Announcement PDF 1. Company details Name of entity: Spenda Limited 2024 Appendix 4E Spenda Limited ABN 67 099 084 143 1. Company details Name of entity: ABN Reporting period: Previous period: Spenda Limited 67 099 084 143 For the year ended 30 June 2024 For the year ended 30 June 2023 2. Results for announcement to the market Revenues from ordinary activities Loss from ordinary activities after tax attributable to the owners of Spenda Limited Year ended 30 June 2024 $ Year ended 30 June 2023 $ Movement $ % 5,375,010 3,111,513 2,263,497 73% (13,205,019) (11,002,914) (2,202,105) 20% Refer to commentary on the results of the period within the review of operations and results of the period contained within the financial report. 3. Net tangible assets Net tangible assets (liabilities) per ordinary security 30 June 2024 cents 30 June 2023 cents 0.001 0.002 4. Control gained over entities Spenda Cash Flow Trust 2. 5. Loss of control over entities Not applicable. 6. Dividends There were no dividends paid, recommended, or declared during the current financial period or previous period. 7. Dividend reinvestment plans Not applicable. 8. Details of associates and joint venture entities Not applicable. 9. Compliance Statement This report has been prepared in accordance with AASB standards, other AASB authoritative pronouncements and interpretations or other standards acceptable to the ASX. No other standards have been applied. This report and the accounts upon which the report is based use the same accounting policies. This report gives a true and fair view of the matters disclosed. 10. Audit qualification or review This preliminary financial report is based on the audited annual report of Spenda Limited for the year ended 30 June 2024. The Company received an unqualified audit report, as detailed in the Independent Auditors Report to Members contained within the Annual report. Signed on behalf of Spenda Limited _______________________ Justyn Stedwell Company Secretary 29 August 2024 2024 Annual Report Spenda Limited ABN 67 099 084 143 Contents Corporate directory 1 Corporate governance statement 2 Directors’ report 3 Remuneration Report (Audited) 15 Auditor’s independence declaration 33 Consolidated statement of profit or loss and other comprehensive income 34 Consolidated statement of financial position 35 Consolidated statement of changes in equity 36 Consolidated statement of cash flows 37 Notes to the consolidated financial statements 38 Consolidated Entity Disclosure Statement 71 Directors’ declaration 72 Independent auditor's report 73 Additional stock exchange information 78 Corporate directory Directors Peter Richards (Non-Executive Chairman) Adrian Floate (Managing Director and Chief Executive Officer) Howard Digby (Non-Executive Director) Stephen Dale (Non-Executive Director) David Laird (Non-Executive Director) Andrew Kearnan (Non-Executive Director) Company secretary Justyn Stedwell Registered office Building B, The Garden Park 355 Scarborough Beach Road Osborne Park, Perth, Western Australia 6017 Principal place of business Building B, The Garden Park 355 Scarborough Beach Road Osborne Park, Perth, Western Australia 6017 Share registry Automic Registry Services Level 5, 126 Philip Street Sydney, New South Wales 2000 Phone (local): 1300 288 664 Phone (international): +61 (2) 9698 5414 www.automic.com.au Auditor HLB Mann Judd Level 4, 130 Stirling Street, Perth, Western Australia 6000 Lawyers Murcia Pestell Hillard Pty Ltd Suite 183, Level 6 580 Hay Street Perth, Western Australia 6000 Bankers Australia & New Zealand Banking Group Limited 833 Collins Street, Melbourne, Victora 3000 Stock exchange listing Spenda Limited’s shares are listed on the Australian Securities Exchange (ASX code: SPX) Website Spenda Limited • 2024 Annual Report www.spenda.co 1 Corporate governance statement In recognising the need for the highest standards of corporate behaviour and accountability, the Directors support the principles of Corporate Governance. Where deemed appropriate, the Company follows the best practice recommendations as set out by the ASX Corporate Governance Council. Where the Company has not followed best practice for any recommendation, an explanation is given in the Corporate Governance Statement. The Company’s Corporate Governance Statement is available on the Company’s website at www.spenda.co Spenda Limited • 2024 Annual Report 2 Directors’ report The Directors present their report together with the financial report of the consolidated entity (referred to hereafter as the ‘Group’) consisting of Spenda Limited (‘Spenda’ or ‘the Company’) and the entities it controlled at the end of, or during, the year ended 30 June 2024. Directors The following persons were directors of the Company during the whole financial year and up to the date of this report, unless stated otherwise:  Peter Richards   Adrian Floate Howard Digby   Stephen Dale David Laird – appointed 27 September 2023  Andrew Kearnan – appointed 29 May 2024 Principal activities The Group offers an integrated platform that enables businesses across the supply chain to sell better and get paid faster. Spenda is both a software solutions provider and a payment processor, delivering the essential infrastructure to streamline processes before and after the payment event. The payments solution has three components – Software, Payments and Lending – and enables end to end einvoicing integration, rapid ordering, digital trust and automated reconciliation. Spenda creates an industry standard operating environment (‘SoE’) that enables the effective and seamless transfer of data from multiple, disparate software systems in one standardised technology solution. Spenda provides the services of five vendors into one solution with end-to-end software and supply integration as well as ledger-to-ledger integration to improve operational efficiency for all trading parties in the supply chain. Spenda captures transactions and payments through the value chain, generating layered revenue streams from SaaS, both B2B and B2C payments and B2B supply chain finance. Spenda’s ability to analyse and understand payment flows throughout these networks enables the Company to offer customised financing solutions to clients, to improve their working capital efficiency and cash utilisation throughout their operations. Dividends The Company did not pay any dividends during the 2024 financial year (2023: $nil). The Directors do not recommend the payment of a dividend in respect to the 2024 financial year. Spenda Limited • 2024 Annual Report 3 Directors’ Report (continued) Review of results and operations Results summary The below table details key financial information for the year ended 30 June 2024 (FY24), with FY23 comparative: 30 June 2024 30 June 2023 Movement $ $ $ 2,842,535 2,532,475 938,790 2,172,723 1,903,745 359,752 Other income 163,702 250,643 (86,941) Total income 5,538,712 3,362,156 2,176,556 (2,246,013) (5,545,952) (1,417,929) (5,254,173) (828,084) (291,779) Other expenses Less: non-cash expenses/benefits (2,919,176) (2,331,633) (587,543) Share-based payment expense Fair value adjustment on non-current asset (1,823,051) (1,725,000) (1,498,960) - (324,091) (1,725,000) Depreciation and amortisation expense Borrowing costs (3,662,728) (773,652) (3,854,967) - 192,239 (773,652) (48,159) (7,408) (40,751) (13,205,019) (11,002,914) (2,202,105) Revenue – SaaS and Payments Revenue – Loan Interest Cost of services rendered Employee and directors’ benefits expense Income tax expense Statutory net loss after income tax expense Revenue for FY24 was $5.4m compared to FY23 revenue of $3.1m, representing an increase of $2.3m or 73%. This increase was predominantly driven by the expansion of services provided to key strategic customers and new revenue streams generated through blending Software, Payments and Lending. The statutory net loss after income tax expense for FY24 was $13.2m (FY23: loss of $11m). The FY24 results included the following non-cash items:   $1.8m share-based payments expense; $1.7m fair value adjustment through profit or loss;  $3.7m depreciation and amortisation expense; and  $0.8m borrowing costs. Operating costs have increased from the prior year, which is mainly attributable to the growth in employee headcount to meet the business objectives. During the year the Company has increased its total headcount to 78 personnel as at 30 June 2024 (FY23: 71). The Group had a closing cash and cash equivalents position of $9.8m (restricted $5.4m), as of 30 June 2024 and a client loan portfolio of $10.8m, representing loan capital deployed to multiple customers. The Group’s net cash position of $6.6m as at 30 June 2024 is represented in the below table: Net cash position $ Cash and cash equivalents (A) 9,837,055 Gross client loan book 10,754,227 Less: Debt Warehouse facility (14,000,000) Net client loan book (B) (3,245,773) Net cash position (A + B) 6,591,282 Spenda Limited • 2024 Annual Report 4 Directors’ Report (continued) Review of results and operations (continued) Operations summary In FY24, Spenda continued to lay the foundations for long-term, sustainable revenue and earnings. In the past year, Spenda signed multiple strategic partnerships, continued to scale all product lines and increased payments volumes across the platform. Key highlights include:  Signed strategic partnerships with the following: o Carpet Court Australia Limited (“Carpet Court”): Entered into a five-year exclusive agreement to offer lending services to the Carpet Court Store network, following roll out of payments solutions between the store network and head office o Capricorn Society Ltd (“Capricorn”): Signed a 10-year Master Services and License Agreement (“MSLA”) with Capricorn for the provision of software and ecommerce payments infrastructure and cornerstone investment by Capricorn, raising $7.2m o AirPlus International GmbH (“Airplus”): Entered into a partnership with AirPlus to jointly offer a virtual credit card product o eBev.com Pty Ltd (“eBev”): Signed binding Memorandum of Understanding (“MOU”) with eBev to provide integrated payments solutions across the eBev marketplace  Continued to scale all product lines: o All product lines, including Spenda Accounts Receivable (“SpendaAR”), Spenda Accounts Payable (“SpendaAP”), Payment Widget with corresponding SaaS software licensing fees, increased in FY24  o Launch of Payment Facilitator (“PayFac”) merchant payment services o Ongoing work on the Spenda retail Standard Operating Environment (“SOE”) Total payment volumes on the Spenda platform up 160% on pcp to $250m Key Strategic Partnerships Carpet Court Carpet Court is the largest retail floor covering specialist in Australia, with a growing network of 205 franchised stores, with a presence in every State and Territory. Spenda and Carpet Court commenced working together in late 2022 to transform the network’s payments infrastructure, from end-consumer right through to suppliers, by digitizing the store invoice-to-payment processes and improving data integration and analysis throughout the network. Spenda’s Pay-Statement-By-Link (“Spenda PSBL”) payments infrastructure is now used across the Carpet Court franchise network, where 100% of the payments flow from the 205 stores to Carpet Court’s National Support Centre (“NCS”) is processed through the Spenda platform. Spenda’s two core products, SpendaAR and Spenda PSBL solutions now deliver e-Invoicing, dispute management and B2B payments to the Carpet Court network. In July 2023, Spenda announced a five-year exclusive agreement with Carpet Court to offer lending services to the store network. By the end of FY24, Spenda was processing stable B2B volumes of approximately $20m per month on its platform, from the roll out of SpendaAR to Carpet Court Head Office. Spenda Limited • 2024 Annual Report 5 Directors’ Report (continued) Review of results and operations (continued) Carpet Court (continued) The continued rollout of B2C payments, including digital payment options and Spenda Point of Sale (“POS”) terminals in-store, is expected in FY25 together with the planned roll out of the SOE to Carpet Court stores, which will enable them to manage their quote-to-install payment flows. Capricorn Capricorn is a member-based organisation established in 1974 to primarily support businesses in the automotive industry. Its current network consists of over 28,000 members and more than 2,000 preferred Suppliers in every State and Territory in Australia and New Zealand. Capricorn’s members purchase ~$270 million per month in parts from the approved Supplier network. In December 2023, Spenda signed a 10-year MSLA with Capricorn for the provision of software and ecommerce payments infrastructure, following the successful completion of the Foundation Stage of the Digital Services Delivery (“DSD”) initiative. The DSD initiative is a significant and strategic project that upgrades the payments infrastructure to Capricorn’s Member and preferred Supplier network to increase productivity and create efficiencies for Members, preferred Suppliers and Capricorn. The new payments solutions will enable all Capricorn Members to access eCommerce payment solutions, that are powered by Spenda. In 2H FY24, Spenda worked closely with Capricorn to customise its payments infrastructure for use by Capricorn’s Members and preferred Supplier network, with the onboarding of the network expected in 1H FY25. The parties have also agreed to a 5+5 year option, which if exercised, would extend the agreement to a 20-year term. The MSLA lays a foundation for both parties to build further joint initiatives that can improve the digitisation of the automotive industry over a decades long horizon. In January 2024, Capricorn became a cornerstone investor in Spenda, raising $7.2m via a private placement, reflecting Capricorn’s confidence in Spenda’s unique payments software and the Company’s earnings potential over time. In Q4 FY24, Spenda completed the 2nd milestone in the Capricorn DSD project, with the commercial launch of the new payment infrastructure on track for 1H FY25. Over half of the $1.3m development fees have now been received, with the remaining expected by the end of 2024. AirPlus AirPlus International is a leading international provider of solutions in the corporate payment segment. In November 2023, Spenda signed a payment processing agreement with AirPlus to jointly offer a virtual credit card product, which enables the generation of credit card numbers for specific purposes or durations. This virtual credit card product enables Spenda’s clients to access funds for purchases, utlising Spenda’s AP and Payment Widget software. The addition of this capability is expected to enable scaling of client payment volumes by providing access to working capital from portable and flexible credit solutions. This agreement significantly expands Spenda’s addressable market and both parties are working together to develop a pipeline of opportunities to grow the virtual credit card product. In 2H FY24, there was strong growth in the roll out of new AirPlus facilities for both new and existing clients, with total approved limits of $6.5m as at 30 June 2024, generating over $200k in revenue in Q4 FY24, up from $35k in Q3 FY24. Continuing growth in SpendaAP adoption and AirPlus facilities is expected in FY25. Spenda Limited • 2024 Annual Report 6 Directors’ Report (continued) Review of results and operations (continued) eBev eBev is a software provider with a platform that enables licensed premises to order alcoholic beverages from eBev’s approved catalogue. eBev has over 2,500 licensed premises (buyers) purchasing through its platform on a regular basis. eBev has a catalogue of approximately 70,000 products from 12,000 beverage producers and 800 distributors. eBev’s ecosystem and its customers’ process $13.6 billion in B2B and B2C transactions annually. In December 2023, Spenda entered into a binding MOU with eBev to provide integrated payments solutions across the eBev marketplace, which encapsulates the entire supply chain from the distributor, to licensed premises and through to the end-consumer. Spenda is integrating its PSBL and AP solutions into the eBev platform across the hospitality supply chain. eBev and Spenda will supply licensed premises with merchant services that enable them to take B2C payments via both physical and virtual terminals, as well as e-invoicing services and payment services. In addition, licensed premises will, subject to credit approval, have access to virtual credit cards, which will enable them to purchase goods from the eBev platform on standard statement terms, via PSBL. Spenda’s Land and Expand Growth Strategy Across all partnerships, Spenda is focused on a ‘land and expand’ strategy whereby Spenda starts with an initial project (at the Aggregator level, being the Buying Group or Franchisor) to build trust and credibility and then moves into a long-term relationship to implement digital transformation across the client’s network, encapsulating their entire supply chain from consumer to manufacturer, as depicted below. Figure 1. Spenda’s Land and Expand Model Spenda’s strategy is to disintermediate supply chains and aggregator networks with an ecosystem that solves problems throughout the whole supply chain or network. This strategy reduces competitive threats by embedding essential infrastructure throughout the whole supply chain, building sustainable recurring revenue over the long-term and generating positive Return on Investment (“ROI”) for the client through improved operational efficiency. Spenda Limited • 2024 Annual Report 7 Directors’ Report (continued) Review of results and operations (continued) Spenda’s business model is to offer bundled solutions across the network and generate revenue from a combination of SaaS, payments and lending across different products. Figure 2. Spenda’s products through the supply chain or network Spenda has bundled solutions for:  Network engagement – e-Invoicing, dispute management, B2B payments;  Demand side engagement – SOE and B2C payments; and  Supply side engagement – Procurement and Early Settlement Discounts (“ESD”). Early evidence of the successful execution of this strategy can be seen in the significant increase in payment volume running through the Spenda platform over the past two financial years. Figure 3. Payments volumes on Spenda platform over past two financial years Total payment volume on Spenda’s platform was up 160% on pcp, from $96m in FY23 to $250m in FY24, primarily due to increased volumes through the Carpet Court network. Spenda Limited • 2024 Annual Report 8 Directors’ Report (continued) Significant changes in the state of affairs Other than as referred to elsewhere in this report, there have been no other significant changes in the state of affairs. Matters subsequent to the end of the financial year On 16 July 2024, the Company announced it had signed a binding Share Sale Agreement (“SSA”) to acquire 100% of the issued capital of Limepay Pty Ltd (“Limepay”), for up to $8m, in an all-script transaction. Under the key terms of the SSA, the Company has agreed to acquire all of the issued shares in Limepay. The consideration for the acquisition is 100% scrip, split across four tranches, with the Company agreeing to issue in aggregate up to a total maximum of 508,272,334 fully paid ordinary shares in the capital of the Company to the shareholders of Limepay, subject to specific terms. Completion of the SSA is subject to and conditional on the satisfaction of various Conditions Precedent, which include: 1. no material adverse condition having occurred or arisen in relation to Limepay; 2. each of the key employees entering into new employment agreements with the Company or an entity designated by it (including the Company); 3. all necessary ASX approvals, regulatory, shareholder and other approvals being obtained in connection with the Transaction such that all required shareholder approvals have been obtained for the issue of the consideration shares; and 4. demonstration to the Company’s reasonable satisfaction that Limepay has cleared all, and as at the Completion date will have no, outstanding liabilities owing to Limepay directors, including in respect of director’s loans, director’s expenses, director’s funding interest payments due and unpaid salaries. As announced on 16 August 2024, the Company will hold a General Meeting on 17 September 2024. Likely developments and expected results The likely developments in the economic entity’s operations, to the extent that such matters can be commented upon are covered in the Review and Results of Operations. Environmental regulation The Group is currently not subject to any particular and significant environmental regulation under a law of the Commonwealth or of a State or Territory. Spenda Limited • 2024 Annual Report 9 Directors’ Report (continued) Key Business Risks & Challenges The Group effectively manages risks and will continue to strengthen and invest in risk resources and capability to proactively identify and manage risks as operations expand. The principal risks and business challenges for the Group include: 1) Loss or failure to attract or retain key management personnel. o Risks associated with a challenging employment market and the Group’s ability to attract new talent and retain existing talent with a tightening labour market. 2) 3) 4) 5) 6) Ability for the Group to continue to drive customer and merchant growth. o Ability to increase transaction volume, merchant and customer numbers; o Increased competition and new sector entrants; o o Ability for the Group’s technology to integrate with third party platform’s; and Risks associated with macro-economic factors. Risks related to technology infrastructure and intellectual property. o Failures or disruptions to technology systems; o Third party banking or processing performance; o Exposure to security breaches and data protection issues; and o Risks of superseded technology by market competitors. Credit risk, fraud and other related risks. o o Risk of customers not repaying their loans as they become due; Risk of fraud, both internal and external; o Risk of merchants unable to fulfil delivery of goods; and o Risk of merchants/customers business failures resultant projected revenue shortfall. Access to funding to support growth. o Access to sufficient equity funding sources; and o Access to sufficient debt funding sources. Risks associated with compliance and changes to regulatory environment that may impact the Group’s operations. o Changes to payment system regulations; o Anti-Money Laundering/Know Your Customer (“AML/KYC”) laws; o Privacy laws; and o Financial product regulations. Spenda Limited • 2024 Annual Report 10 Directors’ Report (continued) Information on directors Name: Peter Richards Title: Non-Executive Chairman Qualifications: Experience and expertise: B Com from University of Western Australia Peter is an experienced independent director with over 40 years of international business experience with global companies including British Petroleum, Wesfarmers Limited, Dyno Nobel Limited and Norfolk Holdings Limited. During his time at Dyno Nobel, he held several senior positions within the North American and Asia Pacific businesses, before being appointed as Chief Executive Officer based in Australia (2005 to 2008). Other current directorships: Former directorships (last 3 years): Chairman of GrainCorp Limited (ASX: GNC) Elmore Limited (retired December 2021) (ASX: EML) Emeco Limited (retired 31 May 2024) (ASX: EHL) Special responsibilities: Chairman of the Board and Member of the Remuneration Interests in shares: Committee 54,956,121 Interests in options: 74,333,333 Name: Adrian Floate Title: Managing Director and Chief Executive Officer Qualifications: B Com from Curtin University Experience and expertise: Adrian is an IT innovator who has been building software for more than 20 years. He has founded, built, and sold several technology businesses and worked in Asia, Australia, the UK and US. Adrian has both private and public company experience at an executive level. He is a business strategist that looks to overcome complex problems with software automation solutions. Adrian has worked in supply chain management systems since 1997 and has experience in manufacturing, wholesale distribution, retail and eCommerce. Adrian’s career includes designing and developing Bunning’s BITS system EDI over IP network, the development and commercialisation of Australia’s first SET payments gateway, the development and commercialisation of a Windows Mobile based email platform that pre-dated the Blackberry equivalent technology, designed the CAPlink EDI network for the automotive industry in conjunction with the Capricorn Society, co-founding the CLANG online car service portal and in more recent times leading the Appstablishment software team to create award-winning mobile App’s for business collaboration. He has also been instrumental in providing the online portal to utilise Spenda’s conversion software to provide a global Other current directorships: online service. None Former directorships (last 3 years): None Special responsibilities: Managing Director Interests in shares: Interests in options: 307,110,077 119,111,111 Spenda Limited • 2024 Annual Report 11 Directors’ Report (continued) Information on directors (continued) Name: Howard Digby Title: Non-Executive Director Qualifications: Bachelor of Engineering (Hons), Mechanical Major from the University of Western Australia Experience and expertise: Howard is a professional business leader with wide ranging international experience across a variety of industries and markets. He has a proven track record in starting and growing businesses. Howard’s recent director experience includes exposure to disruptive early-stage technology, Israeli based provision of high security and bandwidth data voice and video communications technology, IT services, including cloud migration and cybersecurity, cloud-based application software in the healthcare sector, and a Silicon Valley based next generation memory technology. Other current directorships: Non-Executive Director of Elsight Limited (ASX: ELS) Non-Executive Director of 4DS Limited (ASX: 4DS) Non-Executive Chairman of Singular Health Group Ltd (ASX: SHG) Former directorships (last 3 years): Non-Executive Chairman of Vortiv Limited (ASX: VOR)(Resigned on 19 April 2021) Special responsibilities: Interests in shares: Chairman of the Remuneration Committee 17,627,545 Interests in options: 20,555,555 Name: Stephen Dale Title: Non-Executive Director Experience and expertise: Stephen has successfully started, developed, managed and sold businesses across diverse sectors including telecommunications, logistics, retail furniture and equestrian ventures. Since 2003 he was a Board member of Saddleworld Australia, a franchised retail group, having served as chairman or deputy chairman for 15 years. He also served as a founding member of the Assumption College Kilmore advisory board for 14 years. His current activities include paddock to plate retail of heritage beef and pork and development of a beef cattle breeding stud. Other current directorships: Former directorships (last 3 years): None None Special responsibilities: Member of the Remuneration Committee Interests in shares: 1,694,444 Interests in options: 25,000,000 Spenda Limited • 2024 Annual Report 12 Directors’ Report (continued) Information on directors (continued) Name: David Laird Title: Non-Executive Director Experience and expertise: David is a seasoned Payments Industry Professional with over 25 years experience in developing and deploying technology to solve complex client problems. As an institutional banker, he developed and implemented solutions for Government and many of Australia’s largest companies, extending to commercial, legal and technical negotiations. He is a foundation member and shareholder in Fintech company Datamesh Group Pty Ltd and has had senior customer facing roles at ANZ and the Commonwealth Bank of Australia. Other current directorships: Former directorships (last 3 years): None None Special responsibilities: Member of the Remuneration Committee Interests in shares: Nil Interests in options: 10,000,000 Name: Andrew Kearnan Title: Experience and expertise: Non-Executive Director Andrew has held senior, executive or non-executive director positions at leading financial service sector and investment market businesses such as Bank of America, Merrill Lynch, Commonwealth Bank of Australia, Hollard Insurance and RACQ. He is also a past member of the Australian Accounting Standards Board and a top equity market research analyst during an 18-year investment banking career. He is a graduate of the AICD Company Directors course, has an MBA and Other current directorships: an Honours degree in Science. None Former directorships (last 3 years): None Special responsibilities: Member of the Remuneration Committee Interests in shares: Interests in options: Nil Nil Other current directorships quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. Former directorships (last 3 years) quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. Spenda Limited • 2024 Annual Report 13 Directors’ Report (continued) Company s