivered to non-residential premises and where Uniti
proposes to offer products, technology and services
other than high speed broadband, Uniti is not required
to operate as a functionally separate business.
Operational Integration
Today, Uniti has integrated the majority of the operating
and business support systems of all acquired businesses
and any remaining integration steps will be completed
by the end of calendar 2021.
The retail businesses and the acquired CPaaS businesses
are already fully integrated.
We have selected the OptiComm core network and
the OSS/BSS platform of OptiComm as the right
core infrastructure for our networks and technology
infrastructure business. The integration of all the
previously acquired FTTP networks businesses (other
than Velocity) is well advanced and will be completed
by the end of 2021. The majority of the $10 million of
annualised cost synergies we identified on acquisition
of OptiComm have been removed with more than $7
million achieved by the end of FY21 and the target of $10
million is well within sight.
The completion of this integration by December 2021
will enable the commencement of integration of the
Velocity assets in early 2022 and the migration of Velocity
customers to the improved products and services that our
infrastructure will deliver from July 2022.
Financial Highlights for FY21
The year ended 30 June 2021 was only the second full year
of trading for Uniti Group since listing on the ASX. A year
in which our market capitalisation exceeded $2 billion for
the first time and we entered the ASX300 index fleetingly
and very quickly moved into the ASX200 index.
Letter from the Chairman and MD & CEO continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
8
The highlights include:
Our revenue was $159.9 million, a 175% increase on
prior year and exit run rate revenue was 9% up over 6
months at $218 million compared to H1 FY21 exit run
rate of $200 million on a pro-forma basis.
Our underlying EBITDA1 is $93.7 million, a 254%
increase on prior year with EBITDA(u) in H2 FY21
being greater than $64 million.
Exit run rate underlying EBITDA at June 2021 was
$133.4 million, compared to the same measure at
December 2020 of $116 million, an increase of 15%
in 6 months on a like for like basis.
Our FY21 underlying EBITDA of $93.7 million was
ahead of analyst consensus and our exit run rate
for underlying EBITDA of $133.4 million is only 3.3%
below analyst current consensus forecast for FY22 of
$138 million.
High cash generation is a key feature of our
Company and we have achieved further improvement
in Free Cash Flow2 margins. In FY21 Free Cash Flow
(after capex) was $64.2 million, a 68% conversion of
underlying EBITDA to cash after funding all growth
and maintenance capex.
Exit run rate Free Cash Flow after growth capex at June
2021 is estimated at $90.7 million using the 68% cash
generation currently being achieved and demonstrates
Uniti’s ability to deleverage quickly in the future.
FY21 delivered continued improvement in earnings
and cash generation margins demonstrating the
great operating leverage inherent in our business,
that will enable continued margin expansion on
revenue growth in the future. Underlying EBITDA
margin on revenue for FY21 was 59% compared to
H1 FY21 of 54% and FY20 of 46%. Free Cash Flow as
a percentage of underlying EBITDA at 68% in FY21
compared to 51% in FY20.
Our very strong cash generation after funding all
capex has seen our Net Debt reduce by nearly
$48 million during the H2 FY21 with Net Debt at
year end reduced to approximately $208 million.
Continued earnings growth, with continuing high
cash generation, is expected on our exit run rate
underlying EBITDA of $133.4 million, and this will
allow Uniti to reduce borrowings very quickly.
Net leverage at the end of FY21 on exit run rate
underlying EBITDA is just over 1.5 times compared to
2.2 times on the same measure at December 2020.
The list of financial highlights is proof we are executing
on our integration and organic growth plans that
is further evidenced by our first half to second half
financial metrics comparison (on a reported basis).
In the second half, our results did not include the
benefit of any acquisitions made in that period, and the
strong earnings and cash growth validates the strategic
acquisitions we have made.
(1) Underlying EBITDA (or EBITDA(u)) excludes share based payments, acquisition and restructuring costs; and dividends received from the
Company’s acquired interest in OptiComm shares prior to the completion of the Scheme of Arrangement to acquire OptiComm and its
controlled entities index.
(2) Cash (receipts from customers less payments to suppliers and employees) before tax , dividend and interest, less capex
Reported
$m
120
100
80
60
40
20
0
(20)
Revenue
EBITDA (u)
3.1
11.3
0.7
FY19 (H1)
FY19 (H2)
22.0
7.2
36.2
19.3
FY20 (H1)
FY20 (H2)
54.6
29.3
105.3
64.5
FY21 (H1)
FY21 (H2)
Letter from the Chairman and MD & CEO continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
9
A critical and important measure of our success in
market and for future growth in revenues, earnings and
cash flow is the scale of, and growth rate in, our secured
contracted order book. This measure shows the scale
of Uniti’s contracted premises to which it will build
and connect fibre infrastructure as these development
projects are constructed. As at June 2021 our total
secured premises (ready to connect plus contracted
plus in construction) increased to greater than 501,000
compared to approximately 438,000 at December 2020
excluding Velocity. Including Velocity, Uniti has total
secured premises exceeding 565,000.
The most pleasing aspect of FY21, achieved during
H2 FY21, is the traction that our expanded core
infrastructure business has been able to secure in
growing the number of contracted premises to be
serviced in the future. Contracted and in construction
premises increased to greater than 250,000 at June 2021
compared to 202,000 at December 2020; which is a
24% increase in just 6 months, net of 15,900 premises
connected in the period. This is confirmation the
business we have created is now growing market share
in the greenfield residential market.
Health and Safety
At Uniti, safety is everyone’s responsibility and
developing a safety-first culture is an ongoing key
business priority, fully endorsed by the Board.
This commitment to providing and maintaining a
safe and healthy work environment has faced some
challenges in FY21 (and this is continuing in the first half
of FY22) during the COVID-19 pandemic, various State
lockdowns, work and travel restrictions resulting in the
implementation of systems and protocols to protect our
own staff and contractors, customer and suppliers.
In addition to our COVID response, we have
implemented strategies to renew and enhance
general workplace safety management across both
our operational and network installation projects. We
continuously review and improve our systems to identify
and implement improvements that are designed to
achieve our ultimate goal of zero serious injuries.
We will continue to commit the resources necessary to
maintain a safe working environment and ensure the
ongoing health of our team and our business.
Inclusion in ASX200
By the end of the financial year, we were admitted to
the S&P/ASX200 Index – less than two and half years
after listing on the ASX at an initial offer price of $0.25
and approximately $30 million market capitalisation.
Using the closing price on 30 June 2021 of $3.31, more
than 13x the initial offer price, our market capitalisation
had grown to $2.24 billion. We are delighted to deliver
shareholders a total return from share price appreciation
of 133% over the 12-month period to 30 June 2021.
Exit Run Rate
$m
250
200
150
100
50
0
Revenue
EBITDA (u)
31.5
6.0
Dec 18 Exit RR
Jun 19 Exit RR
68.9
33.0
77.0
41.0
Dec 19 Exit RR
Jun 20 Exit RR
200.0
116.0
218.0
133.4
Dec 20 Exit RR
Jun 21 Exit RR
Letter from the Chairman and MD & CEO continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
10
Sustainability
This is the first period Uniti has developed a
sustainability programme and report following our
rapid ascension to the ASX200 index. We acknowledge
that we are at the very start of our sustainability
journey, and we will refine and enhance our focus and
approach to our sustainability strategy over the coming
years. A full Sustainability Report, providing the detail
behind the summary report included in this Annual
Report at page 23, will be published within the next 3
months.
Broadband connectivity now an essential
service
We are at the core of digital infrastructure – our
FTTP networks enable community connectivity to
all forms of communication, entertainment and
business applications that drive economic activity and
productivity. Accelerated by the current pandemic
we have experienced exponential increases in data
consumption across Australia, driven by working from
home, home-schooling, contactless sales and on-line
shopping, video calls and connections. Connectivity
is now considered to be an essential service, and a
fundamental enabler of virtually every home, school
and business continuing to operate effectively through
the challenges that COVID-19 has imposed across our
nation over the past 18 months.
Uniti’s results for FY21 demonstrate the resilience of
our business model and the services we deliver, with
rising demand continuing to validate our focus on
ownership of our own FTTP core infrastructure.
FY22 – The future
At the commencement of the 2021 calendar year, after
completion of the acquisitions of OptiComm and the
Velocity assets, we announced it would be unlikely we
would undertake any further acquisitions of companies
or businesses in the short term.
Our reasoning was that we had executed on the
strategy we had put in place at the time of Uniti’s
listing. We had identified the markets we wanted
to operate within and had acquired the businesses
identified to enable Uniti to become a significant
market participant. Job done.
It was time we moved to our next phase of executing
on driving organic growth in the businesses we had
acquired and integrated. This next phase commenced
at the start of calendar 2021 and the results for the
second half of FY21 are evidence our teams are
successfully executing on our organic growth plans.
Our reasoning is also based on the fact that the
earnings, cash generation and increased returns for
shareholders we can deliver through execution of the
identified organic growth strategy is far greater than
the returns we see being achieved by other market
participants.
This organic growth strategy is very simple. We are
now a simple business with a simple strategy:
WIN – continue to win the right to build our core
infrastructure and expand our existing infrastructure
with new technology. Win market share in our existing
markets and the adjacent markets we have identified
for expansion.
BUILD – build, own and operate the core infrastructure
and technology which underlines and delivers the
superior earnings margins and cash generation we are
achieving, including in identified adjacent markets.
FILL – the core infrastructure and technology we
continue to deploy with happy wholesale and retail
customers to deliver strong revenue growth when
combined with our earnings margins and cash
conversion will enable continued outstanding returns
to shareholders.
For the reasons outlined in this letter, we believe the
core infrastructure platform that we have established,
and the simplified strategy to win new business in
market, coupled with our already secured contract
order book, is poised to deliver substantial organic
growth. This is your Board and Executive team’s
primary objective and current focus as this will deliver
sustainable long term, compounding annuity revenue,
margin and cash flow growth for shareholders.
This core infrastructure platform we have built is
enabling an organic growth strategy with clear goals to:
Increase share of business from current customers,
particularly in greenfield property markets;
Letter from the Chairman and MD & CEO continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
11
Acquire new customers in existing markets. Our
market share in our core market of greenfield
housing and CPaaS still remains low, creating great
opportunity;
Expand FTTP ownership into adjacent property
markets with the same business model. These
markets include commercial, office, retail, industrial
and independent living; and
Expand technology and products and services we
can supply across our core infrastructure and the
CPaaS platform, both as a retailer and a wholesaler.
Since completing the acquisition of Velocity in late
December 2020 we have consistently stated that our
focus will be on organic growth and that we were not
actively pursuing any inorganic opportunities. This
is because of the size of the addressable market and
the attractive returns available to us in executing on
the above is very significant. However, it is possible
that Uniti would consider acquiring additional core
infrastructure assets but only if they complement the
core data infrastructure platform we have already
established, so we are not completely ruling out asset
acquisitions.
Your Company today has a highly resilient business,
a strong balance sheet, low leverage, a significant
forward order book that will deliver locked in organic
growth, significant margins and high cash generation
after being able to fund the organic growth strategy
we have identified above. We also see significant
opportunities to expand our core fibre business and
services in front of us.
We are now Uniti Group, a group of one. We have
become an integrated business with multiple brands
and a functionally separated retail operation. No longer
are we a conglomerate of separate, disparate acquired
businesses.
Due to this enviable position – a high growth, high
cash generating business – our minds are now
turning to consider capital distribution options. Your
Company now holds franking credits in excess of $30
million, cash on balance sheet of $57 million, and a
growing capacity to distribute cash to shareholders in
the future. We are currently considering the various
options open to Uniti to distribute any surplus cash
back to shareholders, including a potential share
buyback subject to market conditions.
Thank you for your support
These achievements have been the result of the
excellent performance of our executive team and
all our staff, led every day by MD & CEO Michael
Simmons, and the collaboration, expertise, and
oversight from the Board. On behalf of the Board and
the executive team, we thank all Uniti employees for
their commitment, hard work and contribution to what
has been another outstanding year for Uniti.
To our Board of Directors, thank you for your focused,
collaborative, thorough and considered approach and
guidance to what has been achieved in FY21. We enter
FY22 with confidence in Uniti being extremely well
placed for significant growth that will enhance the
performance, prospects and value of the Uniti business.
We would like to thank you, our shareholders, for your
outstanding support over the past year, enabling Uniti
to raise the equity funding required to execute on our
strategy through acquisition. Your Board and Executive
leadership team are committed to continuing to
accretively and sustainably build shareholder returns
through aggressively executing on our new, simplified
strategy: WIN, BUILD, FILL.
Graeme Barclay
Michael Simmons
Chairman
MD & CEO
Letter from the Chairman and MD & CEO continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
12
Operating and Financial Review
Uniti Group Limited (ASX: UWL) (‘Uniti’) is a core
technology infrastructure constructor, owner and operator
of predominantly fibre cable networks and associated
technology to provide diversified telecommunications
products and services. Uniti constructs, owns and
operates the infrastructure for property developers,
property owners or building managers and seeks to
build this infrastructure across all property asset classes
with a focus on greenfield property developments. Uniti
also provides the telecommunications products and
services delivered over this infrastructure both
as a wholesaler of owned fibre infrastructure and also
as a retailer to the end-user of telecommunications
products and services, with a particular focus on the
owned core technology infrastructure constructed for
property market participants. Uniti also resells third
party owned telecommunications networks. However,
Uniti’s clear focus is on retailing on owned infrastructure
wherever possible.
Uniti operates in a number of markets and consequently
has a number of revenue segments, namely:
the construction of telecommunications and
technology infrastructure including fibre to the
premise (“FTTP”) for property developers, builders and
/ or building managers to all property asset classes
including residential housing, commercial, industrial,
office and retail properties. The revenue earned is
primarily one off in nature and the activity will be
undertaken under the OptiComm brand in the future.
the ownership, maintenance, operation and
wholesale supply of telecommunications and
technology products and services delivered on the
fibre infrastructure constructed within the property
asset classes above. The revenue is primarily
recurring in nature and earned from retail service
providers (‘RSP’) who on-sell the products and
services to end users, being residents and businesses
within the properties where Uniti owns infrastructure.
The wholesale supply will be undertaken under the
OptiComm brand in the future.
the retail supply of telecommunications and
technology products and services delivered across
both the owned infrastructure constructed within the
property asset classes above or by resale of third party
networks including NBN Co. The revenue earned is
primarily recurring in nature. Uniti adopts a number of
retail brands (and expects to continue to do so in the
future) including Uniti, HarbourISP and FuzeNet.
the supply of retail enablement services for the
supply of telecommunications and technology
products and services on behalf of third parties
including adopting the third party brand where
required. The enablement service is provided across
the same infrastructure which Uniti directly retails
using its own brands.
the operation of a communications platform as a
service (CPaaS) for the retail and wholesale supply of
premium voice services over 13, 1300, 1800 calling
numbers and SMS. The services include a value-added
software as a service data analytics and call tracking
application, as well as the leasing of phonewords on
these numbers. The revenue is primarily recurring
in nature and is earned adopting the brands
Fonedynamics, 1300 Australia and Easy Inbound.
The Uniti business and operating support systems enable
the measurement and recording of revenue, costs of sales,
operating expenses and depreciation and amortisation
for each of these distinct revenue segments to provide
accurate reporting of earnings contributions from each
of these market activities as reported in the Operating
Segments Note 3. Uniti operates a shared services function
for commonly applied functions including finance and
treasury, governance, legal, human resources, financial
and risk management, Uniti’s Managing Director & Chief
Executive Officer, Executive Director, Chief Corporate
Services Officer and Chief Financial Officer (and associated
employees) as well as the Board of Directors are included
within the Corporate Services function and costs as
disclosed in the Operating Segments Note 3.
Uniti listed on the ASX in February 2019 with a clear
strategy of becoming a substantial owner and operator
of core technology infrastructure including FTTP
networks through organic growth and inorganic growth
by acquisitions of businesses. Uniti brought together
an experienced board of directors and executive team
to organically build the business and to support the
identification, execution, integration and growth of the
sizeable pool of acquisition opportunities now completed.
During the year ended 30 June 2021, Uniti completed
strategic acquisitions of prominent FTTP networks
resulting in Uniti now being the second largest FTTP
infrastructure owner and operator in Australia. The
acquisition of OptiComm Limited by way of a Scheme of
Arrangement for the total consideration of $703.4 million
and Telstra’s Velocity and South Brisbane Exchange
assets for $140 million, has created a substantial data
infrastructure company (by far the largest challenger
GROUP OPERATING PERFORMANCE
UNITI GROUP LIMITED ANNUAL REPORT 2021
13
Uniti has now built a core infrastructure platform for
continued strong organic growth into the foreseeable
future. The Uniti Business Model is graphically described
below. The business strategy is very simple.
The core infrastructure platform will deliver the strong
organic growth by the following actions aligned to the
WIN BUILD FILL strategy:
delivery of the current contracted business Uniti has
secured which is expected to significantly increase
earnings over the next 5 years.
increase the share of business obtained from existing
customers who are part of the current contracted order
book.
increasing market share in the historical Uniti core
market of greenfield residential housing relative to NBN
Co who has dominated the segment.
expand infrastructure ownership and
telecommunications and technology products,
services and capabilities to new property verticals
such as industrial, commercial, lifestyle, community
developments.
expansion into adjacent products and services that
leverage Uniti’s core infrastructure ownership including
the FTTP networks such as smart cities/buildings
applications and integrated communications networks
including DAS, security, CCTV, WiFi, IOT.
FILL the Networks & Technology
with customers
FILL the infrastructure with
Wholesale and Retail revenue
FILL the contracted order book
with long term earnings business
BUILD FTTP Networks
BUILD innovative
technology for Customers
BUILD and own / operate
core infrastructure
WIN market share in core
greenfields markets
WIN business in identified
adjacent addressable
markets
WIN business to build core
infrastructure in markets
FILL Network
BUILD Network
WIN Business
Operating and Financial Review continued
GROUP OPERATING PERFORMANCE continued
in the greenfield FTTP market), with a rapidly expanding
network, that is highly profitable. In addition, Uniti acquired
HarbourISP Pty Ltd, a fast-growing RSP which specialises in
delivery of superfast retail broadband services in "greenfield"
developments. This acquisition more than doubled the retail
consumer customer numbers of Uniti, delivering genuine
scale and operational efficiency across all key operational
elements.
Today Uniti has integrated the majority of the operating
and business support systems of acquisitions and, where
incomplete, remaining integration will be finalised by the
end of the current calendar year. Uniti has now transitioned
to Uniti Group, a group of One. Uniti is now one business
with numerous core brands adopted for selected market
segments.
During the year ended 30 June 2021 Uniti secured an ACCC
approved functional separation undertaking for those retail
supply operations required to be separated. This is where
Uniti retails high speed broadband (defined as greater than
25Mbps download) to residential premises where Uniti also
owns the FTTP infrastructure used to deliver the high speed
broadband. Uniti is not required to be functionally separated
where the telecommunications products and services
are not high speed broadband or delivered to premises
identified as non residential or Uniti is not the owner of
the FTTP infrastructure. Uniti continues to adopt the same
brands whether the retail operations are required to be
separated or not.
UNITI GROUP LIMITED ANNUAL REPORT 2021
14
Operating and Financial Review continued
GROUP OPERATING PERFORMANCE continued
$
One-off connection fee
paid by occupier
Communication
Platform as a
Service
Wholesale &
Infrastructure
Provides fibre ready
premises in residential
and commercial
Consumer & Business
Retail Service
Provider
Functionally separated
$
Retail Fee
for use of network
(Internet + Voice)
$
Revenue streams from
premium inbound
(including: 13, 1300 &
1800) voice,
Phonewords, SIP
Trunking &
business-grade SMS
service
$
W&I recurring
revenue for
wholesale use of
network
$
Developer funded
contribution for
construction and
installation of the network
Our business model
Primarily a wholesale infrastructure business supported by a functionally separate retail presence and a cash
generative CPaaS business
Underlying results overview
$’000
FY21
FY20
$ change
% change
Revenue1
159,854
58,216
101,638
175%
Operating expenses2
(66,117)
(31,686)
(34,431)
109%
Underlying EBITDA3
93,737
26,530
67,207
254%
Depreciation and amortisation4
(9,451)
(4,267)
(5,184)
121%
Underlying EBIT5
84,286
22,263
62,024
279%
Finance costs
(7,955)
(595)
(7,360)
1,238%
Underlying net profit before tax
76,331
21,668
54,663
252%
(1) Revenue of $159.9 million excludes dividend income of $0.6 million relating to the Company’s acquired interest in OptiComm Limited shares
prior to the completion of the Scheme of Arrangement to acquire OptiComm Limited and its controlled entity (OptiComm).
(2) Operating expenses refers to network and hardware expense of $34.4 million (2020: $13.8 million), employee benefits expense of $29.0 million
(2020: $17.4 million) and other expenses of $23.5 million (2020: $10.9 million) less significant items of $20.7 million (2020: $10.5 million).
(3) EBITDA refers to earnings before interest, tax, depreciation and amortisation and Underlying EBITDA is stated before share based payment
expense and acquisition and restructuring costs, and after dividends received.
(4) Depreciation and amortisation refers to reported depreciation and amortisation expense less amortisation of acquired customer base intangible
of $12.0 million (2020: $2.6 million).
(5) EBIT refers to earnings before interest and tax.
UNITI GROUP LIMITED ANNUAL REPORT 2021
15
Operating and Financial Review continued
Reconciliation of reported to underlying results
$’000
FY21
FY20
$ change
% change
Underlying EBITDA
93,737
26,530
67,207
253%
Significant items
Acquisition and restructure costs1
(13,976)
(5,894)
(8,082)
137%
Share based payments
(6,772)
(4,581)
(2,191)
48%
Dividend income
621
-
621
-
Reported EBITDA
73,610
16,055
57,555
358%
Depreciation and amortisation
(21,418)
(6,853)
(14,565)
213%
Finance costs
(7,955)
(595)
(7,361)
1,238%
Tax2
(15,042)
7,314
(22,356)
n/m
Reported net profit after tax
29,195
15,921
13,273
83%
(1) Costs incurred, including stamp duty, on the acquisition of OptiComm Limited and its controlled entity (OptiComm), HarbourISP Pty Ltd
(HarbourISP) and Telstra Velocity and South Brisbane Exchange (Velocity) network assets of $12.6 million. In addition, non-recurring restructure
costs of $1.4 million were incurred. Acquisition costs incurred in corresponding period last year were for the acquisitions of LBNCo Pty Ltd and
its related bodies corporate (LBNCo), OPENetworks Pty Ltd (OPEN) and 1300 Australia Pty Ltd (1300 Australia) and its related entities of $5.2
million. Non-recurring restructure costs of $0.7 million were also incurred in the corresponding period last year.
(2) During FY21 Uniti recorded an income tax expense of $15.0 million. Whilst an income tax expense has been incurred during the period, Uniti is
in a tax refund position as at 30 June 2021. This is predominantly driven by capital allowance incentives that allow accelerated deductions for
depreciating assets. The application of these tax depreciation incentives resulted in a deduction of $155.6 million (tax effected: $46.7 million), and
therefore Uniti is in a tax loss position for FY21. Of this $155.6 million, $135.0 million derives from assets acquired as part of the OptiComm and
Velocity acquisitions. As at 30 June 2021, Uniti has carried forward tax losses of $106.8 million (tax effected: $32.0 million) as a result of the losses
incurred in the current year ($96.8 million) and the opening losses as at 1 July 2020 of $9.1 million. The opening tax loss position represents the
recognition of income tax losses incurred by Uniti and certain acquired companies from prior periods and the movement in the deferred tax assets
and liabilities on the acquired companies joining the tax consolidated group. The transition to significant profits before tax in FY20 and the continued
growth in profitability of Uniti has meant that the realisation of accumulated losses being recouped against current and future taxable income is
more certain, resulting in the recording of the deferred tax asset for these losses.
Revenue and underlying EBITDA overview
Discussion of the factors driving revenue and underlying EBITDA are contained in the commentary on divisional
performance. As several acquisitions were completed during the period, results presented below represent a
contribution for part of FY21 only depending on when the businesses were acquired. For further information on the
financial performance of the division please refer to Divisional Performance section.
$’000
FY21
FY20
$ change
% change
Revenue
160,475
58,216
102,259
176%
Wholesale & Infrastructure
105,442
22,351
83,091
372%
Communications Platform as a Service
30,810
20,969
9,841
47%
Consumer & Business
43,609
24,004
19,605
82%
Intercompany1
(20,450)
(9,432)
(11,018)
117%
Unallocated2
1,064
324
740
228%
Underlying EBITDA
93,737
26,530
67,207
254%
Wholesale & Infrastructure
78,579
14,525
64,054
441%
Communications Platform as a Service
19,973
11,752
8,221
70%
Consumer & Business
4,468
4,779
(311)
(7%)
Unallocated2
(9,283)
(4,526)
(4,757)
105%
(1) Intercompany revenue is eliminated on consolidation and relates primarily to recurring charges from the W&I business unit to the C&B business
unit for the provision of wholesale telecommunications services.
(2) Unallocated revenue represents $0.5 million interest income earned in relation to cash and cash equivalents and $0.6 million dividend income
relating to Uniti’s acquired interest in OptiComm shares prior to the completion of the scheme of Arrangement to acquire OptiComm.
Unallocated costs include corporate services costs and board costs.
GROUP OPERATING PERFORMANCE continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
16
Operating and Financial Review continued
Discussion of the factors driving revenue and underlying EBITDA are contained in the commentary on divisional
performance.
Statement of financial position
$’000
FY21
FY20
Current assets
77,866
199,170
Non-current assets
1,127,776
254,949
Total assets
1,205,642
454,119
Current liabilities
50,788
24,356
Non-current liabilities
338,982
8,069
Total liabilities
389,770
32,425
Net assets
815,872
421,694
Current ratio
1.5
8.2
As at 30 June 2021, Uniti had cash on hand of $57.3 million (2020: $189.2 million). Uniti continued to generate strong
cash conversion across the year, with Operating Free Cash flow (operating cash less capital expenditure) at 68% of
underlying EBITDA. The decrease in our cash position year on year is mainly driven by the proceeds from the issue of
shares as part of the then proposed OptiComm acquisition being on balance sheet as at 30 June 2020.
Plant, Property and Equipment cost increased across the period by $193.3 million to $234.0 million net book value.
This increase includes $166.3 million acquired as part of the business acquisitions completed during the year, in
addition to continued investment in our core infrastructure asset. Goodwill has increased by $632.6 million year on
year as a result of the HarbourISP ($9.3 million), OptiComm ($566.5 million) and Velocity ($56.8 million) acquisitions.
Non-current liabilities increased by $330.9 million to $338.9 million. Uniti currently has $265.6 million borrowings
drawn of the total $290.0 million facility available (Please see Net Debt and Financial Covenants section for more
details). In addition, deferred and contingent consideration of $51.9 million in relation to the Velocity acquisitions has
been recorded.
Cash flows
$’000
FY21
FY20
Operating cash flow
84,639
21,644
Investing activities
(654,883)
(176,460)
Financing activities
438,426
324,835
Net movement in cash
(131,818)
170,019
Operating cash flow has improved significantly compared to prior year which has risen substantially from the contribution
of the acquisitions completed during the year and the highly cash generative nature of the businesses acquired,
supported by the organic growth achieved under Uniti’s ownership. Investing activities includes $615.7 million relating
to businesses acquired, with $27.6 million relating to capital expenditure, mainly in our fibre infrastructure business.
Financing activities include $179.2 million cash generated from share issues throughout the year (net of share issue costs)
and proceeds from borrowings of $305.6 million to fund the OptiComm and Velocity acquisitions. During the year Uniti
repaid loans of $40 million from excess cash on hand, with total borrowings of $265.6 million as at 30 June 2021.
GROUP OPERATING PERFORMANCE continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
17
Operating and Financial Review continued
Capital expenditure
2021 - $’000
Wholesale &
Infrastructure
Communications
Platform as a Service
Consumer &
Business
Corporate
TOTAL
Growth
Maintenance
24,456
631
146
135
1,207
672
–
339
25,809
1,777
Total capital expenditure
25,087
281
1,879
339
27,586
2020 - $’000
Wholesale &
Infrastructure
Communications
Platform as a Service
Consumer &
Business
Corporate
TOTAL
Growth
Maintenance
6,077
677
76
50
1,140
223
–
–
7,293
950
Total capital expenditure
6,754
126
1,363
–
8,243
Net Debt
$’000
FY21
FY20
Borrowings
265,625
-
Cash
57,332
189,150
Net debt
208,293
189,150
Financial Covenants
FY21
FY20
Net Leverage Ratio
Net debt1 / LTM pro forma2 EBITDA (≤ 3.25 on 30 June 2021)
2.2x
n/a
Interest Cover Ratio
LTM EBITDA / LTM net interest expense (≥ 4 times)
12.4x
n/a
Minimum Net Worth
Total assets less total liabilities (≥ $350m)
$818.0m
n/a
(1) Net debt is total debt less cash, where debt includes borrowings under the current syndicated facility, bank guarantees, hire purchases, trade
payables greater than 90 days, and deferred consideration owing for acquisitions.
(2) Pro forma EBITDA has been adjusted to include a full twelve month’s contribution from all businesses acquired during FY21. EBITDA used in the
calculation of all covenants is underlying EBITDA. Please refer to the reconciliation of reported to underlying results included in this report.
Uniti is compliant with its syndicated facility financial covenants as at 30 June 2021. The Group measures its
financial covenants excluding the impact of AASB 16 Leases accounting standard.
GROUP OPERATING PERFORMANCE continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
18
Operating and Financial Review continued
Wholesale & Infrastructure
Earnings summary
$’000
FY21
FY20
$ change
% change
Revenue
105,442
22,351
83,091
372%
Recurring
84,305
20,169
64,136
318%
Construction
21,137
2,182
18,955
868%
EBITDA1
78,579
14,525
64,054
441%
EBITDA margin %
75%
65%
10pp
15%
Capital expenditure
25,088
6,755
18,333
271%
Underlying EBITDA less capital expenditure
53,491
7,770
45,721
588%
Underlying EBITDA less capital expenditure / EBITDA %
68%
53%
15pp
28%
(1) EBITDA refers to earnings before interest, tax, depreciation and amortisation. The reported net profit before tax for the business unit for FY21 is
$63.8 million (2020: $13.2 million) and represents EBITDA less depreciation and amortisation expense of $14.8 million (2020: $1.3 million). Please
refer to Note 3 for the reconciliation of reported EBITDA to reported net profit after tax for each segment.
W&I delivered strong results for FY21 and includes part-year contribution from OptiComm (acquired on 20 November 2020)
and Velocity (acquired on 24 December 2020). The underlying growth in construction activity and RSP activations across
existing and newly acquired customers has resulted in strong revenue growth. This growth is largely driven by increased
demand across the housing industry and customers need for faster internet speeds. EBITDA margins have increased from
65% to 75% across the period, largely driven by the Velocity licence fee contribution to revenue, organic growth achieved
during the year and the benefit of operating leverage.
Communications Platform as a Service
Earnings summary
$’000
FY21
FY20
$ change
% change
Revenue
30,810
20,969
9,841
47%
EBITDA1
19,973
11,752
8,221
70%
EBITDA margin %
65%
56%
9pp
16%
Capital expenditure
281
126
155
123%
Underlying EBITDA less capital expenditure
19,693
11,626
8,067
69%
Underlying EBITDA less capital expenditure / EBITDA %
99%
99%
0pp
0%
(1) EBITDA refers to earnings before interest, tax, depreciation and amortisation. The reported net profit after tax for the business unit for FY21 is
$17.2 million (2020: $9.8 million) and represents EBITDA less depreciation and amortisation expense of $2.8 million (2020: $1.9 million). Please
refer to Note 3 for the reconciliation of reported EBITDA to reported net profit after tax for each segment.
CPaaS delivered solid results for FY21. FY21 results represent a full 12 months of ownership of 1300 Australia, driving
the increase in EBITDA margin from 56% to 65%. The BU continues to service all levels of enterprise from Small/
Medium Enterprise (SME) to Large Enterprise/Government, recognising benefits from integration into the group
through the ability to cross-sell and achieve cost synergies. FY21 was a strong year of growth in the customer base,
with a focus on product offering and digitisation to grow market share. CPaaS continues to deliver exceptionally
strong free cash flow at 99% as a result of minimal capital expenditure.
DIVISIONAL PERFORMANCE
UNITI GROUP LIMITED ANNUAL REPORT 2021
19
Operating and Financial Review continued
Consumer & Business
Earnings summary
$’000
FY21
FY20
$ change
% change
Revenue
43,609
24,004
19,605
82%
EBITDA1
4,468
4,779
(311)
(7%)
EBITDA margin %
10%
20%
(10pp)
(50%)
Capital expenditure
1,879
1,363
516
38%
Underlying EBITDA less capital expenditure
2,589
3,417
(828)
(24%)
Underlying EBITDA less capital expenditure / EBITDA %
58%
71%
(13pp)
(18%)
(1) EBITDA refers to earnings before interest, tax, depreciation and amortisation. The reported net profit before tax for the business unit for FY21 is $0.2
million (2020: $0.7 million) and represents EBITDA less depreciation and amortisation expense of $3.8 million (2020: $3.7 million) and finance costs
of $0.4 million (2020: $0.4 million). Please refer to Note 3 for the reconciliation of reported EBITDA to reported net profit after tax for each segment.
C&B revenue has increased by $19.6 million on the prior
period to $43.6 million, driven by a full year contribution
from the HarbourISP acquisition in November 2020, in
addition to strong growth in the underlying customer
base. Continued focus on acquiring customers on
Uniti’s own fibre infrastructure has been a key strategic
objective of FY21. The acquisition of HarbourISP has
increased market share, whilst simultaneously realising
cost efficiencies. EBITDA margin has declined from
20% to 10% given the reduction in the legacy wireless
business customer base, which has a greater margin,
though offset by higher capital outlay and depreciation.
Looking forward
Uniti has clearly executed on the planned strategy to
build a substantial core infrastructure business with a
particular focus on FTTP networks through growth by
acquisition combined with strong organic growth.
Today Uniti can proudly proclaim it has been building
FTTP networks before and longer than NBN Co, the
dominant market incumbent.
Organic revenue and profit growth are evident in the
financial results in FY21 particularly in the second half
of the financial year.
The combination of this organic growth and successful
execution of targeted growth by acquisition is evident
by the growth in earnings and Uniti’s valuation since
listing in 2019. The Group has transitioned from loss
making to generating significant earnings and a market
capitalisation in excess of $2.2 billion, at 30 June 2021,
culminating in the inclusion of Uniti in the ASX200
index in June 2021.
This strong growth and successful execution is
attributable to a number of factors including:
investing in identified businesses and markets
within the telecommunications and technology
infrastructure segments where competition is
not intense, the products and services are in
demand, growth and returns are high and are
for the long term.
acquiring businesses which are an ideal fit aligning
with the business activities identified for the core
strategy.
the acquisition of businesses with similar or
naturally associated products generating high cash
margins resulting in self-funding organic growth
better than pre acquisition.
the focus on businesses with the characteristics
of high growth, margins and cash generation
providing enhanced products, customer service,
innovation and a more efficient go to market to
contribute to organic growth.
the speedy integration of acquired businesses to
deliver the cost synergies and organic long term
growth identified.
DIVISIONAL PERFORMANCE continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
20
Operating and Financial Review continued
DIVISIONAL PERFORMANCE continued
Uniti’s intention to pursue an acquisition strategy in targeted market segments and to then transition to strong
organic growth in each has been deliberate, was focussed on rewarding its shareholders and has been successful in:
building capability (people, process, platforms);
adding sustainable, annuity and expandable earnings to the business;
adding diversity to revenues and earnings; and
adding scale, and consequently deliver operating efficiencies.
Each of Uniti’s acquisitions satisfied the above objectives, and have also met the following criteria which are
systematically applied to any contemplated acquisition:
aligns with Uniti’s stated strategy and fits within strategic growth plans;
provides products with high profit margins;
has the ability to quickly grow organically;
provides high cash generation to ensure certainty of cash payback and accretive returns to its shareholders; and
is fairly priced.
SUMMARY OF KEY RISKS
The Board and Directors recognise that effective management of risk is critical for Uniti to meet its key business
objectives and create value for all its stakeholders. Over the past 12 months, Uniti has gone through a further period
of rapid growth and expansion. Uniti has implemented enterprise risk management processes to ensure that risks are
proactively identified and managed.
The following information sets out the major risks that Uniti is exposed to. It excludes specific financial risks that
are identified in the commentary around the financial performance of the Company. These risks may affect Uniti’s
financial performance, financial position, cash flows, distributions, growth prospects and share price.
The risks below are identified to assist investors in understanding the nature of the risks faced by Uniti and the
industry in which it operates. There may be other risks that result in an adverse outcome for the Company, as this
list is not necessarily exhaustive. Uniti manages and seeks to mitigate these risks through regular internal review and
control processes at the Board and management level.
People and
Safety
Ensuring the health, safety and wellbeing of Uniti’s staff, contractors, customers and public is a
key priority for the Board and Management. There are safety risks inherent in the construction and
maintenance of Uniti’s networks and COVID 19 has increased the profile of both physical and
mental health risks to staff. To manage these risks, Uniti has a Safety Management System certified
to ISO 45001 which is continually reviewed and improved, as well as committed Safety resources
across the business and regular focus on Safety risks at the Board level.
Competition
risks
Uniti faces competition from other private fibre network owners and operators including nbnTM, as well
as alternative technologies for broadband connectivity including fixed wireless/cellular (4G and 5G)
technology. If there was a change to nbnTM’s technology solutions or pricing strategies that made the
nbnTM more competitive, this could have a materially adverse impact on Uniti’s ability to attract FTTP
network construction and the consequent acquisition of and/or retention of sufficient customers and
to generate sufficient revenues and profitability to provide a return to investors.
Uniti C&B faces competition for customers from other retailers of broadband internet connectivity
services, including other resellers of nbnTM and private fibre broadband services, and mobile 4G and 5G
cellular services.
UNITI GROUP LIMITED ANNUAL REPORT 2021
21
Operating and Financial Review continued
Supplier and
technology
risks
Uniti relies on the use of third-party hardware and software technologies to deliver its products and
services. These technologies are required to continually perform to expected standards, without
disruption or cessation. Uniti’s success will depend on its ability to access technology and respond
quickly to changes in a cost-effective manner. The extent to which recent changes in the security
stance from the Australian Government in relation to equipment and components sourced from some
countries may impact on Uniti’s existing plans or requirements to refresh its network, is still uncertain.
Uniti also relies on key business relationships to deliver its services such as IP transit, backhaul, high
sites or equipment including fibre optic cable. A disruption in the supply of, or prices associated
with, equipment or services utilised by Uniti may have a negative impact on the business. Effective
management of Uniti’s inventory and supply chain has meant Uniti has not been affected by the global
chip shortage to date, but further disruptions of this nature from COVID-19 or other Global events
could pose risks to delivery.
Certain equipment used by Uniti is sourced from overseas, the cost of which is dependent on foreign
exchange rates. Uniti’s ability to pass on or recover the impact of adverse currency movements is
uncertain.
Regulatory
risks
Uniti operates in a highly regulated environment, with penalties for non-compliance, including
undertakings or the imposition of substantial civil and criminal penalties. Uniti also utilises class
license spectrum and is subject to and must comply with laws, regulations and government policies
in relation to that use. Possible further changes to existing regulation may from time to time result in
increased compliance costs for different parts of Uniti’s business as well as impose substantial risks.
Uniti is not able to predict the nature or impact of future policies and any such changes are beyond
Uniti’s control. If changes occur to existing policies and legislation, then Uniti could be adversely
affected.
Network and
operational
disruption
Uniti depends on the performance, reliability and availability of its network and technology
platforms, including its broadband and fixed wireless networks, OSS and BSS systems, RSP Portal,
online led customer service platform, call centre and communications systems. There is a risk that
these platforms and systems may be adversely affected by a number of factors, including damage,
equipment faults, power failure, cyber security incidents such as computer viruses, malicious
interventions, third party security infringements or breaches, hacking, natural disasters or failure of
third party networks. Events of that nature may adversely impact the availability of Uniti’s technology
platform or website, and this may have an adverse impact on Uniti’s ability to acquire or retain
customers.
Operational
and growth
risks
Uniti is exposed to risks associated with the rollout of its network, outages and loss of customer
services.
There is a risk that the implementation of Uniti’s growth strategies will be subject to delays or cost
overruns, and there is no guarantee that these strategies will generate growth. Furthermore, the
implementation of these growth strategies may lead to changes to Uniti’s business or the customer
experience which may result in unintended adverse consequences if such changes affect customers’
willingness to buy the Company’s products.
SUMMARY OF KEY RISKS continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
22
SUMMARY OF KEY RISKS continued
Design,
construction
and
development
risks
Any delays or unexpected costs associated with the design, construction, and development of any
of Uniti’s fibre optic telecommunications infrastructure or any changes in funding arrangements with
developers may harm Uniti’s growth prospects, future operating results and financial condition.
Delays or unexpected costs can be dictated by external factors such as decisions by developers to
vary, delay or cancel developments or industry price increases affecting equipment components,
labour or other aspects of the design, construction and development stages. Whilst this risk is largely
outside Uniti’s control, the risk is actively managed through visibility over the timing and completion
of projected developments and keeping appraised of market conditions.
General
economic
conditions
In light of recent global macroeconomic events, including the impact of COVID-19, Australia
could experience an significant economic recession which could impact the development and
construction of new housing projects and/or vacancy rates in residential, commercial or retail
premises, and this could also have an impact Uniti’s ability to attract and retain customers, to invest
sufficiently to develop, adopt and integrate the latest technologies into existing infrastructure, and
to secure and maintain third party suppliers for IT and network infrastructure over whom Uniti may
have no direct operational or financial control. These economic disruptions may adversely impact
Uniti’s earnings and assets, as well as the value of Uniti shares.
Integration
of acquired
businesses
Uniti has acquired a number of businesses in the recent years. Uniti has undertaken detailed due
diligence in respect of each of those acquisitions, and following each acquisition, has promptly
undertaken a systematic integration programme to integrate that business within its respective
business unit or strategic pillar. In most cases, the integration programme has been successfully
completed. However, there are a number of technology integration projects which remain in
progress, in particular those arising from the acquisitions of OptiComm Limited and the Telstra
Velocity network assets. Those projects are expected to be completed through a comprehensive
migration and integration plan that will run over the next few years. Until completed, there
remains a risk to future income streams to be generated and synergies to be achieved from those
acquisitions.
Cyber
In a global environment where cyber security threats are continually increasing in both frequency
and sophistication, managing the security of Uniti’s networks and our customer’s data is critical.
Uniti is investing in its cyber security capability by continually improving technologies for
prevention and detection of malicious access to its networks, improving processes for information
security management, and ensuring that the organisation has a security aware culture through
regular training and awareness of its people.
Operating and Financial Review continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
23
Safety
The health and safety of our team members is of
paramount importance to Uniti’s leadership team.
Uniti seeks to foster a safety-first culture with hazard
identification, incident prevention and the active
management of all WHS issues being a key priority for
Board, senior management and every team member.
Uniti’s goal is to have zero serious injuries across all of
our activities.
We are committed to achieving this through education,
training, identification, prevention and monitoring across
our team members and our contractor base, managed
by our dedicated Work Health & Safety Manager.
Uniti’s W&I business is certified to ISO9001 quality and
ISO45001 safety management systems standards, and
we are in the process of extending these same standards
across the other parts of our business.
Our People
Uniti has always embraced the full scope of the diversity
of its workforce, recognising the benefits and strengths
that this brings. In the second half of 2021, Uniti will submit
its first EOWA Gender Equality report. We plan to launch
several key initiatives over the next few years which will
result in stronger gender diversity across our workforce,
specifically in the areas of recruitment, training and
development and among our leadership teams.
In FY21, Uniti introduced paid parental leave for all
primary caregivers, a benefit that had not previously
been available to team members in the smaller
organisations acquired by Uniti.
Uniti continued to invest in the training and
development of its team members through supporting
training programmes and government traineeship
schemes, including the Australian Apprenticeship
Support Network. We also provide education support
to a number of our employees undertaking further
education and development through a partial
reimbursement of costs and the provision of study leave.
We also enhanced the range of services offered through
our Employee Assistance Program, Lifeworks, to support
our employees’ well-being through the COVID-19
lockdown restrictions, particularly in Victoria where a
large cohort of our team is based. This program provides
24/7 access to support if needed, and this is accessible
by our employees and their families.
Sustainability
Introduction
In FY21, the integration of the various businesses
Uniti acquired in 2019 and 2020 and establishing our
future-ready operating model and systems, was a key
priority for us. The COVID-19 pandemic meant that this
integration had to be undertaken against the challenging
backdrop of restrictions, lockdowns and significant
disruption to our previously adopted ways of working
and infrastructure. Telecommunications, already
considered critical infrastructure, became an essential
service as Australians pivoted to working and schooling
from home, with this becoming the “new normal”. Uniti
team members rose to the challenge faced by
Australians generally and continued to deliver
exceptional customer service and support to its
customers across all business units within the Group in a
new working paradigm.
Digital Infrastructure
Infrastructure is at the heart of economic,
environmental and social sustainability and our FTTP
network provides high speed connectivity to over
250,000 premises across Australia, an increase of more
than 30,000 in the last 12 months.
Our network connects communities, providing an
essential service, that enhances business and economic
productivity, home schooling, entertainment, social
interaction and wellbeing. COVID-19 has also shown how
high-speed broadband can reduce carbon emissions by
facilitating flexible home working and home-schooling
solutions. Between 30 June 2020 and 30 June 30 2021,
the daily download traffic volume, in petabytes, on the
wholesale broadband network increased by 34%, with the
increases occurring between 10am and 6pm linked to
education and business traffic profiles.
Employment
Our W&I business employs over 200 people designing,
constructing and operating the broadband network,
spread between direct employees and sub-contractor
partners. Health and safety has been a key focus over the
last year, with our employees and sub-contractors being
on the “front line”, maintaining critical broadband
infrastructure in hot spot areas, broadacre estates and
quarantine hotels and buildings. More than ever before,
FY21 has demonstrated why broadband infrastructure
and operations is now recognised as essential
infrastructure.
UNITI GROUP LIMITED ANNUAL REPORT 2021
24
Modern Slavery
Uniti will be submitting its first Modern Slavery
Statement for the FY22 reporting period having passed
the reporting threshold of annual consolidated revenue
of $100m during FY21. Given the rapid growth of
the Company to date, we have not yet established
a centralised procurement function, and functional
responsibility for our supply chains remain within the
relevant parts of the business. Accordingly, for practical
reasons, the focus of our first reporting period has been
to identify gaps in our policies and procedures and
to publish key external-facing documents to ensure
we have a strong foundation from which to build our
Modern Slavery programme for the future.
During the current reporting period, we will introduce
a Supplier Code of Conduct which will outline the
minimum expectations we have of our suppliers in
relation to ESG issues, including Modern Slavery. The
Code will be shared with our existing, new and potential
suppliers and its terms and conditions which relate to
Modern Slavery will be included in our updated standard
purchase terms. Current and new suppliers will be
required to acknowledge compliance with the Code.
We have put in place a staged approach to rolling out
our supplier due diligence, focusing on our highest risk
and highest volume suppliers for the current reporting
period. We have completed a desktop exercise to
understand where the risks are highest, taking into
consideration high risk country or sectors in our
operations and supply chains, and the types of workers
likely to be present in those chains. Guided by this
exercise, we will shortly commence the distribution of
questionnaires to select suppliers and use the findings
to generate a report for our Board. If any actual or
suspected instances of modern slavery are identified,
Uniti will carry out an investigation, and if deemed
necessary, work with its suppliers to implement a
remediation plan. If this fails to result in appropriate
changes, Uniti will review its ongoing relationship with
that supplier and establish mechanisms for external
reporting.
Ongoing implementation and management of the
activities relating to Modern Slavery will be managed
by our Chief Corporate Services Officer and her team
including representatives from legal, risk & audit and
human resources.
Environment
On the environment front, Uniti is certified to ISO
14001 Environmental Management Systems. The
management system and processes assist us in
continually assessing our environmental impact, setting
targets and monitoring our environmental performance
for continual improvement.
Uniti builds and maintains optical fibre networks that
are operated and used in an ecological and sustainable
manner. The delivery of multiple communication
services through a single fibre optic cable provides not
only monetary savings to the communities we service,
but also minimises the impact on the environment.
In a move that will reduce carbon emissions, Uniti
has decided to adopt FTTP XGS-PON and FTTP
GPON technologies in the construction of its network
infrastructure. This technology consumes significantly
less power than FTTN DSL (copper) and HFC networks.
A European study performed by the Prysmian Group in
November 2020, determined that GPON technology
consumes the least amount of energy to provide
broadband residential connections compared to VDSL
and HFC DOCSIS. At the 50Mbps download speed
tier, GPON consumed an average of 56 kWh/year per
person, 37% less than HFC at 88 kWh/year per person,
and 9% less than VDSL at 61 kWh/year per person. At
faster broadband speeds (eg: 1Gbps download speeds
as per the majority of the Uniti wholesale network), the
study concluded the percentage savings with GPON
or XGSPON would be even greater than the legacy
technologies.
The new technology, made of tiny fibres of glass
and sand, also generates much smaller quantities of
environmental waste than DSL and HFC networks
which use copper and metal (which rust and need to be
mined). DSL copper and HFC networks have an effective
life of 20 to 30 years, after which these networks need
to be replaced and disposed of via waste or some
recycling. Fibre networks have a life of more than 50
years, therefore a lower environmental waste impact.
Post integration of all acquired networks, Uniti will be
able to efficiently measuring power usage per home and
Gbps to enable carbon emissions to be calculated, and
to drive improvements in environmental performance.
At Uniti, we have a motto of “Ban the Box” because we
believe above ground Fibre Distribution Hubs (FDHs) are
detrimental to the aesthetics of an estate. The traditional
Sustainability continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
25
Corporate Social Responsibility
In December 2020, Uniti Group became a platinum
member of the Telco Together Foundation (TTF), the
industry’s foundation for uniting Australia’s leading
telcos, drawing on their core capabilities, strengths and
access to technology to drive a significant social impact.
TTF supports several significant social impact projects
and organisations, primarily focussed on changing the
lives of young Australians. TTF is a key driver in creating
social change amongst the Telco Industry, supporting
disadvantaged communities in the areas of Indigenous
communities, mental health, and youth employment and
disadvantage. One of its key initiatives is Small Change
Big Change, a fundraising program based on Workplace
Giving, On-Bill Donations and Volunteering, with the
goal of building resilient young Australians through a
wide range of education and engagement programs
designed to promote good mental health, a strong sense
of identity and connection beyond connectivity. TTF was
founded in 2011 by Vaughan Bowen, Uniti’s Executive
Director, in his then capacity as the founder and a
director of M2 Group.
In addition to participating in TTF initiatives such as
workplace giving and volunteering activities, Uniti
Group members have banded together to raise funds
for various causes throughout the year, including
STEPtember, The Push-Up Challenge (for Mental
Health) and the St Vincent’s CEO Sleep Out initiative.
As Uniti continues to mature as a telecommunications infrastructure company in FY22 and beyond, Uniti intends to
further develop and formalise it’s Sustainability framework and principles. Further detail on our plan will be published
in a stand-alone Sustainability Report later this year.
Sustainability continued
large above ground hubs are also vulnerable to damage
and are not waterproof. With the exception of the
Velocity network, all OptiComm and LBN greenfield
communities use underground splitters and connectors,
and all our future builds are based on underground
equipment, so even in a flood, our services continue to
work. These advanced features enhance the sustainable
efficiency of our networks.
Uniti adopts "REDUCE – REUSE – RECYCLE" as the basis
of its environmental objectives, whether its reducing
packaging from our suppliers, recycling toner cartridges
at our offices or reusing plastic water bottles. All Uniti
employees have undergone environmental awareness
training and adopt environmental initiatives as part of
their daily routines.
Uniti has also reduced its environment waste
contribution by moving most of its Group IT and OSS
infrastructure to cloud providers, which results in Uniti
no longer having to maintain servers in its own racks.
This supports efficient recycling and disposal of hardware
at end of life, as well as the sharing of capacity across
infrastructure, to make for more efficient utilisation.
Cyber Resilience
The resilience and sustainability of Uniti’s systems
and networks is essential to ensure the continuity and
availability of customer services and the security of
customer data. Uniti is continually strengthening its
information security posture through regular review of
cyber security risks and threats, continual improvement
of technology to prevent and detect cyber breaches
and investment in its information security management
systems. Uniti recognises that the most critical defence
in its cyber security strategy is ensuring a culture of
security awareness of best practice behaviour among
its people and as such has a cyber security training and
awareness program being rolled out.
Uniti is also currently undertaking the necessary steps
to ensure its Security Management processes comply
with the ISO27001 Information Security Management
Systems standard.
UNITI GROUP LIMITED ANNUAL REPORT 2021
26
Director’s Report
Independent Non-Executive Chairman
Committee Membership: Member of the Audit & Risk
Committee and Member of Nomination & Remuneration
Committee
Other listed Directorships (last 3 years): Codan Limited,
BSA Limited (resigned December 2019)
Graeme Barclay is a former CEO and qualified Chartered
Accountant with more than 35 years experience in
professional services, corporate finance and investment
banking, broadcast, telecommunications and digital
infrastructure.
Graeme has held Executive and Non-Executive Chair,
Director or Group CEO roles at a number of companies
including BAI Communications group, Transit Wireless
LLC (New York), Arqiva Limited (UK), Nextgen Networks,
Metronode data centres, Axicom (formerly Crown Castle
Australia) and as an Executive Director in Macquarie
Group’s infrastructure business. In addition, he had a
14-year career, including 4 years as partner, with a major
international accounting firm.
In these corporate roles, Graeme was responsible for all
aspects of strategy, M&A, sales and business development,
contract delivery, capital expenditure management and
operations, as well as implementing the appropriate capital
structure and raising third party debt and equity for these
infrastructure businesses with operations in Australia, UK,
Hong Kong, Singapore, Canada, USA and New Zealand.
Over the past 22 years in these businesses, Graeme led
and completed more than 20 acquisition and divestment
transactions including the sale of Nextgen Networks to
Vocus for $820m in 2016 and the sale of Metronode to
Equinix for $1,040m in 2018.
Graeme holds an honours economics degree, is a qualified
Chartered Accountant in Scotland and Australia/NZ, a
fellow of FINSIA and a member of the Australian Institute
of Company Directors.
Independent Non-Executive Director
Committee Membership: Chair of Nomination &
Remuneration Committee and Member of the Audit &
Risk Committee
Other listed Directorships (last 3 years): Redflow Ltd
John Lindsay is one of Australia’s original Internet industry
executives with more than 25 years’ experience in the
telecommunications industry.
His past roles include senior executive responsibility as
Chief Technology Officer at iiNet Ltd where he integrated
the iiNet, Internode, TransACT and Adam networks and
operations teams into one global IP network from the USA,
Asia and Europe all the way to DSLAMs and fibre to the
premises. In this role, John was responsible for network
commercial strategy, wholesale carrier relations including
negotiating the purchase of wholesale ADSL, exchange
and copper loop access, IP transit, dark fibre and high-
capacity inter-capital and international data services. He
was also responsible for regulatory matters with the ACMA,
ACCC, TIO and industry associations, and successfully
challenged Telstra’s wholesale pricing via Access Disputes
with the ACCC on several occasions resulting in large cost
reductions and back-dated refunds.
As TransGrid Telecommunications Advisory Chief
Technology Officer in 2015 and 2016, John advised on
commercial strategy and technical design of a ground-up
new network and services during the successful $10.258
billion-dollar 99 year lease of the NSW government’s
assets.
John currently serves as a director of Zinc/Bromine flow
battery maker Redflow Ltd (ASX:RFX), a number of private
companies including multinational eCommerce Software
as a Service (SaaS) host, Ultra Commerce Holdings Ltd,
Chatbot innovator Clevertar Pty Ltd and is co-founder
of Adelaide based enterprise and government Cloud IT
transition specialists jtwo solutions Pty Ltd. John is also a
director of the Telecommunications Industry Ombudsman
(TIO), a federal government body.
John is a graduate member of the Australian Institute of
Company Directors.
BOARD OF DIRECTORS
The names and details of the directors of Uniti during FY21 and at the date of this report are as follows:
Graeme Barclay
Independent Non-Executive
Chairman
John Lindsay
Independent Non-Executive
Director
UNITI GROUP LIMITED ANNUAL REPORT 2021
27
Committee Membership: Chair of the Audit & Risk
Committee & Member of Nomination & Remuneration
Committee
Other listed Directorships (last 3 years): Codan Limited
Kathy Gramp is a professional company director with over
24 years’ experience across a diverse range of industries
including commercial radio, digital media, technology and
consumer-centric organisations and she has significant
experience as Chair of Audit & Risk Committees.
Kathy spent 22 years at Austereo Ltd, including her
appointment as Chief Financial Officer since 2003. In
that time the company grew from 2 radio stations to
the largest commercial radio network in Australia, and
the leader in Digital and Online Media. Kathy’s current
roles include being a non-executive director of Codan
Limited (ASX: CDA). Codan delivers technology solutions
in communication, safety and security, with international
operations exporting to over 150 countries. She is also a
director of The Australian Institute of Company Directors
and a Council member of Flinders University.
Kathy is a Fellow of the Australian Institute of Company
Directors and Chartered Accountants Australia and New
Zealand, Member of Chief Executive Women and holds a
BA in Accountancy from The University of South Australia.
Other listed Directorships (last 3 years): None
Vaughan Bowen is a highly successful business builder,
M&A practitioner & philanthropist. As founder of ASX100
telecommunications company M2 Group (which became
part of Vocus Group, following a merger in 2016),
Vaughan took M2 from start-up to a corporation valued at
greater than $2B, with more than 3,000 team members,
nearly 1 million customer services across Australia &
New Zealand and owner of household names including
Dodo, iPrimus and Commander. During the M2 journey,
Vaughan led the identification, negotiation and acquisition
of more than 30 companies.
In 2012 Vaughan founded, seeded and for 8 years served
as Chairman of the Telco Together Foundation (“TTF”), the
Australian telco industry’s only united charitable entity,
endorsed by the federal government’s Department of
Communications. TTF has raised millions of dollars for
various disadvantaged communities and implemented
national programs for the benefit of the not-for-profit
sector as a whole, including on-bill donations, work-
place giving and skilled volunteering. Vaughan continues
to serve as a TTF non-executive Director and benefactor.
Kathy Gramp
Independent Non-Executive
Director
Vaughan Bowen
Executive Director
Director’s Report continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
28
Other listed Directorships (last 3 years): None
Michael Simmons is a seasoned media and
telecommunications executive who brings more than 40
years industry experience to Uniti Group.
Prior to taking on this role, Michael was the CEO of Vocus
Group Limited. Michael joined Vocus as a Non-Executive
Director following the merger of M2 Telecommunications
Limited and Vocus in 2016. Michael left the Vocus board
stepping into Executive roles as CEO of Enterprise,
Wholesale & Government business and subsequently
Interim Group CEO.
Michael was employed by TPG Telecom Limited for
in excess of 26 years. Michael held various executive
positions and served as CEO for the majority of this time.
ASX-listed SP Telemedia Limited (SPT Group) which listed
in 2001 acquired TPG and later changed its name to TPG.
Prior to listing, the SPT Group was a wholly owned
subsidiary of Washington H. Soul Pattinson Limited.
Michael held executive roles within the SPT Group
of Companies, including as Chief Financial Officer.
During his time with SPT Group, Michael developed
and implemented the business plan to create a
telecommunications business within the Group, which
became SP Telemedia and resulted in Michael being
Group CEO. Michael continued to lead the growth of SP
Telemedia including the acquisition of TPG Telecom.
In 2008, Michael left TPG to become the Managing
Director of TERRiA, a telecommunications consortium
of infrastructure-based telecommunications carriers
(including TPG), formed to bid for the contract to
build, own and operate the National Broadband
Network (NBN). At this time, Michael also joined the M2
Telecommunications Group, as a Non Executive Director.
Michael remained a Director until 2016 when M2 merged
with Vocus as a $2.2B enterprise.
Michael has considerable executive experience
in building ASX listed businesses within the
telecommunications and media sectors.
Ashe-lee Jegathesan is a highly experienced executive with
more than 20 years’ experience, including in the technology
and telecommunication industry. She brings with her
effective leadership and management skills alongside
corporate legal and governance experience to deliver
strong commercial outcomes for the business. She has also
had significant experience in leading and implementing
strategic M&A activity (both local and cross-border)
including the integration of those acquired businesses.
As Chief Corporate Services Officer for Uniti Group, she
is responsible for providing oversight of the Corporate
Shared Services function including IT and Projects, Legal,
Regulatory & Risk, ESG, HR, Corporate Communications
and Investor Relations, and the integration of the business
acquired by Uniti. Prior to this she held the role of General
Counsel & Company Secretary of Vocus Group Limited.
Ashe-lee is a graduate member of the Australian Institute
of Company Directors. She also sits on the advisory board
for Archangel, an early stage start-up investment syndicate
based in Australia, and is a member of the Human Research
Ethics Committee for Orima Research.
Director’s Report continued
Michael Simmons
Managing Director &
Chief Executive Officer
Ashe-lee Jegathesan
Chief Corporate Services
Officer & Company Secretary
LLB (Hons), GAICD
UNITI GROUP LIMITED ANNUAL REPORT 2021
29
Director’s Report continued
The directors present their report, together with the
financial statements, on the consolidated entity Uniti
Group Limited hereinafter referred to as “the Group” or
"consolidated entity" consisting of Uniti Group Limited
(referred to hereafter as the "Company" or "parent
entity") and the entities it controlled at the end of, or
during, the year ended 30 June 2021 (“year”).
Directors’ Interests
The following table sets out each Director’s relevant
interest in shares and options as at 30 June 2021:
Ordinary Shares
Options
Graeme Barclay
4,636,162
4,990,534
Kathryn Gramp
458,037
1,871,451
John Lindsay
466,052
1,871,451
Vaughan Bowen
10,695,503
4,990,537
Michael Simmons
5,558,475
4,990,534
No director has:
a relevant interest in the shares of any related body
corporate of Uniti Group Limited; or
a relevant interest in debentures of Uniti; or
rights or options over shares in, or debentures of,
Uniti; or
rights under a contract that confer a right to call for
or deliver shares in, or debentures of, Uniti.
Full detail of the unissued Ordinary Shares under option
is included in the Remuneration Report, which forms
part of this Directors’ Report.
Shares issued on the exercise of options
During the financial year, no options were exercised and
therefore no Ordinary Shares were issued as a result of
options being exercised.
Corporate governance
Our Corporate Governance Statement, detailing our
compliance with the ASX Corporate Governance
Council’s “Corporate Governance Principles &
Recommendations – 4th Edition” can be found online at
www.unitigrouplimited.com/governance/policies.
Principal activities
During the financial year, the principal continuing
activities of the Group consisted:
the construction, ownership and operation of
telecommunications infrastructure, and the provision
of telecommunications and technology products
and services delivered over this infrastructure as a
wholesaler of the infrastructure constructed, owned
and operated.
retailing telecommunications products and services
to end users, operating the retail business as a
functionally separated business under the terms of
an enforceable undertaking provided to the ACCC.
the operation of a communications platform as a
service (CPaaS) for the retail and wholesale supply
of premium voice services over 13, 1300, 1800
calling numbers and SMS. The services include a
value-added software as a service data analytics and
call tracking application, as well as the leasing of
phonewords on these numbers.
Dividends
There were no dividends declared or paid during the
financial year.
UNITI GROUP LIMITED ANNUAL REPORT 2021
30
Review of Operations
The statutory profit for the consolidated entity after
providing for income tax amounted to $29.2 million
(30 June 2020: $15.9 million).
The statutory profit includes significant items consisting
of $12.6 million acquisition costs incurred as part of
the acquisitions of OptiComm Limited (OptiComm),
HarbourISP Pty Ltd (HarbourISP) and Telstra Velocity
and South Brisbane Exchange (Velocity) network assets,
$6.8 million share based expenses relating to shares and
options issued, $1.4 million restructure costs incurred
as part of group reorganisation activity, $0.6 million
dividend income relating to Uniti’s acquired interest
in OptiComm shares prior to the completion of the
Scheme of Arrangement to acquire OptiComm and
amortisation of acquired customer base intangible of
$12.0 million.
After adjusting for the significant items, the profit after
tax for the consolidated entity for the year was $61.3
million compared to the prior corresponding period of
$21.7 million, an increase of 182%.
The Earnings before Interest, Tax, Depreciation and
Amortisation (EBITDA) after adjusting for the significant
items for the year was $93.7 million compared to $26.5
million for the prior corresponding period, an increase
of 254%. Please refer to the reconciliation of reported
to underlying results in the Operating and Financial
Review section.
The growth in the operating businesses and the
transactions undertaken has resulted in the Group
performing well, with strong cash flow for the financial
year, with the Group well positioned for further growth
in the 2022 financial year.
In line with our strategy, the Company completed the
acquisitions of HarbourISP, OptiComm and Velocity in
FY21. The transactions were highly earnings accretive
and were a significant contributor to the current
earnings of the Group.
The Group has a strong balance sheet, ownership
of an integrated data infrastructure business, more
diverse products and services and a pipeline of organic
growth opportunities such that the Directors are highly
confident the Group will continue to grow earnings in
the future.
Significant changes in the state of affairs
On 22 October 2020, the Australian Competition and
Consumer Commission (ACCC) accepted the functional
separation undertaking submitted by the Company. The
terms of the undertaking were effective immediately, for
an initial period of 10 years. This undertaking means that
the Company can operate on a functionally separated
basis, to serve residential customers directly on the
superfast fixed line broadband networks which it owns
and operates, most notably its rapidly expanding FTTP
networks and its other fixed line superfast broadband
networks.
On 17 November 2020, the Company acquired 100%
of HarbourISP Pty Ltd (HarbourISP) for a purchase
consideration of $10.3 million and 1 million options
to acquire Uniti shares at an exercise price of $1.54.
The purchase consideration represents the cost of the
business combination in line with AASB 3. HarbourISP
specialises in delivery of superfast retail broadband
services in greenfields developments.
On 20 November 2020, the Company acquired 100%
of the ordinary shares of OptiComm Limited and
its controlled entity, OptiComm Integration Pty Ltd
(OptiComm), by way of a Scheme of Arrangement for
total consideration of $703.4 million. The purchase
consideration consisted of cash payments of $530.3
million and $173.2 million scrip consideration. The total
purchase consideration includes shares acquired via
share purchase agreements with certain OptiComm
institutional shareholders prior to the completion of
the Scheme of Arrangement. OptiComm operates
a FTTP network across Australia servicing both
residential and business customers, including
retirement living, community and commercial clients.
On 24 December 2020, the Company acquired
Telstra’s (ASX:TLS) Velocity and South Brisbane
Exchange network assets (Velocity) for $140 million. The
purchase consideration consists of a cash payment of
$85m upon transaction completion, $20 million payable
in 3 equal instalments over 3 years and $35 million
payable upon completion of migration of the assets.
The Velocity network is Telstra’s optical fibre network
that uses FTTP technology to deliver high-speed
broadband, phone, subscription TV and free-to-air
services in certain locations across Australia.
Director’s Report continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
31
Both the OptiComm and Velocity acquisitions were
funded by share capital raises and a three-year debt
facility agreement. In June 2020, a non-renounceable
rights issue was completed, raising $270 million
(before costs) at $1.40 per share issued. In December, a
placement was completed, raising $50 million (before
costs) at $1.50 per share issued. In January 2021, Uniti
completed a share purchase plan to shareholders
which was over-subscribed by more than seven times,
raising $20 million (before costs) at $1.50 per share
issued. Any surplus funds have been added to the
Company’s reserves.
The Company executed a $320 million revolving
syndicated facility agreement with Westpac Banking
Corporation and Commonwealth Bank of Australia
taking effect 18 December 2020. The facility included
a $315 million revolving loan facility and a $5 million
contingent instrument facility. The Company
renegotiated a syndicated facility with Westpac
Banking Corporation, Commonwealth Bank of
Australia and Macquarie Bank Limited taking effect 26
May 2021. The facility included a reduced $285 million
revolving loan facility and a $5 million contingent
instrument facility.
On 21 June 2021, the Company was admitted to the
S&P/ASX 200 index.
Impact of COVID-19
The global impact of the COVID-19 pandemic, and
the advice and responses from health and regulatory
authorities, is continuously developing. The global
economic outlook is facing uncertainty due to the
COVID-19 pandemic which has had and may continue
to have significant impact on capital markets and share
prices.
Uniti may be impacted both by deterioration in
macroeconomic conditions generally and specifically
in relation to its operations. Many of the operational
and general risks highlighted in the Group Outlook
section are likely to be heightened due to the impacts
of the COVID-19 pandemic. To date, COVID-19 has
affected, amongst other things, economic conditions,
employment markets, equity markets, governmental
action, regulatory policy, quarantining, self-isolations
and travel restrictions.
In addition, the COVID-19 global pandemic may
specifically impact the projected growth rate of Uniti’s
Infrastructure business, including from any downturn
in the property market which may lead to a delay in the
construction of new developments and in the signing
of new developer agreements and/ or delay in the
construction of dwellings under these new agreements
and/or increases in vacancy factors, resulting in delays
in the realisation of revenue from these contracts or
connections.
There is also a risk that the operations of Uniti may be
interrupted by government enforced restrictions (such as
lockdowns) or other COVID-19 related health concerns.
Although there is a level of inherent uncertainty as
outlined above, so far there has not been any noticeable
adverse impact on the Group’s operations or profitability.
Uniti has not claimed any amounts under the Australian
Government JobKeeper Payment Scheme.
There were no other significant changes in the state of
affairs of the consolidated entity during the financial year.
Matters subsequent to the end of the
financial year
No other matter or circumstance has arisen since
30 June 2021 that has significantly affected, or may
significantly affect the consolidated entity’s operations,
the results of those operations, or the consolidated
entity’s state of affairs in future financial years.
Likely developments and expected results
of operations
There are no other developments other than those
listed above that are likely to materially impact the
results of operations of the Group at this time.
Environmental regulation
The consolidated entity is not subject to any
significant environmental regulation under Australian
Commonwealth or State law.
Director’s Report continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
32
Indemnities and insurance
The Uniti Group Constitution provides that to the
extent permitted by law and except as may be
prohibited by the Corporations Act, each director and
secretary of Uniti (and its subsidiaries) is indemnified
against any liability (other than for legal costs where the
indemnity is limited to reasonable legal costs) incurred
by that person in the performance of their role.
The current and former directors and secretary of
Uniti, as well as the members of the executive team
are also party to a customary deed of access and
indemnity.
During FY21, Uniti paid a premium in respect of a
contract insuring the directors and officers of Uniti
against any liability that may arise from the carrying
out of their duties and responsibilities to the extent
permitted by the Corporations Act. The contract of
insurance prohibits disclosure of the nature of the
liability and the amount of the deductible or premium.
Auditor indemnity
The Company has not, during or since the financial
year, indemnified or agreed to indemnify the auditor
of the Company or any related entity against a liability
incurred by the auditor. During the financial year,
the Company has not paid a premium in respect of a
contract to insure the auditor of the Company or any
related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section
237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to 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 part of those proceedings.
Deed of cross guarantee
A deed of cross guarantee between Uniti and its
subsidiary entities was enacted during the prior
financial year and relief was obtained from preparing
individual financial statements for the Group under
ASIC Corporations (Wholly-owned Companies)
Instrument 2016/785. Under the deed, Uniti guarantees
to support the liabilities and obligations of its
subsidiaries listed above. As its entities are a party to
the deed the income statement and balance sheet
information of the combined class-ordered group is
equivalent to the consolidated information presented
in this financial report.
Non-audit services
Details of the amounts paid or payable to the auditor
for non-audit services provided during the year by
the auditor are outlined in Note 27 to the financial
statements.
Meetings of directors
The number of meetings of the Company’s Board of Directors (‘the Board’) and of each Board committee held during the
year ended 30 June 2021, and the number of meetings attended by each director that held office during the year were:
Full Board
Nomination &
Remuneration Committee
Audit & Risk Committee
Attended
Held
Attended
Held
Attended
Held
Graeme Barclay
25
25
5
5
5
5
John Lindsay
25
25
5
5
5
5
Kathy Gramp
25
25
5
5
5
5
Vaughan Bowen
25
25
5
5
5
5
Michael Simmons
25
25
5
5
5
5
Director’s Report continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
33
The directors are satisfied, on the advice of the Audit
Committee, that the provision of non-audit services
during the year, by the auditor (or by another person
or firm on the auditor’s behalf), is compatible with
the general standard of independence for auditors
imposed by the Corporations Act 2001.
The directors are of the opinion that the services as
disclosed in Note 27 to the financial statements do
not compromise the external auditor’s independence
requirements of the Corporations Act 2001 for the
following reasons:
all non-audit services have been reviewed and
approved to ensure that they do not impact the
integrity and objectivity of the auditor; and
none of the services undermine the general
principles relating to auditor independence as set
out in APES 110 Code of Ethics for Professional
Accountants issued by the Accounting Professional
and Ethical Standards Board, including reviewing
or auditing the auditor’s own work, acting in a
management or decision-making capacity for the
Company, acting as advocate for the company or
jointly sharing economic risks and rewards.
Auditor’s independence declaration
The auditor’s independence declaration for the
financial year ended 30 June 2021 can be found on
page 56 of the financial report and forms part of the
Directors Report.
Rounding of amounts
The Company is of a kind referred to in Corporations
Instrument 2016/191, issued by the Australian
Securities and Investments Commission, relating
to "rounding-off". Amounts in this report have been
rounded off in accordance with that Corporations
Instrument to the nearest thousand dollars, or in
certain cases, the nearest dollar.
Director’s Report continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
34
Remuneration report (audited)
Dear Shareholders,
I am pleased to present the Uniti Group remuneration report for FY21. In another year of transformational growth for
Uniti, including significant acquisition activity and resulting integration of those acquisitions, we have sought to provide
stakeholders with transparency, visibility and insight into our remuneration structure and framework.
Uniti’s remuneration structure should be considered in the context of the transformation that has been achieved over the
past two years.
Uniti has grown from an initial market capitalisation of ~$30m when it listed on the ASX in February 2019 to a market
capitalisation of $2,240m when it was admitted to the S&P/ASX200 on 21 June 2021. Prior to its listing, Uniti was a loss-
making business with a small fixed wireless network and ~6,000 customers predominantly in Adelaide. At that time, and
before there was any certainty as to whether Uniti would be able to successfully raise new equity capital through a listing,
Uniti was able to attract the current non-executive directors and MD & CEO by offering exposure to equity through share
options and shares, which were approved by shareholders. This history has resulted in certain existing legacy arrangements,
such as options being held by non-executive directors, and a remuneration structure focused on rewarding the achievement
of shorter term priorities with a bias towards equity-based remuneration for that delivery.
Importantly, the remuneration structure we have had in place up until now, including the FY21 year, directly links the
remuneration of directors and executives to the performance of the company to ensure that directors and executives are
aligned with shareholders. This alignment has, in turn, delivered significant additional value to our shareholders in FY21.
Our remuneration framework has evolved considerably over the short period that Uniti has been a listed company, and your
Board acknowledges that further evolution of our remuneration framework is now appropriate as we have become an S&P/
ASX200 company, reflecting the considerable growth in the scale and value of your Company that has been achieved.
As part of designing our remuneration strategy and framework for FY22 and beyond, we have engaged with key stakeholders
and external independent advisors to better understand not only the structure that will attract, retain and motivate the high
calibre executive leaders and team members needed to execute on our strategy to significantly increase our market share
(particularly in our fibre-to-the-premise core business), profitability, cash generation and sustainable shareholder returns, but
also take into account market norms and expectations, as well as other non-financial elements which are important to our
sustainable growth into the future.
We remain committed to our core remuneration philosophy which is based upon the following principles:
alignment with Uniti’s overall strategy for long term value creation;
alignment of executives and directors with shareholders;
ensuring that Uniti can attract, motivate and retain the leadership team needed to successfully execute the overall strategy;
simple to understand and based on measurable objectives, with reward demonstrably linked to performance (pay for
performance principle); and
supports robust performance management.
We have included in our report details of the FY22 remuneration structure to provide shareholders with insight into the way
in which our remuneration structure is evolving, following the transformation of the Company that has been delivered by
the Board and executive leadership team over the past two years. Our intention is to create and maintain a reward structure
that will incentivise and motivate the executive team to continue to deliver superior returns for our shareholders, through a
mechanism that enables them to participate in that wealth creation.
I trust that with the above relevant history and context that clearly illustrates your Company has been transformed over
its short ASX history, to the benefit of all shareholders, and that our evolution to an appropriate remuneration framework
will continue to receive your support, whilst your Board and executive leadership team remain committed to delivering
outstanding shareholder returns into the future.
John Lindsay
Chair, Nomination & Remuneration Committee
Introductory Letter from John Lindsay, Chair of the Nomination & Remuneration Committee
UNITI GROUP LIMITED ANNUAL REPORT 2021
35
The remuneration report details the Key Management Personnel “KMP” remuneration arrangements for the consolidated
entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
The Remuneration Report is designed to provide shareholders with an understanding of the principles guiding Uniti’s
remuneration framework for directors and executives, the main basis of which is its alignment with shareholders’ interests,
as well as ensuring that reward is linked to company performance appropriately. Individual outcomes for Uniti’s KMP are also
outlined in this report.
KMP are those persons having authority and responsibility for planning, directing and controlling the activities of the Group,
directly or indirectly, including all directors.
In the FY21 year, the following people were assessed to be KMP:
Directors
Graeme Barclay
Non-executive Chairman
Kathryn Gramp
Non-executive Director (Chair, Audit & Risk Committee)
John Lindsay
Non-executive Director (Chair, Nomination & Remuneration Committee)
Vaughan Bowen
Executive Director
Michael Simmons
Managing Director & Chief Executive
Executives
Darryl Inns
Chief Financial Officer
Ashe-lee Jegathesan
Chief Corporate Services Officer & Company Secretary
Changes since the end of the reporting period: Nil
1. Remuneration Framework and Principles
Uniti’s remuneration framework has been designed to support Uniti’s ability to attract, motivate and retain high calibre
executives, in a manner which is consistent with Uniti’s organisational strategy and key value drivers, encourages an ownership
mindset among KMP and aligns remuneration outcomes with the achievement of strategic objectives and, most importantly,
the creation of sustainable value for shareholders. This has translated into a structure where strong alignment between
shareholders and executives is created and maintained, with a significant proportion of remuneration being equity based.
The remuneration framework has evolved over the short period that Uniti has been a listed company, and it is
acknowledged that further evolution of our remuneration framework is now required as outlined in our new FY22
remuneration structure set out below.
In designing our FY22 remuneration structure, and moving away from our current structure, we remain committed to
our core philosophy based upon the following principles:
alignment with Uniti’s overall strategy for long term value creation
alignment of executives and directors with shareholders
ensure that Uniti can attract, motivate and retain the leadership team needed to successfully execute the overall strategy
simple to understand and based on measurable objectives, with reward demonstrably linked to performance (pay
for performance principle)
supports robust performance management
Remuneration report (audited) continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
36
Remuneration report (audited) continued
2. FY21 Remuneration Structure
During FY21, our focus has been to ensure alignment of executive remuneration outcomes with shareholders and link
reward to Company performance. As such, the remuneration mix for executives employs a lower fixed pay base, with a
higher variable performance-based opportunity (potentially including an accelerator or multiplier component), a significant
proportion of which is share-based and vested progressively over a number of years.
Our FY21 incentive structure did not include a proportion linked to traditional long-term performance measures, partly for
the reasons outlined above, and partly to ensure that executives were rewarded during FY21 for the significant effort and
achievement in successfully executing the acquisitions of OptiComm (which was on foot at the start of the FY21 year and at
the date of our FY20 annual report) and the Velocity network assets in particular. Further, the Board implemented measures
to ensure that the performance of the acquired businesses was better than the acquisition case expectations in assessing
the appropriate reward outcomes for executives.
The Board has sought to also alleviate any concerns that the FY21 incentive structure does not include long term
performance measures through 25% only of the incentive being in the form of cash, 25% of the incentive being in the form
of non-deferred rights, 50% of the incentive being in the form of deferred rights, and 100% of the accelerator for out-
performance above targets also being in the form of deferred rights.
Our FY22 remuneration structure implements a long-term incentive component and target measures, as set out later in this
report.
2.1 Fixed Pay
Fixed Pay comprises cash salary and superannuation contributions, delivered in accordance with terms and conditions
of employment.
Fixed Pay is set based on skills, capabilities, experience and performance and is positioned below market median
levels for equivalent positions, noting a skew towards "pay for performance" outcomes. Fixed Pay is reviewed annually,
however increases are normally only made on role changes, promotion, or major market movements.
2.2 Remuneration Mix
The remuneration mix at maximum opportunity for FY21, comprising Fixed Pay and Variable Remuneration (a Senior
Executive Incentive Plan (SEIP) consisting of a Non-Deferred Incentive payable in a combination of cash and equity which
is not subject to further deferral or restrictions (NDI), and a Deferred Equity Incentive (DEI) which includes an accelerator
opportunity), is weighted towards variable remuneration, consistent with the pay for performance principle, as set out below.
Target
Stretch
Target
Maximum
Maximum DEI
Performance based
Target DEI
Target NDI
Fixed Pay
Deferred Equity
40%
Deferred Equity
20%
Cash
10%
Equity
10%
33% at Target
20% at Maximum
Executive Director:
Target
Stretch
Target
Maximum
Maximum DEI
Performance based
Target DEI
Target NDI
Fixed Pay
Deferred Equity
32%
Deferred Equity
16%
Cash
8%
Equity
8%
53% at Target
36% at Maximum
Managing Director & Chief Executive:
UNITI GROUP LIMITED ANNUAL REPORT 2021
37
Target
Stretch
Target
Maximum
Maximum DEI
Performance based
Target DEI
Target NDI
Fixed Pay
Deferred Equity
29%
Deferred Equity
14%
Cash
7%
Equity
7%
60% at Target
43% at Maximum
Other Executive KMP:
Note: The remuneration mix, at target opportunity rather than maximum opportunity for FY21, would be reduced by the “Maximum Deferred
Equity Component” in each of the above charts.
The timeline below reflects the period of time over which the FY21 maximum remuneration opportunity is delivered
to executives, aligned with pay for performance principles and longer-term shareholder value. This framework also
supports Uniti’s ability to retain its senior executives over time.
Fixed Pay
Base Salary & Super
Target NDI (50% of the target Variable opportunity
– 50% cash & 50% equity)
Cash & Equity or
Equity only
Target DEI (50% target Variable opportunity)
Vests in equal thirds across this period
Accelerator DEI (up to 100% of target Variable
opportunity) – from out-performance above
target, all of which is in the form of share rights, to
a maximum cap of 2x
Vest in equals thirds across this period
Year (FY)
2021
2022
2023
2024
The components of the FY21 SEIP are as follows:
Component
Weighting
Target Non-Deferred
Incentive (NDI) – Cash
25%
Participants may elect to receive cash or convert their cash entitlement to
shares at a 5% discount to the value of each share-based payment share with
these additional shares subject to a 12-month holding lock
Target Non-Deferred
Incentive (NDI) - Equity
25%
Approved payment to be divided by the 10-day VWAP after the date the
FY21 Annual Results are announced to market, with no vesting conditions or
divestment restrictions
Target Deferred Equity
Incentive (DEI) - subject
to time-based vesting
50%
Approved payment to be divided by the 10-day VWAP after the date the FY21
Annual Results are announced to market and subject to a time-based vesting
condition, and no further performance conditions, as follows:
1/3 to vest 12 months following allocation
1/3 to vest 24 months following allocation
1/3 to vest 36 months following allocation
Accelerator - Deferred
Equity Incentive (DEI) -
subject to time-based
vesting
0-100%
Where actual performance exceeds the targets, an accelerator will apply subject
to an overall cap of two times the aggregate target variable opportunity.
All accelerator awards will be in the form of deferred share rights on the same
terms as the DEI
Note: Equity based remuneration will be delivered through the grant of share rights. For the two executive directors, the grant of share rights
to them will be subject to shareholder approval at the next AGM.
Remuneration report (audited) continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
38
Remuneration report (audited) continued
2.3 Remuneration Outcomes and Link to Performance
Executive remuneration is directly linked to Uniti’s financial performance and aligned with shareholder returns over
the long term. A summary of the key metrics relating to Uniti’s earnings and shareholder wealth, or Total Shareholder
Returns (TSR) are set out below (for the period since Uniti’s listing in February 2019):
Financial Performance metrics for FY21 and the previous financial years
FY21
FY20
FY19
$’000
Statutory
Underlying
Statutory
Underlying
Statutory
Underlying
Revenue
160,475
159,854
58,216
58,216
14,336
14,336
Revenue growth
176%
175%
306%
306%
n/a
n/a
EBITDA
73,610
93,737
16,055
26,530
(5,499)
(884)
EBITDA growth
358%
254%
n/m
n/m
n/a
n/a
EBIT
52,192
84,287
9,202
22,263
(12,659)
(6,098)
Profit after tax
29,195
53,432
15,921
15,168
(13,531)
(6,970)
Free Cash Flow (FCF)
64,200
64,200
13,401
13,401
(1,696)
(1,696)
FCF growth
371%
371%
n/m
n/m
n/a
n/a
Financial Performance metrics for FY21 and the previous financial years
Measure
FY21
FY20
FY19
Underlying Earnings per share (Basic, in cents)
8.80
5.54
(5.98)
Underlying Earnings per share (Diluted, in cents)
8.39
5.24
(5.98)
Statutory Earnings per share (Basic, in cents)
4.81
5.81
(11.61)
Statutory Earnings per share (Diluted, in cents)
4.59
5.50
(11.61)
Share price at 30 June
3.31
1.42
1.70
Total Shareholder Return (Annualised)
133%
(16%)
186%
2.4 FY21 KMP remuneration outcomes
The variable remuneration outcomes for executives are determined by the Nomination & Remuneration Committee,
assessed against the performance targets set for the FY21 year, and taking into account any other factors not
included in the targets that the Committee considers to be relevant, including for example compliance with Uniti’s
policies and all regulatory requirements, the performance of businesses acquired during the year and progress with
integration of businesses acquired during the year.
During FY21, the Company undertook and completed the acquisitions of OptiComm Limited (OptiComm),
HarbourISP Pty Ltd (HarbourISP) and the Telstra Velocity network assets (Velocity assets), and the integration of
these businesses has been progressed at or ahead of schedule and in accordance with expected synergy targets.
The executive team’s very significant contribution to these value creating acquisitions has been reflected in the
variable remuneration outcomes for FY21.
UNITI GROUP LIMITED ANNUAL REPORT 2021
39
The performance measures for FY21 that contributed to executive’s variable remuneration outcomes were:
Weighting
Description
Target
Actual
Achieved as a %
of Target
Within or Above
Target/Stretch
50%
Underlying Group EBITDA
$43,974,000
$93,737,000
212%
Above Stretch
20%
Free Cash Flow (FCF)
$27,899,000
$64,200,000
226%
Above Stretch
20%
EBITDA(u) per
Share (EBITDAPS)
7.3cps
14.7cps
201%
Above Stretch
10%
Individual KPIs which related to non-financial metrics relating to the integration of
acquired businesses to achieve expected acquisition business cases from a network,
systems, processes and people (team) perspective, and to ensure strong risk,
compliance and safety management practices across the Group.
Within or above
Target
No payments would have been made if the threshold of 90% of the Underlying Group EBITDA Target had not been
satisfied. This threshold was not only met, but exceeded by >100% in each metric.
In relation to Individual KPI’s, integration progressed at or ahead of schedule and successfully with expected
synergies achieved. The Company’s strong safety record continued, with training and processes being rolled out
across all teams. Significant improvement in embedding a consistent risk and compliance framework across the
Group also occurred throughout the year, as the Company’s risk management processes matured.
The Board also compared the earnings and free cash flow contributions from acquired businesses to what was
expected in the respective acquisition cases, to confirm that the aggregate earnings and free cash flow generated
from existing businesses, acquired businesses and combination synergies significantly exceeded expectations in the
acquisition cases to ensure that the structure of the incentive targets only rewards executives when value accretive
acquisitions have been undertaken. The below table sets out the aggregated out-performance from existing and
acquired businesses.
Metric
Actual Achieved in FY21
% Above Target
Comments
FY21 budgeted EBITDA(u) plus
acquisition case EBITDA (u)
$93,737,000
114%
Reflects organic growth
and execution of synergies
exceeding targets
FY21 budgeted FCF plus
acquisition case FCF
$66,151,000
109%
Reflects efficient and profitable
deployment of growth capital
FY21 Budgeted secured on-net
premises plus acquisition case
secured on-net premises
98,800
210%
Winning new business in
market contributes to future
growth over the long term
Remuneration report (audited) continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
40
Based on the stretch performance targets set by the Board having been exceeded, including that the actual financial
performance of acquired businesses was also significantly above acquisition case assumptions, the Board determined
to award the maximum potential variable remuneration to executives as out below. The Executive Directors elected
to take the 25% cash component of the SEIP in equity (subject to a holding lock of 12 months applying to that
component) and therefore did not receive any cash payment from their FY21 performance based pay:
2021
Target Variable
Rem (as % of
Fixed Pay)
Maximum
Variable Rem
(as % of Fixed
Pay)
Variable Rem
awarded (as %
of Maximum
Opportunity)
Variable Rem
awarded in
total for FY21
Variable Rem
paid in cash1
Variable Rem
paid in Equity
(unrestricted)2
Variable
Rem paid
in Deferred
Equity3
%
%
%
$
$
$
$
Executive Directors:
Michael Simmons
89
178
100
800,000
-
200,000
600,000
Vaughan Bowen
175
350
100
700,000
-
175,000
525,000
Other Executive KMP:
Darryl Inns
67
133
100
400,000
50,000
50,000
300,000
Ashe-lee Jegathesan
67
133
100
400,000
50,000
50,000
300,000
1 The portion of variable remuneration awarded for FY21 which is paid as cash.
2 The portion of variable remuneration awarded for FY21 which is paid as equity including, for the Executive Directors, where the cash component
was deferred to equity. The number of shares to be issued will be based on the 10-day VWAP following the release of FY21 Annual Results.
3 The portion of variable remuneration awarded for FY21 which is to be paid in deferred equity, which will vest over the following 3-year period.
The number of shares to be issued will be based on the 10-day VWAP following the release FY21 Annual Results.
2.5 FY20 Deferred Equity Outcome
One third of the DEI component of FY20 awarded variable remuneration vested on 30 June 2021. Each of the FY20
DEI awards to the Chairman, Executive Director and MD & CEO were approved by shareholders at the 2020 AGM.
The table below provides the award value at the time of grant of the equity to KMP as well as the cash value to each
KMP of the vested equity based on the 30 June 2021 share price.
FY20 DEI (Tranche1) value upon award1
DEI (Tranche 1) value
Number of
shares
Value per
share
Vested on
30 June 2021
Value per share
on vesting date
$
%
$
Graeme Barclay
67,567
1.48
100
3.31
Michael Simmons
135,135
1.48
100
3.31
Vaughan Bowen
101,351
1.48
100
3.31
Darryl Inns
67,567
1.48
100
3.31
Ashe-lee Jegathesan
67,567
1.48
100
3.31
1 Share Rights were granted based on a value of $1.48, being the 10-day VWAP following the release of FY20 Annual Results
Remuneration report (audited) continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
41
2.6 Additional Options issued in FY21
At the 2020 AGM shareholders approved the grant of additional options to Directors under the Company’s Employee
Share Option Plan. The rationale for these grants was outlined in detail in the Explanatory Notes sent to shareholders
in support of these approvals. Details of the options issued to Directors during FY21 are set out in a later section of
this report.
2.7 Realised Remuneration for KMP
The table below outlines the actual remuneration that was received by Executive KMP in relation to FY21 which
includes Fixed Pay and the non-deferred portion of Variable Remuneration. The table also includes the value of
deferred equity awards from FY20 which vested during FY21.
The amounts disclosed below are not the same as the remuneration expensed in relation to each Executive KMP in
accordance with statutory rules and applicable Accounting Standards. Instead, the amounts shown below reflect the
actual benefits received by KMP.
The Directors consider that the realised remuneration information is more relevant to shareholders than the statutory
information for the following reasons:
the statutory remuneration expense is based on historic cost and does not reflect the value of the equity
instruments when they are actually received by the KMP
the statutory remuneration shows benefits before they are actually received by the KMP
where equity incentives do not vest because one of the performance conditions is not satisfied, the company
may still be required to recognise the full amount of expenses even though the KMP will never receive any
benefits
Fixed Pay1
Variable Rem
awarded
and received
as cash2
Variable Rem
awarded and
received as non-
deferred equity2
Previous year’s
Deferred Equity
which was
realised3
Total
remuneration
(received
and/or realised)
Executive Directors:
Michael Simmons
2021
456,662
-
200,000
447,297
1,103,959
2020
307,642
-
200,000
-
507,642
Vaughan Bowen
2021
204,641
-
175 ,000
335,472
715,113
2020
199,460
-
150,000
-
399,460
Other Executive KMP:
Darryl Inns
2021
306,056
50,000
50,000
223,647
629,703
2020
251,010
50,000
50,000
-
351,010
Ashe-lee Jegathesan
2021
306,056
50,000
50,000
223,647
629,703
2020
183,427
50,000
50,000
-
283,427
1 Fixed Pay includes cash salary, superannuation and packaged benefits (and associated taxes).
2 FY21 variable remuneration awards are shown in the section above.
3 This represents the value of prior years’ deferred equity remuneration which vested during FY21 using the 30 June 2021 closing share price of $3.31.
Remuneration report (audited) continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
42
3. FY22 Remuneration Structure
With the significant growth in scale and value, including the recent admission of Uniti Group to the S&P/ASX200 Index
in June 2021, the Board considered that it was appropriate to redesign the executive remuneration framework, to
support the continuing growth and evolution of the Company, retaining the core philosophy and principles outlined
above. The new STI incentive structure is focused on those aspects of the Company’s performance within the control
of the executive team and that will impact the value of the Company: earnings, free cash, activation rate and growth
in the secured on-net order book. The LTI incentive structure is focused on long term performance being delivered to
shareholders measured with reference to a TSR metric and to the growth in underlying EPS over a 3 year period, and is
designed to motivate superior performance and retention of the executive team.
The revised framework will apply from 1 July 2021.
3.1 Fixed Pay
No change in approach to fixed pay is proposed in FY22 from that set out in section 2.1.
3.2 Short Term Incentives
Feature
Description
Purpose:
The purpose of the STI plan is to reward the achievement of annual targets, and exceeding them, as
well as alignment to the delivery of sustainable stakeholder outcomes.
Value:
% of Fixed Pay
At-Target Performance
At Maximum (Stretch)
MD&CEO
Not more than 50%
Not more than 100%
Executive Director
Not more than 50%
Not more than 100%
Other KMP
Not more than 33%
Not more than 66%
Individual STI awards are dependent on achievement of, and contribution of individual executives
to, Board approved Key Performance Indicators (KPIs) for the Company that are aligned to overall
business strategy and key priorities. These awards are subject to annual review, and in the case of
executive directors also to shareholder approval of performance rights. The KPI’s for the STI
incentive plan for FY22 are shown below.
Performance Measure (KPI)
Reason for choosing
this measure
Financial Performance
Outcomes (40%)
Financial performance
(underlying EBITDA)
Key measure of progress
on effective execution of
growth strategy
Financial Performance
Outcomes (25%)
Free Cash Flow (Net
operating cash flow before
interest, dividends and tax
less all capital expenditure)
A key cash flow generation
metric that encourages
operational and capital
expenditure efficiency
Sales Performance (20%)
Growth in secured on-net
FTTP premises
Reflects long term growth
and sustainability of
business model
Customer and network
performance (15%)
Growth in active FTTP
on net premises
Reflects improving asset
utilisation, customer
retention and operational
performance
Gateway:
No STI will be paid if the EBITDA gateway target is not achieved. The FY22 gateway is set at 95% of
budget, which is a threshold that is higher than the June FY21 exit run rate for EBITDA(u) of $133.4 million.
The FY22 budgeted EBITDA target is not disclosed at this time as that would constitute market guidance.
However it will be disclosed at the end of the performance period in next year’s remuneration report.
Remuneration report (audited) continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
43
Feature
Description
Performance
Assessment:
The Board takes a robust approach to determining executive remuneration outcomes, using judgement
and oversight to consider a range of internal and external factors. This judgement and oversight is
exercised in the context of the overall philosophy that fixed base remuneration levels are set below
median market remuneration for comparable ASX listed companies with a market capitalisation
within a range comparable to the Company. There is an opportunity provided to executives to receive
additional reward/remuneration where performance meets and exceeds targets, with the STI and LTI
incentive schemes heavily weighted towards equity-based rewards, particularly for KMP and other
executive leaders.
Individual awards are proposed by the Managing Director & CEO, considered and endorsed by the
Remuneration and Nomination Committee and approved by the Board. For the Managing Director &
CEO the Remuneration and Nomination Committee recommends the STI award for Board approval.
The remuneration framework has safeguards that give the Board discretion over reward outcomes
for executives if Company or individual performance is significantly below expectations. In particular
the Board may reduce or decline to make an STI award (or an LTI award) and can apply malus to
unvested equity if a participant is found to have engaged in fraud, dishonesty, misrepresentation,
gross misconduct, poor risk practices, poor regulatory compliance or reputational matters or any
other matters, including individual contribution below expectations, the Board determines in its sole
discretion are relevant.
Delivery of
Awards:
To maintain alignment of the STI scheme with shareholders and to support the objective of retaining
a motivated and engaged executive team, the STI award will be delivered in the following way:
50% as Share Rights (at the 10-day VWAP following the announcement of the FY22 annual results)
with no additional vesting conditions.
50% in cash, with each executive having the option to elect to take this component as Share
Rights at a 5% discount to the 10-day VWAP following the announcement of the FY22 annual
results, with these Share Rights with no additional vesting conditions, but subject to a 12 month
holding lock.
The Board has the discretion to increase the percentage of the STI that is delivered to the executive
in the form of Share Rights, should it form the view that further alignment with shareholders is
warranted.
Voting and
Dividend
rights:
STI awards/rights are not entitled to participate in any dividend or capital return voting.
Leaver
Provisions:
On termination for cause or due to poor performance or departure for any reason considered by the
Board to be as a bad leaver: all awards are forfeited.
In the circumstances of death, disability, retirement, redundancy, mutually agreed separation, or
voluntary termination (as a good leaver, in circumstances to be determined by the Board) the Board
has discretion and intends to retain STI awards on foot on a pro-rata basis based on time served,
and determined at the same time on same basis as if the executive had not left Uniti’s employ.
Remuneration report (audited) continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
44
3.3 Long Term Incentives
Feature
Description
Purpose
Uniti has developed a long-term incentive plan structure to be implemented for the FY22 year, and
thereafter. The objective of this LTI plan is to align executive reward outcomes with long term sustainable
shareholder returns and to build further accountability and ownership in the Uniti business.
Instrument
LTI awards are made in the form of performance rights to acquire Uniti shares. A performance right
is a right to acquire, at no cost to the executive, one fully paid ordinary share in Uniti subject to
certain performance and service conditions being satisfied.
Value
The maximum LTI opportunity for awards made for FY22 are set using the following percentages:
% of Fixed Pay
At-Target Performance
At Maximum (Stretch)
MD&CEO
Not more than 50%
Not more than 100%
Executive Director
Not more than 50%
Not more than 100%
Other KMP Executives
Not more than 33%
Not more than 66%
The number of rights to be issued = maximum LTI amount divided by the Right Value.
The Right Value is the VWAP of Uniti Shares over the 30 day trading period preceding 30 June 2021.
The maximum LTI award recognises that the stretch level of rights will vest when stretch performance
is achieved. This stretch/maximum is designed to replace the 2x accelerator provision in the FY20 and
FY21 SEIP.
For the MD & CEO and Executive Director, specific details of the number of performance rights to be
granted, and the percentage of fixed pay, will be set out in the notice of meeting for the FY21 AGM for
approval by shareholders.
Performance
Period
The LTI rights measurement period for FY22 is a 3-year period beginning on 1 July 2021 and ending on
30 June 2024. The 30-day trading VWAP will be used to determine the starting share price and final share
price on the relevant dates for determining the TSR achieved.
Performance
Conditions
Vesting is subject to two equally weighted performance conditions (i.e. 50% each) measured over the
performance period.
Performance Measure
Description
Reason for choosing this
measure
Underlying Earnings
per share growth (EPS
Growth)
Underlying EPS growth measured as
the compound average annual growth
rate per share (on a fully diluted basis) ,
calculated as underlying NPAT adjusted for
acquisition and restructuring costs, share
based payment expense, amortisation of
acquired customer contracts and using a
notional 30% tax rate.
This measure underpins value
accretion over the long term
Total Shareholder Return
(TSR)
TSR measures the growth in the price
of shares plus cash dividends notionally
reinvested in Uniti shares.
In order for the TSR grant to vest, Uniti’s
TSR must be greater than the growth
in the applicable TSR hurdle. The TSR
hurdle is relative performance against the
ASX200 Accumulation Index (excluding
resources).
Aligns to our strategic objective
to deliver sustainable earnings
growth and superior shareholder
returns.
Remuneration report (audited) continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
45
Feature
Description
Vesting
Conditions
The vesting schedule for FY22 awards is as follows:
TSR
EPS Growth
TSR of Uniti compared
to Benchmark
Proportion of TSR
grant vesting
CAGR of EPS
Proportion of EPS
Growth vesting
< 50th percentile
0%
<15%
0%
50th percentile
50%
15%
50%
50-75th percentile
Pro rata 50-100%
15-25%
Pro rata 50-100%
>75th percentile
100%
>25%
100%
Vesting Date
30 June 2024 for all eligible performance rights to vest. Performance rights that meet the
performance conditions at the end of the performance period become fully vested on this
date, subject to service conditions and clawback provisions.
Leaver
Provisions:
Reason for Termination
Treatment of unvested rights
Death, disability, retirement, redundancy or
mutually agreed separation or other "good
leaver" circumstances (i.e. other than a
"bad leaver").
At the discretion of the Board, a pro-rata number of
rights may be retained with vesting to be determined
in accordance with the original performance
conditions and clawback provisions.
In all "bad leaver circumstances" (such
as termination for cause).
Treatment of unvested LTI rights will lapse and be
forfeited.
Exercise
of vested
Rights:
No amount is payable by participants to exercise vested rights. The Board will determine, at the time
of exercise by the participant, whether new shares will be issued or on-market purchases of shares
will be undertaken.
Expiry:
Each right must be converted to an ordinary share within 5 years of the grant date, subject to service
and performance conditions.
Minimum
holding
period and
trading
restrictions:
No additional trading restrictions or holding period obligations beyond the vesting date.
Board
Discretion:
The Board retains discretion to modify vesting outcomes. Rights that do not vest will lapse. Board
discretion to vary vesting will generally only be applied when the vesting outcome that would otherwise
apply is considered by the Board to be inappropriate and not aligned with shareholders’ interests.
Change of
control:
In circumstances of a change in control of the Company, the Board has the discretion to determine
the level of accelerated vesting having regard to the elapsed portion of the performance period,
performance to date against performance conditions and any other factors it considers to be
appropriate, including the valuation at which the change in control is to be transacted.
Malus/
Clawback
provisions:
The Board has the ability to reduce unvested or clawback vested awards under the LTI plan where
the participant has acted fraudulently or dishonestly or is in material breach of their obligations
to the Company, or where the Board becomes aware of material misstatements or omissions in
any financial statements of the Company, or any circumstance that the board determines to have
resulted in an unfair or disproportionate benefit to the participant.
Remuneration report (audited) continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
46
4. Executive Service Agreements
All Executive team members have service agreements determining Fixed Pay comprising cash salary and
superannuation and performance based variable rewards. They have no fixed employment terms. The termination
notice period is three months by either party (and Executives are entitled to a three month Fixed Pay termination
payment if terminated by the Company for convenience). All agreements include non-solicitation and non-compete
restrictions and agreements provide for dismissal due to gross misconduct with no entitlement to termination
payments in this event. Statutory leave entitlements apply in each agreement.
5. Non-executive Director Remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Uniti’s Non-
executive Director remuneration policy seeks to appropriately recognise the contribution, time and expertise of each
director.
Non-executive directors’ fees and payments are reviewed annually by the Nomination and Remuneration Committee,
the total of which falls within the annual aggregate remuneration pool approved by shareholders. The current maximum
annual aggregate remuneration of $850,000 was approved by shareholders at the Annual General Meeting held on 19
November 2020.
The Nomination and Remuneration Committee may, from time to time, receive advice from independent remuneration
consultants to ensure non-executive directors’ fees and payments are appropriate and in line with the market.
The Chairman’s fees are determined independently to the fees of other non-executive directors and are based on
comparative roles in the market. The Chairman is excluded from any discussions relating to the determination of his own
remuneration.
As noted in the Committee Chairman’s letter to shareholders, in order to attract the calibre of independent non-
executive directors needed to oversee the ASX listing of a small, loss-making entity and the subsequent turnaround
and strategy for inorganic growth and given the Company’s then financial position and ability to pay, remuneration
for Non-executive Directors was structured as a mix of cash (below market) and equity (in the form of options issued
under the Uniti Group Employee Share Option Plan). This remuneration structure reflected the Company’s then
constraints, opportunities and risk profile. The framework involved the allocation of share options which provided the
recognition and incentive to guide and oversee the rapid turnaround and transformation of Uniti and was considered
to be directly aligned to shareholder interests over the longer term. It also reflected the significant commitment of
time and resources by non-executive directors, which far exceeded the level which would typically be expected of a
similar position.
Additionally, in recognition of the significant additional contribution and work which would be required by the
Chairman to drive the desired growth of the Company, the Chairman was invited to participate in the Senior Executive
Incentive Plan (SEIP) which was established to incentivise the executive management team to achieve extraordinary
growth for shareholders. This was specifically to recognise the Chairman’s contribution to a number of accretive
acquisitions and associated capital raisings completed during the FY20 year, and the Chairman’s participation in this
SEIP for FY20 was approved by shareholders at the AGM in November 2020. Whilst the Chairman was also intensively
involved in the OptiComm, HarbourISP and Velocity network assets acquisitions and associated capital raisings
completed during FY21, in order to address independence concerns this participation has caused, he has agreed to
waive eligibility to participate in the FY21 SEIP and for all subsequent years.
Non-executive directors all hold a significant number of shares in the Company and, as noted above, also hold a
significant number of options over ordinary shares. All options that have been awarded to non-executive directors,
including recent additional grants to offset the dilutionary impact of entitlement and other equity issues to fund the
Company’s acquisition strategy, has at all times been subject to, and only following receipt of, the approval of the
Company’s shareholders.
Remuneration report (audited) continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
47
The Board recognises that with the evolution of Uniti to its current status as an S&P/ASX200 index company, Uniti
should transition its non-executive director remuneration structure to reflect the expectations of an ASX200 entity,
whilst also recognising and balancing the existing legacy arrangements and the reasons for their existence.
Therefore, a review was undertaken with effect from April 2021 and included an analysis of remuneration for Non-
executive Directors of comparably scaled companies. The total fee pool remains significantly below the median across
both the ASX200 and ASX300 indices, and consistent with the Executive Remuneration framework, the non-executive
director annual fees have been set at below the median across both those indices at both Chairman and Director level1.
The Non-executive Director Fee structure for FY22 has been set at the following level, compared to cash fees
actually paid in FY21:
FY22
FY212
Non-executive Chairman (all-inclusive)
$200,000
$132,125
Non-executive Directors
$100,000
$84,987
Chair of Committee
$ 10,000
Nil
(2) Cash fees actually paid in FY21, which includes one calendar quarter of FY22 fee base
No additional fees are payable in respect of individual Committee memberships. Superannuation is included in the
above amounts.
6. Remuneration Governance
The Nomination and Remuneration Committee is responsible for determining and reviewing remuneration
arrangements for all Directors and Executives.
An agreed set of protocols was put in place to ensure that the remuneration recommendations would be free from
undue influence from key executive personnel.
These protocols include Management (including both executive directors) not being members of the Nomination
and Remuneration Committee. Management regularly reports to the Committee on issues that may impact their
decisions and attend meetings by invitation, but do not participate in decisions regarding their own remuneration
arrangements.
6.1 Use of remuneration advisors
Under the provisions of the Committee’s Charter, the Committee may engage the assistance and advice from
external remuneration advisors. To ensure that any recommendations made by remuneration consultants are
provided without undue influence being exerted by Executives, external remuneration consultants are engaged by
and deliver their advice directly to members of the Committee.
Ernst & Young (“EY”) provided market practice, commentary and insights on short and long-term incentive plans to
support Uniti’s review of the remuneration frameworks to be implemented for the FY22 year.
The Committee is satisfied that no remuneration recommendations (as defined in the Corporations Act 2001) were
provided by EY or any other external remuneration advisor during FY21.
(1) AON and Governance Institute of Australia 2021 Board and Executive Remuneration survey
Remuneration report (audited) continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
48
Remuneration report (audited) continued
6.2 Engagement with shareholders and proxy advisors
This year, members of the Board have proactively engaged with many of the Company’s largest shareholders many
times during the year. Meetings with proxy advisors have also occurred on a number of occasions to try to ensure
they have a good understanding of the Company’s history, remuneration structure and decisions.
The Company views these meetings as an opportunity to receive valuable feedback on issues of importance to its
shareholders, in particular in relation to the structure and scale of remuneration to its Board and Executive team.
As a reference point, a the last AGM, 94.5% of the shareholders who voted, in person or by proxy, voted to adopt the
Company’s remuneration report for the year ended 30 June 2020.
6.3 Share Trading Policy
Uniti has a Share Trading Policy which aims to ensure that all employees understand their obligations in relation to
insider trading, describes restrictions on buying and selling Uniti shares by the employees and when approvals need to
be sought. Under the Share Trading Policy, Uniti prohibits employees from entering into arrangements which have the
effect of limiting the economic risk related to an unvested share, option or other security granted or awarded under a
Uniti employee incentive scheme, including those still subject to disposal restrictions.
All directors and employees are also restricted from entering into margin loans in respect to Uniti’s securities, unless they
have received prior written approval from the Chairman. No margin loans were entered into by KMP during FY21 and
none are currently on foot.
The Share Trading Policy can be found on the Corporate Governance page in the Investors section of the Company’s
website at www.unitigrouplimited.com/governance/policies
6.4 Minimum shareholding requirements
Uniti has implemented Minimum Shareholding Guidelines (‘Guidelines) which apply to all Directors, to promote the
alignment of interests of those Directors with the interests of shareholders. Executive Directors are also required to
hold a minimum shareholding consistent with the Guidelines. In FY21, all Directors met their minimum shareholding
requirements as outlined below.
Under the Guidelines, non-executive Directors are required to hold Uniti shares equivalent to one year of their
annual base director fee under the Policy, and executive directors are required to hold Uniti shares equivalent to
their annual fixed remuneration under the Policy. Newly appointed Directors are permitted to reach the minimum
shareholding requirement over a three-year.
7. Statutory Remuneration Disclosures
7.1 Accounting based remuneration and benefits
The table below has been prepared in accordance with the requirements of the Corporations Act 2001 and relevant
Australian Accounting Standards. The figures provided under the share-based payments columns are based on
accounting values and do not reflect actual cash amounts received by KMP in FY21. Share-based payments to
Executive Directors are subject to shareholder approval at the 2021 AGM and have been recorded in the table below
for transparency and completeness.
UNITI GROUP LIMITED ANNUAL REPORT 2021
49
2021
Short Term
Benefits
Post
Employment
Benefit
Long-term
benefits
Non-
Monetary
Benefits
Cash Salary
& Fees
Cash STI
Share-
based STI
Super-
annuation
Annual &
Long
Service
Leave
Equity
Settled
Options
Equity Settled
Shares (Annual
Employee
Grant)
Share-based
payments2
Total
Performance
Based
$
$
$
$
$
$
$
$
$
$
Non-executive Directors:
Graeme Barclay
Chairman
120,662
–
–
11,463
–
649,749
–
275,000
1,056,874
87%
Kathy Gramp
77,614
–
–
7,373
–
254,947
–
–
339,934
75%
John Lindsay
77,614
–
–
7,373
–
254,947
–
–
339,934
75%
Executive Directors:
Vaughan Bowen
186,161
–(1)
200,000
18,480
8,588
1,025,557
–
275,000
1,713,786
88%
Michael
Simmons
427,810
– (1)
200,000
28,852
17,633
649,749
–
366,667
1,690,711
72%
Other Key
Management Personnel:
Darryl Inns
279,926
50,000
50,000
26,130
15,602
464,011
998
183,333
1,070,000
70%
Ashe-lee
Jegathesan
279,926
50,000
50,000
26,130
22,350
572,635
998
183,333
1,185,372
72%
Total
1,449,713
100,000
500,000
125,801
64,173
3,871,595
1,996
1,283,333
7,396,611
78%
(1) The executive directors have elected to receive their cash STI in the form of NDI Share Rights for FY21 (which remain subject to
shareholder approval at the next AGM)
(2) Share based payments all relate to deferred remuneration awarded for the FY20 year, and in the case of each director these share based
payments were approved at the FY20 AGM
2020
Short Term
Benefits
Post
Employment
Benefit
Long-term
benefits
Non-
Monetary
Benefits
Cash Salary
& Fees
Cash STI
Share-
based STI
Super-
annuation
Annual &
Long
Service
Leave
Equity
Settled
Options
Equity Settled
Shares (Annual
Employee
Grant)
Share-based
payments
Total
Performance
Based
$
$
$
$
$
$
$
$
$
$
Non-executive Directors:
Graeme Barclay
Chairman
100,000
–
–
9,500
–
422,085
–
–
531,585
79%
Kathy Gramp
70,000
–
–
6,650
–
160,660
–
–
237,310
68%
John Lindsay
70,000
–
–
6,650
–
160,660
-
–
237,310
68%
Executive Directors:
Vaughan Bowen
182,108
–
150,000
17,352
3,052
1,925,970
–
–
2,278,482
91%
Michael
Simmons
286,757
–
200,000
20,885
4,579
422,085
–
–
934,305
67%
Other Key
Management Personnel:
Darryl Inns
230,082
50,000
50,000
20,928
3,835
298,520
761
–
654,125
61%
Ashe-lee
Jegathesan
168,383
50,000
50,000
15,044
2,721
430,736
737
–
717,621
74%
Total
1,107,330
100,000
450,000
97,009
14,187
3,820,716
1,498
–
5,590,740
78%
Remuneration report (audited) continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
50
Cash bonuses and the associated short term share based payments are dependent on meeting defined performance
measures. The amount of the bonus is determined having regard to the satisfaction of performance measures and
weightings as described above in section 2.2. The maximum bonus value was established at the start of the financial
year and amounts payable were recommended by the MD & CEO and approved in August after the end of the
financial year by the Nomination and Remuneration Committee. For the MD & CEO, the FY21 maximum bonus award
was determined by the Remuneration Committee and approved by the Board (other than the MD & CEO).
7.2 KMP Equity Disclosures
Share-based compensation
Issue of shares
Details of shares issued to other key management personnel as part of compensation during the year ended 30 June
2021 are set out below:
NAME
DATE
SHARES
ISSUE PRICE
VALUE $
Darryl Inns
1 April 2021
460
$2.17
998
Ashe-lee Jegathesan
1 April 2021
460
$2.17
998
7.3 Share-based compensation disclosures
The terms and conditions of each grant of options and Share Rights, including options and Share Rights granted
during FY21, affecting remuneration in the current or a future reporting period are as follows:
Name
Number of
Options/Share
Rights Granted
Grant
Date
Vesting Date
Expiry Date
Exercise
price
Total Fair
Value at
Grant Date1
Graeme Barclay
Options
1,229,114
21-Dec-18
30-Jun-19
30-Jun-22
$0.25
$171,013
614,557
21-Dec-18
30-Jun-20
30-Jun-23
$0.30
$88,627
614,557
21-Dec-18
30-Jun-21
30-Jun-24
$0.38
$90,243
267,947
5-Nov-19
30-Jun-19
30-Jun-22
$1.35
$201,534
133,973
5-Nov-19
30-Jun-20
30-Jun-23
$1.35
$96,929
133,973
5-Nov-19
30-Jun-21
30-Jun-24
$1.35
$93,577
665,471
3-Dec-20
3-Dec-20
30-Jun-23
$1.48
$212,434
665,471
3-Dec-20
30-Jun-21
30-Jun-24
$1.48
$246,567
665,471
3-Dec-20
30-Jun-22
30-Jun-25
$1.48
$275,808
Share rights
67,567
3-Dec-20
1-Jul-21
1-Dec-25
Nil
$100,000
67,567
3-Dec-20
1-Jul-22
1-Dec-25
Nil
$100,000
67,568
3-Dec-20
1-Jul-23
1-Dec-25
Nil
$100,000
Remuneration report (audited) continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
51
Name
Number of
Options/Share
Rights Granted
Grant
Date
Vesting Date
Expiry Date
Exercise
price
Total Fair
Value at
Grant Date1
Kathy Gramp
Options
307,279
21-Dec-18
30-Jun-19
30-Jun-22
$0.25
$42,753
307,278
21-Dec-18
30-Jun-20
30-Jun-23
$0.30
$44,313
307,277
21-Dec-18
30-Jun-21
30-Jun-24
$0.38
$45,121
66,987
5-Nov-19
30-Jun-19
30-Jun-22
$1.35
$50,384
66,987
5-Nov-19
30-Jun-20
30-Jun-23
$1.35
$48,465
66,987
5-Nov-19
30-Jun-21
30-Jun-24
$1.35
$46,789
249,552
3-Dec-20
3-Dec-20
30-Jun-23
$1.48
$79,663
249,552
3-Dec-20
30-Jun-21
30-Jun-24
$1.48
$92,463
249,552
3-Dec-20
30-Jun-22
30-Jun-25
$1.48
$103,428
John Lindsay
Options
307,279
21-Dec-18
30-Jun-19
30-Jun-22
$0.25
$42,753
307,278
21-Dec-18
30-Jun-20
30-Jun-23
$0.30
$44,313
307,277
21-Dec-18
30-Jun-21
30-Jun-24
$0.38
$45,121
66,987
5-Nov-19
30-Jun-19
30-Jun-22
$1.35
$50,384
66,987
5-Nov-19
30-Jun-20
30-Jun-23
$1.35
$48,465
66,987
5-Nov-19
30-Jun-21
30-Jun-24
$1.35
$46,789
249,552
3-Dec-20
3-Dec-20
30-Jun-23
$1.48
$79,663
249,552
3-Dec-20
30-Jun-21
30-Jun-24
$1.48
$92,463
249,552
3-Dec-20
30-Jun-22
30-Jun-25
$1.48
$103,428
Vaughan Bowen
Options
819,410
6-Aug-19
31-Dec-19
31-Dec-22
$0.25
$864,821
819,410
6-Aug-19
30-Jun-20
30-Jun-23
$0.30
$849,995
819,408
6-Aug-19
30-Jun-21
30-Jun-24
$0.38
$840,994
178,632
5-Nov-19
31-Dec-19
31-Dec-22
$1.35
$143,789
178,632
5-Nov-19
30-Jun-20
30-Jun-23
$1.35
$152,047
178,632
5-Nov-19
30-Jun-21
30-Jun-24
$1.35
$166,361
665,471
3-Dec-20
3-Dec-20
30-Jun-23
$1.48
$212,434
665,471
3-Dec-20
30-Jun-21
30-Jun-24
$1.48
$246,567
665,471
3-Dec-20
30-Jun-22
30-Jun-25
$1.48
$275,808
Share Rights
128,354
3-Dec-20
3-Dec-20
1-Dec-25
Nil
$189,964
101,351
3-Dec-20
1-Jul-21
1-Dec-25
Nil
$150,000
101,351
3-Dec-20
1-Jul-22
1-Dec-25
Nil
$150,000
101,352
3-Dec-20
1-Jul-23
1-Dec-25
Nil
$150,000
Remuneration report (audited) continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
52
Name
Number of
Options/Share
Rights Granted
Grant
Date
Vesting Date
Expiry Date
Exercise
price
Total Fair
Value at
Grant Date1
Michael Simmons
Options
1,229,114
21-Dec-18
30-Jun-19
30-Jun-22
$0.25
$171,013
614,557
21-Dec-18
30-Jun-20
30-Jun-23
$0.30
$88,627
614,557
21-Dec-18
30-Jun-21
30-Jun-24
$0.38
$90,243
267,947
5-Nov-19
30-Jun-19
30-Jun-22
$1.35
$201,534
133,973
5-Nov-19
30-Jun-20
30-Jun-23
$1.35
$96,929
133,973
5-Nov-19
30-Jun-21
30-Jun-24
$1.35
$93,577
665,471
3-Dec-20
3-Dec-20
30-Jun-23
$1.48
$212,434
665,471
3-Dec-20
30-Jun-21
30-Jun-24
$1.48
$246,567
665,471
3-Dec-20
30-Jun-22
30-Jun-25
$1.48
$275,808
Share Rights
138,690
3-Dec-20
3-Dec-20
1-Dec-25
Nil
$205,261
135,135
3-Dec-20
1-Jul-21
1-Dec-25
Nil
$200,000
135,135
3-Dec-20
1-Jul-22
1-Dec-25
Nil
$200,000
135,135
3-Dec-20
1-Jul-23
1-Dec-25
Nil
$200,000
Darryl Inns
Options
330,000
12-Apr-19
31-Mar-20
31-Mar-23
$0.56
$89,832
330,000
12-Apr-19
31-Mar-21
31-Mar-24
$0.71
$91,365
590,000
12-Apr-19
31-Mar-22
31-Mar-25
$0.86
$168,411
71,940
5-Nov-19
31-Mar-20
31-Mar-23
$1.35
$59,610
71,940
5-Nov-19
31-Mar-21
31-Mar-24
$1.35
$65,664
128,620
5-Nov-19
31-Mar-22
31-Mar-25
$1.35
$126,326
338,390
3-Dec-20
3-Dec-20
30-Jun-23
$1.48
$108,022
338,390
3-Dec-20
30-Jun-21
30-Jun-24
$1.48
$125,379
338,390
3-Dec-20
30-Jun-22
30-Jun-25
$1.48
$140,247
Share Rights
33,715
3-Dec-20
3-Dec-20
1-Dec-25
Nil
$50,000
67,431
3-Dec-20
1-Jul-21
1-Dec-25
Nil
$100,000
67,431
3-Dec-20
1-Jul-22
1-Dec-25
Nil
$100,000
67,431
3-Dec-20
1-Jul-23
1-Dec-25
Nil
$100,000
Ashe-lee
Jegathesan
Options
330,000
10-Sep-19
10-Sep-20
10-Sep-23
$1.35
$244,425
330,000
10-Sep-19
10-Sep-21
10-Sep-24
$1.50
$258,700
590,000
10-Sep-19
10-Sep-22
10-Sep-25
$1.65
$485,923
277,824
3-Dec-20
3-Dec-20
30-Jun-23
$1.48
$88,688
277,824
3-Dec-20
30-Jun-21
30-Jun-24
$1.48
$102,938
277,824
3-Dec-20
30-Jun-22
30-Jun-25
$1.48
$115,145
Share Rights
33,715
3-Dec-20
3-Dec-20
1-Dec-25
Nil
$50,000
67,431
3-Dec-20
1-Jul-21
1-Dec-25
Nil
$100,000
67,431
3-Dec-20
1-Jul-22
1-Dec-25
Nil
$100,000
67,431
3-Dec-20
1-Jul-23
1-Dec-25
Nil
$100,000
(1) Fair value is independently determined using the Black-Scholes option pricing model that takes into account the exercise price, the term of the
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, together with non-vesting conditions that do not determine whether the consolidated
entity receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.
Remuneration report (audited) continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
53
Remuneration report (audited) continued
Share Rights have an exercise price of $Nil. Options and Share Rights carry no dividend or voting rights, nor do they
carry any rights to participate in any issues of shares of the Company or any other entity. All Options and Share
Rights were granted over unissued fully paid ordinary shares in the Company. When exercisable, each option or
share right is convertible into one ordinary share upon payment of the exercise price by the holder, provided that
the holder complies with the rules of the relevant Option Plan or Incentive Rights Plan. Share Rights may be
converted to one ordinary share following the vesting date provided the holder complies with the rules of Uniti
Group Executive Incentive Rights Plan.
Options and Share Rights not exercised expire at the earliest of (a) the expiry date applicable to the option or share
right; (b) 30 days after the employee ceases to be employed by Uniti Group or one of its subsidiaries, unless the
board determines otherwise; (c) where vesting conditions are not met at the relevant date; or (d) where there has
been a special circumstance, then within 90 days after that special circumstance has occurred or as specified by the
Board.
The Options and Share Rights granted to Directors as set out above were approved by shareholders at the 2020
AGM prior to the grant being made. The rationale for these grants were outlined in detail in the Explanatory Notes
sent to shareholders in respect of these approvals, as the basis for the approval being provided.
7.4 Shares provided on exercise of remuneration options and performance rights
During FY21, there were no ordinary shares in the Company issued as a result of the exercise of options by any KMP.
7.5 Additional Options issued subsequent to Year End
Pursuant to approval of relevant resolutions by shareholders at the Company’s EGM on 3 June 2021, additional
options were issued to Directors on 2 July 2021. The number of options issued to Directors was scaled back to
approximately 67% of the number that were approved, so that the total number of options issued to Directors
subsequent to the end of the year was 18,714,514. The rationale for the grant of these options, and the terms
attaching to their grant including performance conditions and extended vesting dates were set out in detail in the
Explanatory Memorandum attached to the Notice of Meeting for the 3 June 2021 EGM.
Details of the total number of options issued by the Company, and ordinary shares issued by the Company following
option exercise by KMP, subsequent to year end are set out in Company disclosures to the ASX and will be included
in the FY22 Remuneration Report.
UNITI GROUP LIMITED ANNUAL REPORT 2021
54
8. Additional disclosures relating to KMP
8.1 Shareholding
The numbers of shares in the Company held during the financial year by each current KMP including their personally
related parties, is set out below. There were no shares granted during the reporting period as compensation.
Balance at the
Start of the Year
Purchased
Under Option
Plan
Received
as Part of
Remuneration
Purchased on
Market (Inc
Participation In
Equity Raise)
Disposals/
Other
Balance at the
End of the Year
Ordinary shares
Graeme Barclay
4,630,496
-
5,666
-
4,636,162
Kathy Gramp
458,037
-
-
-
-
458,037
John Lindsay
466,052
-
-
-
466,052
Vaughan Bowen
10,678,505
-
16,998
-
10,695,503
Michael
Simmons
5,535,424
-
23,051
-
5,558,475
Darryl Inns
647,960
4601
63,842
(50,000)
662,262
Ashe-lee
Jegathesan
43,655
4601
25,986
-
70,101
Total
22,460,129
-
920
135,543
(50,000)
22,546,592
(1) These shares were granted to all employees to mark the anniversary of Uniti’s listing ($1,000 in value).
8.2 Option holding
The number of options over ordinary shares in the Company held during the financial year by each current director
and other KMP of the consolidated entity, including their personally related parties, is set out below:
Balance at the Start
of The Year
Granted in
FY 21
Exercised
during the Year
Expired/
Forfeited/Other
Balance at the
End of the Year
Ordinary shares
Graeme Barclay
2,994,121
1,996,413
–
–
4,990,534
Kathy Gramp
1,122,795
748,656
–
–
1,871,451
John Lindsay
1,122,795
748,656
–
–
1,871,451
Vaughan Bowen
2,994,124
1,996,413
–
–
4,990,537
Michael Simmons
2,994,121
1,996,413
–
–
4,990,534
Darryl Inns
1,192,500
1,015,169
–
–
2,207,669
Ashe-lee Jegathesan
1,250,000
833,472
2,083,472
Total
13,670,456
9,335,192
–
–
23,005,648
Remuneration report (audited) continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
55
8.3 Shares or options over shares in subsidiaries
KMP do not hold any shares or options over shares in any subsidiaries of Uniti.
8.4 Loans to KMP
There were no loans to KMP during FY2021 (FY2020: $nil).
8.5 Other transactions with KMP
Some of the Non-executive Directors hold directorships or positions in other companies or organisations. From time
to time, Uniti may provide or receive services from these companies or organisations on arm’s length terms. None
of the Non-executive Directors were, or are, involved in any procurement or Board decision-making regarding the
companies or organisations with which they have an association.
There were no other transactions of the kind contemplated in item 22 of Regulation 2M.3.03 of the Corporations
Regulations during FY21.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations
Act 2001.
On behalf of the directors:
Graeme Barclay
Chairman
24 August 2021
Remuneration report (audited) continued
UNITI GROUP LIMITED ANNUAL REPORT 2021
56
Auditor’s Independence Declaration
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
56
Deloitte Touche Tohmatsu
ABN 74 490 121 060
477 Collins Street
Melbourne, VIC, 3000
Australia
Phone: +61 3 9671 7000
www.deloitte.com.au
24 August 2021
Dear Board Members
Uniti Group Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of
independence to the directors of Uniti Group Limited.
As lead audit partner for the audit of the financial statements of Uniti Group Limited for the year ended 30 June 2021,
I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
(ii)
any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Chris Biermann
Partner
Chartered Accountants
The Board of Directors
Uniti Group Limited
Level 1, 44 Currie Street
Adelaide, SA, 5000
UNITI GROUP LIMITED ANNUAL REPORT 2021
57
Financial Report
for the year ended 30 June 2021
Contents
Statement of Profit or Loss and Other
Comprehensive Income
58
Statement of Financial Position
59
Statement of Changes in Equity
60
Statement of Cash Flows
62
Notes to the Financial Statements
63
Directors’ Declaration
116
Independent Auditor’s Report to the
Members of Uniti Group Limited
117
General Information
The financial statements cover Uniti Group Limited as a consolidated entity consisting of Uniti Group Limited and the
entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars,
which is Uniti Group Limited’s functional and presentation currency.
Uniti Group Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its
registered office and principal place of business are:
Registered office
Principal place of business
Level 1, 44 Currie Street
Level 1, 44 Currie Street
Adelaide SA 5000
Adelaide SA 5000
A description of the nature of the consolidated entity’s operations and its principal activities are included in the
directors’ report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 24 August 2021.
The directors have the power to amend and reissue the financial statements.
UNITI GROUP LIMITED ANNUAL REPORT 2021
58
CONSOLIDATED
NOTE
2021
$’000
2020
$’000
Revenue
4
160,475
58,216
Expenses
Network and hardware expense
5
(34,391)
(13,837)
Employee benefits expense
5
(28,997)
(17,398)
Depreciation and amortisation expense
5
(21,418)
(6,853)
Other expenses
5
(23,477)
(10,926)
Finance costs
5
(7,955)
(595)
Profit before income tax expense
44,237
8,607
Income tax (expense) / income
6
(15,042)
7,314
Profit after income tax expense for the year
29,195
15,921
Other comprehensive income for the year, net of tax
-
-
Total comprehensive income for the year
29,195
15,921
CENTS
CENTS
Basic earnings per share attributable to owners of Uniti Group
40
4.81
5.81
Diluted earnings per share attributable to owners of Uniti Group
40
4.59
5.50
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
Statement of Profit or Loss and Other
Comprehensive Income
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
59
Statement of Financial Position
as at 30 June 2021
CONSOLIDATED
NOTE
2021
$’000
2020
$’000
Assets
Current assets
Cash and cash equivalents
7
57,332
189,150
Trade and other receivables
8
15,389
5,981
Inventories
9
35
161
Deposits and prepayments
10
2,720
2,073
Current tax asset
6
1,429
-
Contract assets
11
961
1,008
Total current assets
77,866
198,373
Non-current assets
Right-of-use assets
12
3,837
3,044
Property, plant and equipment
13
234,008
46,507
Intangibles
14
889,931
206,027
Deferred tax assets
6
–
168
Total non-current assets
1,127,776
255,746
Total assets
1,205,642
454,119
Liabilities
Current liabilities
Trade and other payables
15
33,695
13,141
Contract liabilities
16
3,581
2,269
Employee benefits
17
2,598
1,076
Contingent consideration
18
2,799
4,439
Deferred consideration
19
6,561
–
Lease liabilities
1,554
1,357
Provisions
–
184
Provision for income tax
6
–
1,890
Total current liabilities
50,788
24,356
Non-current liabilities
Trade and other payables
15
1,411
1,411
Employee benefits
17
107
93
Contingent consideration
18
32,808
2,712
Deferred consideration
19
12,500
–
Borrowings
20
261,911
–
Lease liabilities
4,435
3,853
Provisions
414
–
Deferred tax liabilities
6
25,396
–
Total non-current liabilities
338,982
8,069
Total liabilities
389,770
32,425
Net assets
815,872
421,694
Equity
Issued capital
21
777,917
421,812
Reserves
22
14,943
6,065
Accumulated gains / (losses)
23
23,012
(6,183)
Total Equity
23
815,872
421,694
The above statement of financial position should be read in conjunction with the accompanying notes
UNITI GROUP LIMITED ANNUAL REPORT 2021
60
CONSOLIDATED
ISSUED
CAPITAL
$’000
RESERVES
$’000
ACCUMULATED
GAINS/
(LOSSES)
$’000
TOTAL
EQUITY
$’000
Balance at 1 July 2019
46,691
1,283
(22,104)
25,870
Profit after income tax expense for the year
–
–
15,921
15,921
Issue of share capital:
Contributions of equity (Note 21)
336,951
–
–
336,951
Transaction costs
(9,115)
–
–
(9,115)
327,836
–
–
327,836
Issue of shares to vendors on acquisition:
Issue of shares to Fone Dynamics vendors
6,652
–
–
6,652
Issue of shares to LBNCo vendors
11,262
–
–
11,262
Issue of shares to OPENetworks vendors
9,389
–
–
9,389
Issue of shares to 1300 Australia vendors
20,000
–
–
20,000
Issue of shares to Pivit vendors
80
–
–
80
Transactions costs
(189)
–
–
(189)
47,194
–
–
47,194
Other:
Reserve reclassification
(317)
317
–
–
Conversion of share-based payment options
345
–
–
345
Issue of shares to employees
115
–
–
115
Transaction costs associated with issue of shares to employees
(52)
–
–
(52)
Share-based payments (Note 41)
–
4,465
–
4,465
91
4,782
–
4,873
Balance at 30 June 2020
421,812
6,065
(6,183)
421,694
Statement of Changes in Equity
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
61
Statement of Changes in Equity continued
CONSOLIDATED
ISSUED
CAPITAL
$’000
RESERVES
$’000
ACCUMULATED
GAINS/
(LOSSES)
$’000
TOTAL
EQUITY
$’000
Balance at 1 July 2020
421,812
6,065
(6,183)
421,694
Profit after income tax expense for the year
–
–
29,195
29,195
Issue of share capital:
Contributions of equity (Note 21)
188,125
–
–
188,125
Transaction costs
(3,167)
–
–
(3,167)
184,958
–
–
184,958
Issue of shares and options to vendors on acquisition:
Issue of shares to OptiComm vendors
173,164
–
–
173,164
Issue of shares to HarbourISP vendors
804
–
–
804
Issue of options to HarbourISP vendors
–
1,774
–
1,774
Transaction costs
(3,458)
–
–
(3,458)
170,510
1,774
–
172,284
Other:
Conversion of share-based payment options
393
–
–
393
Issue of shares to employees
244
–
–
244
Share-based payments (Note 41)
–
6,528
–
6,528
Equity settled short term incentives
–
576
–
576
637
7,104
–
7,741
Balance at 30 June 2021
777,917
14,943
23,012
815,872
The above statement of changes in equity should be read in conjunction with the accompanying notes
UNITI GROUP LIMITED ANNUAL REPORT 2021
62
CONSOLIDATED
NOTE
2021
$’000
2020
$’000
Cash flows from operating activities
Receipts from customers (inclusive of GST)
170,502
63,360
Payments to suppliers and employees (inclusive of GST)
(78,752)
(41,725)
Dividend received
621
–
Interest received
481
324
Other revenue
–
(561)
Interest and other finance costs paid
(5,615)
246
Income taxes paid
(2,598)
–
Net cash from operating activities
37
84,639
21,644
Cash flows used in investing activities
Payment for purchase of businesses, net of cash acquired
33
(620,656)
(165,527)
Payments to suppliers for the business acquisitions
(6,659)
(2,728)
Payments for property, plant and equipment
(26,365)
(7,541)
Payments for intangible assets
(1,221)
(702)
Proceeds from disposal of property, plant and equipment
18
38
Net cash used in investing activities
(654,883)
(176,460)
Cash flows from financing activities
Proceeds from issue of shares
21
188,518
337,280
Proceeds from borrowings
305,625
–
Share issue transaction costs
(9,279)
(8,981)
Repayment of borrowings
(40,000)
(2,460)
Payment of borrowing costs
(4,674)
–
Repayment of lease liability
(1,764)
(1,004)
Net cash from financing activities
438,426
324,835
Net increase in cash and cash equivalents
(131,818)
170,019
Cash and cash equivalents at the beginning of the financial year
189,150
19,131
Cash and cash equivalents at the end of the financial year
7
57,332
189,150
The above statement of cash flows should be read in conjunction with the accompanying notes.
Statement of Cash Flows
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
63
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.
During the year, the Company revised its accounting policy in relation to upfront configuration and customisation
costs incurred in implementing SaaS arrangements in response to the IFRIC agenda decision clarifying its
interpretation of how current accounting standards apply to these types of arrangements.
SaaS arrangements are service contracts providing the Company with the right to access the cloud provider’s
application software over the contract period. Costs incurred to configure or customise, and the ongoing fees to
obtain access to the cloud provider’s application software, are recognised as operating expenses when the services
are received.
Some of these costs incurred are for the development of software code that enhances or modifies, or creates
additional capability to, existing on-premise systems and meets the definition of and recognition criteria for an
intangible asset. These costs are recognised as intangible software assets and amortised over the useful life of the
software on a straight-line basis. The useful lives of these assets are reviewed at least at the end of each financial
year, and any change accounted for prospectively as a change in accounting estimate.
AASB 15 Revenue from Contracts with Customers and AASB 16 Leases have been early adopted by the Group with
effect from 1 July 2016. The consolidated entity has adopted AASB 9 from 1 July 2018. The following Accounting
Standards and Interpretations are most relevant to the consolidated entity:
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001,
as appropriate for for-profit oriented entities. These financial statements also comply with International Financial
Reporting Standards as issued by the International Accounting Standards Board (‘IASB’). Accounting policies adopted
in the preparation of these financial statements are presented below and have been consistently applied unless
stated otherwise.
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of financial assets and liabilities at fair value through profit or loss.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity’s accounting policies.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements, are disclosed in Note 2.
Notes to the Financial Statements
for the year ended 30 June 2021
64
UNITI GROUP LIMITED ANNUAL REPORT 2021
Notes to the Financial Statements
for the year ended 30 June 2021
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES continued
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated
entity only. Supplementary information about the parent entity is disclosed in Note 32.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Uniti Group Limited
("company" or "parent entity") as at 30 June 2021 and the results of all subsidiaries for the year then ended. Uniti
Group Limited and its subsidiaries together are referred to in these financial statements as the "consolidated entity".
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls
an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are
fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated
from the date that control ceases.
Inter-company transactions, balances and unrealised gains on transactions between entities in the consolidated
entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the
impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the non-controlling interest acquired is recognised
directly in equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or
loss and other comprehensive income, statement of financial position and statement of changes in equity of the
consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full,
even if that results in a deficit balance.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities
and non- controlling interest in the subsidiary together with any cumulative translation differences recognised in
equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any
investment retained together with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the "management approach", where the information presented is on the
same basis as the internal reports provided to the Chief Operating Decision Makers (‘CODM’).
Revenue recognition
The consolidated entity recognises revenue as follows:
Revenue from contracts with customers
Revenue from contracts with customers is recognised when or as the Group satisfies a performance obligation in the
contract when the Group transfers a promised good or service (ie an asset) to a customer.
UNITI GROUP LIMITED ANNUAL REPORT 2021
65
Revenue from these sales is recognised based on the price specified in the contract. No element of financing is
deemed present as the sales are made with a credit term between 30-90 days, which is consistent with market
practice.
Revenue is recognised in accordance with the following five-step process:
1. Identifying the contract with the customer.
2. Identifying the performance obligations in the contract.
3. Determining the transaction price.
4. Allocating the transaction price to the performance obligations in the contract.
5. Recognising revenue as and when the performance obligations are satisfied.
The following is a description of principal activities from which the Group generates its revenue.
Broadband and fibre access networks
For the Wireless revenue stream, there are two performance obligations, the delivery of hardware to facilitate
connection and the delivery of internet services. Payments are received as part of the delivery and installation process
and then services are settled monthly. Amounts received in relation to installations is combined with expected
monthly payments for the total transaction price. Installation is not considered to be a performance obligation as the
customer does not obtain any benefit at the point of installation. The installation and broadband service are therefore
identified as a single performance obligation and the associated revenue is recognised over time. Revenue from the
provision of wireless broadband services is recognised monthly over the expected life of the contract, including any
expected extensions of the service. The typical length of a contract for wireless broadband services is 20 months.
The provision of fibre communications services does require installation of network infrastructure and the
performance obligation is the delivery of the services. Revenue from the provision of fibre communications services
is recognised each month the service is made available to the customer.
For bundled packages, the Group accounts for individual products and services separately if they are distinct - i.e. if
a product or service is separately identifiable from other items in the bundled package and if a customer can benefit
from it. Packages may include internet and home phone bundles. The consideration is allocated between separate
products and services in a bundle based on their stand-alone selling prices for items that can be sold separately. The
stand-alone selling prices for items that can be sold separately are determined based on the list prices at which the
Group sells the devices and services. For items that are not sold separately, the Group estimates stand-alone selling
prices using the adjusted market assessment approach.
Telecommunication services
Revenue from the provision of telecommunication services relating to the provision of SMS and voice services and
1300 number leasing is recognised over time as the customer simultaneously receives and consumes the benefit of
the service. The services offered to customers each represent distinct performance obligations. The transaction price
is fixed monthly amounts for 1300 numbers and variable based on usage for SMS services.
Recurring network revenues
Revenue from the provision of network operations services includes recurring network operations revenue received
from retail service providers for network access in the form of a monthly wholesale charge. Network operations
revenue is recognised over time as the services are rendered.
Construction revenue
Services to developers as contracted customers are considered a distinct performance obligation enabling the
developer to discharge its regulatory requirements in seeking approval to assign titles on properties with an
established broadband network connection.
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NOTE 1. SIGNIFICANT ACCOUNTING POLICIES continued
The associated revenue may be recognised over time, over the project life as costs are incurred, on the basis that the
benefit of the construction is received and consumed as the construction is performed.
The Company recognises as construction revenue, non-refundable cash contributions from developers for installation
of networks in their Broadacre estates and Multi Dwelling Uniti (MDU) developments. For Broadacre estates, construction
revenue is recognised when the network is practically complete. The connection service is the primary performance
obligation the Group has to a developer. For MDU developments, there is not a distinct connection service and
developer revenue is recognised over the life of the construction period, as a percentage of the total contract value.
This above treatment differs to developer billing, which is recognised with billing milestones largely based on
practical completion.
Interest revenue
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating
the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective
interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to the net carrying amount of the financial asset.
Disposal of assets
Revenue from the disposal of other assets is recognised when the group has transferred the risks and rewards of
ownership to the buyer.
All revenue is stated net of the amount of goods and services tax (GST).
Research and Development/Grants
Research and Development incentives and other grant incentives are recognised when grant criteria are met.
Other items of income
Other items of income are recognised when they are received or when the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable
to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied
when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively
enacted, except for:
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability
in a transaction that is not a business combination and that, at the time of the transaction, affects neither the
accounting nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures,
and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in
the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
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The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date.
Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will
be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to
the extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
Uniti Group Limited (the "head entity") and its wholly-owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated
group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied
the "separate taxpayer within group" approach in determining the appropriate amount of taxes to allocate to
members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities
(or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each
subsidiary in the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group.
Under the terms and conditions of the Group’s tax funding agreement, the Company charges each subsidiary for all
current tax liabilities incurred in respect of their activities. Where the inter-company charge is less than the current
tax liability of the subsidiary, this results in a contribution by the Company to the subsidiary.
The Company also reimburses each subsidiary for any tax assets arising from unused tax losses.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in
the consolidated entity’s normal operating cycle; it is held primarily for the purpose of trading; it is expected to be
realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are
classified as non-current.
A liability is classified as current when: it is either expected to be settled in the consolidated entity’s normal operating
cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period;
or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting
period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term,
highly liquid investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value. For the statement of cash flows
presentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowings
in current liabilities on the statement of financial position.
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NOTE 1. SIGNIFICANT ACCOUNTING POLICIES continued
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 days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a
lifetime expected loss allowance. 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 losses.
Contract assets
Contract assets are recognised when the consolidated entity has transferred goods or services to the customer but
where the consolidated entity is yet to establish an unconditional right to consideration. Contract assets are treated
as financial assets for impairment purposes.
Inventories
Costs of purchased inventory are determined after deducting rebates and discounts received or receivable.
Stock on hand is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs
net of rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on both a straight-line basis and a diminishing value basis to write off the net cost of each
item of property, plant and equipment (excluding land) over their expected useful lives as follows:
Leasehold improvements
5 years
Diminishing Value basis
Plant and equipment
3-8 years
Straight Line basis
Software
5 years
Straight Line basis
Network Infrastructure
4-40 years
Straight Line basis
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each
reporting date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the
lease or the estimated useful life of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit
to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to
profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.
Notes to the Financial Statements
for the year ended 30 June 2021
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Leases and right-of-use assets
At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group
assesses whether:
the contract involves the use of an identified asset - this may be specified explicitly or implicitly and should be
physically distinct or represent substantially all the capacity of a physically distinct asset. If the supplier has a
substantive substitution right, then the asset is not identified;
the Group has the right to obtain substantially all the economic benefits from use of the asset throughout the
period of use; and
the Group has the right to direct the use of the asset. The Group has this right when it has the decision-making
rights that are most relevant to changing how and for what purpose the asset is used.
At inception or on reassessment of a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease component based on relative stand-alone prices.
Measurement
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs
to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less
any lease incentives received.
The right-of-use asset is subsequently depreciated from the commencement date to the earlier of the end of the
useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are
summarised below.
In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
CLASS OF RIGHT-OF-USE ASSET USEFUL LIFE
DEPRECIATION METHOD
Buildings
2 to 10 years
Straight line basis
Network Infrastructure
2 years to 20 years
Straight line basis
Plant and Equipment
4 to 5 years
Diminishing value basis
Motor Vehicles
8 years
Diminishing value basis
The lease liability is initially measured at present value of the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s
incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise:
fixed payments, including in-substance fixed payments
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date;
amounts expected to be payable under a residual value guarantee; and
lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option,
and penalties for early termination of the lease unless the Group is reasonably certain not to terminate early.
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NOTE 1. SIGNIFICANT ACCOUNTING POLICIES continued
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a
change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate
of the amounts expected to be payable under a residual value guarantee or if the Group changes its assessment of
whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-
of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Short-term leases and low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a
lease term of 12 months or less and leases of low-value assets (less than $10,000), including IT equipment. The Group
recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
Extension options
Where practicable, the Group seeks to include extension options in new leases to provide operational flexibility.
The Group assesses at lease commencement whether it is reasonably certain to exercise the options if there is a
significant event or significant change in circumstances within its control.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair
value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life
intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible
assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in
profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal
proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets
are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively
by changing the amortisation method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for
impairment, or more frequently if events or changes in circumstances indicate that it might be impaired and is carried
at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not
subsequently reversed.
Trademarks
Trademarks owned by group entities are carried at cost less accumulated impairment losses.
Customer contracts
Customer contracts acquired in a business combination are amortised on a straight-line basis over the period of their
expected benefit, being their finite life of 3 years to 10 years.
Software
Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their
expected benefit, being their finite life of 3 years.
Impairment of financial assets
The Group recognises loss allowances for expected credit loss (ECL) on financial assets measured at amortised cost.
The Group measures loss allowances at an amount equal to lifetime ECLs. The Group has adopted the simplified
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
71
approach under AASB 9 for calculating the allowance. The collective loss allowance is determined based on the
historical default percentage in each portfolio and adjusted for other current observable and forward-looking
information to estimate lifetime ECL for similar financial assets.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and
when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available
without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the
Group’s historical experience and informed credit assessment and including forward-looking information.
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 90 days past
due. The Group considers a financial asset to be in default when:
the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions;
or
the financial asset is more than 90 days past due.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the
reporting date (or a shorter period if the expected life of the instrument is less than 12 months). The maximum period
considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash
flows that the Group expects to receive). The impact of COVID-19 on the allowance for calculation for expected
credit losses calculation was assessed as at 30 June 2021. Please refer to Note 8.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit-impaired. A
financial asset is "credit-impaired" when one or more events that have a detrimental impact on the estimated future
cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
significant financial difficulty of the borrower or issuer
a breach of contract such as a default or being more than 90 days past due
the restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise
it is probable that the borrower will enter bankruptcy or other financial reorganisation or
the disappearance of an active market for a security because of financial difficulties.
Presentation of allowance for ECL in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of
recovering financial asset in its entirety or a portion thereof. The Group expects no significant recovery from the
amount written off. However, financial assets that are written off could still be subject to enforcement activities in
order to comply with the Group’s procedures for recovery of amounts due.
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NOTE 1. SIGNIFICANT ACCOUNTING POLICIES continued
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be
impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows
from continuing use that are largely independent of the cash inflows of other assets or Cash Generating Unit (CGU).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value
in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.
Impairment losses are recognised in profit or loss. They are allocated to reduce the carrying amount of assets in the
CGU on a pro rata basis. An impairment loss is reversed only to the extent that the asset’s carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment
loss had been recognised.
Impairment of right-of-use assets
The carrying values of right-of-use assets are reviewed for impairment annually. If an indication of impairment exists,
and where the carrying value of the right-of-use asset exceeds the estimate recoverable amount, the right-of-use
assets are written down to their recoverable amount. The assessment includes a review of performing and non-
performing towers. Where a tower is identified as non-performing, the right-of-use asset associated with that non-
performing tower is reduced to its recoverable amount through an impairment charge.
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the
financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not
discounted.
The amounts are unsecured and are usually paid within 30 days of recognition.
Contract liabilities
Contract liabilities represent the consolidated entity’s obligation to transfer services to a customer and are
recognised when a customer pays consideration, or when the consolidated entity recognises a receivable to reflect
its unconditional right to consideration (whichever is earlier) before the consolidated entity has transferred the
services to the customer.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method.
Notes to the Financial Statements
for the year ended 30 June 2021
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Finance 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.
Provisions
Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result
of a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate
can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the reporting date, taking into account the risks and
uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using
a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is
recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to
be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the
liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting
date are measured at the present value of expected future payments to be made in respect of services provided by
employees up to the reporting date using the projected unit credit method. Consideration is given to expected future
wage and salary levels, experience of employee departures and periods of service. Expected future payments are
discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash outflows.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange
for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the
amount of cash is determined by reference to the share price.
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is independently determined
using the Black-Scholes option pricing model that takes into account the exercise price, the term of the 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, together with non-vesting conditions that do
not determine whether the consolidated entity receives the services that entitle the employees to receive payment.
No account is taken of any other vesting conditions.
The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award,
the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The
amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less
amounts already recognised in previous periods.
Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market
conditions are considered to vest irrespective of whether or not that market condition has been met, provided all
other vesting conditions are satisfied.
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NOTE 1. SIGNIFICANT ACCOUNTING POLICIES continued
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made.
An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the
condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee
and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining
vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled
and new award is treated as if they were a modification.
Fair value measurements
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes,
the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date; and assumes that the transaction will take place
either: in the principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on
its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use
of unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and
transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the
fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is
either not available or when the valuation is deemed to be significant. External valuers are selected based on market
knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to
another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and
a comparison, where applicable, with external sources of data.
Issued capital
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.
Capital risk management
The consolidated entity’s objectives when managing capital is 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. Capital is regarded as total equity, as recognised in the statement of
financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents.
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
75
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid
to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity will look to raise capital when an opportunity to invest in a business or company is seen as
value adding relative to the current company’s share price at the time of the investment.
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the company.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity
instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any
non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree
is measured at either fair value or at the proportionate share of the acquiree’s identifiable net assets. All acquisition
costs are expensed as incurred to profit or loss.
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed
for appropriate classification and designation in accordance with the contractual terms, economic conditions, the
consolidated entity’s operating or accounting policies and other pertinent conditions in existence at the acquisition date.
Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity
interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous
carrying amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value.
Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised
in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is
accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing
investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is
less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference
is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment
of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any,
the consideration transferred and the acquirer’s previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and recognises additional assets or liabilities during the measurement period,
based on new information obtained about the facts and circumstances that existed at the acquisition-date. The
measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the
acquirer receives all the information possible to determine fair value.
76
UNITI GROUP LIMITED ANNUAL REPORT 2021
Notes to the Financial Statements
for the year ended 30 June 2021
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES continued
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Uniti Group Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares.
Goods and Services Tax (‘GST’) and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement
of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax
authority.
Rounding of amounts
The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to "rounding-off". Amounts in this report have been rounded off in accordance
with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
UNITI GROUP LIMITED ANNUAL REPORT 2021
77
NOTE 2. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements
and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its
judgements, estimates and assumptions on historical experience and on other various factors, including expectations
of future events, management believes to be reasonable under the circumstances. The resulting accounting
judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to
the respective notes) within the next financial year are discussed below.
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.
Business combinations
As discussed in Note 1, 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.
Impact of COVID-19
As noted in the Review of Operations in the Directors’ Report, the Board and management have considered the
impact of COVID-19 on the consolidated entity’s operations and financial performance, and have noted that there
were no significant changes in the state of affairs of the consolidated entity during the financial year. In particular,
Uniti’s business has been resilient to date. Uniti has not claimed any amounts under the Australian Government
JobKeeper Payment Scheme.
In preparing the consolidated financial report, management has considered the impact of COVID-19 on the various
balances in the financial report, including the carrying values of trade receivables, as well as balances and accounting
estimates for which cash flow forecasts are required to be prepared, such as impairment assessments of goodwill
and brand names. Management determined that there was no significant impact of COVID-19 on the above-
mentioned balances and accounting estimates.
Software-as-a-Service (SaaS) arrangements
Note 1 describes the entity’s accounting policy in respect of customisation and configuration costs incurred in
implementing SaaS arrangements. In applying the entity’s accounting policy, the directors made the following key
judgements that have had the most significant effect on the amounts recognised in financial statements.
Capitalisation of configuration and customisation costs in SaaS arrangements
Part of the customisation and configuration activities undertaken in implementing SaaS arrangements may entail the
development of software code that enhances or modifies, or creates additional capability to the existing on-premise
software to enable it to connect with the cloud-based software applications (referred to as bridging modules or
APIs). Judgement was applied in determining whether the additional code meets the definition of and recognition
UNITI GROUP LIMITED ANNUAL REPORT 2021
78
NOTE 2. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS continued
criteria for an intangible asset in AASB 138 Intangible Assets. During the year, the Company recognised $917,000
(2020: $799,000) as intangible assets in respect of customisation and configuration costs incurred in implementing
SaaS arrangements.
Determination whether configuration and customisation services are distinct from the SaaS access
Costs incurred to configure or customise the cloud provider’s application software are recognised as operating
expenses when the services are received. In a contract where the cloud provider provides both the SaaS
configuration and customisation, and the SaaS access over the contract term, the directors applied judgement to
determine whether these services are distinct from each other or not, and therefore, whether the configuration and
customisation costs incurred are expensed as the software is configured or customised (i.e. upfront), or over the
SaaS contract term.
Specifically, where the configuration and customisation activities significantly modify or customise the cloud
software, these activities will not be distinct from the access to the cloud software over the contract term.
Judgement has been applied in determining whether the degree of customisation and modification of the cloud-
based software would be deemed significant. The Company did not recognise any prepayments in respect of
customisation and configuration activities undertaken in implementing SaaS arrangements which are considered not
to be distinct from the access to the SaaS access over the contract term.
NOTE 3. OPERATING SEGMENTS
Identification of reportable operating segments
Segment information is based on the information that management uses to make decisions about operating
matters and allows users to review operations through the eyes of management. Operating segments represent the
information reported to the chief operating decision makers (CODM), being the Board of Directors, for the purposes
of resource allocation and assessment of segment performance. Any new acquisitions will be made to complement
the business units.
Major customers
There were 4 major customers that contributed more than 5% of revenue in 2021 (2020: Nil).
Operating segments
The directors have chosen to organise the Group around the three main business units in which the Group operates.
Specifically, the Group’s reportable segments under AASB 8 follows:
Consumer & Business (formerly Consumer & Business Enablement) (C&B)
Wholesale & Infrastructure (W&I)
Communications Platform as a Service (formerly Specialty Services) (CPaaS)
The reportable segments represent the group’s cash-generating units for impairment testing purposes, with corporate
income (interest and one-off dividend) and costs being allocated to the three cash-generating units. The chief
decision maker for the reporting segments are the CEOs of each of the three business units.
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
79
Segment revenues and results
CONSOLIDATED – 2021
W & I
$’000
CPaaS
$’000
C& B
$’000
UNALLOCATED1
$’000
INTER-
COMPANY2
$’000
TOTAL
$’000
Revenue
105,442
30,810
43,609
1,064
(20,450)
160,475
EBITDA (Reported)
78,579
19,973
4,468
(29,410)
-
73,610
Depreciation and amortisation
(14,797)
(2,773)
(3,848)
-
-
(21,418)
Net finance costs
-
(23)
(394)
(7,538)
-
(7,955)
Profit before income tax expense
63,782
17,177
226
(36,948)
-
44,237
Income tax expense
-
-
-
(15,042)
-
(15,042)
Profit after income tax expense
63,782
17,177
226
(51,990)
-
29,195
(1) Unallocated revenue represents $0.5 million interest income earned in relation to cash and cash equivalents and $0.6m dividend income
relating to Uniti’s acquired interest in OptiComm shares prior to the completion of the scheme of Arrangement to acquire OptiComm.
Unallocated costs include corporate services costs and board costs, share based expenses, restructure, and acquisition costs..
(2) Intercompany revenue is eliminated on consolidation and relates primarily to recurring charges from the W&I business unit to the C&B
business unit for the provision of wholesale telecommunications services.
CONSOLIDATED – 2020
W & I
$’000
CPaaS
$’000
C& B
$’000
UNALLOCATED1
$’000
INTER-
COMPANY2
$’000
TOTAL
$’000
Revenue
22,351
20,969
24,004
324
(9,432)
58,216
EBITDA (Reported)
14,525
11,752
4,779
(15,001)
-
16,055
Depreciation and amortisation
(1,283)
(1,916)
(3,654)
-
-
(6,853)
Net finance costs
-
(29)
(403)
(163)
-
(595)
Profit before income tax expense
13,242
9,807
722
(15,164)
-
8,607
Income tax income
-
-
-
7,314
-
7,314
Profit after income tax expense
13,242
9,807
722
(7,850)
-
15,921
(1) Unallocated revenue represents interest income earned in relation to cash and cash equivalents. Unallocated costs include corporate services
costs, board costs, share-based payment expenses, restructure, and acquisition costs..
(2) Intercompany revenue is eliminated on consolidation and relates primarily to recurring charges from the W&I business unit to the C&B
business unit for the provision of wholesale telecommunications services.
Geographical segments
The consolidated entity operated in only one geographical segment during 2021 and 2020, being Australia.
UNITI GROUP LIMITED ANNUAL REPORT 2021
80
NOTE 4. REVENUE
CONSOLIDATED
2021
$’000
2020
$’000
Revenue from contracts with customers
Sale of goods
36
37
Rendering of services – Broadband and fibre access networks
43,378
23,462
Rendering of services – Telecommunications services
30,073
20,576
Rendering of services – Recurring network revenues
63,616
10,989
Construction revenues
21,137
2,182
158,240
57,246
Other revenue
Interest revenue
443
324
Dividend revenue
621
-
Other revenue
1,171
646
2,235
970
160,475
58,216
Revenue from contracts with customers is recognised over time, excluding sale of goods.
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
CONSOLIDATED – 2021
W & I
$’000
CPaaS
$’000
C& B
$’000
INTER-
COMPANY1
$’000
TOTAL
$’000
Major product lines
Broadband and fibre access networks
-
-
43,572
(194)
43,378
Telecommunications services
-
30,810
-
(737)
30,073
Recurring network revenues
83,135
-
-
(19,519)
63,616
Construction revenues
21,137
-
-
-
21,137
Sale of goods
-
-
36
-
36
104,272
30,810
43,608
(20,450)
158,240
Geographical regions
Australia
104,272
30,810
43,608
(20,450)
158,240
Timing of revenue recognition
Goods transferred at a point in time
-
-
36
-
36
Services transferred over time
104,272
30,810
43,572
(20,450)
158,204
104,272
30,810
43,608
(20,450)
158,240
(1) Intercompany revenue is eliminated on consolidation and relates primarily to recurring charges from the W&I business to the C&B business
unit for the provision of wholesale telecommunications services.
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
81
CONSOLIDATED – 2020
W & I
$’000
CPaaS
$’000
C& B
$’000
INTER-
COMPANY1
$’000
TOTAL
$’000
Major product lines
Broadband and fibre access networks
-
-
23,797
(335)
23,462
Telecommunications services
-
20,576
-
-
20,576
Recurring network revenues
20,086
-
-
(9,097)
10,989
Construction revenues
2,182
-
-
-
2,182
Sale of goods
-
-
37
-
37
22,268
20,576
23,834
(9,432)
57,246
Geographical regions
Australia
22,268
20,576
23,834
(9,432)
57,246
Timing of revenue recognition
Goods transferred at a point in time
-
-
37
-
37
Services transferred over time
22,268
20,576
23,797
(9,432)
57,209
22,268
20,576
23,834
(9,432)
57,246
(1) Intercompany revenue is eliminated on consolidation and relates primarily to recurring charges from the W&I business to the C&B business
unit for the provision of wholesale telecommunications services.
UNITI GROUP LIMITED ANNUAL REPORT 2021
82
UNITI GROUP LIMITED ANNUAL REPORT 2021
82
NOTE 5. EXPENSES
CONSOLIDATED
2021
$’000
2020
$’000
Profit before income tax includes the following specific expenses:
Network and hardware expense
Network and hardware expense
34,391
13,837
Employee benefits expense
Employee benefits expense
22,225
12,816
Share-based payments expense
6,772
4,581
28,997
17,398
Depreciation
Leasehold improvements
148
28
Plant and equipment
7,305
3,127
Right-of-use assets
1,502
813
8,955
3,968
Amortisation
Customer contracts
11,967
2,586
Software
347
220
Other intangibles
149
79
12,463
2,885
21,418
6,853
Other expenses
Restructure costs
1,384
707
Acquisition costs
12,592
5,187
Other
9,501
5,032
23,477
10,926
Finance costs
Interest and finance charges paid/payable
7,955
595
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
83
NOTE 6. TAX BALANCES
CONSOLIDATED
2021
$’000
2020
$’000
Income tax expense
Current tax
–
1,890
Deferred tax – origination and reversal of temporary differences
16,269
(9,204)
Under/over provision
(1,227)
–
Aggregate income tax expense/(benefit)
15,042
(7,314)
Deferred tax included in income tax expense comprises:
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
44,237
8,607
Tax at the statutory tax rate of 30% (2020: 30%)
13,271
2,582
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Net deferred tax assets and liabilities brought to account
1,407
(9,204)
Tax losses utilised
–
(2,281)
Deferred Tax Asset Losses not previously brought to account, now brought to account
(326)
–
Under/over provision
(1,227)
–
Acquisition costs - permanent
369
–
Share-based payments
1,537
1,629
Other items
11
(40)
Income tax expense/(benefit)
15,042
(7,314)
Deferred tax assets not bought to account
Unrecognised deferred tax relating to tax losses
–
–
Unrecognised deferred tax relating to temporary differences
–
–
–
–
During FY21 Uniti recorded an income tax expense of $15.0 million. Whilst an income tax expense has been incurred
during the period, Uniti is in a tax refund position as at 30 June 2021. This is predominantly driven by capital allowance
incentives that allow accelerated deductions for depreciating assets. The application of these tax depreciation
incentives resulted in a deduction of $155.6 million (tax affected: $46.7 million), and therefore Uniti is in a tax loss
position for FY21. Of this $155.6 million, $135.0 million derives from assets acquired as part of the OptiComm and
Velocity acquisitions. As at 30 June 2021, Uniti has carried forward tax losses of $106.8 million (tax affected: $32.0
million) as a result of the losses incurred in the current year ($96.8 million) and the opening losses as at 1 July 2020
of $9.1 million. The opening tax loss position represents the recognition of income tax losses incurred by Uniti and
certain acquired companies from prior periods and the movement in the deferred tax assets and liabilities on the
acquired companies joining the tax consolidated group. The transition to significant profits before tax in FY20 and the
continued growth in profitability of Uniti has meant that the realisation of accumulated losses being recouped against
current and future taxable income is more certain, resulting in the recording of the deferred tax asset for these losses.
NOTE 6. TAX BALANCES continued
Movements in deferred tax balances
BALANCE AS AT 30 JUNE 2021
CONSOLIDATED – 2021
NET
OPENING
BALANCE
$’000
RECOGNISE
IN PROFIT
OR LOSS
$’000
RECOGNISED
DIRECTLY TO
EQUITY
$’000
ACQUISITIONS
$’000
NET CLOSING
BALANCE
$’000
DEFERRED
TAX ASSETS
$’000
DEFERRED
TAX
LIABILITIES
$’000
Trade and other receivables
728
79
–
22
829
829
–
Property, plant & equipment
–
(46,994)
–
(1,630)
(48,624)
–
(48,624)
Intangible assets
(8,964)
3,489
–
(18,395)
(23,870)
–
(23,870)
Provisions and accruals
475
(964)
–
6,251
5,762
5,762
–
Deferred Income
1,187
(108)
–
1,662
2,741
2,741
–
Lease liability
650
(4)
–
–
646
646
–
Blackhole expenditure
3,675
(1,405)
2,217
579
5,066
5,066
–
Tax losses carried forward
2,417
29,637
–
–
32,054
32,054
–
168
(16,270)
2,217
(11,511)
(25,396)
47,098
(72,494)
BALANCE AS AT 30 JUNE 2020
CONSOLIDATED – 2020
NET
OPENING
BALANCE
$’000
RECOGNISE
IN PROFIT
OR LOSS
$’000
RECOGNISED
DIRECTLY TO
EQUITY
$’000
ACQUISITIONS
$’000
NET CLOSING
BALANCE
$’000
DEFERRED
TAX ASSETS
$’000
DEFERRED
TAX
LIABILITIES
$’000
Trade and other receivables
–
728
–
–
728
728
–
Intangible assets
–
72
–
(9,036)
(8,964)
–
(8,964)
Provisions and accruals
–
475
–
–
475
475
–
Deferred Income
–
1,187
–
–
1,187
1,187
–
Lease liability
–
650
–
–
650
650
–
Blackhole expenditure
–
3,675
–
–
3,675
3,675
–
Tax losses carried forward
–
2,417
–
–
2,417
2,417
–
–
9,204
–
(9,036)
168
9,132
(8,964)
NOTE 7. CURRENT ASSETS – CASH AND CASH EQUIVALENTS
CONSOLIDATED
2021
$’000
2020
$’000
Cash at bank
57,332
7,499
Cash on deposit
–
181,651
57,332
189,150
Prior year cash and cash equivalents includes $148.0 million net proceeds from the institutional entitlement offer,
which was used to partially fund the Company’s acquisition of OptiComm Limited.
UNITI GROUP LIMITED ANNUAL REPORT 2021
Notes to the Financial Statements
for the year ended 30 June 2021
84
UNITI GROUP LIMITED ANNUAL REPORT 2021
85
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the financial year as shown in the
statement of cash flows as follows:
CONSOLIDATED
2021
$’000
2020
$’000
Balances as above
57,332
189,150
Balance as per statement of cash flows
57,332
189,150
NOTE 8. CURRENT ASSETS – TRADE AND OTHER RECEIVABLES
CONSOLIDATED
2021
$’000
2020
$’000
Trade receivables
17,123
7,563
Less: Allowance for expected credit losses
(2,765)
(2,428)
14,358
5,135
Other receivables
1,031
846
15,389
5,981
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
CONSOLIDATED
EXPECTED
CREDIT
LOSS RATE
%(1)
CARRYING
AMOUNT 2021
$’000
ALLOWANCE FOR EXPECTED
CREDIT LOSSES 2021
$’000
0 to 1 months overdue
4%
13,793
(486)
1 to 2 months overdue
34%
911
(306)
2 to 3 months overdue
51%
562
(287)
Over 3 months overdue
91%
1,857
(1,686)
17,123
(2,765)
(1) Specific debtors balances have been excluded from the general provision where there is a degree of certainty around the recoverability of these
debts or Uniti is not exposed to any credit risk.
CONSOLIDATED
2021
$’000
2020
$’000
Opening balance
2,428
575
Additional provisions recognised
(354)
260
Additions as part of Business Combinations
691
1,593
2,765
2,428
UNITI GROUP LIMITED ANNUAL REPORT 2021
86
UNITI GROUP LIMITED ANNUAL REPORT 2021
NOTE 8. CURRENT ASSETS – TRADE AND OTHER RECEIVABLES continued
Allowance for expected credit losses
The allowance for expected credit losses are determined using a provision matrix and excludes debtors based on
specific assessment. The consolidated entity has recognised a loss of $983,000 (2020: $260,000) in other expenses
in respect of the expected credit losses for the year ended 30 June 2021.
Impact of COVID-19 on the allowance for expected credit losses calculation:
Management acknowledges that there is a level of uncertainty in the economy at present. However, the
telecommunications industry is insulated to a degree due to the essential nature of the services the Group provides.
In addition, demand for internet services and bandwidth has increased, further emphasising the importance of
telecommunications services. Furthermore, the construction industry has at large continued to operate during the
COVID-19 restriction period and we have not noted a decline in revenues due to any pandemic related factors.
Management has employed a level of conservatism when assessing current and forecast credit conditions and
considered this when determining the default rate on debtors’ balances.
NOTE 9. CURRENT ASSETS – INVENTORIES
CONSOLIDATED
2021
$’000
2020
$’000
Customer premise and network equipment
35
161
35
161
NOTE 10. CURRENT ASSETS – DEPOSITS AND PREPAYMENTS
CONSOLIDATED
2021
$’000
2020
$’000
Deposits
18
75
Security deposits
98
57
Prepayments
2,604
1,941
2,720
2,073
NOTE 11. CURRENT ASSETS – CONTRACT ASSETS
CONSOLIDATED
2021
$’000
2020
$’000
Contract assets
961
1,008
961
1,008
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
87
NOTE 12. NON-CURRENT ASSETS – RIGHT-OF-USE ASSETS
CONSOLIDATED
2021
$’000
2020
$’000
Office leases – at cost
3,783
1,974
Less: Accumulated depreciation
(1,856)
(1,071)
1,927
903
Plant and equipment – at cost
338
83
Less: Accumulated depreciation
(147)
(59)
191
24
Network Infrastructure – at cost
5,261
5,261
Less: Accumulated depreciation
(3,542)
(3,180)
1,719
2,081
Motor Vehicles – at cost
94
117
Less: Accumulated depreciation
(94)
(81)
-
36
3,837
3,044
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
CONSOLIDATED
OFFICE
LEASES
$’000
PLANT AND
EQUIPMENT
$’000
NETWORK
INFRASTRUCTURE
$’000
MOTOR
VEHICLES
$’000
TOTAL
$’000
Balance at 1 July 2019
569
69
3,774
52
4,464
Additions
–
–
–
–
–
Additions through business combinations
526
–
–
–
526
Disposals
–
–
–
–
–
Remeasurement (1)
195
(28)
(1,314)
23
(1,124)
Depreciation expense
(387)
(17)
(379)
(39)
(822)
Balance at 30 June 2020
903
24
2,081
36
3,044
Additions
–
–
–
–
–
Additions through business combinations
(Note 33)
1,681
–
–
130
1,811
Disposals
–
–
–
–
–
Remeasurement (1)
323
254
30
(123)
484
Depreciation expense
(980)
(87)
(392)
(43)
(1,502)
Balance at 30 June 2021
1,927
191
1,719
-
3,837
(1) During the year, remeasurement in the lease liability has resulted in the change in the carrying value of the right-of-use assets.
UNITI GROUP LIMITED ANNUAL REPORT 2021
88
NOTE 13. NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT
CONSOLIDATED
2021
$’000
2020
$’000
Leasehold improvements – at cost
1,319
219
Less: Accumulated depreciation
(247)
(99)
1,072
120
Plant and equipment – at cost
2,747
1,484
Less: Accumulated depreciation
(911)
(588)
1,836
896
Network infrastructure – at cost
242,208
51,341
Less: Accumulated depreciation
(11,108)
(5,850)
231,100
45,491
234,008
46,507
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
CONSOLIDATED
LEASEHOLD
IMPROVEMENTS
$’000
PLANT AND
EQUIPMENT
$’000
NETWORK
INFRASTRUCTURE
$’000
TOTAL
$’000
Balance at 1 July 2019
147
471
2,971
3,589
Additions
–
166
8,864
9,030
Additions through business combinations
–
463
35,856
36,319
Measurement period adjustments
–
(242)
-
(242)
Disposals
–
(31)
-
(31)
Reclassification of asset type
–
-
611
611
Remeasurements (1)
–
272
(1,112)
(840)
Depreciation expense
(27)
(203)
(1,699)
(1,929)
Balance at 30 June 2020
120
896
45,491
46,507
Additions
27
137
28,201
28,365
Additions through business combinations (Note 33)
1,073
1,112
172,423
174,608
Measurement period adjustments (Note 33)
–
–
(8,283)
(8,283)
Disposals
–
(13)
–
(13)
Reclassification of asset type
–
–
–
–
Remeasurements (1)
–
68
208
276
Depreciation expense
(148)
(364)
(6,940)
(7,452)
Balance at 30 June 2021
1,072
1,836
231,100
234,008
(1) During the year, the base asset value for customer premise equipment (CPE) was adjusted based on the active customer list as at 30 June 2021.
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
89
NOTE 14. NON-CURRENT ASSETS – INTANGIBLES
CONSOLIDATED
2021
$’000
2020
$’000
Goodwill
808,649
176,011
Less: Impairment
–
–
808,649
176,011
Customer contracts – at cost
84,576
26,051
Less: Accumulated amortisation
(14,890)
(2,934)
69,686
23,117
Software – at cost
3,304
1,681
Less: Accumulated amortisation
(783)
(428)
2,521
1,253
Other intangible assets
1,321
1,178
Less: Accumulated amortisation
(228)
(79)
1,093
1,099
Brand
7,959
4,524
Trademarks
23
23
7,982
4,547
889,931
206,027
UNITI GROUP LIMITED ANNUAL REPORT 2021
90
NOTE 14. NON-CURRENT ASSETS – INTANGIBLES continued
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
CONSOLIDATED
GOODWILL
$’000
CUSTOMER
CONTRACTS
$’000
BRANDS
$’000
SOFTWARE
$’000
OTHER
INTANGIBLE
ASSETS
$’000
TRADEMARKS
$’000
TOTAL
$’000
Balance at 1 July 2019
13,451
6,531
–
680
235
23
20,920
Additions
-
174
–
452
76
–
702
Additions through business
combinations
161,327
20,367
1,695
330
1,230
–
184,950
Measurement period
adjustments
1,233
(1,560)
2,829
–
–
–
2,502
Reclassification of asset type
–
–
–
23
(23)
–
–
Remeasurement
–
(341)
(341)
Amortisation expense
–
(2,395)
–
(232)
(79)
–
(2,706)
Balance at 30 June 2020
176,011
23,117
4,524
1,253
1,099
23
206,027
Additions
-
-
–
1,075
143
–
1,218
Additions through business
combinations (Note 33)
630,699
57,849
3,435
833
-
–
692,816
Measurement period
adjustments (Note 33)
1,939
676
-
(141)
–
–
2,474
Remeasurement
–
11
-
(152)
-
–
(141)
Amortisation expense
–
(11,967)
–
(347)
(149)
–
(12,463)
Balance at 30 June 2021
808,649
69,686
7,959
2,521
1,093
23
889,931
Impairment testing
Goodwill acquired through business combinations and brands have been allocated for impairment testing purposes
to the following cash-generating units:
Consumer & Business (C&B) (Formerly Consumer & Business Enablement)
Wholesale & Infrastructure (W&I)
Communications Platform as a Service (CPaaS) (Formerly Specialty Services)
The recoverable amount of the CGU has been determined by a value-in-use calculation using a discounted cash flow
model, based on a 5 year projected cash flow and terminal value. The cash flow projections are based on financial
estimates approved by the Board for the 2021 financial year and Management’s view on the further four years. As part
of the annual impairment test for goodwill, management assesses the reasonableness of growth rate assumptions by
reviewing historical cash flow projections as well as future growth objectives. Corporate charges were allocated to each
business unit based on the percentage of the business unit’s underlying EBITDA in comparison to the Group.
Key assumptions are those to which the recoverable amount of an asset or cash-generating units is most sensitive.
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
91
The following key assumptions were used in the discounted cash flow model:
KEY ASSUMPTIONS
W&I
CPAAS
C&B
Discount rate (post tax)
7.5%
9.4%
10.8%
Terminal value growth rate
3%
3%
3%
Other key assumptions used in the calculation are:
Five-year cash flow forecasts, of which the initial year is the board approved budget.
Capital expenditure five-year forecast.
The discount rates (post tax) used in 2020 were 7.8% for W&I, 8.5% for CPaaS and 8.7% for C&B.
The discount rate has been determined using the estimated weighted average cost of capital which incorporates
both the cost of debt and the cost of capital, using a benchmark gearing level. The resulting discounted cash flow
exceeded the carrying value of goodwill on the company’s balance sheet.
Carrying amounts and recoverable amounts by business units for FY21 are disclosed in the table below:
KEY ASSUMPTIONS
W&I
CPAAS
C&B
Carrying amount – goodwill
721,149
70,833
16,667
Carrying amount – intangible assets
50,331
20,972
7,458
Impact of COVID-19 on impairment testing
Management has considered any potential impacts from COVID-19 when assessing the recoverable amount of the
CGU. The Group may be impacted both by deterioration in macroeconomic conditions generally and specifically in
relation to its operations. To date, COVID-19 has affected, amongst other things, economic conditions, employment
markets, equity markets, governmental action, regulatory policy, quarantining, self-isolations and travel restrictions.
In addition, the COVID-19 global pandemic may specifically impact the projected growth rate of Uniti’s W&I business,
including any downturn in the property market which may lead to a delay in the construction of new developments and
in the signing of new developer agreements and/or delay in the construction of dwellings under these new agreements,
resulting in delays in the realisation of revenue from these contracts. There is also a risk that the operations may be
interrupted by government enforced restrictions (such as lockdowns) or other COVID-19 related health concerns.
Although there is a level of inherent uncertainty as outlined above, there has not been any noticeable adverse impact on
the group’s operations or profitability as further discussed below. We note that telecommunications remains an essential
service and the current environment has led to increased demand for telecommunications products and services.
Sensitivity
As disclosed in Note 2, the directors have made judgements and estimates in respect of impairment testing of
goodwill. Should these judgements and estimates not occur the resulting goodwill carrying amount may decrease.
Management has considered the possible change in EBITDA and discount rates applied and any change would need
to be significant for the recoverable amount not to exceed the carrying amount.
UNITI GROUP LIMITED ANNUAL REPORT 2021
92
NOTE 15. CURRENT AND NON-CURRENT LIABILITIES – TRADE AND OTHER PAYABLES
CONSOLIDATED
2021
$’000
2020
$’000
Current liability
Trade payables
13,319
5,601
Other payables
17,238
2,164
Accrued expenses
3,138
5,376
33,695
13,141
Non-current liability
Unearned Grant Income – South Australia Financing Authority Grant
1,411
1,411
1,411
1,411
Unearned Income of $1.4 million (2020: $1.4 million) was received in the prior year from the South Australia
Financing Authority but not yet recognised. This income will be brought to account as revenue progressively as grant
income criteria are met.
Refer to Note 24 for further information on financial instruments.
NOTE 16. CURRENT AND NON-CURRENT – CONTRACT LIABILITIES
CONSOLIDATED
2021
$’000
2020
$’000
Current liability
Customer contract liabilities
3,581
2,269
Non-current liability
Customer contract liabilities
–
–
3,581
2,269
Reconciliation
Reconciliation of the written down values at the beginning and end of the current and
previous financial year are set out below:
Opening balance
2,269
498
Additions as part of Business Combination
4,900
1,178
Revenue recognised from opening balance
(1,455)
(472)
Revenue recognised from acquired balance
(2,844)
(1,178)
Revenue deferred during the year
711
2,243
3,581
2,269
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
93
Unsatisfied performance obligations
The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the
end of the reporting period was $3.6 million as at 30 June 2021 ($2.3 million as at 30 June 2020) and is expected to
be recognised as revenue in future periods as follows:
CONSOLIDATED
2021
$’000
2020
$’000
Within 12 months
3,581
2,269
1 – 2 years
–
–
2 – 5 years
–
–
3,581
2,269
NOTE 17. CURRENT AND NON-CURRENT LIABILITIES – EMPLOYEE BENEFITS
CONSOLIDATED
2021
$’000
2020
$’000
Employee benefits – current
2,598
1,076
Employee benefits – non-current
107
93
2,705
1,169
Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes all unconditional entitlements where employees have
completed the required period of service and also those where employees are entitled to pro-rata payments in
certain circumstances. The entire amount is presented as current, since the consolidated entity does not have an
unconditional right to defer settlement. However, based on past experience, the consolidated entity does not expect
all employees to take the full amount of accrued leave or require payment within the next 12 months.
The following amounts reflect leave that is not expected to be taken within the next 12 months:
CONSOLIDATED
2021
$’000
2020
$’000
Employee benefits obligation expected to be settled after 12 months
638
295
UNITI GROUP LIMITED ANNUAL REPORT 2021
94
Notes to the Financial Statements
for the year ended 30 June 2021
NOTE 18. CURRENT AND NON-CURRENT LIABILITIES – CONTINGENT CONSIDERATION
CONSOLIDATED
2021
$’000
2020
$’000
Current liability
Contingent consideration for Fone Dynamics acquisition
–
1,747
Contingent consideration for LBNCo acquisition
2,799
2,692
2,799
4,439
Non-current liability
Contingent consideration for LBNCo acquisition
–
2,712
Contingent consideration for Velocity acquisition
32,808
–
32,808
2,712
The total contingent consideration for LBNCo and Velocity was measured at fair value as at 30 June 2021.
Refer to Note 24 for further information on contingent consideration.
NOTE 19. CURRENT AND NON-CURRENT LIABILITIES – DEFERRED CONSIDERATION
CONSOLIDATED
2021
$’000
2020
$’000
Current liability
Deferred consideration for Velocity acquisition
6,561
–
6,561
–
Non-current liability
Deferred consideration for Velocity acquisition
12,500
–
12,500
–
Refer to Note 24 for further information on deferred consideration.
NOTE 20. CURRENT AND NON-CURRENT LIABILITIES – BORROWINGS
CONSOLIDATED
2021
$’000
2020
$’000
Current liability
Bank loans
–
–
–
–
Non-current liability
Bank loans
265,625
–
Capitalised borrowing costs
(3,714)
–
261,911
–
UNITI GROUP LIMITED ANNUAL REPORT 2021
95
The Company executed a $320 million revolving syndicated facility agreement with Westpac Banking Corporation
and Commonwealth Bank of Australia taking effect 18 December 2020. The facility included a $315 million revolving
loan facility and a $5 million contingent instrument facility. The Company renegotiated a syndicated facility with
Westpac Banking Corporation, Commonwealth Bank of Australia and Macquarie Bank Limited taking effect 26 May
2021. The facility included a reduced $285 million revolving loan facility and a $5 million contingent instrument
facility. As at 30 June 2021, $19.4 million of the revolving loan facility was not utilised, with $265.6 million of the
revolving loan facility and $0.9 million of the contingent instrument facility utilised. Interest on the facility is incurred
at the aggregate of the reference bank bill rate plus a margin.
The key terms of the Facility are summarised below:
Security: Joint and several liability guarantee, with first-ranking security with respect to the Group’s present and after
acquired property.
Expiry: 18 December 2023.
The Company is subject to and is compliant with financial covenants and undertakings for the period ended 30 June
2021.
Refer to Note 24 for further information on financial instruments.
Description of Lease Arrangements
The Group leases land and buildings for its office spaces as well as network infrastructure, plant and equipment and
motor vehicles. The typical lease period of these leases is summarised below. Where leases include an option to
renew the lease after the end of the contract term, the Group assesses at the lease commencement whether it is
reasonably certain to exercise the extension options. It reassesses whether it is reasonably certain to exercise the
options if there is a significant event or significant change in circumstances within its control. Some leases provide
for additional rental payments that are based on changes in consumer price indices.
LEASE CATEGORY
TERM OF LEASE
RENEWAL OPTION AVAILABLE
Buildings
2 – 5 years
2 – 5 years
Network Infrastructure
2 – 10 years
2 – 10 years
Plant and Equipment
4 – 5 years
None
Motor Vehicles
8 years
None
Assets pledged as security
The lease liabilities are effectively secured as the rights to the leased asset, recognised in the statement of financial
position, revert to the lessor in the event of default.
NOTE 21. EQUITY – ISSUED CAPITAL
CONSOLIDATED
2021
SHARES
2020
SHARES
2021
$’000
2020
$’000
Ordinary shares – fully paid
676,537,743
433,453,275
777,917
421,812
UNITI GROUP LIMITED ANNUAL REPORT 2021
96
NOTE 21. EQUITY – ISSUED CAPITAL continued
CONSOLIDATED
DETAILS
DATE
SHARES
ISSUE PRICE
$’000
Balance
30 June 2019
147,034,060
n/a
46,691
Issue of share capital:
Issue of shares (Placement)
26 August 2019
15,548,988
$1.20
18,659
Issue of shares (Retail entitlement offer)
26 August 2019
19,131,363
$1.20
22,958
Issue of shares (Retail entitlement offer)
20 September 2019
48,803,240
$1.20
58,564
Issue of shares (Placement)
11 December 2019
26,505,383
$1.62
42,939
Issue of shares (Retail entitlement offer)
11 December 2019
17,105,166
$1.62
27,710
Issue of shares (Retail entitlement offer)
27 December 2019
8,795,543
$1.62
14,249
Issue of shares (Placement)
24 June 2020
108,480,884
$1.40
151,873
Share issue transaction costs
Various
n/a
n/a
(9,116)
244,370,567
n/a
327,836
Issue of shares to vendors on acquisition:
Issue of shares to Pivit vendor
4 July 2019
56,196
$1.42
80
Issue of shares to Fone Dynamics vendor
12 August 2019
12,556,059
$0.53
6,652
Issue of shares to LBNCo vendor
30 September 2019
9,384,755
$1.20
11,262
Issue of shares to OPENetworks vendor
31 October 2019
6,492,425
$1.45
9,389
Issue of shares to 1300 Australia vendor
16 December 2019
12,345,682
$1.62
20,000
Issue of shares to Pivit vendor
8 May 2020
140,550
–
–
Share issue transaction costs
Various
n/a
n/a
(189)
40,975,667
n/a
47,194
Other:
Issue of shares under employee shares
20 April 2020
94,828
$1.22
115
Conversion of share-based payment option on exercise
19 June 2020
648,153
$0.25
161
Conversion of share-based payment option on exercise
25 June 2020
330,000
$0.56
184
Reserves reclassification
n/a
n/a
(317)
2,028
Share issue transaction costs
Various
n/a
n/a
(52)
1,072,981
n/a
91
Balance
30 June 2020
433,453,275
n/a
421,812
Issue of share capital:
Issue of shares (Retail entitlement offer)
13 July 2020
84,372,830
$1.40
118,122
Issue of shares (Retail entitlement offer)
21 December 2020
33,333,334
$1.50
50,000
Issue of shares (Share Purchase Plan)
29 January 2021
13,335,093
$1.50
20,003
Share issue transaction costs
Various
n/a
n/a
(3,167)
131,041,257
n/a
184,958
Issue of shares to vendors on acquisition:
Issue of shares to OptiComm vendor
18 September 2020
5,001,901
$1.26
6,304
Issue of shares to OptiComm vendor
20 November 2020
104,943,217
$1.59
166,860
Issue of shares to HarbourISP vendor
1 December 2020
570,316
$1.41
804
Share issue transaction costs
Various
n/a
n/a
(3,458)
110,515,434
n/a
170,510
Other:
Conversion of share-based payment option on exercise
24 July 2020
277,780
$0.25
69
Conversion of share-based payment option on exercise
24 July 2020
277,780
$0.31
87
Conversion of share-based payment option on exercise
26 February 2021
648,153
$0.31
203
Conversion of share-based payment option on exercise
26 February 2021
11,824
-
-
Conversion of share-based payment option on exercise
15 March 2021
200,000
$0.17
34
Issue of shares under employee shares
31 March 2021
112,240
$2.17
244
1,527,777
n/a
637
Balance
30 June 2021
676,537,743
n/a
777,917
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
97
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the 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
and the company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
Reconciliation to proceeds from issue of shares
CONSOLIDATED
2021
$’000
2020
$’000
Issue of Shares
362,337
384,477
Business acquisitions
(173,968)
(40,747)
Repayment of contingent consideration
-
(6,652)
Share-based payments and reserve reclassification
149
202
188,518
337,280
NOTE 22. EQUITY – RESERVES
CONSOLIDATED
2021
$’000
2020
$’000
Share option and share rights reserve
14,943
6,065
14,943
6,065
Share option and share rights reserve
The reserve is used to recognise the fair value of share-based payments, in particular options issued to Directors and
Senior Management. In addition, share rights granted to Directors and Senior Management are recorded in the reserve.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
CONSOLIDATED
TOTAL
$’000
Balance at 30 June 2019
1,283
Options issued
4,465
Reserve reclassification
317
Balance at 30 June 2020
6,065
Share based payments
6,528
Equity settled short term incentives
576
Options issued to HarbourISP vendors
1,774
Balance at 30 June 2021
14,943
UNITI GROUP LIMITED ANNUAL REPORT 2021
98
NOTE 23. EQUITY – ACCUMULATED PROFITS / (LOSSES)
CONSOLIDATED
2021
$’000
2020
$’000
Accumulated losses at the beginning of the financial year
(6,183)
(22,104)
Profit after income tax expense for the year
29,195
15,921
Accumulated profits / (losses) at the end of the financial year
23,012
(6,183)
NOTE 24. FINANCIAL INSTRUMENTS
Financial risk management objectives
The consolidated entity’s activities expose it to a variety of financial risks: market risk (including foreign currency
risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity’s overall risk management
program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the
financial performance of the consolidated entity.
Market risk
Foreign currency risk
The consolidated entity undertakes limited transactions denominated in foreign currency and is exposed to limited
foreign currency risk through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial
liabilities denominated in a currency that is not the entity’s functional currency.
Price risk
The consolidated entity is not exposed to any significant price risk. Most customers in each entity sign up to a
contract term with an agreed price.
Interest rate risk
The Company executed a revolving syndicated facility agreement with Westpac Banking Corporation and
Commonwealth Bank of Australia taking effect 18 December 2020. As at 30 June 2021, $19.4 million of the revolving
loan facility not utilised, with $265.6 million of the revolving loan facility and $0.9 million of the contingent instrument
facility utilised. Interest on the facility is incurred at the aggregate of the reference bank bill rate plus a margin.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to
the consolidated entity. The consolidated entity has a code of credit, including obtaining agency credit information
when applicable, confirming references and setting appropriate credit limits The maximum exposure to credit risk
at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment
of those assets, as disclosed in the statement of financial position and notes to the financial statements. The
consolidated entity does not hold any collateral.
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
99
The consolidated entity has adopted a lifetime expected loss allowance in estimating expected credit losses to trade
receivables using a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered
representative across all customers of the consolidated entity based on recent sales experience, historical collection
rates and forward-looking information that is available.
The impact of COVID-19 on the allowance for calculation for expected credit losses calculation was assessed as at
30 June 2021. Please refer to Note 8.
The consolidated entity does not have a credit risk exposure as there is no single customer that represents a material
component of the outstanding debtor balance. There are no guarantees against receivables but management closely
monitors the receivable balance on a monthly basis and is in regular contact with this customers to mitigate risk.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this
include the failure of a debtor to engage in a repayment plan and, no active enforcement activity.
Cash and cash equivalents
Credit risk related to balances with banks and other financial institutions is managed by the Board.
The Group held cash and cash equivalents of $57.3 million as at 30 June 2021 and $189.2 million as at 30 June 2020.
The cash and cash equivalents are held with bank and financial institution counterparties, which are rated A to AA-,
based on Standard & Poor’s ratings.
Impairment on cash and cash equivalents has been measured on a 12-month expected loss basis and reflects the
short maturities of the exposures. The Group considers that its cash and cash equivalents have low credit risk based
on the external credit ratings of the counterparties. The Group uses a similar approach for assessment of ECLs for
cash and cash equivalents to those used for debt securities.
Liquidity risk
Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing
facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial
assets and liabilities.
Financing arrangements
Unused borrowing facilities at the reporting date:
CONSOLIDATED
2021
$’000
2020
$’000
Bank loans
19,375
–
19,375
–
Remaining contractual maturities
The following tables detail the consolidated entity’s remaining contractual maturity for its financial instrument liabilities.
The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest
date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows
disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the
statement of financial position.
UNITI GROUP LIMITED ANNUAL REPORT 2021
100
NOTE 24. FINANCIAL INSTRUMENTS continued
CONSOLIDATED – 2021
WEIGHTED
AVERAGE
INTEREST RATE
%
1 YEAR OR
LESS
$’000
BETWEEN 1
AND 2 YEARS
$’000
BETWEEN
2 AND
5 YEARS
$’000
OVER
5 YEARS
$’000
REMAINING
CONTRACTUAL
MATURITIES
$’000
Non-derivatives
Non-interest bearing
Trade payables
–
13,319
–
–
–
13,319
Other payables
–
3,140
–
–
–
3,140
Interest-bearing – fixed rate
Contingent Consideration
3.30%
2,799
32,808
–
–
35,607
Deferred Consideration
3.30%
6,561
12,500
–
–
19,061
Lease liability
8.21%
1,921
1,171
2,675
4,645
10,412
Bank loans
3.09%
–
–
265,625
–
265,625
Total non-derivatives
27,740
46,479
268,300
4,645
347,164
CONSOLIDATED – 2020
WEIGHTED
AVERAGE
INTEREST RATE
%
1 YEAR OR
LESS
$’000
BETWEEN 1
AND 2 YEARS
$’000
BETWEEN
2 AND
5 YEARS
$’000
OVER
5 YEARS
$’000
REMAINING
CONTRACTUAL
MATURITIES
$’000
Non-derivatives
Non-interest bearing
Trade payables
–
5,601
–
–
–
5,601
Other payables
–
7,540
–
–
–
7,540
Contingent consideration
–
4,439
2,712
–
–
7,151
Interest-bearing – fixed rate
Lease liability
8.21%
1,058
921
1,887
2,934
6,800
Total non-derivatives
18,638
3,633
1,887
2,934
27,092
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually
disclosed above.
The interest expense on lease liabilities incurred in FY21 was $417,000 (2020: $432,000). The interest expense on the
contingent and deferred consideration incurred in FY21 was $849,000 (2020: Nil).
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
101
NOTE 25. FAIR VALUE MEASUREMENT
Fair value
The fair value of financial assets and liabilities of the group approximate their carrying value.
Fair value hierarchy
The following tables detail the consolidated entity’s assets and liabilities, measured or disclosed 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
LEVEL 2
LEVEL 3
Measurements based on quoted
prices (unadjusted) in active
markets for identical assets or
liabilities that the entity can access
at the measurement date.
Measurements based on inputs
other than quoted prices included
in Level 1 that are observable for
the asset or liability, either directly
or indirectly.
Measurements based on
unobservable inputs for the asset
or liability.
CONSOLIDATED – 2021
LEVEL 1
$’000
LEVEL 2
$’000
LEVEL 3
$’000
TOTAL
$’000
Liabilities
Contingent consideration
–
–
35,607
35,607
Total liabilities
–
–
35,607
35,607
CONSOLIDATED – 2020
LEVEL 1
$’000
LEVEL 2
$’000
LEVEL 3
$’000
TOTAL
$’000
Liabilities
Contingent consideration
–
–
7,152
7,152
Total liabilities
–
–
7,152
7,152
There were no transfers between levels during the financial year. The fair value of assets and liabilities classified as
level three is determined by the use of models incorporating unobservable inputs and assumptions. Included within
the $35.6 million balance (FY20: $7.1 million) above is $2.8 million (FY20: $5.4 million) contingent consideration for the
LBNCo acquisition and $32.8 million for the Velocity acquisition. The LBNCo consideration has been calculated based
on amounts expected to be settled using estimated constructed and activated port numbers, developer revenue and
new development fee amounts. The Velocity consideration has been calculated based on the terms outlined in the Sale
Agreement, discounted to net present value.
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair
values due to their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market
interest rate that is available for similar financial liabilities.
UNITI GROUP LIMITED ANNUAL REPORT 2021
102
NOTE 26. KEY MANAGEMENT PERSONNEL DISCLOSURES
Compensation
The aggregate compensation made to directors and other members of key management personnel of the
consolidated entity is set out below:
CONSOLIDATED
2021
$
2020
$
Short-term employee benefits
2,049,713
1,657,330
Post-employment benefits
125,801
97,009
Long-term benefits
64,173
14,187
Equity settled options
5,156,924
3,822,214
7,396,611
5,590,740
NOTE 27. REMUNERATION OF AUDITORS
During the financial year the following fees were paid or payable for services provided by Deloitte Touche Tohmatsu,
the auditor of the company, its network firms and unrelated firms:
CONSOLIDATED
2021
$
2020
$
Audit services – Deloitte Touche Tohmatsu
Audit or review of the financial statements
341,000
170,000
Other services – Deloitte Touche Tohmatsu
File access fees
–
8,950
341,000
178,950
NOTE 28. CONTINGENT ASSETS
There are no contingent assets as at 30 June 2021.
NOTE 29. CONTINGENT LIABILITIES
As at 30 June 2021 the Company has provided bank guarantees of $1,054,545 to landlords and developers under the
$5 million contingent instrument facility (Note 20). As at 30 June 2020, the Company had given bank guarantees of
$1,651,000 on a term deposit and to various landlords.
NOTE 30. COMMITMENTS
CONSOLIDATED
2021
$’000
2020
$’000
Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
–
126
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
103
NOTE 31. RELATED PARTY TRANSACTIONS
Parent entity
Uniti Group Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in Note 34.
Key management personnel
Disclosures relating to key management personnel are set out in Note 26 and the remuneration report included in
the directors’ report.
Transactions with related parties
The following transactions occurred with related parties:
CONSOLIDATED
2021
$
2020
$
Payment for network tower right-of-use assets from Axicom Pty Limited
(director-related entity of Graeme Barclay)
513,959
497,389
Payment for network tower right-of-use assets from BSA Limited
(director-related entity of Graeme Barclay)
-
5,455
CONSOLIDATED
2021
$
2020
$
Current payables:
Trade payables to Axicom Pty Limited (director-related entity of Graeme Barclay)
49,758
110,674
NOTE 32. PARENT ENTITY INFORMATION
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
PARENT
2021
$’000
2020
$’000
Loss after income tax
(30,744)
(6,351)
Total comprehensive income
(30,744)
(6,351)
UNITI GROUP LIMITED ANNUAL REPORT 2021
104
NOTE 32. PARENT ENTITY INFORMATION continued
Statement of financial position
PARENT
2021
$’000
2020
$’000
Total current assets
(47,475)
169,892
Total assets
1,049,742
411,595
Total current liabilities
21,348
8,004
Total liabilities
315,282
13,155
Equity
Issued capital
777,917
421,812
Share-based payments option reserve
14,626
5,749
Accumulated losses
(58,083)
(29,121)
Total equity
734,460
398,440
Contingent liabilities
As at 30 June 2021, the parent entity has provided bank guarantees of $1,054,545 to landlords and developers under
the $5 million contingent instrument facility. The parent entity had given bank guarantees as at 30 June 2020 of
$1,651,000 on a term deposit and to various landlords (2019: $24,600 to various landlords).
Capital commitments
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 and 30 June 2020.
NOTE 33. BUSINESS COMBINATIONS
HarbourISP Pty Ltd
On 1 November 2020 the Company acquired 100% of HarbourISP Pty Ltd (HarbourISP) for a purchase consideration
of $11.8 million and 1 million options to acquire Uniti shares at an exercise price of $1.54. The purchase consideration
consisted of a cash payment of $8.7 million, $0.8 million scrip consideration and a contingent consideration of $2.2
million payable in cash ($0.5 million) and options ($1.8 million). The contingent consideration is payable 6 months
after the completion date and is payable only if the seller has provided all reasonable assistance and support to assist
Uniti achieving transition requirements including operating systems and business operations transitioned to Uniti.
The contingent consideration was fully paid as at 30 June 2021. HarbourISP specialises in delivery of superfast retail
broadband services in greenfields developments. The acquired business contributed revenues of $16.4 million and
profit before tax of $1.7 million to the consolidated entity for the period from 1 November 2020 to 30 June 2021.
Disclosure of the full year contributions for revenue and profit after tax for HarbourISP is impracticable due to the
changes that have occurred during the year readying the business for sale. Disclosure of the actual results for the full
year would be misleading to users. The values identified in relation to the acquisition of HarbourISP were provisional
as at 31 December 2020. The final values are as follows:
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
105
Details of the acquisition are as follows:
FINAL
$’000
Cash and cash equivalents
1,364
Trade receivables
747
Prepayments
341
Inventories
3
Deferred tax assets
104
Right of use assets
130
Customer contracts
1,856
Brand
2,867
Trade payables
(2,227)
Other payables
(455)
Contract liabilities
(325)
Lease liability
(130)
Deferred tax liability
(1,421)
Employee benefits provision
(395)
Net assets acquired
2,459
Goodwill
9,341
Acquisition-date fair value of the total consideration transferred
11,800
Representing:
Cash payable to vendor
9,222
Options issued in lieu of cash paid
1,774
Shares issued in lieu of cash paid
804
11,800
Cash used to acquire the business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
9,222
Less: Cash and cash equivalents
(1,364)
Net Cash used in the financial year ended 30 June 2021
7,858
UNITI GROUP LIMITED ANNUAL REPORT 2021
106
NOTE 33. BUSINESS COMBINATIONS continued
FINAL
$’000
Reconciliation:
Goodwill at 31 December 2020
7,060
Measurement period adjustments:
Trade receivables
(560)
Prepayments
295
Inventories
(38)
Deferred tax assets
(144)
Trade payables
57
Other payables
(17)
Contract liabilities
(325)
Net deferred tax liability
(4)
Net assets acquired
(736)
Acquisition-date fair value of the total consideration transferred
Revaluation of options contingent on performance hurdles issued in lieu of cash paid
1,545
Goodwill at 30 June 2021
9,341
OptiComm Limited
On 20 November 2020 the Company acquired 100% of the ordinary shares of OptiComm Limited and its controlled
entity, OptiComm Integration Pty Ltd, by way of a Scheme of Arrangement for the total consideration of $703.4
million. The purchase consideration consisted of cash payments of $530.3 million and $173.1 million scrip
consideration. The total purchase consideration includes shares acquired via share purchase agreements with certain
other OptiComm institutional shareholders prior to the completion of the Scheme of Arrangement. OptiComm
operates a FTTP network across Australia servicing both residential and business customers, including retirement
living, community and commercial clients. The acquired business contributed revenues of $66.5 million and profit
before tax of $40.3 million to the consolidated entity for the period from 20 November 2020 to 30 June 2021.
Disclosure of the full year contributions for revenue and profit after tax for OptiComm is impracticable due to the
changes that have occurred during the year readying the business for sale. Disclosure of the actual results for the full
year would be misleading to users. The values identified in relation to the acquisition of OptiComm were provisional
as at 31 December 2020. The final values are as follows:
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
107
Details of the acquisition are as follows:
FINAL
$’000
Cash and cash equivalents
7,422
Trade receivables
7,860
Prepayments
1,205
Deferred tax assets
6,783
Contract assets
102
Right of use assets – office leases
1,681
Leasehold improvements
1,073
Plant and equipment
1,112
Network infrastructure
84,891
Software
691
Customer contracts
56,022
Brand
568
Trade payables
(3,800)
Other payables
(2,881)
Contract liabilities
(4,575)
Lease liability
(1,806)
Employee benefits provision
(1,469)
Provisions
(455)
Deferred tax liability
(16,977)
Provisions for income tax
(500)
Net assets acquired
136,947
Goodwill
566,487
Acquisition-date fair value of the total consideration transferred
703,434
Representing:
Cash payable to vendor
530,270
Shares to be issued in lieu of cash paid
173,164
703,434
Cash used to acquire the business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
530,270
Less: Cash and cash equivalents
(7,422)
Net Cash used in the financial year ended 30 June 2021
522,848
UNITI GROUP LIMITED ANNUAL REPORT 2021
108
NOTE 33. BUSINESS COMBINATIONS continued
FINAL
$’000
Reconciliation:
Goodwill at 31 December 2020
566,640
Measurement period adjustments:
Trade receivables
787
Deferred tax assets
4,203
Network infrastructure
(8,259)
Software
534
Trade payables
1,924
Other payables
(1,596)
Contract liabilities
963
Provision for income tax
1,597
Net assets acquired
153
Goodwill at 30 June 2021
566,487
Telstra Velocity
On 24 December 2020 the Company acquired Telstra Velocity and South Brisbane Exchange assets (Velocity) for
$140 million from Telstra (ASX:TLS). The purchase consideration consists of a cash payment of $85 million upon
transaction completion, $20 million payable in 3 equal instalments over 3 years and $35 million payable upon
completion of migration of the assets. The $35 million payable represents a contingent consideration and will be
payable only if a specified number of Active Broadband Service is provided by the seller upon migration of the assets.
Velocity is Telstra’s optical fibre network that uses fibre-to-the-premises FTTP technology to deliver high-speed
broadband, phone, subscription TV and free-to-air services in Australia. The acquired business contributed revenues
and profit before tax of $11.3 million to the consolidated entity for the period from 24 December 2020 to 30 June
2021. Disclosure of the full year contributions for revenue and profit after tax for Velocity is impracticable due to the
changes that have occurred during the year readying the business for sale. Disclosure of the actual results for the full
year would be misleading to users.
The acquisition of the Velocity assets has been treated as a business combination, as opposed to an asset purchase.
This is consistent with AASB 3 Business Combinations. To be considered a business, an integrated set of activities
and assets must include, at a minimum, an input and a substantive process that together significantly contribute
to the ability to create outputs. The Company has acquired processes in order to manage the Velocity assets,
including a technology migration plan, as well as ongoing sales, services, and maintenance plans under a Heads of
Agreement. This Agreement requires the Company to adhere to key principles to ensure the acquired assets can
continually provide services in line with certain standards. Thus, these processes and standards are substantive, as
they are critical to the ability to continue producing income from these assets. The values identified in relation to the
acquisition of Velocity assets were provisional as at 31 December 2020. The final values are as follows:
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
109
Details of the acquisition are as follows:
FINAL
$’000
Network infrastructure
79,211
Net assets acquired
79,211
Goodwill
56,810
Acquisition-date fair value of the total consideration transferred
136,021
Representing:
Cash payable to vendor
85,000
Contingent consideration
32,271
Deferred consideration
18,750
Shares to be issued in lieu of cash paid
-
136,021
Cash used to acquire the business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
85,000
Less: Cash and cash equivalents
-
Net Cash used in the financial year ended 30 June 2021
85,000
FINAL
$’000
Reconciliation:
Goodwill at 31 December 2020
56,999
Measurement period adjustments:
Network infrastructure
(24)
Net assets acquired
(24)
Acquisition-date fair value of the total consideration transferred
Revaluation of the deferred consideration
(213)
Goodwill at 30 June 2021
56,810
Payment for purchase of businesses, net of cash acquired
2021
$’000
Acquisition of HarbourISP
7,858
Acquisition of OptiComm
522,848
Acquisition of Velocity assets
85,000
615,706
Other – deferred consideration payment
4,268
Other – asset purchase
682
620,656
UNITI GROUP LIMITED ANNUAL REPORT 2021
110
NOTE 34. INTERESTS IN SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned
subsidiaries in accordance with the accounting policy described in Note 1:
OWNERSHIP INTEREST
NAME
PRINCIPAL PLACE OF BUSINESS/
COUNTRY OF INCORPORATION
2021
2020
OptiComm Limited
Australia
100.00%
–
OptiComm Integration Pty Ltd
Australia
100.00%
–
HarbourISP Pty Ltd
Australia
100.00%
–
1300 Holdings Pty Ltd
Australia
100.00%
100.00%
1300 Australia Pty Ltd
Australia
100.00%
100.00%
Alpha Phone Words Pty Ltd
Australia
100.00%
100.00%
LBNCo Holdings Pty Ltd
Australia
100.00%
100.00%
LBNCo InterCo Pty Ltd
Australia
100.00%
100.00%
LBNCo BidCo Pty Ltd
Australia
100.00%
100.00%
LBN Co Pty Ltd
Australia
100.00%
100.00%
Service Elements Pty Ltd
Australia
100.00%
100.00%
Link Us Pty Ltd
Australia
100.00%
100.00%
Capital Fibre Networks Pty Ltd
Australia
100.00%
100.00%
OPENetworks Pty Ltd
Australia
100.00%
100.00%
Fuzenet Pty Ltd
Australia
100.00%
100.00%
Fibreworks Pty Ltd
Australia
100.00%
100.00%
Fone Dynamics Pty Ltd
Australia
100.00%
100.00%
Call Dynamics Pty Ltd
Australia
100.00%
100.00%
Uniti Air Pty Ltd
Australia
100.00%
100.00%
Uniti EST Pty Ltd
Australia
100.00%
100.00%
Uniti Play Pty Ltd
Australia
100.00%
100.00%
FDX Holdings Pty Ltd
Australia
100.00%
100.00%
ACN 619 678 787 Pty Ltd
Australia
100.00%
100.00%
FDX Infotech Pty Ltd
Australia
100.00%
100.00%
Fuzeconnect Pty Ltd
Australia
100.00%
100.00%
LK Internet Pty Ltd
Australia
100.00%
100.00%
Uniti Wireless Limited
Australia
100.00%
100.00%
Uniti Broadband Limited
Australia
100.00%
100.00%
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
111
NOTE 35. DEED OF CROSS GUARANTEE
A deed of cross guarantee between Uniti Group Limited and its entities listed above was enacted during the financial year
and relief was obtained from preparing individual financial statements for the Group under ASIC Corporations (Wholly-
owned Companies) Instrument 2016/785. Under the deed, Uniti Group Limited guarantees to support the liabilities and
obligations of its subsidiaries listed above. As its entities are a party to the deed the income statement and balance
sheet information of the combined class-ordered group is equivalent to the consolidated information presented in
this financial report.
NOTE 36. EVENTS AFTER THE REPORTING PERIOD
The global impact of the COVID-19 pandemic, and the advice and responses from health and regulatory authorities,
is continuously developing. The global economic outlook is facing uncertainty due to the COVID-19 pandemic
which has had and may continue to have significant impact on capital markets and share prices.
In addition, the COVID-19 global pandemic may specifically impact the projected growth rate of Uniti’s W&I business,
including any downturn in the property market which may lead to a delay in the construction of new developments
and in the signing of new developer agreements and/or delay in the construction of dwellings under these new
agreements, and/or increased vacancy rates, resulting in delays in the realisation of revenue from these contracts.
There is also a risk that the operations of Uniti may be interrupted by government enforced restrictions (such as
lockdowns) or other COVID-19 related health concerns. Uniti has not claimed any amounts under the Australian
Government JobKeeper Scheme during the financial year.
Although there is a level of inherent uncertainty as outlined above, there has not been any noticeable adverse
impact on the Group’s operations or profitability. Telecommunications remains an essential service and the current
environment has led to increased demand for telecommunications products and services.
No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly
affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs
in future financial years.
UNITI GROUP LIMITED ANNUAL REPORT 2021
112
NOTE 37. RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH FROM
OPERATING ACTIVITIES
CONSOLIDATED
2021
$’000
2020
$’000
Profit after income tax expense for the year
29,195
15,921
Adjustments for:
Depreciation and amortisation
21,418
6,853
Write-off of assets
88
57
Profit on disposal of plant and equipment
(3)
(3)
Business acquisitions transaction costs and restructure costs
13,928
5,168
Share-based payments
6,544
4,465
Non-cash share expense
244
115
Contingent and Deferred consideration
445
-
Capitalised borrowing costs
931
-
Income tax expense
15,042
(7,314)
Change in operating assets and liabilities:
(Increase) in trade and other receivables
(932)
(487)
(Increase)/Decrease in inventories
(45)
216
Decrease/(Increase) in deposits and prepayments
899
(344)
Decrease/(Increase) in contract assets
148
(184)
Increase/(Decrease) in trade and other payables
3,477
(1,960)
(Decrease) in employee benefits
(328)
(1,417)
(Decrease) in other provisions
(226)
(35)
(Decrease)/Increase in customer contract liability
(3,588)
593
Tax refund
116
-
Tax paid
(2,714)
-
Net cash from operating activities
84,639
21,644
NOTE 38. NON-CASH INVESTING AND FINANCING ACTIVITIES
2021
$’000
2020
$’000
Equity-settled contingent consideration
-
6,276
Shares issued under employee share plan
244
115
Share based payments under Senior Executive Incentive Plan (SEIP)
7,104
4,465
7,348
10,856
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
113
NOTE 39. CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
CONSOLIDATED
OTHER
LOANS
$’000
SAFA
LOAN
$’000
BANK
LOANS
$’000
LEASE
LIABILITY
$’000
TOTAL
$’000
Balance at 1 July 2019
15
2,460
–
6,865
9,340
Net cash from/(used in) financing and operating activities
(15)
(2,460)
–
(989)
(3,464)
Acquisition of right-of-use assets
–
–
–
628
628
Remeasurement of lease liability (Note 12)
–
–
–
(1,294)
(1,294)
Balance at 30 June 2020
–
–
–
5,210
5,210
Net cash from/(used in) financing and operating activities
–
–
265,625
(1,764)
263,861
Finance costs on bank loan
–
–
(3,714)
–
(3,714)
Acquisition of right-of-use assets
–
–
–
1,936
1,936
Remeasurement of lease liability (Note 12)
–
–
–
607
607
Balance at 30 June 2021
–
–
261,911
5,989
267,900
NOTE 40. EARNINGS PER SHARE
CONSOLIDATED
2021
$’000
2020
$’000
Profit after income tax
29,195
15,921
Profit after income tax attributable to the owners of Uniti Group Limited
29,195
15,921
NUMBER
NUMBER
Weighted average number of ordinary shares used in calculating basic earnings per share
607,186,809
274,015,626
Adjustments for calculation of diluted earnings per share:
Options over ordinary shares
29,298,463
15,690,104
Weighted average number of ordinary shares used in calculating diluted
earnings per share
636,485,272
289,705,730
CENTS
CENTS
Basic earnings per share
4.81
5.81
Diluted earnings per share
4.59
5.50
NOTE 41. SHARE-BASED PAYMENTS
A share option plan has been established by the consolidated entity and approved by shareholders at a general meeting,
whereby the consolidated entity may, at the discretion of the Nomination and Remuneration Committee, grant options
over ordinary shares in the company to certain key management personnel of the consolidated entity. Options granted
carry no dividend or voting rights, nor do they carry any rights to participate in any issues of shares of the Company
or any other entity. All options were granted over unissued, and on satisfaction of performance conditions that may
be applicable, fully paid ordinary shares in the Company. Options typically (unless Board determines otherwise, or
shareholders approve otherwise) vest based on the provision of service over the vesting period whereby the employee
becomes beneficially entitled to the option on vesting date. Options are exercisable by the holder from the vesting date.
UNITI GROUP LIMITED ANNUAL REPORT 2021
114
NOTE 41. SHARE-BASED PAYMENTS continued
Set out below are summaries of options granted under the plan:
2021
GRANT DATE
EXPIRY DATE
EXERCISE
PRICE
BALANCE AT THE
START OF THE
YEAR
GRANTED
EXERCISED
EXPIRED/
FORFEITED/
OTHER
BALANCE AT
THE END OF
THE YEAR
21/12/2018
30/06/2022
$0.25
3,072,786
–
–
–
3,072,786
21/12/2018
30/06/2023
$0.30
1,843,670
–
–
–
1,843,670
21/12/2018
30/06/2024
$0.38
1,843,670
–
–
–
1,843,670
13/02/2019
30/06/2024
$0.38
925,933
–
–
–
925,933
13/02/2019
30/06/2022
$0.25
277,780
–
(277,780)
–
–
13/02/2019
30/06/2023
$0.31
925,933
–
(925,933)
–
–
13/03/2019
30/06/2023
$0.17
200,000
–
(200,000)
–
–
13/03/2019
31/12/2022
$0.25
819,410
–
–
–
819,410
13/03/2019
30/06/2023
$0.30
819,410
–
–
–
819,410
13/03/2019
30/06/2024
$0.38
819,410
–
–
–
819,410
13/03/2019
30/06/2023
$0.25
200,000
–
–
–
200,000
15/04/2019
31/03/2023
$0.71
330,000
–
–
–
330,000
15/04/2019
31/03/2024
$0.86
590,000
–
–
–
590,000
10/09/2019
10/09/2023
$1.35
660,000
–
–
–
660,000
10/09/2019
10/09/2024
$1.50
660,000
–
–
–
660,000
10/09/2019
10/09/2025
$1.65
930,000
–
–
–
930,000
18/10/2019
18/10/2023
$1.62
200,000
–
–
–
200,000
18/10/2019
18/10/2024
$1.77
200,000
–
–
–
200,000
18/10/2019
18/10/2025
$1.92
250,000
–
–
–
250,000
5/11/2019
30/06/2022
$1.35
669,868
–
–
–
669,868
5/11/2019
31/12/2022
$1.35
178,632
–
–
–
178,632
5/11/2019
31/03/2023
$1.35
71,940
–
–
–
71,940
5/11/2019
30/06/2023
$1.35
580,551
–
–
–
580,551
5/11/2019
31/03/2024
$1.35
71,940
–
–
–
71,940
5/11/2019
30/06/2024
$1.35
580,551
–
–
–
580,551
5/11/2019
31/03/2025
$1.35
128,620
–
–
–
128,620
27/04/2020
26/04/2024
$1.38
80,000
–
–
–
80,000
27/04/2020
26/04/2025
$1.53
80,000
–
–
–
80,000
27/04/2020
26/04/2026
$1.68
90,000
–
–
–
90,000
3/12/2020
30/06/2023
$1.48
–
3,534,024
–
–
3,534,024
3/12/2020
30/06/2024
$1.48
–
3,534,024
–
–
3,534,024
3/12/2020
30/06/2025
$1.48
–
3,534,024
–
–
3,534,024
15/04/2021
30/06/2027
$2.17
–
1,000,000
–
–
1,000,000
Balance as at 30 June 2021
18,100,104
11,602,072
(1,403,713)
-
28,298,463
Notes to the Financial Statements
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
115
Set out below are the options exercisable, that vested at the end of the financial year:
GRANT DATE
EXPIRY DATE
2021
NUMBER
2020
NUMBER
26/10/2018
30/06/2022
3,072,786
3,072,786
26/10/2018
30/06/2023
1,843,670
1,843,670
26/10/2018
30/06/2024
1,843,670
-
13/02/2019
30/06/2022
-
925,933
13/02/2019
30/06/2023
-
925,933
12/03/2019
30/06/2023
200,000
-
13/03/2019
30/06/2022
-
200,000
13/03/2019
31/12/2022
819,410
819,410
13/03/2019
30/06/2023
819,410
1,019,410
13/03/2019
30/06/2024
819,410
-
15/04/2019
31/03/2023
-
330,000
15/04/2019
31/03/2024
330,000
-
10/09/2019
10/09/2023
660,000
-
18/10/2019
18/10/2023
200,000
-
5/11/2019
30/06/2022
669,868
669,868
5/11/2019
31/12/2022
178,632
178,632
5/11/2019
31/03/2023
71,940
71,940
5/11/2019
30/06/2023
580,551
580,551
5/11/2019
31/03/2024
71,940
-
5/11/2019
30/06/2024
580,551
-
27/04/2020
26/04/2024
80,000
-
3/12/2020
30/06/2023
3,534,024
-
3/12/2020
30/06/2024
3,534,024
-
19,909,886
10,638,133
For the options granted during the current financial year, the valuation model inputs used to determine the fair value
at the grant date, are as follows:
GRANT DATE
EXPIRY DATE
SHARE PRICE
AT GRANT
DATE
EXERCISE
PRICE
EXPECTED
VOLATILITY
DIVIDEND
YIELD
RISK-FREE
INTEREST
RATE
FAIR VALUE AT
GRANT
DATE
3/12/2020
30/06/2023
$1.53
$1.48
31%
0.0%
0.11%
$0.32
30/06/2024
$1.53
$1.48
31%
0.0%
0.11%
$0.37
30/06/2025
$1.53
$1.48
31%
0.0%
0.11%
$0.41
15/04/2021
30/06/2027
$2.60
$2.17
26%
0.0%
0.09%
$0.85
UNITI GROUP LIMITED ANNUAL REPORT 2021
116
In the directors’ opinion:
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards
the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board as described in Note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity’s financial position
as at 30 June 2021 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become
due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
Graeme Barclay
Chairman
24 August 2021
Director’s Declaration
for the year ended 30 June 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
117
Independent Auditor’s Report
for the year ended 30 June 2021
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
117
Deloitte Touche Tohmatsu
ABN 74 490 121 060
477 Collins Street
Melbourne, VIC, 3000
Australia
Phone: +61 3 9671 7000
www.deloitte.com.au
Independent Auditor’s Report to the members of
Uniti Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Uniti Group Limited (the “Company”) and its subsidiaries (the “Group”)
which comprises the consolidated balance sheet as at 30 June 2021, the consolidated statement of profit or loss
and other comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies and other explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial
performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our
report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional 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
directors of the Company, would be in the same terms if given to directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial report for the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
UNITI GROUP LIMITED ANNUAL REPORT 2021
118
Independent Auditor’s Report
for the year ended 30 June 2021
118
Key Audit Matter
How the scope of our audit responded to the Key Audit Matter
Assessment of the recoverability of goodwill
Refer to note 14
As at 30 June 2021, the Group had goodwill totalling $809
million. The recoverability of goodwill is subject to
judgement in determining assumptions and estimates
involved in evaluating the recoverable amounts of the cash
generating units (“CGUs’). The CGUs disclosed are:
•
Consumer & Business ;
•
Wholesale & Infrastructure; and
•
Customer Platforms as a Service.
As disclosed in note 14, management applied a ‘value in
use’ approach for all CGUs. Under this approach,
discounted cash flow models were prepared, which
included significant judgements and estimates relating to:
•
Future cash flows for each CGU;
•
Discount rates; and
•
Terminal value growth rates.
Changes to these assumptions can impact the recoverable
amount determined for each CGU.
Our procedures included, but were not limited to:
•
Assessing the design and implementation of key controls
relating to the preparation of the value-in-use models;
•
Assessing the determination of the Group’s CGUs based on
our understanding of the nature of the Group’s businesses
and how independent cash flows are derived;
•
Agreeing forecast cash flows to the latest Board approved
budget and assessing the accuracy of management’s
forecasting;
•
With the assistance of our valuation specialists we:
o
Assessed management’s value-in-use methodology;
o
Challenged key assumptions, including forecast
growth rates by comparing them to historical results
and economic forecasts including the impact of
COVID-19;
o
Performed a cross-check against comparable
companies to assess the reasonableness of the
value-in-use models;
o
Evaluated the discount rate used by assessing the
cost of capital for each CGU by comparison to
market data such as IBISWorld industry reports;
o
Tested the mathematical accuracy of the valuation
model; and
o
Assessed management’s sensitivity analyses around
key assumptions and estimates used in the valuation
model.
We also assessed the appropriateness of the disclosures included in
the notes to the financial statements.
Accounting for acquisitions in the current period
Refer to note 33
The Group acquired several businesses during the 30 June
2021 financial year and finalised the accounting for certain
acquisitions that were provisionally accounted for at 31
December 2020.
Significant judgement is involved in relation to acquisition
accounting including:
•
Determining the determination of the acquisition
as a business combination or asset purchase;
•
Determining the fair value of acquired tangible
assets such as network infrastructure; and
•
Identifying and valuing intangible assets acquired
in the business combination such as customer
relationships and brand names.
Changes in the above matters can impact the amount of
goodwill recognised for each of the respective acquisitions.
Our procedures included, but were not limited to:
•
Reviewing the sale agreements to understand key terms
and conditions;
•
Assessing the procedures performed by management
regarding the:
o
Application of AASB 3 Business Combinations to the
transaction including the determination of whether
the transaction is a business combination or an asset
acquisition; and
o
Identification and valuation of acquired assets and
liabilities, including intangible assets.
•
With the assistance of our valuation specialists we:
o
Assessed the third party valuations utilised by
management in their determination of fair value of
assets acquired;
o
Evaluated the methodology and assumptions used
by the third party in the valuation performed; and
o
Assessed the competence and objectivity of the
third party.
We also assessed the appropriateness of the disclosures included in
the notes to the financial statements.
UNITI GROUP LIMITED ANNUAL REPORT 2021
119
119
Other Information
The directors are responsible for the other information. The other information comprises the Directors’ Report,
which we obtained prior to the date of this auditor’s report and also includes the following information which will
be included in the annual report (but does not include the financial report or our auditors report thereon): Annual
Review, which is expected to be made available to us after that date.
Our opinion on the financial report does not cover the other information and accordingly we do not and will not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information identified
above and, in doing so, consider whether the other information is materially inconsistent with the financial report
or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work
we have performed on the other information that we obtained prior to the date of this auditor’s report, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We
have nothing to report in this regard.
When we read the Annual Review, if we conclude that there is a material misstatement therein, we are required
to communicate the matter to the directors and use our professional judgement to determine the appropriate
action.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group 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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
UNITI GROUP LIMITED ANNUAL REPORT 2021
120
120
•
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the directors.
•
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
•
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 34 to 55 of the Directors’ Report for the year ended
30 June 2021.
In our opinion, the Remuneration Report of Uniti Group Limited, for the year ended 30 June 2021, complies with
section 300A of the Corporations Act 2001.
UNITI GROUP LIMITED ANNUAL REPORT 2021
121
121
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Chris Biermann
Partner
Chartered Accountants
Melbourne, 24 August 2021
UNITI GROUP LIMITED ANNUAL REPORT 2021
122
UNITI GROUP LIMITED ANNUAL REPORT 2021
Shareholder Information
30 June 2021
ASX Additional Shareholder Information
Additional information required by the ASX Listing Rules and not disclosed elsewhere in this report is set out below
and was applicable as at 31 July 2021 (unless otherwise stated).
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
HOLDINGS RANGES
HOLDERS
TOTAL UNITS
%
1-1,000
3,712
1,959,770
0.290
1,001-5,000
4,011
10,456,481
1.530
5,001-10,000
1,602
12,098,026
1.770
10,001-100,000
2,132
56,251,693
8.220
100,001-9,999,999,999
248
603,913,135
88.200
Total
11,705
684,679,105
100.000
EQUITY SECURITY HOLDERS
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted and unquoted ASX escrow equity securities are listed below:
ORDINARY SHARES
NUMBER HELD
% OF TOTAL SHARES ISSUED
J P Morgan Nominees Australia Pty Limited
131,616,131
19.223%
HSBC Custody Nominees (Australia) Limited
81,863,642
11.956%
National Nominees Limited
71,374,332
10.424%
Citicorp Nominees Pty Limited
51,381,327
7.504%
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
25,814,235
3.770%
Cornish Group Investments Pty Ltd
23,480,000
3.429%
BNP Paribas Noms Pty Ltd
20,951,084
3.060%
UBS Nominees
13,905,665
2.031%
Cannes Management Pty Ltd
10,154,854
1.483%
Asoon Holdings Pty Ltd
9,258,663
1.352%
Certane Ct Pty Ltd
5,756,810
0.841%
BNP Paribas Nominees Pty Ltd
5,274,369
0.770%
Capital B Asset Management Pty Ltd
5,000,000
0.730%
Bowen Family Super Co Pty Ltd
4,797,372
0.701%
Mr Michael John Simmons
4,676,881
0.683%
Mr Vaughan Bowen
4,547,771
0.664%
Sandhurst Trustees Ltd
3,974,987
0.581%
Thirty Fourth Zulu Pty Ltd
3,822,529
0.558%
Citicorp Nominees Pty Limited
3,670,049
0.536%
Dr Jules Willem Johan Mathys Maussen
3,657,500
0.534%
Total Securities of Top 20 Holdings
484,978,201
70.833%
UNITI GROUP LIMITED ANNUAL REPORT 2021
123
RESTRICTED SECURITIES
The following securities have escrow restrictions applicable:
Ordinary Securities Subject To Voluntary Escrow
Release 18 November 2021
570,316
Total
570,316
SUBSTANTIAL HOLDERS
No shareholder holds more than 5% interest in the Group
VOTING RIGHTS
The voting rights attached to ordinary shares are set out below:
Ordinary shares including Voluntary and ASX Escrow shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
Options
Options have no voting rights.
There are no other classes of equity securities.
On Market Buy Back
There is no current on market buy back.
Use of Proceeds
In accordance with Listing Rule 4.10.19, the Company confirms that it has used cash and assets in a form readily
convertible to cash in a way consistent with its business objectives during the period 13 February 2019 (date of
listing) and 30 June 2021.
UNITI GROUP LIMITED ANNUAL REPORT 2021
124
Corporate Directory
DIRECTORS
Graeme Barclay
Kathy Gramp
John Lindsay
Vaughan Bowen
Michael Simmons
COMPANY SECRETARY
Ashe-lee Jegathesan
ANNUAL GENERAL MEETING
26 November 2021
Please refer to our website for further detail:
www.unitigrouplimited.com
REGISTERED OFFICE
Level 1, 44 Currie Street
Adelaide SA 5000
Phone: 1300 847 201
PRINCIPAL PLACE OF BUSINESS
Level 1, 44 Currie Street
Adelaide SA 5000
Phone: 1300 847 201
SHARE REGISTER
Boardroom Pty Limited
Grosvenor Place
Level 12, 225 George Street
Sydney NSW 2000
Phone: 1300 808 280
AUDITOR
Deloitte Touche Tohmatsu
477 Collins Street
Melbourne VIC 3000
STOCK EXCHANGE LISTING
Uniti Group Limited shares are listed on the Australian
Securities Exchange (ASX code: UWL)
WEBSITE
www.unitigrouplimited.com
UNITI GROUP LIMITED ANNUAL REPORT 2021
125
Notes
UNITI GROUP LIMITED ANNUAL REPORT 2021
126
Notes
www.unitigrouplimited.com