2021 ANNUAL REPORT
Webcentral Group Limited and its controlled entities
FOR THE 18 MONTHS ENDED 30 JUNE 2021 ABN: 21 073 716 793
1 Corporate Directory
Directors
Joseph Gangi (Non-Executive Chairman)
Natalie Mactier (Non-Executive Director)
Joseph Demase (Managing Director)
Company Secretaries
Glen Dymond
Michael Wilton
Registered Office and
Principal Place of Business
Level 7, 505 Little Collins Street
Melbourne, VIC, 3000
Tel: 1300 638 734
Company Number
ACN 073 716 793
Country of Incorporation
Australia
ASX Code: WCG
Company Domicile and Legal Form
Webcentral Group Limited is the parent entity
and an Australian Company limited by shares
Legal Advisors
Cornwalls
Level 10, 114 William Street
Melbourne, VIC, 3000
Share Register
Link Market Services Limited
Tower 4, 727 Collins Street
Melbourne, VIC, 3000
Auditors
Grant Thornton Audit Pty Ltd
Tower 5, 727 Collins Street
Melbourne, VIC, 3000
Internet address www.webcentral.com.au
Contents
Corporate Directory
Chairman’s Address
Managing Director's Operational Report
Our Brand & People
Directors’ Report
Remuneration Report
Corporate Governance Statement
Auditors' Independence Declaration
Financial Statements
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Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Directors Declaration
Independent Auditors’ Report
Shareholder Information
2
4
6
8
21
31
38
43
46
48
50
51
52
93
94
98
23
"With operational stability now achieved
in FY21, combined with modernized and
simplified technology platforms and improved
customer care, the outlook for Webcentral
is exciting and positive"
Chairman's Address
As Chairman of Webcentral Group (ASX:WCG),
I am proud to present to you the Annual Report for
Financial Year 2021. Since 5GN acquired a controlling
interest in Webcentral in October 2020, the Company
has experienced significant transformation of its’
business, including restructuring several business
units, streamlining service delivery, simplification
of business processes and migration to modern
technology platforms.
Critically, several operational programs have now
been implemented to ensure that the ongoing
business transformation could deliver a more
positive experience for customers in addition to an
improved financial performance to grow shareholder
value. I am very pleased to highlight that the
successful delivery of these programs has been
instrumental in Webcentral achieving significant
business improvements in the second half of FY21.
Accordingly, the Company has reported outstanding
EBITDA performance with growth of 391% for the
six-months ended 30 June 2021 compared to the
prior comparative period and has stabilised revenue,
achieving $78.3M for the group in the FY21 period.
The active strategy to improve customer care
has been delivered through the investment in our
Australian based customer support teams, who
have dramatically improved customer engagement
and retention. Our customer Net Promoter Score
(NPS) provides evidence of this improvement with
end of year results of +12— the highest NPS in the
company’s history.
The significant changes and improved organisational
effectiveness have been driven by a dedicated
and experienced executive team, strongly led by
Managing Director, Joe Demase. The organisation
is now operating within a cohesive, collaborative
customer driven culture, which has been nurtured
and reinforced through the ongoing communication
of a clear strategic vision and purpose.
Importantly, the Australian market conditions
during FY21 have been severely impacted by the
ongoing COVID pandemic. This has caused some
purchase delays for Australian businesses as a
result of fluctuating levels of confidence when
considering investment in their online services.
However, despite COVID impacts, we expect organic
growth to resume in FY22 as customers respond
favorably to the improvements in Webcentral
service and support, in addition to the simplified
offers which are now well supported by modernised
e-commerce and technology platforms.
Webcentral is now focused on achieving the
strategic goals for the approaching financial year.
Our Company will remain dedicated to improving and
simplifying the service experience for our customers
with sales and marketing resources continuing to
target growth opportunities across the small and
medium business segments.
With operational stability now achieved in FY21,
combined with modernised and simplified
technology platforms and improved customer care,
the outlook for Webcentral is exciting and positive.
The Board very much looks forward to the talented
staff continuing the transformation journey and
guiding this Company to a stronger performance
in FY22.
On behalf of the Board, I am extremely grateful for
the support of Webcentral and 5GN shareholders,
customers, suppliers and business partners and
would also like to thank our Managing Director, staff
and executives for their commitment to achieving
ongoing operational and financial improvements
during a challenging FY21.
Yours sincerely,
Joe Gangi
Chairman
45
"As an Australian business
we are continuing to invest
in Australian resources
and technology and
to support Australian
organisations."
Managing Director’s Report
In the first year as Managing Director of Webcentral
Limited (ASX:WCG), I am proud to present our Annual
Report on the business operations for Financial
Year 2021.
throughout the year. We are now achieving the
highest recorded scores for the company since
being established in 1996.
This has been an incredibly important year for
Webcentral. A year where the business has
embraced the acquisition and majority shareholding
by 5G Networks (ASX:5GN) in a period heavily
impacted by the effects of COVID-19. The change
in ownership has reset the strategic direction
of Webcentral and enabled the implementation
of several business transformation programs to
improve the financial and operational performance
of the business.
The strategic programs are critical to our
ongoing success and will underpin the sustained
achievement of profitable revenue growth.
They have also been instrumental in reinforcing
and redefining our strategic purpose, whilst
strengthening the organisational commitment
to our core values. As a result, we have quickly
progressed to become a very different organisation.
Our business is much simpler. We have improved
the support and sales experience for our customers,
invested in the growth of our Australian based
customer care teams and overall have become more
customer focused.
Accordingly, the financial performance throughout
the second half of FY21 demonstrated sustained
improvement. Since December 2020, we have lifted
profitability performance to achieve underlying
EBITDA growth of 391% for the six-months ended
30 June 2021. The significant improvement of
EBITDA was attained though diligent and tight cost
management, and our refocus on more effective
service delivery. Operating cash flow was strong in
the six-months ended 30 June 2021, with underlying
operating cash flows of $7.3M. Additionally, the
organisation has worked tirelessly to arrest and
stabilise the average monthly revenue decline to
record $78.3M for the reporting period.
Through our operational improvement programs,
I am excited to highlight that our customer
satisfaction ratings have dramatically improved
The customers contacting our Care team have
recorded the most significant improvement.
In June 2021, 93% of customers contacting our care
teams were satisfied with their level of service.
This improvement was enabled by the rapid growth
of our onshore support teams, where Webcentral
committed significant investment. Since December
2020, we have now introduced over 50 new support
staff to our customer care teams across Melbourne,
Sydney and Brisbane.
By simplifying and bundling our products to meet
market requirements, our customers are more
comfortable in selecting products through our sales
channels. Importantly, 92% of customers are now
satisfied after making their first purchase through
our online shopping cart, and 95% report being
satisfied after speaking to a member of the offline
sales team.
In conclusion, I am very excited about the future
for Webcentral and the future merging with
5G Networks. Our Board, executive team, and
people are committed to delivering and executing
our strategy to drive continued growth and deliver
improvements for customers, in addition to creating
improved shareholder value in the years to come.
I would like to thank our employees for all their
hard work in difficult circumstances, and our
shareholders who continue to back our strategy
and enjoy the exciting ride we are on.
Yours sincerely,
Joe Demase
Managing Director
67 A changed brand for a changed world
Our strategy is to actively pursue ongoing product
development and operational improvement to deliver
market leading sales and service experiences.
Importantly, Webcentral challenges our teams to
work closely with our customers to improve our
understanding of their needs. By doing so, we develop
more effective, innovative digital solutions – solutions
uniquely designed to deliver online business success.
While the world has battled a global pandemic
Webcentral has been anything but locked down. Our
organisation continues to grow and transform to
ensure we sustain our leadership as an online service
provider for Australian business. This customer driven
focus is a key element of our culture.
As a result, our organisation will continue to work
closely with Australian business, assisting them as
they navigate their way through their operational and
strategic challenges, including COVID-19. We remain
dedicated to building online success for Australian
business and believe we can have a significant impact
through the development of our own Australian based
service teams.
Our new brand identity
Our new brand identity
is just the beginning
is just the beginning
89 "We work with our customers
to accelerate their business
ideas and ensure they
optimise every opportunity
within the online space."
Oliver Thompson – Account Manager
Online services supported by world class
customer service
Delivering better service:
Over the last 12 months Webcentral has undergone a comprehensive staff training upgrade to improve service
delivery across all products. These are a few highlights
And we’ve brought our customer support home.
Already, the majority of our customer service is
delivered by responsive, skilled and enthusiastic
customer service professionals, right here in
Australia. We are an Australian owned business,
serving Australian businesses locally.
Measuring our customer services performance is a
key metric for our business, one which will underpin
our own future growth and success. Already,
those measures reflect an easier to access, more
responsive and efficient customer service delivery
and vastly improved customer satisfaction ratings.
Our customer focussed heritage has been built on
expertise, innovation and personalised service;
critical attributes delivered through our culture
and embraced by our people. This is demonstrated
through more than 25 years of online industry
leadership across Australia’s digital foundation
brands such as Melbourne IT, Netregistry and WME.
We are dedicated to leading online success for our
customers and achieve this by building trusted and
valued client relationships which convert successful
business outcomes at each milestone across the
customers’ digital journey
At Webcentral, Customer Care remains our top
priority. We want to partner with our customers to
ensure they're successful. Whether that's setting
them up for eCommerce or assisting them with a
smarter, faster, more profitable digital presence;
our skilled support team is always available. Our
customers' success is our success.
1st
Highest customer satisfaction
ratings reported for the company
since being launched in 1996
95%
of all customer service calls are
handled in Australia
93%
of customers contacting our
Customer Care teams were satisfied
with the level of service
* Melbourne IT
50
new digital support staff added to
our Melbourne, Sydney and Brisbane
Customer Care teams
95%
of customers are satisfied after
speaking to a member of our offline
sales team*
92%
of customers are satisfied after
making their first online purchase
1011
"Enabling 24/7 access to world’s
best digital technology
is our commitment to
Australian business."
Michael Roberts – National Manager Data Centres
Enterprise-grade technology and
service at small business rates
We believe that all businesses deserve access to the
best digital services and technology available.
Our systems and technology have been simplified
and integrated to offer Australian business,
enterprise grade digital services at small business
rates. Through these digital capabilities, our
solutions will always be easy to use, scalable and fit
for purpose.
With more than 330,000 customers and over
500,000 domains registered, Webcentral is well
positioned to provide easy to use and integrated
product and service offers as our customers
progress their journey with the digital economy.
“It’s not enough that
our digital technology
and service is the
best. It must also meet
the strictest security
requirements from
industry regulators
and authorities such
as AuDA.
Marco Mattiuzzo, Chief Technology Officer
Our customers are also increasingly aware of the
significant risks associated with growing online
services such as data security. Our merger with
5G Networks (5GN) will provide an important
opportunity to enhance the security environment for
our customers. Not only do we comply with certified
policies and effective security protocols, but all
critical infrastructure is owned and located here
in Australia, offering enhanced data security and
ongoing protection from cyber-attacks.
Webcentral will continue to focus on developing
our systems to introduce new and innovative
products and services. This innovation will extend
to new capabilities such as automated service
delivery which will be driven by digital intelligence
technologies that further support every milestone
along the customers’ digital journey.
High Performance Digital Solutions
for Australian Business
Webcentral assists Australian small to medium
business get online, and once there, provides
technologies and services that support their
ongoing growth and success.
Our portfolio of digital services is extensive, with
market leading offers across domain management,
website development and hosting, office and
productivity applications and online marketing.
We know the local market and we work with our
customers to accelerate their business ideas and
ensure they optimise every opportunity within the
online space, from the purchase of a domain name
and webhosting through to a full suite of digital
marketing services. Our digital technology solutions
are underpinned by world class customer service
that is based here in Australia.
Our customers also appreciate that we have the
critical infrastructure located here in Australia and
that we have certified security protocols so that all
data remains secure and their business protected
from cyber-attacks.
1213 Our Products and Services
Over the past 12 months we have been simplifying
and integrating our products to ensure our high
performance technology platforms can deliver
product bundles and packaging which enable
customers to grow and adapt to rapidly changing
market conditions.
Web hosting:
With more than 20 years in supporting the online
success of Australian business, our organisa-
tion clearly demonstrates industry expertise and
leadership with web services and hosting.
We now deliver a suite of products and services that
can evolve with the needs of Australian business;
services which effectively support the entire
digital journey as customers progress and build
online success.
Whether registering a domain name with a website
or the launch of their e-commerce platform, our
customers can be confident in selecting Webcentral
services for accelerating their online growth and
claiming their share of Australia’s digital economy.
Domain name registration:
As a market leader for many years, Webcentral has
registered more than 500,000 domain names in
Australia and New Zealand. We partner with all major
domain accreditation authorities to ensure the
domain name registration process is easy as possible
for our customers. Once registered customers can
start building and developing their online presence.
Webcentral can also assist business to further manage
and protect their branded assets with a range of domain
extensions such as .com.au, net.au, and org.au.
Email hosting:
Email addresses that match domain names are
important in establishing a professional image for
any brand – a position designed to support growth
and success.
Our portfolio of email products include full-featured
self-service platforms so customers can efficiently
and confidently self- manage emails, contacts and
calendars from anywhere in the world.
Located here in Australia, our web hosting solutions
are fast, reliable, and comply with industry certified
security standards. The world class website security
service and SSL certificate programs are the
foundations to Webcentral ensuring all customer
data is protected from viruses, hackers and
identity thieves.
Accordingly, Webcentral offers a range of different
hosting packages uniquely designed for Australian
business. We work with customers to identify the
best web hosting plan for their future success and
can choose from many options including cPanel or
Virtual Private Server (VPS) hosting. Critically, all
services are delivered with unlimited support from
our Australian domiciled support teams.
Digital marketing services:
As Australia’s online experts for Australian business,
we assist customers to plan their digital journey
and establish roadmaps for growth and business
success. Our digital marketing makes it easy
for customers to fully engage with all our digital
services, so they can focus on what they do best –
building their business.
Webcentral offers multiple solutions for website
design to ensure their online presence is on-brand,
engaging and built to succeed. Customers may
choose to build it themselves using our convenient
and effective website builders or we can offer a fully
customised design service.
Webcentral offers three primary digital marketing
services to build online success: Search Engine
Optimisation (SEO), Pay Per Click advertising (PPC)
and social media advertising. We also provide our
customers with effective audit and performance
monitoring services to ensure their digital
programs are always delivering online growth and
business success.
1415
RESILIENCE
Our People
HONESTY
COLLABORATION
INTEGRITY
ACCOUNTABILITY
RESPECT
Making a difference
Making a difference
everyday
everyday
A collaborative environment filled with opportunities
for innovative ideas, Webcentral is a dynamic
space for passionate people.
Our people love supporting the lifeblood of the Australian economy — small and medium businesses —
to grow their digital presence and leverage the many benefits of online marketing.
Honesty
Resilience
When we succeed, so do our customers. Whatever
the challenge, we’re ready to face it and deliver
solutions that fit. We get to know our customers so
we can ensure our work is tailored to their unique
business requirement.
We take every job and every opportunity seriously
and dedicate the time and effort for quality results.
Respect
Webcentral is an awesome place to do great work.
We are a people business and we respect that every
person delivers valuable outcomes for the business
and our customers. We lend a hand, support each
other, laugh and have fun. We’re all playing on the
same team here, and it shows.
Similarly we respect our customers and their
endeavours to create successful business
outcomes. That respect is best demonstrated with
skilled, efficient and responsive customer service
delivery, teamed with the best technology around.
Even in times of uncertainty our teams can bring
the best technology and people together to deliver
amazing outcomes for our customers.
The world and the workplace is subject to ongoing
change and disruption. At Webcentral we value and
celebrate our teams’ ability to adapt, change and
keep improving our offer for customers, even in
times of adversity. We are resilient.
Collaboration
Individually, we create incredible solutions. But it’s
when we collaborate that really great ideas come to
life. We are always up for open conversations and are
ready to listen to new ideas. And because we trust
each other, we’re not afraid to share our thoughts or
ask for help.
When it comes to implementing new ideas, we move
together to ensure our customers get value from the
fruits of our labour. We support and uplift each other
to deliver, without fail.
Accountability
Integrity
We work hard at Webcentral and we never shirk our
responsibilities. Our team members always take
ownership of their decisions, actions, performance
and behaviour. It’s all about building trust and staying
committed to doing the right thing for the business,
and our customers.
We will always do the right thing. If someone needs a
hand we will stop and help. If things look like they are
getting off course, we’ll help navigate, even if that is
not part of our role. It’s all about behaviours designed
to boost everyone in the entire team. Because we’re
all playing on the same team here, and it shows.
1617 “ Our people are connected
by their passion and energy
for empowering customers
to succeed.“
Steve Marchese, Head of People & Culture
Our Leadership Team
The goal at Webcentral is to make a difference every
day to challenge the current and design the future.
We empower customers to collaborate, optimise and
connect with digital technology and services.
To do this, we also understand technology leadership
can only be achieved through the talented and
experienced people who work every day to support
our customers and the Webcentral business. This
year has proven to be challenging and unique, given
the need to work from many diverse settings which
are not the traditional office or meeting locations.
The disruption of workplace environments across
many teams, has placed a tremendous strain on
delivering premium services to customers.
By embracing the core company values, the
Webcentral business has continued to grow and
deliver value for customers and shareholders.
The company is tremendously proud that our
people have embraced this challenge, with energy,
positive attitude and the dedication to ensure our
customers remain a key focus. This approach has
been successfully achieved through their deep
understanding of their role, combined with the
guidance and commitment of our leadership teams.
Through this pandemic, our people, our processes
and our business has become more resilient.
Board Members
Executive Team
Managing Director
Chairman
Chief Marketing Officer
Sales Director
Joe comes from a background in building a host of
successful businesses, including the completion of
two ASX listings in the telecommunications sector.
Further to this, Joe has acquired experience in
the telecommunications sector amongst both the
Australian and UK divisions, along with over 25 years
of business experience, allowing Joe to skilfully
identify market opportunities across the board.
Joe displays an abundance of experience, having
succeeded in a broad range of executive positions.
Non-Executive Director
Natalie has over 17 years experience in the online
space having held senior management and
Executive roles at Australian start-up and scale-up
organisations. With a background in Sales and
Marketing, Natalie helped build online brands SEEK
and Kidspot before being approached by Square Peg
capital to create School Places, an online private
school marketplace. Since 2018 Natalie has been
the CEO of Vivi International, an Australian owned
EdTech software organisation.
Joe
Demase
Natalie
Mactier
Company Secretaries
Chief Financial Officer and Joint
Company Secretary
Glen has more than 25 years’ experience in senior
finance and operations management roles at several
ASX-listed entities, including Zenitas Healthcare
Limited, Spotless Group Limited, Broadspectrum
Limited and ConnectEast Group. Glen's commercial
finance and operations experience has been achieved
across a diverse range of business programs.
This includes process development to drive
financial performance, as well as client commercial
management and driving successful change
management across organisations undergoing
rapid growth and change. In addition to his role at
Webcentral, Glen is Chief Financial Officer and joint
Company Secretary at 5G Networks Limited.
Glen
Dymond
Joe
Gangi
Joe has over 30 years’ experience in corporate management
and governance in both private and public sectors and has
been an independent director of Webcentral since October
2020. His other board roles include Non-Executive Director
of 5G Networks Ltd (ASX: 5GN), Chair of the Risk & Audit
Committee of 5G Networks Ltd and Non-Executive Director
of Assisi Aged Care Centre. Joe is also a member of the
Industry Advisory Committee to the Faculty of Chemical
and Environmental Engineering at RMIT University and
Executive Director of a consulting firm that provides
technical consulting and project governance advice to both
Private and Government clients. His corporate experience is
focused on risk management, an area that he is particularly
passionate about, that enables him to offer advice on risk
mitigation and business sustainability.
"We are acutely focussed
on creating shareholder
value through customer
centricity combined with
strategic execution."
Joe Gangi – Chairman
General Counsel and Joint
Company Secretary
Michael is a capital markets and M&A lawyer, having
more than 25 years’ experience in those sectors.
He also has substantial legal expertise in IT and
telecommunications. In addition to his role at
Webcentral, Michael is General Counsel and joint
Company Secretary at 5GN and is a partner in the
Melbourne office of Cornwalls Lawyers.
Michael
Wilton
Glenn brings over 20 years of experience in the ICT
sector across marketing and product management,
with a strong background in managing cloud, data
networks and unified applications. With extensive
post graduate education including a Masters in
Marketing, Glenn has industry leading experience
in managing agile business transformation and
digital technology to support revenue growth and
customer demand.
Garry
White
Garry comes from a successful background in both
the ICT and telecommunications sectors, holding
over 20 years of experience. Garry has delivered
success for leading organisations across Australia,
New Zealand, Hong Kong, Singapore and the UK,
including being the Sales Director for one
of Australia’s major Telco companies.
Executive General Manager, Operations
Chief Technology Officer
Chris holds extensive experience in the
telecommunication sector. Previously General
Manager for Fibre Deployment at Sky Bridge Group
Pty Ltd, Chris was responsible for the delivery of
NBN fibre construction services to over 15,000 end
user premises and management of over 1100 field
contractors. Complimenting Chris’ experience is
a Masters in Business Administration (MBA) and
Prince 2 Project Management.
Marco
Mattiuzzo
Marco has a strong background in providing
IT services to legal firms and barristers across
Australia. With over 10 years experience in ICT
and specialising in virtualisation and data centre
services, Marco’s current focus lies on maximising
value for the clients of Webcentral Group.
Head of People & Culture
Steve is a psychologist who has worked across a
range of sectors for over 25 years. He has always had
an interest in organisation development and growth
and the complexities of the intricate relationship
between people and the organisation. Steve is
passionate about driving positive workplace culture
and relationships, working closely with staff across
all levels of the organisation to develop environments
where people feel valued, and experience a sense of
connection to their organisation.
“ We are proud to be helping our
customers build and grow their
business through Australian
innovation, service and digital
leadership"
Garry White – Sales Director
Glenn
Flower
Chris
Demase
Steve
Marchese
1819 Director’s Report
Your Directors submit their report for the 18 months ended
30 June 2021.
Directors were in office for the entire period unless
otherwise stated.
Directors
Mr. J. Gangi
Period in office
Appointed 16 October 2020,
Chair from 27 October 2020
Mr. J. Demase
Appointed 16 October 2020
Ms. N. Mactier
Appointed 22 October 2020
Mr. A. Reitzer
Chair until 27 October 2020,
retired 10 November 2020
Mr. K. Siegling
Retired 10 November 2020
Mr. A. Macpherson
Retired 22 October 2020
Mr. L. Bloch
Retired 16 August 2020
Ms. N. Sparks, AM
Retired 27 February 2020
Mr. S. Martin
Retired 27 February 2020
Chief Executive Officer Period in office
Mr. J. Demase
Appointed 27 October 2020
Mr. B. Fenton
Appointed 11 February 2020
until 27 October 2020
Chief Financial Officer
Period in office
Mr. G. Dymond
Appointed 13 November 2020
Mr. B. White
Appointed 23 March 2020
until 13 November 2020
Mr. F. Bearsley
Ceased employment 23 March 2020
Company Secretaries
Period in office
Mr. M. Wilton
Appointed 13 November 2020
Mr. G. Dymond
Appointed 13 November 2020
Mr. M. Licciardo
Appointed 17 July 2020
until 19 November 2020
Ms. A. Jordan
Ceased employment 17 July 2020
Mr. F. Bearsley
Ceased employment 23 March 2020
Details of Directors'
experience, expertise
and directorships
Details of Directors in office during the period is
presented below:
Joe Gangi
Non-Executive Director and Chair
Appointed 16 October 2020, Chair from 27 October 2020
Member of the Audit & Risk Committee and Member of the
Remuneration and Nomination Committee
Experience and Expertise
Joe has over 30 years’ experience in corporate management
and governance in both private and public sectors and has
been an independent director of Webcentral since October
2020. His other board roles include Non-Executive Director
of 5G Networks Ltd (ASX: 5GN), Chair of the Risk & Audit
Committee of 5G Networks Ltd and Non-Executive Director
of Assisi Aged Care Centre. Joe is also a member of the
Industry Advisory Committee to the Faculty of Chemical and
Environmental Engineering at RMIT University. In addition,
Joe is the Executive Director of a consulting firm that
provides technical consulting and project governance
advice to both Private and Government clients with specific
technical expertise in project management and delivery
of complex engineering projects for the Life Sciences and
Healthcare sectors.
His corporate experience is focused on risk management,
an area that he is particularly passionate about, that
enables him to offer advice on risk mitigation and business
sustainability.
Joe holds a Bachelors’ Degree in Chemical Engineering and
a Master’s Degree in Business Administration (MBA) with a
major in International Business. He is also a Graduate of the
Australian Institute of Company Directors (GAICD).
Other Current Directorships
• 5G Networks Limited
• Assisi Aged Care
Previous Directorships (last 3 years)
Nil
Natalie Mactier
Non-Executive Director
Appointed 22 October 2020
Chair of the Audit & Risk Committee and Chair of the
Remuneration and Nomination Committee
Experience and Expertise
Natalie has over 17 years’ experience in the online space
having held senior management and Executive roles at
Australian start-up and scale-up organisations. With a
background in Sales and Marketing, Natalie helped build
online brands SEEK and Kidspot before being approached
by Square Peg capital to create School Places, an online
private school marketplace. Since 2018 Natalie has been
the CEO of Vivi International, an Australian owned EdTech
software organisation.
Other Current Directorships
Nil
Previous Directorships (last 3 years)
Nil
2120 Director’s Report
Director’s Report
Joe Demase
Managing Director & CEO
Appointed 16 October 2020
Member of the Audit & Risk Committee and Member of the
Remuneration and Nomination Committee
Experience and Expertise
Mr Demase comes from a background in building a host of
successful businesses, including the completion of two ASX
listings in the telecommunications sector. Further to this,
Joseph has acquired experience in the telecommunications
sector amongst both the Australian and UK divisions,
along with over 25 years of business experience, allowing
Joseph to skilfully identify market opportunities across the
board. Joseph displays an abundance of experience, having
succeeded in a broad range of executive positions.
Other Current Listed Company Directorships
5G Networks Limited
Former Listed Company Directorships In Last Three Years
Nil
Andrew Reitzer
Non-Executive Director and Chair
Retired 10 November 2020
Qualifications
Bachelor of Commerce - University of South Africa
Master of Business Leadership - University of South Africa
Experience and Expertise
Andrew Reitzer brings more than 35 years of global
experience in the technology, retail and wholesaling
industries. Andrew has extensive experience in M&A,
post-acquisition integration and organisational change.
From 1988 to 30 June 2013, Andrew was CEO of Metcash
Limited. Prior to his appointment to CEO, Andrew held
various management roles at METRO Cash & Carry and
led the establishment of METRO’s operations in Israel and
Russia and served as the Group Operations Director.
In addition to the Non-Executive Directorships listed below,
Andrew is a Director of several private companies.
Other Current Listed Company Directorships
• Amaysim Limited (ASX: AYS) (Non-Executive Chair)
(appointed June 2015)
• SG Fleet Limited (ASX: SGF) ) (Non-Executive Chair)
(Appointed February 2014)
Former Listed Company Directorships In Last Three Years
Nil
Special Responsibilities
Chair of the Board (until 27 October 2020)
Andrew Macpherson
Non-Executive Director
Retired 22 October 2020
Qualifications
Bachelor of Industrial Engineering (Hons) – University of NSW
Experience and Expertise
Andrew Macpherson is an experienced senior executive
with strong interests, and specific experience, in the use
of technology to transform traditional businesses.
Andrew worked with global consulting firm Accenture
for 27 years, specialising in implementing complex
technology-enabled change projects in large enterprises
and government in Australia, Asia and Europe. He retired
as APAC Regional Managing Director - Technology in 2005.
Over the following 13 years he has been actively involved
as an investor, director and executive in the agribusiness,
retail, hospitality and services sectors.
Andrew is also the Chair of Workventures and LifeCircle,
and a non-executive director of the Rozetta Institute, all
of which are not-for-profit enterprises.
Other Current Listed Company Directorships
Nil
Former Listed Company Directorships In Last Three Years
• OneVue Holdings (ASX: OVH) (appointed October 2016,
retired June 2019)
• Ruralco Holdings (ASX: RHL) (appointed December 2017,
retired September 2019)
Special Responsibilities
Chair of the Human Resources, Remuneration and
Nomination Committee (until 22 October 2020)
Member of the Audit and Risk Management Committee
(until 22 October 2020)
Karl Siegling
Non-Executive Director
Retired 10 November 2020
Qualifications
Bachelor of Commerce - University of Melbourne
Bachelor of Law - University of Melbourne
Masters in Business Administration – INSEAD (France)
Post Graduate Diploma in Finance with the Securities
Institute of Australia (FINSIA)
Experience and Expertise
Karl Siegling has over 25 years’ investment experience in
the financial sector in Australia and overseas.
Mr Siegling commenced work in the Financial Services
sector in Australia with Deutsche Morgan Grenfell, trading
overnight currencies, bonds and bond options on the
Sydney Futures Exchange. Mr Siegling then worked within
the Equities Research Division of Deutsche Morgan Grenfell
before studying an MBA at INSEAD and working as a
Summer Associate within the equities division of Goldman
Sachs in London.
Upon returning to Australia, Mr Siegling was the Managing
Director of eFinancial Capital Limited (a subsidiary of
Challenger international Limited) focused on investing in
early stage and expansion capital for financial services
and technology companies. Mr Siegling also worked as
a consultant for Wilson Asset Management, researching
stocks, before setting up Cadence Asset Management
Proprietary Limited.
Other Current Listed Company Directorships
• Cadence Capital Limited (Executive Chair)
(appointed 9 February 2005)
Former Listed Company Directorships In Last Three Years
Nil
Special Responsibilities
Nil
Larry Bloch
Non-Executive Director
Retired 16 August 2020
Qualifications
Bachelor of Science and Post-graduate Honours degrees
in Pure Mathematics and Computer Science - University of
Cape Town
Experience and Expertise
Mr Bloch has been a serial entrepreneur, pioneer and leader
in the online business services industry for 20 years. He was
the founder and former MD of NetBenefit (UK) in 1994, which
rapidly became the largest domain and hosting provider
in Europe. He also founded Virtual Internet (France) in
1996. After re-locating to Australia in 1997, he co-founded
Netregistry Group and was its major shareholder, CEO and
Chair for 17 years, before selling it to Arq Group in 2014.
Other Current Listed Company Directorships
Nil
Former Listed Company Directorships In Last Three Years
Nil
Special Responsibilities
Member of the Human Resources, Remuneration and
Nomination Committee (until 16 August 2020)
Simon Martin
Non-Executive Director
Retired 27 February 2020
Qualifications
Bachelor of Commerce - University of Melbourne
Master of Business Administration (MBA)
– University of Melbourne
Member of Chartered Accountants Australia and New
Zealand, Member of the Australian Institute of Company
Directors
Experience and Expertise
Mr Martin has more than 25 years of financial and
commercial experience, most recently as an investor and
Director. The majority of his executive career was spent
in leadership, strategy and finance roles in the technology
sector. He was CFO and a Director of MYOB from 2004 to
2012, before joining iCareHealth as CEO until the sale of its
Australian operations to Telstra Health in 2014.
Mr Martin is also an investor in, and Director of, a number of
technology businesses focused on the SME and healthcare
sectors in Australia and the UK.
Mr Martin is also a Non-Executive Director of Tandem
Corporation Pty Ltd (appointed April 2018), BIG4 Holiday
Parks of Australia Pty Ltd (appointed May 2016) and
Methodist Ladies’ College Ltd in Melbourne (appointed
January 2016).
Other Current Listed Company Directorships
Nil
Former Listed Company Directorships In Last Three Years
Nil
Special Responsibilities
Chair of the Audit and Risk Management Committee
(until 27 February 2020)
Member of the Human Resources, Remuneration and
Nomination Committee (until 27 February 2020)
Naseema Sparks AM
Non-Executive Director
Retired 27 February 2020
Qualifications
Master of Business Administration - Melbourne Business
School, University of Melbourne
Fellow of the Australian Institute of Company Directors
Experience and Expertise
Ms Sparks is an experienced top-line growth director
with experience across a range of sectors, particularly
technology. Her expertise includes corporate strategy,
mobile digital, data, customer and consumer segmentation,
media, branding and marketing. She was formerly Managing
Director and Global Partner of M&C Saatchi Ltd.
Ms Sparks is a Non-Executive Director of Knight Frank
Australia (appointed February 2017) and AIG Australia
(appointed 2010).
2223
Director’s Report
Director’s Report
Ms Sparks also serves on the boards of several emerging
technology companies at scale-up and pre-IPO stage.
Other Current Listed Company Directorships
• Australian Vintage Ltd (McGuigan Wines) (ASX: AVG)
(appointed February 2015)
Former Listed Company Directorships In Last Three Years
• IncentiaPay Ltd (ASX: INP) (Non-Executive Chair)
(appointed May 2018, retired June 2019)
Special Responsibilities
Member of the Audit and Risk Management Committee
(until 27 February 2020)
Member of the Human Resources, Remuneration and
Nomination Committee (until 27 February 2020)
Company Secretaries
Mr Glen Dymond
Company Secretary since 2020
Glen has more than 25 years’ experience in senior finance
and operations management roles at several ASX-listed
entities, including Zenitas Healthcare Limited, Spotless
Group Limited, Broadspectrum Limited and ConnectEast
Group. Glen's commercial finance and operations
experience has been achieved across a diverse range of
business programs. This includes process development to
drive financial performance, as well as client commercial
management and driving successful change management
across organisations undergoing rapid growth and
change. In addition to his role at Webcentral, Glen is
Chief Financial Officer and joint Company Secretary at
5G Networks Limited.
Mr Michael Wilton
Company Secretary since 2020
Michael is a capital markets and M&A lawyer, having more
than 25 years’ experience in those sectors. He also has
substantial legal expertise in IT and telecommunications.
In addition to his role at Webcentral Group, Michael is
General Counsel and joint Company Secretary at 5GN and
is a partner in the Melbourne office of Cornwalls Lawyers.
Principal activities
The principal activities of the Group during the period are
described as follows:
Continuing operations
Webcentral provides domain name registrations and
renewals, website and email hosting, website development,
search engine marketing and social advertising campaigns
for businesses in Australia and New Zealand.
Discontinued operations – Enterprise
Enterprise provides services including cloud, mobile
application development, data and analytics to Australian
enterprise and government organisations. The Enterprise
division is represented by the net assets of Arq Group
Enterprise Pty Ltd, which was sold on 2 March 2020. The
sale included the rights to the Arq brand.
Review and results of
operations
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
87,359
83,615
CONTINUING OPERATIONS
Revenue from contracts
with customers
- Less reversal of revenue
(9,096)
-
from settlement of
customer dispute
Total revenue from
contracts with customers
Underlying EBITDA(1) from
Continuing Operations
78,263
11,928
83,615
14,795
1.
The Group believes this unaudited non-IFRS information is relevant to the
user's understanding of the Group's underlying performance. Refer to page
25 for a reconciliation of this information to statutory IFRS information.
The Group’s improved performance reflects the significant
change and transformation that occurred during the period
including the strategic review and associated restructuring
activities, the acquisition of a controlling interest in the
Company by 5G Networks Limited in October 2020, the
settlement of a customer dispute and the disposal of the
Enterprise and Netalliance businesses.
The Group’s underlying EBITDA of $6.3 million for the
6 months ending 30 June 2021 was 391% higher than the
corresponding 6 months period ended 30 June 2020 and
47% higher than the previous 6 months period ended
31 December 2020, reflecting the significant initiatives
implemented since the change of control by 5GN in
October 2020.
The Group’s revenue has been stable since the change of
control in October 2020 and the Group is confident that
revenue growth will return across all four core services
of domains, hosting, email and digital marketing as these
short term issues are resolved.
Management performance
measures – underlying
EBITDA
The non-recurring restructuring activities that led to the
loss for the period are now complete and the business has
recorded an operating profit and has generated positive
operating cashflows each month since the change of
control by 5GN in October 2020.
The specific initiatives that have been implemented by the
Directors to date include:
• Focus on profitable revenue and product lines;
• Customer service and support improvements
including on-shoring of customer service and
process improvements;
•
Infrastructure and operating platform improvements
including outsourcing to 5GN and improvements
to system workflows and technical stability of
the Console;
•
Improved collection of debtors, shift from post-
paid to prepaid customer billing and more frequent
monitoring of operating cashflows;
• Reduction in direct costs, overhead and
property costs;
• Reduction in labour headcount;
• Disposal of Netalliance business in November 2020;
• Surrender of Sydney office leases;
• Equity capital raising in November and
December 2020; and
• Debt capital raising in June 2021.
Performance from
discontinued operations
The following table presents a summary of the performance
of the Enterprise business that has been classified as a
discontinued operation for the period until the date of its
disposal on 2 March 2020:
30-Jun-2021
18 months
$’000
31-Dec-19
12 months
$’000
The Group makes use of a management performance
measure, “Underlying EBITDA” (Earnings before Interest,
Tax, Depreciation and Amortisation). The Group believes
that Underlying EBITDA is useful for users of financial
reports when assessing the Group’s underlying business
performance and profit generation after adjusting for
non-recurring and unusual items affecting comparability
between financial periods. Underlying EBITDA is also the
primary financial performance indicator used by the Group
and is the basis for driving internal business decision-making
as well as setting remuneration and reward outcomes.
Underlying EBITDA is a non-IFRS and unaudited
performance measure and therefore may not be
comparable with measures sharing similar descriptions
by other entities. A reconciliation of Underlying EBITDA to
statutory IFRS performance measures (profit before tax)
is shown below:
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
CONTINUING OPERATIONS
(Loss) / profit before tax
Depreciation and amortisation
expense
Interest income
Finance costs (excl. bank charges
and merchant fees)
Gain on reassessment of
contingent consideration liability
Gain on sale of TPP Wholesale
reseller business
Net TPP Wholesale reseller
separation income(1)
Net loss from changes in the
group’s leasing arrangements
Gain on sale of Netalliance
business
(64,412)
12,468
(254)
4,434
-
-
-
2,946
(384)
9,096
13
236
5,930
3,134
-
727
33,000
4,994
11,928
(45,713)
10,537
(202)
4,679
(98)
(554)
(68)
-
-
-
486
1,567
2,259
365
642
-
41,123
(228)
14,795
Revenue from contracts
with customers
Underlying EBITDA1
12,781
1,400
86,167
Reversal of revenue from
settlement of customer dispute1
2,555
Branding costs
1 The Group believes this unaudited non-IFRS information is relevant to the
user's understanding of the Group's underlying performance. Refer to page
26 for a reconciliation of this information to statutory IFRS information.
Integration costs
Transaction costs
Restructuring costs
Property costs
Impairment of receivables
Impairment of goodwill
Other net non-operating expenses
Underlying EBITDA
2425
Director’s Report
Director’s Report
DISCONTINUED OPERATIONS
Loss before tax
Depreciation and amortisation
expense
Finance costs (excl. bank charges
and merchant fees)
Loss on revaluation of disposal
group to fair value
Loss on sale of the Enterprise
business
Restructuring costs2
Integration costs
Underlying EBITDA
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
(934)
306
50
-
1,565
413
-
(85,042)
4,742
304
81,258
-
853
440
1,400
2,555
1 Refer to the discussion in the “Settlement of Customer Dispute” section of
the Directors Report on page 27 for further details.
Acquisition by 5G Networks
Limited
On 17 September 2020, the Company entered into a Bid
Implementation Deed (BID) with 5G Networks Limited (5GN)
in respect of an all scrip off-market takeover bid proposed
by 5GN (5GN Proposal). The Company also entered a Loan
Implementation Deed with 5GN (and subsequently a Debt
Facility Agreement with 5GN), whereby 5GN Finance Pty
Ltd (a wholly owned subsidiary of 5GN) agreed to provide a
secured loan to the Company (5GN Secured Loan) to allow
the Company to repay its existing debt providers in full.
On 18 September 2020 5GN made an off-market takeover bid
(Takeover Bid) for the Company in accordance with the BID.
On 16 October 2020, 5GN announced that it had notified
the Company that the Takeover Bid had been freed of
each of the defeating conditions as set out in its Bidder’s
Statement. On the same day, Joseph Demase and Joe Gangi
were appointed as Directors of the Company.
On 22 October 2020, 5GN announced that it had a
substantial holding in the Company comprising over
46.67% of the Company’s shares and that 5GN and the
Company entered an agreement to waive the condition
that 5GN obtain 50.1% ownership of the Company’s shares
before the Company could draw down on the 5GN Secured
Loan. On the same day, Natalie Mactier (a nominee of 5GN)
was appointed as a Director of the Company and Andrew
Macpherson resigned as a Director of the Company.
The loan drawdown occurred on 26 October 2020 and
the existing debt facilities were fully repaid.
On 27 October 2020, Joe Gangi was appointed as Chair
of the Board, replacing Andrew Reitzer, and Joe Demase
replaced Brett Fenton as Chief Executive Officer.
On 28 October 2020, 5GN held ownership of 50.69% of
the Company’s shares and therefore at that date 5GN
obtained control of the Company. The takeover offer
closed on 10 November 2020, with 5GN holding ownership
of 56.7% of the Company’s shares. Following a capital
raising completed in November and December 2020 5GN’s
holding was reduced to 44.6%. The current ownership by
5GN is 44.75%.
On 13 November 2020, Glen Dymond was appointed
as Chief Financial Officer and Company Secretary and
Michael Wilton was appointed as Company Secretary.
On 16 July 2021, the Company announced that it had entered
into a Merger Implementation Agreement (MIA) with 5GN
under which it is proposed that the two companies will
merge by way of a scheme of arrangement that is subject
to 5GN shareholder approval and court approval in
accordance with Part 5.1 of the Corporations Act (Scheme).
Under the Scheme Webcentral will acquire 100% of the
fully paid ordinary shares in 5GN and 5GN shareholders
will receive two Webcentral ordinary shares for each 5GN
share held. Pursuant to the Scheme, 5GN will become a
wholly-owned subsidiary of Webcentral.
Sale of the Enterprise
business
On 11 February 2020, the Company announced that it
had entered into a binding agreement to sell Arq Group
Enterprise Pty Limited to an entity owned by a consortium
comprising Quadrant Private Equity and certain members of
the Enterprise leadership team for $35,000,000 (less a final
payment of $5,979,000 due to the vendors of InfoReady Pty
Limited, which was acquired by the Company in 2016) on
a cash free, debt free basis. The net assets of Arq Group
Enterprise Pty Limited represents the Group’s former
Enterprise business. The sale included the rights to the
Arq brand. The sale completed on 2 March 2020 and the net
proceeds were used to reduce the amounts drawn under
the Group’s existing debt facilities. A transitional services
agreement was also entered into in connection with the
Enterprise sale, and the parties continue to work together
to manage the smooth transition of the Enterprise business
following its divestment.
On 20 July 2020, the completion accounts for the
Enterprise business sale were finalised. This finalisation
resulted in an aggregate amount of $1,558,000 becoming
payable by the Company to the consortium. The parties
agreed that, given the Company’s cash flow position, rather
than the Company making an immediate payment in full, the
Company would make monthly payments to the consortium
of $260,000 between July 2020 and December 2020
(inclusive) in respect of that amount.
As a result of the finalisation of the completion accounts,
the Group recognised a $1,565,000 net loss (inclusive of
movements in working capital balances up to the date of
disposal) on the disposal of the net assets of Arq Group
Enterprise Pty Ltd (including the Arq brand).
Impact of the COVID-19
pandemic
Settlement of Customer
Dispute
On 11 March 2020, the World Health Organisation (WHO)
declared the outbreak of the novel coronavirus (COVID-19)
as a global pandemic.
Since the onset of the COVID-19 outbreak and resulting
market conditions, the Group initially observed a reduction
in small business spend away from digital marketing and
online business promotion. Late in the second half of the
current reporting period, the Group has seen a slow but
gradual recovery in customers’ digital marketing spend.
The Group has launched campaigns and other customer-
centric efforts to take advantage of the demand for online
services as small businesses accelerate towards providing
their goods and services online during the ongoing COVID-19
pandemic. The Group’s trading activity has stabilised since
the onset of the COVID-19 pandemic and there has not been
a further decline in the Group’s trading performance.
In response, the Group executed certain initiatives to
maximise cash preservation, including deferrals of tax
payments and negotiating with its landlords for rent
deferrals. Additionally, certain subsidiaries of the Group
received amounts related to the Federal Government’s
JobKeeper payment scheme.
It is not possible to predict the ongoing impact of COVID-19
to the Group’s financial performance, particularly if
another significant outbreak occurs or trading levels of our
Group’s customers do not return to pre-COVID-19 levels.
Furthermore, the effects of ongoing measures introduced
by State and Federal governments to limit transmission
of COVID-19 (including the forced closures of business,
overseas and domestic travel bans and quarantine
requirements) will likely have a material negative impact
on Australia’s overall macro-economic environment to
which Webcentral is exposed.
While future revenues and cash flows of Webcentral
may be negatively impacted, at this time the Group is
unable to estimate the exact scope and any financial
impact COVID-19 may have on its operations in the
future. The Group is currently monitoring the impact of
COVID-19. To date, it has executed its business continuity
framework and implemented crisis management tools
to mitigate the impacts of COVID-19 on its business
operations to a sufficiently acceptable level. The Group
has identified further cost reduction and cash preservation
strategies in the event that Group revenues are materially
negatively impacted.
The Group’s annual report for the year ended 31 December
2019 disclosed a customer dispute pursuant to a contract
for the provision of services by the Group to the customer in
respect of which, as at 31 December 2019, a trade receivable
balance of $10,006,000 was held (“Customer Dispute”).
The Group also received notice of a cross claim from
the customer.
On 20 August 2020, Webcentral Pty Ltd (a wholly owned
subsidiary of the Group) entered into a release and
settlement agreement (“Settlement Agreement”) in
relation to the Customer Dispute.
The terms of the Settlement Agreement provide for the
release by both parties of any and all claims they may have
in relation to the subject matter of the Customer Dispute
for nil payment to the other party. Under the Settlement
Agreement, the Group has agreed to provide the customer
with certain services free of charge until 31 December
2020. The Group’s obligations in relation to those
services have ceased.
Following both parties settling their respective claim and
cross-claim at nil, the trade receivable balance held in
respect of the amounts claimed by Webcentral Pty Ltd
under the Customer Dispute has been reversed to nil.
As at 31 December 2019, this balance was $10,006,000
(inclusive of GST). The settlement results in a change in the
variable consideration of revenue previously recognised for
services performed that was associated with the disputed
receivables, and therefore the impact of the settlement
is a reversal of the GST-exclusive portion of all historical
disputed services provided that has previously been
recognised in revenue to date.
Since the date of settlement, no revenues were recognised
relate to the provision of services by the Group to the
customer that are in scope of the Settlement Agreement.
Sale of Netalliance Pty
Limited
On 20 November 2020, the Group sold its 50% interest in
Netalliance Pty Limited (“Netalliance”) to Trellian Pty Ltd
for $500,000 in cash consideration. Netalliance’s principal
operations relate to the purchase and resale or auction
of specific domain names that have expired but not
renewed (also known in the industry as the “drop catching”
of domain names). The sale comprises both the Group’s
interest in Netalliance, as well as Netalliance’s wholly
owned subsidiary, Ziphosting Pty Ltd.
During the current and prior reporting periods, Netalliance
contributed to less than 1% of the Group’s revenues and
underlying EBITDA. Therefore, the Group is not required
to separately present the results of Netalliance as a
discontinued operation for the current reporting period.
2627
Director’s Report
Director’s Report
Capital Structure
The Group repaid $22.1 million of its debt facilities with ANZ
and NAB in March 2020 using proceeds from the sale of the
Enterprise business. The remaining balance was repaid in
October 2020 following drawdown of loans totalling $47.6
million from 5G Networks Finance Pty Ltd, a wholly owned
subsidiary of 5GN.
In addition, in September 2020, 5GN provided a $500,000
unsecured loan to the Company to fund the break fee that
was paid on termination of the unsuccessful Scheme
of Arrangement with Web.com. This loan was repaid in
November 2020.
In December 2020, following the return of $5.3 million
from ANZ, the issuer of the Group’s property lease bank
guarantees issued on behalf of Webcentral, $5.3 million
was repaid to 5GN.
On 30 June 2021, the Group executed debt facility
agreements with Commonwealth Bank of Australia in
relation to a $16.6 million debt facility, comprising a
$15 million Market Rate Loan Facility, a $1.5 million Bank
Guarantee Facility and a $0.1 million Credit Card Facility.
On 30 June 2021 the Company made a $15 million
drawdown under the Market Rate Loan Facility and
repaid $15 million to 5GN.
During the period the following ordinary shares were issued:
•
18,319,660 ordinary shares were issued under
a placement to sophisticated and institutional
investors for total consideration of $3,114,000
• 4,705,882 ordinary shares were issued following
shareholder approval to entities controlled by Mr. Joe
Demase and Mr. Joe Gangi for total consideration of
$2,500,000
• 209,013 ordinary shares were issued under the
Employee Share Plan
During the period the Company granted a total of 15,400,000
performance rights and options.
Dividends
No dividends were paid during the period and no
interim or final dividend has been declared related
to the current period.
Significant changes in affairs
The Company’s name was changed from Arq Group Limited
to Webcentral Group Limited following approval by the
Company’s shareholders at the annual general meeting
held on 28 May 2020.
In accordance with s323D(3) of the Corporations Act 2001, on
14 December 2020 the Company has changed its financial year
end to 30 June to be aligned with the financial year end of 5GN.
Other than as stated above, there have been no other
significant changes in the state of affairs during the
period ended 30 June 2021.
Significant events after
reporting date
On 15 July 2021 the Company issued 4,950,000 options
to Executives under the Company’s Executive and Share
Option Plan and 1,000,000 Options to a services provider
as consideration for consulting services.
On 16 July 2021, the Group entered into a Merger
Implementation Agreement with 5G Networks Limited
under which it is proposed they will merge by way of a
scheme of arrangement (Scheme). Under the Scheme,
Webcentral will acquire 100% of the ordinary shares in 5GN
and 5GN shareholders will receive 2 new Webcentral shares
for each 5GN share held. The Scheme is subject to several
conditions including 5GN shareholder approval, Court
approval in accordance with Part 5.1 of the Corporations
Act 2001, Webcentral shareholder approval of a reverse
takeover resolution under ASX Listing Rule 7.1 and the
acquisition of related party shares under ASX Listing
Rule 10.1, and the Independent Expert concluding that
the Scheme is in the best interests of 5GN shareholders.
The Scheme is expected to be implemented in November
2021 if these conditions are met.
On 30 July 2021, the Group announced that it held 8.86%
of the ordinary shares in Cirrus Networks Holdings Limited
(ASX: CNW) and launched an on-market takeover bid
(“Takeover Bid” for Cirrus Networks Holdings Limited (ASX:
CNW) at an offer price of 3.2 cents per share. On the same
day, the Group received credit approval for a $10.5 million
debt facility with Commonwealth Bank of Australia for the
purpose of funding the Takeover Bid, and a Debt Facility
Amendment Deed was subsequently executed with CBA.
On 31 August 2021, 125,000 options were exercised by
option holders and 125,000 ordinary shares were issued at
$0.20 per share.
Other than the above, there has not been any other
matter or circumstance in the interval between the end
of the half-year date and the date of this report that has
materially affected or may materially affect the operations
of the consolidated entity, the results of those operations
or the state of affairs of the consolidated entity in
subsequent financial periods.
Likely developments,
business strategies
and prospects
The Chairman’s Report on page 4 and the Managing
Director’s report on page 6 contains further information on
the likely developments, business strategies and prospects
of the Group.
Meetings of Directors
The number of meetings of the Company’s Board of Directors and of each Board committee held during the period ended
30 June 2021, and the numbers attended by each Director were:
Full meetings of Directors
Meetings of Committees
Audit and Risk
Remuneration and Nomination
Number of meetings held
32
3
2
Name of Director
Eligible
Attended
Eligible
Attended
Eligible
Attended
Joseph Gangi
Joe Demase
Natalie Mactier
Andrew Reitzer
Andrew Macpherson
Karl Siegling
Larry Bloch
Simon Martin
Naseema Sparks
10
10
9
24
23
24
19
1
1
10
10
9
24
22
24
18
1
1
2
2
2
0
1
0
0
1
1
2
2
2
0
1
0
0
1
1
2
2
2
0
0
0
0
0
0
2
2
2
0
0
0
0
0
0
Insurance of Officers
Indemnity of auditors
During the period, Webcentral Group Limited agreed to pay
a premium to insure the Directors and secretaries of the
Group and its Australian-based controlled entities.
The liabilities insured are legal costs that may be
incurred in defending civil or criminal proceedings that
may be brought against the officers in their capacity as
officers of the Group, and any other payments arising
from liabilities incurred by the officers in connection
with such proceedings, other than where such liabilities
arise out of conduct involving a wilful breach of duty
by the officers or the improper use by the officers
of their position or of information to gain advantage
for themselves or someone else to cause detriment
to the Group.
Details of the amount of the premium paid in respect of
insurance policies are not disclosed as such disclosure
is prohibited under the terms of the contract.
The Group has not otherwise, during or since the end of
the financial year, except to the extent permitted by law,
indemnified or agreed to indemnify any current or former
officer of the Group against a liability incurred as such
by an officer.
The Group has agreed to indemnify its auditors, Grant
Thornton, to the extent permitted by law, against any
claim by a third party arising from the Group’s breach of its
agreement. The indemnity requires the Group to meet the
full amount of any such liabilities including a reasonable
amount of legal costs.
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. No proceedings have been brought or
intervened in on behalf of the company with leave of the
Court under section 237 of the Corporations Act 2001.
Non-Audit Services
The Group may decide to employ the auditor on
assignments additional to their statutory audit duties where
the auditor’s expertise and experience with the Group and/
or the Group are important.
2829
Director’s Report
Remuneration Report (Audited)
Auditor’s independence
declaration
A copy of the auditor’s independence declaration as
required under section 307C of the Corporations Act 2001
is set out on page 43.
Rounding
The amounts contained in this report and in the financial
report have been rounded to the nearest $1,000 (where
applicable) under the option available to the Company
under ASIC Corporations (Rounding in Financial / Directors’
Report) Instrument 2016/191 (Instrument 2016/191).
The Company is an entity to which the Class Order applies.
Corporate governance
On 23 December 2020, ASIC provided consent for
the resignation of Ernst & Young (EY) as the outgoing
auditor and the appointment of Grant Thornton as the
incoming auditor of the Company, in order to align the
Company’s auditor with that of its controlling shareholder
(5GN). The Company will seek to ratify Grant Thornton’s
appointment at the Company’s next Annual General Meeting.
The Company's Corporate Governance Statement is available
on the Company's website www.webcentral.com.au.
Signed in accordance with a resolution of the Directors.
Mr. Joe Gangi
Chair
Melbourne
13 September 2021
Details of the amounts paid or payable to the auditor for
audit and non-audit services provided during the period
are set out below in relation to the Group's current auditor,
Grant Thornton, and the previous auditor, EY.
The Board of Directors has considered the position
and, in accordance with advice received from the audit
committee, is satisfied that the provision of the non-
audit services is compatible with the general standard of
independence for auditors imposed by the Corporations
Act 2001. The Directors are satisfied that the provision of
non-audit services by the auditor, as set out below, did not
compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
• All non-audit services have been reviewed by the
audit committee to ensure they do not impact the
impartiality and objectivity of the auditor
• None of the services undermines the general
principles relating to auditor independence as set
out in APES 110 Code of Ethics for Professional
Accountants.
During the year the following fees were paid or payable for
non-audit services provided by the auditor of the parent
entity, its related practices and non-related audit firms:
Consolidated
30-Jun-21
18 months
$
31-Dec-19
12 months
$
39,343
8,350
1,500
49,193
-
-
-
-
87,080
-
87,080
28,709
129,986
158,695
136,273
158,695
GRANT THORNTON
Other assurance and agreed-upon
procedure services under other
legislation or contractual arrangement
Other Taxation and Advisory Services
Tax Compliance Services
Compliance services
Total Remuneration for Non-Audit
Services – Grant Thornton
EY
Other Taxation and Advisory Services
Tax Compliance Services
Digital Advisory and Implementation
Total Remuneration for
Non-Audit Services – EY
Total Remuneration for
Non-Audit Services
The Directors present the Webcentral Group Limited
2021 remuneration report, outlining key aspects of our
remuneration policy and framework as well as remuneration
awarded this year. It has also been audited as required by
section 308(3C) of the Corporations Act 2001.
The Report is structured as follows:
(a) Key management personnel (KMP) covered
in this report
(b) Remuneration policy and link to performance
(c) Elements of remuneration
(d) Remuneration expenses for executive KMP
(e) Non-executive Director arrangements
(f) Other statutory information
(A) Key Management
Personnel (KMP) Covered
in This Report
Directors:
Joseph Gangi
Non-Executive Chair from 27 October 2020,
Director from 16 October 2020
Natalie Mactier
Non-Executive Director from 22 October 2020
Joseph Demase
Managing Director from 16 October 2020
Andrew Reitzer
Non-Executive Chair until 27 October 2020,
retired 10 November 2020
Karl Siegling
Non-Executive Director until 10 November 2020
Andrew Macpherson
Non-Executive Director until 22 October 2020
Larry Bloch
Non-Executive Director until 16 August 2020
Naseema Sparks, AM
Non-Executive Director until 27 February 2020
Scott Martin
Non-Executive Director until 27 February 2020
Other key management personnel:
Glen Dymond
Chief Financial Officer and Company Secretary
from 13 November 2020
Garry White
National Sales Director from 27 October 2020
Brendan White
Chief Financial Officer from 23 March 2020
until 13 November 2020
Brett Fenton
Chief Executive Officer from 11 February 2020
until 27 October 2020
Fraser Bearsley
Chief Financial Officer until 23 March 2020
Tristan Sternson
Chief Executive Officer until 11 February 2020
There have been no changes in KMP since the end of
the reporting period.
(B) Remuneration Policy and
Link to Performance
Our remuneration committee is currently made up of
all directors. The Committee makes recommendations
to the Board with respect to appropriate remuneration
and incentive policies for executive Directors and senior
executives that:
a. Motivate Executive Directors and senior executives
to pursue long term growth and success of the Group
within an appropriate control framework;
b. Demonstrate a clear correlation between key
performance and remuneration; and
c. Align the interests of key leadership with the long-
term interests of the Group’s shareholders.
Executive KMP Remuneration Policy Statement
Consistent with contemporary Corporate Governance
standards Webcentral remuneration policy aims to
set employee and executive remuneration that is fair,
competitive and appropriate for the markets in which
it operates. Specific objectives of the policy include
the following:
a. Ensuring executive remuneration packages involve a
balance between fixed and incentive pay, reflecting
short and long term performance objectives
appropriate to the Group’s circumstances and
objectives;
b. A proportion of executives’ remuneration is
structured in a manner designed to link reward to
corporate and individual performances; and
c. Ensure that incentive plans are designed around
appropriate and realistic performance targets that
measure relative performance and provide rewards
when they are achieved.
3031
Remuneration Report (Audited)
Remuneration Report (Audited)
(C) Elements of Remuneration
Long-term Incentives
Key Management Personnel Remuneration (continued)
Fixed Annual Remuneration
Executives may receive their fixed remuneration as cash,
superannuation and fringe benefits.
Short-term Incentives (“STI”) –
Operational Bonuses
In 2021, a bonus of $105,000 each was paid to Glen
Dymond and Garry White linked to the achievement of
the acquisition of Webcentral by 5G Networks Limited.
This amount represents the allocation to Webcentral of
the total bonus paid by 5G Networks Limited.
No other short-term incentives were paid to KMP
during the year.
Retention bonus arrangements
During the year ended 31 December 2019, the Board
approved retention bonus arrangements for Mr Tristan
Sternson, Mr Brett Fenton and Mr Fraser Bearsley (as the
remaining KMPs at 31 December 2019) to ensure continuity
of business as a result of the Strategic Review being
undertaken at that time and any other changes to the
business. The retention bonuses paid in the period ended
30 June 2021 were:
•
•
Brett Fenton:
$103,333
Brendan White:
$40,680
Up until 2018 the Group operated a Long Term Incentive
Plan (LTIP) under which Performance Rights were issued
each year to the Managing Director and selected employees
of the Group. The LTIP Plan was discontinued in 2019 and all
Performance Rights previously issued under the LTIP have
since lapsed since the performance conditions were unable
to be met for the relevant performance periods.
In December 2020 the Group adopted a new long-term
incentive plan (LTIP) or Executive and Director Share Option
Plan (ESOP) for directors, executives and senior leaders of
the Group.
During the period ended 30 June 2021 the Group issued
12,000,000 performance rights and share options to
directors under the ESOP as a means of rewarding and
incentivising the directors.
Further details of the performance rights and share options,
including details of rights issued during the financial year,
are set out in section D below.
(D) Remuneration Expenses
for Executive KMP
The following table shows details of the remuneration
expense recognised for the Group’s executive
key management personnel for the current and
previous financial year measured in accordance
with the requirements of the accounting standards.
Remuneration paid to Directors and executives is
valued at the cost to the Group.
Short term benefits
Post
Employment
benefits
Long term
benefits
Share
based
payments
Other
Period
Cash salary
& fees
Cash
STI1
Annual
leave3
Other2
Superannuation Long service
leave3
Amortisation
expense4
Termination
pay
Total
$
$
$
$
$
$
$
$
$
Perfor-
mance
related5
%
Executives
Mr Joe Demase
Mr Glen Dymond
Mr Garry White
2021
2019
2021
2019
2021
2019
-
-
-
-
-
-
-
-
105,000
-
105,000
-
-
-
-
-
-
-
Former Key Management Personnel
Mr Brett Fenton6
2021
221,730
94,368
20,302
215,698
-
102,740
-
111,301
-
-
2019
315,947
Mr Tristan Sternson7 2021
55,263
-
-
11,901
5,620
21,851
-
2019
93,349
126,667
7,877
4,558
Mr Brendan White8 2021
222,449
37,151
2,677
2019
-
Mr Fraser Bearsley9 2021
62,978
2019
306,304
Mr Martin Mercer10
2021
-
2019
487,061
Mr Peter Wright11
2021
-
Ms Amy Rixon12
Ms Emma Hunt11
2019
194,389
2021
2019
2021
2019
-
16,376
-
67,652
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,171
-
-
5,796
15,186
-
-
6,003
-
-
886
-
74,097
7,253
Total KMP
2021
562,420
341,519
34,395
429,739
-
-
-
-
-
-
31,958
24,053
5,784
8,868
24,916
-
8,736
23,287
-
-
-
-
-
-
-
-
322,023
-
-
-
-
-
-
17,044
(6,801)
-
3,754
-
-
-
4,091
-
-
-
-
-
-
11,747
-
537,721
60%
-
-
-
-
-
-
-
207,740
-
216,301
-
87,694
456,052
-
-
383,995
66,667
245,073
19,987
307,180
-
-
46,102
123,612
-
-
369,786
-
51%
-
49%
-
21%
(2%)
-
52%
12%
-
-
3%
-
-
(18%)
35%
(14%)
31,113
23,307
14,603
15,106
(378,872)
668,925
861,243
(44%)
-
-
-
-
-
-
-
-
27,470
11,054
38,377
46,025
(42,932)
266,531
540,914
(8%)
-
1,565
-
13,159
71,394
-
-
-
-
-
-
(27,799)
-
-
-
-
-
-
(2,969)
936%
-
(50,284)
163,373
275,250
322,023
153,783
1,915,273
2019
1,481,078
126,667
173,647
78,080
123,912
86,020
(494,941)
1,098,829
2,673,292
1. Represent STIs accrued in relation to the 2021 and 2019 financial periods.
The 2021 amounts for Glen Dymond and Garry White represent the portion of
STI allocated to Webcentral Group Limited from 5GN. The 2021 STI amounts
for Brett Febnton and Brendan White represent retention bonuses paid
to ensure continuity of business as a result of the Strategic Review being
undertaken at that time and any other changes to the business.
2. This item includes the allocation of salary costs via management
fees charged from 5GN to Webcentral for current KMP. For former
KMP this includes the cost to the business of any non-cash business
benefits provided.
3. Comprises Annual Leave and Long Service Leave accrued during the year.
A credit balance in respect of leavers represents the reversal of leave
accrued in prior years
4. Relates to the amortisation recorded during the period in relation to the fair
value of Performance Rights and Options.
5. Calculated as STI plus Amortisation of Performance Rights and Options, as a
proportion of total remuneration. These two elements represent the at-risk
and discretionary amount payable which will vary depending on the financial
performance of the Company. They are in addition to the fixed remuneration.
6. Mr Brett Fenton was a KMP until he ceased employment on 28 October 2020.
Their information has been included up to that date.
7. Mr Tristan Sternson became a KMP on 24 September 2019 until his
resignation on 11 February 2020. Their information has been included up to
the date of their resignation.
8. Mr Brendan White was a KMP from 23 March 2020 to 13 November 2020.
Their information has been included up to that date.
9. Mr Fraser Bearsley was a KMP until 23 March 2020. Their information has
been included up to the date of their resignation.
10. Mr Martin Mercer was a KMP until 24 September 2019. Their information has
been included up to the date of their resignation.
11. Mr Peter Wright and Ms Emma Hunt resigned on 5 July and 8 July 2019
respectively and are no longer a KMP from that date onwards. Their
information has been included up to the date of their resignation.
12. Ms Amy Rixon resigned on 24 January 2019 and is no longer a KMP from
that date onwards. Their information has been included up to the date of
their resignation.
Total
Non-Executive
Directors
Total
Non-Executive
Directors
Total -
Non-Executive
Directors & KMP
Total
Non-Executive
Directors & KMP
2021
411,356
2019
571,865
-
-
-
-
-
-
29,738
53,542
2021
973,776
341,519
34,395
429,739
101,132
-
-
-
161,100
-
-
-
602,194
27%
625,407
-
483,123
153,783
2,517,467
33%
2019
2,052,943
126,667
173,647
78,080
177,454
86,020
(494,941)
1,098,829
3,298,699
(11%)
3233
Remuneration Report (Audited)
Remuneration Report (Audited)
OPTIONS AND RIGHTS GRANTED AS REMUNERATION
Balance at 1
January 2020
Grant Details
Exercised
Exercised
Lapsed
Balance at
30 June 2021
No.
Grand Date
No.
Value
$000
No.
Value
$000
No.
No.
-
-
-
-
-
-
-
-
-
-
86,421
-
-
31,426
-
-
51,309
-
169,156
18-Dec-20
1,000,000
18-Dec-20
10,000,000
18-Dec-20
1,000,000
303
3,031
303
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,000,000
3,637
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
86,421
-
-
31,426
-
-
51,309
-
1,000,000
10,000,000
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
169,156
12,000,000
Name
Executives
Joe Gangi
Joe Demase
Natalie Mactier
Glen Dymond
Garry White
Andrew Reitzer
Karl Siegling
Andrew Macpherson
Larry Bloch
Naseema Sparks
Brett Fenton1
Tristan Sternson
Brendan White
Fraser Bearsley1
Martin Mercer
Peter Wright
Amy Rixon1
Emma Hunt
KMP Total
1. All Performance Rights issued under the previous LTIP have since lapsed since the performance conditions were unable to be met for the relevant
performance periods.
The key criteria for performance rights and options granted during the period are as follows:
•
•
Performance Rights (Joe Demase) – the achievement of normalised annualised EBITDA of at least $10 million.
Options (Joe Gangi and Natalie Mactier) – the completion of tenure periods of two years. There is no performance
condition in relation to these options as the Board considers the service condition is sufficient.
The fair value per option is $0.3031 for the 12,000,000 performance rights and options granted during the period.
The following table summarises information about performance rights and options held by Directors as at 30 June 2021.
None of the performance rights or options are exercisable at period end (2019: nil):
Issue Date and Type
Number
Grant Date
Vesting Date
Expiry Date
2020 Performance Rights - Director
10,000,000
18/12/2020
-1
18/12/2025
2020 Options - Director
2,000,000
18/12/2020
18/12/2022
18/12/2025
12,000,000
Weighted Average
Exercise Price
$0.20
$0.20
$0.20
The following table lists the inputs to the models used for
the LTI Grants:
Share price
Dividend yield
Expected volatility
Risk-free interest rate
2020 Rights
2020 Options
$0.415
0%
73.4%
0.375%
$0.415
0%
73.4%
0.375%
The dividend yield is zero as the Group has not paid
a dividend for the previous two reporting periods.
The expected volatility was determined using the group's
average five-year share price. The risk-free rate is derived
from the yield on Australian Government Bonds of an
appropriate term.
Historical share price volatility has been the basis for
determining expected share price volatility as it is assumed
(E) Non-Executive Director Arrangements
Current Board fees are $90,000 per annum for Joe Gangi and $60,000 per annum for Natalie Mactier.
The table below represent the amounts paid during the periods in which their services were provided.
Short term benefits
Post
Employment
benefits
Long term
benefits
Share based
payments
Period
Cash salary
& fees
$
Cash
STI1
$
Annual
leave
$
Superannuation
$
Long service
leave
$
Amortisation
expense
$
Total
$
Performance
related5
%
Non-Executive Directors
Mr Joe Gangi1
Ms Natalie Mactier2
Former Directors
Mr Andrew Reitzer3
Mr Karl Siegling4
Mr Andrew Macpherson5
Mr Larry Bloch6
Ms Naseema Sparks7
Mr Simon Martin7
Total
2021
2019
2021
2019
2021
2019
2021
2019
2021
2019
2021
2019
2021
2019
2021
2019
2021
2019
58,333
-
40,000
-
113,341
176,813
76,678
25,625
55,689
113,882
48,096
76,875
19,219
83,542
-
95,128
411,356
571,865
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,767
16,797
7,284
2,434
5,291
10,819
4,569
7,303
1,826
7,936
-
8,253
29,737
53,542
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
80,550
138,883
58%
-
-
80,550
120,550
67%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
124,108
193,610
83,962
28,059
60,980
124,701
52,665
84,178
21,045
91,478
-
103,381
-
-
-
-
-
-
-
-
-
-
-
-
-
161,100
602,193
-
625,407
27%
-
1.
Vesting period is dependent on the achievement of normalised annualised EBITDA of at least $10 million.
1. Mr Joe Gangi was appointed 16 October 2020 and has been Chair
4. Mr Karl Siegling retired on 10 November 2020.
The fair values of options granted during the period were determined using a variation of the binomial option pricing model
that takes into account factors specific to the ESOP, such as the vesting period. The following principal assumptions
were used in the valuation.
of the Board since 27 October 2020.
2. Ms Natalie Mactier was appointed on 22 October 2020
3. Mr Andrew Reitzer was Chair until 27 October 2020 and retired
on 10 November 2020.
5. Mr Andrew Macpherson retired on 22 October 2020.
6. Mr Larry Bloch retired on 16 August 2020.
7. Ms Naseema Sparks and Mr Simon Martin retired on 27 February 2020.
All non-executive Directors enter into a service agreement with the Group in the form of a letter of appointment.
The letter summarises the Board policies and terms, including remuneration, relevant to the office of Director.
3435
Remuneration Report (Audited)
Remuneration Report (Audited)
(F) Other Statutory Information
Shareholdings
The numbers of shares in the Group held (directly, indirectly or beneficially) during the financial year by KMP,
including their related parties, are set out below.
Balance at 1 January 2020
or date of appointment
Net Other Changes
Balance at 30 June 2021
Directors
Joe Gangi
Joe Demase
Natalie Mactier
Andrew Reitzer
Karl Siegling
Andrew Macpherson
Larry Bloch
Naseema Sparks
Simon Martin
Total Directors
Other Management Personnel (OMP)
Glen Dymond
Garry White
Brett Fenton
Tristan Sternson
Brendan White
Fraser Bearsley
Martin Mercer
Peter Wright
Amy Rixon
Emma Hunt
Total OMP
Group Total
-
-
-
122,500
22,873,712
171,340
6,708,363
42,560
215,353
2,941,176
11,951,206
-
(122,500)
(22,873,712)
(171,340)
(6,708,363)
(42,560)
(215,353)
2,941,176
11,951,206
-
-
-
-
-
-
-
30,133,828
(15,241,446)
14,892,382
-
-
203,743
1,269,687
-
31,819
318,216
159,256
64,959
3,031
2,050,711
32,184,539
919,999
1,411,764
(203,743)
(1,269,687)
-
(31,819)
(318,216)
(159,256)
(64,959)
(3,031)
281,052
(14,960,394)
919,999
1,411,764
-
-
-
-
-
-
-
-
2,331,763
17,224,145
Voting and comments made at the
Company’s Annual General Meeting
The Company received 69.9% of ‘yes’ votes on its
Remuneration Report for the financial year ending
31 December 2019. The Company received no specific
feedback on its Remuneration Report at the Annual
General Meeting.
Service Agreements
Remuneration and other terms of employment for the
Managing Director and other Key Management Personnel
are formalised in an Executive Service Agreement between
5G Networks Limited and each executive. A management
fee is charged from 5G Networks Limited to Webcentral
Group Limited.
During the period, 5GN granted loans of $0.28 million to key
management personnel to allow them to take up shares in a
capital raising being undertaken by the Group. The loans are
repayable within two years and are interest-free. The loans
are expected to be repaid at the time the FY2021 bonus is
approved by the Board following the release of 5GN’s FY21
Annual Report in September 2021.
There were no other transactions with KMP during the
periods ended 30 June 2021 or 31 December 2019.
End of Remuneration Report
This report, incorporating the Remuneration Report is
signed in accordance with a resolution of Directors.
Executive
Base Salary
Term of
agreement
Notice period
Joe Demase
$300,000
Unspecified
6 months
Joe Gangi
Chairman
13 September 2021
Glen Dymond
$250,000
Unspecified
3 months
Garry White
$250,000
Unspecified
3 months
Other Transactions with Key
Management Personnel
During the period, the Group has conducted the following
related party transactions:
• Mr Tristan Sternson, the Group’s Interim CEO
(until 11 February 2020), was one of the previous
owners of Infoready Pty Ltd (Infoready) before its
acquisition by the Group. As part of the Share
Purchase Agreement (SPA) with the previous owners
of Infoready, three earn-out payments have been
agreed. For further details, please refer to section
3(d) in the Remuneration Report and note C5 in the
financial statements. The Enterprise business was
sold on 2 March 2020 to a consortium of buyers, of
which Mr Tristan Sternson has a direct interest in.
• A total of $1,686,745 (2019: nil) was paid to
5G Networks Limited for management fees,
managed IT services and network services during
the period. All transactions are carried at commercial
third-party rates.
• A total of $51,351 (2019: nil) was paid to Studio Inc.,
an entity related to Joe Demase, for the design of
marketing materials for the Group. All transactions
are carried at commercial third-party rates.
3637
Corporate Governance Statement
Corporate Governance Statement
The Board of Webcentral Group Limited (the Company) recognises the need for the highest standards of corporate behaviour and
accountability. The Board is committed to optimising security holder returns within a framework of ethical business practices.
Webcentral Group's corporate governance practices and policies comply with the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations (the Governance Principles and Recommendations), the ASX Listing Rules and
the Corporations Act 2001 (Cth). This Statement reflects a summary of Webcentral Group’s corporate governance framework,
policies and procedures that are in place and operating as at the date of this report.
Further information on Webcentral Group’s corporate governance policies, including Board and Committee charters, are
available from the Corporate Governance page of the Company’s website.
Principles and Recommendations
Compliance
Comply
Principle 1 – Lay solid foundations for management and oversight
1.1 Establish the functions expressly
reserved to the Board and those delegated
to management, and disclose those
functions.
The Board is responsible for the overall corporate governance of
the Company. It has adopted various charters and key corporate
governance documents which set out the policies and procedures
followed by the Company.
1.2 Undertake appropriate checks before
appointing a person as a director, and
provide security holders with all material
information in its possession relevant to a
decision on whether or not to elect or re-
elect a director.
The Company has and will continue to conduct appropriate searches
in relation to all appointed and future nominated directors. It will
carry out necessary background checks, including ASIC Banned &
Disqualified Persons Register and bankruptcy searches.
The Company has published Director profiles on the Company’s
website outlining biographical details, other directorships held,
commencement date of office and level of independence.
Compliant
Compliant
1.3 Have a written agreement with each
director and senior executive setting out the
terms of their appointment.
The Company has written agreements with each director and senior
executive. On appointment of directors and senior executives the
Company will issue necessary written agreements outlining the
terms of their appointment.
Compliant
1.4 The company secretary should be
accountable directly to the Board on all
matters to do with the proper functioning of
the Board.
1.5 Establish a diversity policy and disclose
the policy. The policy should include
requirements for the Board to establish
measurable objectives for achieving gender
diversity and for the Board to assess
annually both the objectives and progress in
achieving them, for reporting against in each
reporting period.
1.6 Have a process for periodically
evaluating the performance of the Board,
its committees and individual directors, and
disclose that process and, at the end of each
reporting period, whether such performance
evaluation was undertaken in that period.
The Company Secretary reports directly to the Board, through the
Chairman, on matter relating to the proper functioning of the Board.
All Directors have access to the Company Secretary.
Compliant
The Company is committed to promoting a diverse workplace where
everyone is treated with respect regardless of gender, age, race,
disability, language, cultural background or sexual preference.
Compliant
The Company has a Diversity & Inclusion Policy that outlines how it
meets the highest standard of inclusion and respect. The Diversity &
Inclusion Policy is available from the Corporate Governance page of
the Company’s website.
The Nomination and Remuneration Committee (‘NRC’) is responsible
for, among other things, reviewing the Board’s performance, policies
and practices and review the performance of its Committees and the
Board and Committee Chairs.
Compliant
The NRC meets at least twice a year and operates in accordance
with its charter which is available on the Corporate Governance page
of the Company’s website.
1.7 The Company should have a process
evaluating the performance of the
Company’s senior executives, and disclose
that process and, at the end of each
reporting period, whether such performance
evaluation was undertaken in that period.
The Managing Director (MD) reviews the performance of the senior
executives on a regular basis throughout the reporting period.
Additionally, the Board reviews the Managing Director’s performance
throughout the reporting period. These reviews were conducted in
the current reporting period.
Compliant
Principles and Recommendations
Compliance
Comply
Principle 2 – Structure the Board to be effective and add value
2.1 The Company should have a nomination
committee, which has at least three
members, a majority of independent
directors and is chaired by an independent
director. The functions and operations of the
nomination committee should be disclosed.
A Nomination and Remuneration Committee (‘NRC’) has been
established with its own charter and currently comprises the
following Directors:
• Natalie Mactier (Committee Chair, Non-Executive Director);
• Joe Gangi (Non-Executive Director); and
• Joe Demase (Managing Director and CEO).
Compliant
The primary objective of the NRC is to assist the Board with the
discharge of its responsibilities with respect to constitution of
the members of the Board of Directors and the remuneration of
directors and senior management as set out in its charter which
is available on the Corporate Governance page of the Company’s
website.
2.2 Have and disclose a board skills matrix,
setting out what the board is looking to
achieve in its membership
2.3 Disclose the names of the directors
that the Board considers to be independent
directors, and an explanation of why the
Board is of that opinion if a factor that
impacts on independence applies to a
director, and disclose the length of service
of each director
The NRC undertakes its deliberations in accordance with the rules
set out in its charter. The NRC seeks to ensure that the Directors
have a broad range of experience, expertise, skills, qualifications
and contacts and that they are relevant to the Company and its
business.
Compliant
The Board considers Natalie Mactier (Non-Executive Director
appointed 22 October 2020) to be an independent director.
Compliant
The Board notes that neither Joseph Demase nor Joe Gangi are
independent directors for the purposes of the Governance Principles
and Recommendations. Mr Demase is Managing Director and Chief
Executive Officer of the Company and Mr Gangi is a director of 5G
Networks Limited which is a major shareholder in the Company.
2.4 A majority of the Board should be
independent directors.
The Board is presently comprised of three directors, of which one is
an independent non-executive director.
Partially
Compliant
2.5 The Chair of the Board should be an
independent director and should not be the
CEO.
2.6 The Company should have a program
for inducting new directors and providing
appropriate professional development
opportunities for directors to develop and
maintain the skills and knowledge needed to
perform their role as a director effectively.
The size of the Company does not currently justify the retention of
additional independent non-executive directors.
The Chair of the Board, Joe Gangi, is a non-executive director but
not an independent director.
Partially
Compliant
The Board Charter provides a program for inducting new directors
and requires that Directors have access to opportunities for
professional development so as to ensure the continual development
of their skills and knowledge.
Compliant
The Board Charter is available on the Corporate Governance page of
the Company’s website.
Principle 3 – Act lawfully, ethically and responsibly
3.1 The Company should articulate and
disclose its values
The Company articulates and discloses its guiding principles and
values in its Code of Conduct. The Code of Conduct is available on
the Corporate Governance page of the Company’s website.
3.2 The Company should have a Code of
Conduct and ensure that any material
breaches of that Code are reported.
The Company has a Code of Conduct that articulates the standards
of behaviour it expects of its directors, senior executives and
employees.
Compliant
Compliant
The Code also sets out the process for identifying and reporting
material breaches of the Code. The Code of Conduct is available on
the Corporate Governance page of the Company’s website.
3839 Corporate Governance Statement
Corporate Governance Statement
Principles and Recommendations
Compliance
3.3 The Company should have a
whistleblower policy and ensure that the
Board is informed of any material breaches
reported under that policy
The Company encourages directors, senior executives and
employees to speak up about any unlawful, unethical or irresponsible
behaviour within the organisation.
The Company has a Whistleblower Policy to guide the directors,
senior executives and employees as to the practices necessary to
report unlawful, unethical or irresponsible behaviour.
The Policy is available on the Corporate Governance page of the
Company’s website.
Comply
Compliant
3.4 The Company should have an anti-
bribery and corruption policy and ensure
that the Board is informed of any material
breaches reported under that policy
As at the date of this Statement, the Board is in the process of
reviewing its policies concerning anti-bribery and corruption. An
updated Anti-Bribery and Corruption Policy will be made available on
the Corporate Governance page of the Company’s website.
Partially
Compliant
Principle 4 – Safeguard the integrity of corporate reports
4.1 The Company should have an audit
committee, which consists of only
non- executive directors, a majority of
independent directors, is chaired by an
independent chairman who is not chairman
of the Board, and has at least three
members. The functions and operations of
the audit committee should be disclosed.
4.2 The Board should, before approving
financial statements for a financial period,
receive a declaration from the CEO and CFO
that, in their opinion, the financial records
have been properly maintained and that
the financial statements comply with the
appropriate accounting standards and
give a true and fair view of the financial
position and performance of the Company,
formed on the basis of a sound system of
risk management and internal controls,
operating effectively.
4.3 The Company’s auditor should attend the
AGM and be available to answer questions
from security holders relevant to the audit.
The Board has established an Audit and Risk Committee (‘ARC’) which
operates under an audit and risk committee charter.
Partially
Compliant
The Audit and Risk Committee members are:
• Natalie Mactier (Committee Chair, Independent Non-Executive
Director);
• Joe Gangi (Non-Executive Director); and
• Joseph Demase (Managing Director and CEO).
The ARC oversees the Company’s corporate reporting process
pursuant to the rules of its Charter which is available on the
Corporate Governance page of the Company’s website
In accordance with section 295A of the Corporations Act 2001 (Cth),
each year the CEO and CFO state in writing to the Board that, for the
relevant financial year, the financial records of the Company have
been properly maintained, the financial statements and the notes
comply with the accounting standards and give a true and fair view
of the financial position and performance of the Company, and that
their statement has been provided on the basis of a sound system of
risk management and internal control which is operating effectively.
Compliant
External auditors attend the Company’s Annual General Meeting and
are available to answer reasonable questions from security holders
in relation to the conduct of the audit, the preparation and content
of the independent audit report and the accounting policies adopted
by the Company.
Compliant
Principle 5 – Make timely and balanced disclosure
5.1 The Company should have a written policy
for complying with its continuous disclosure
obligations under ASX Listing Rule 3.1.
The Company has a Disclosure Policy which is designed to ensure
that all material matters are appropriately disclosed in a balanced
and timely manner and in accordance with the requirements of the
ASX Listing Rules.
Compliant
The Policy is available on the Corporate Governance page of the
Company’s website.
Principles and Recommendations
Compliance
Comply
5.2 The Company should ensure that its
Board receives copies of all material market
announcements promptly after they have
been made.
5.3 The Company should release copies of
presentation materials on the ASX Market
Announcements Platform ahead of the
presentation.
The Company’s Disclosure Policy provides that the Board receives
market announcements promptly after they have been made.
Compliant
The Policy is available on the Corporate Governance page of the
Company’s website.
The Company diligently releases copies of all of its presentation
materials on the ASX Market Announcements Platform ahead of
presentations.
Compliant
Principle 6 – Respect the rights of security holders
6.1 The Company should provide information
about itself and its governance to investors
via its website
The Corporate Governance landing page on the Company’s website
contains a range of documents concerning information about the
entity and its governance that security holders can download.
Compliant
Further information about the Company’s Corporate Governance
regime can be found on the Corporate Governance page of the
Company’s website.
6.2 The Company should have an investor
relations program that facilitates effective
two-way communication with investors.
The Company will use its website, half year and annual reports,
market announcements and media disclosures to communicate with
its security holders, as well as encourage participation at general
meetings.
6.3 The Company should disclose how it
facilitates and encourages participation at
meetings of security holders.
The Company’s security holders have the opportunity to ask
questions of the Company’s external auditors who attend the
Company’s annual general meeting.
Compliant
Compliant
6.4 The Company should ensure that all
substantive resolutions at a meeting of
security holders are decided by a poll.
6.5 The Company should give
security holders the option to receive
communications from, and send
communications to, the Company and its
security registry electronically.
Principle 7 – Recognise and manage risk
7.1 The Board should have a committee to
oversee risk with at least three members, a
majority of whom are independent directors;
and is chaired by an independent director.
Further, the Company has adopted a range of appropriate
technologies to facilitate two-way engagement at its annual general
meetings,
All resolutions at meetings of security holders are decided on a poll.
Compliant
The Company’s security holders have the option to electronically
receive communications from, and send communications to, the
Company and its security registry.
Compliant
The Board has established an Audit and Risk Committee (‘ARC’) which
operates under an audit and risk committee charter.
Partially
Compliant
The Audit and Risk Committee members are:
• Natalie Mactier (Committee Chair, Independent Non-Executive
Director);
• Joe Gangi (Non-Executive Director); and
• Joseph Demase (Managing Director and CEO).
The ARC oversees the Company’s corporate reporting process
pursuant to the rules of its Charter which is available on the
Corporate Governance page of the Company’s website.
4041 Corporate Governance Statement
Auditor's Independence Declaration
7.2 The Board should review the Company’s
risk management framework at least
annually; and disclose, in relation to each
reporting period, whether such a review has
taken place.
7.3 The Company should disclose if it has an
internal audit function, how the function is
structured and what role it performs, or if
it does not have an internal audit function,
that fact and the processes the Company
employs for evaluating and continually
improving the effectiveness of its risk
management and internal control processes.
7.4 The Company should disclose whether
the Company has any material exposure
to economic, environmental and social
sustainability risks and, if so, how it manages
those risks.
Principles and Recommendations
Compliance
The ARC meets at least four times each year and a risk review is
conducted in relation to each reporting period.
Comply
Compliant
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
The ARC oversees the Company’s internal audit program. It reviews
and approves the Company’s internal audit plan and monitors the
progress of the Company’s internal audit.
Compliant
Auditor’s Independence Declaration
To the Directors of Webcentral Group Limited
The Board does not believe that the Company has any such
material risks.
Compliant
While the Company is not exposed to such risks, the Board has
adopted an Environment & Sustainability Policy to deal with such
risks if they are ever to eventuate.
The Environment & Sustainability Policy is available on the
Corporate Governance page of the Company’s website.
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of
Webcentral Group Limited for the period ended 30 June 2021, I declare that, to the best of my knowledge and belief, there
have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
Principle 8 – Remunerate fairly and responsibly
8.1 The Board should have a remuneration
committee which is structured so that
it consists of a majority of independent
directors, is chaired by an independent
director, and has at least three members.
The functions and operations of the
remuneration committee should be
disclosed.
8.2 The Company should disclose its policies
and practices regarding the remuneration
of non-executive directors and the
remuneration of executive directors and
other senior executives.
8.3 The Company should have a policy on
whether participants are permitted to
enter into transactions (whether through
the use of derivatives or otherwise) which
limit the economic risk of participating in
the scheme, and disclose that policy or a
summary of it.
A Nominations and Remuneration Committee (‘NRC’) has been
established with its own charter and consists of the following
Directors:
Partially
Compliant
• Natalie Mactier (Committee Chair, Independent Non-Executive
Director);
• Joe Gangi (Non-Executive Director); and
• Joe Demase (Managing Director and CEO).
The primary objective of the NRC is to assist the Board with the
discharge of its responsibilities as set out in its charter which is
available on the Corporate Governance page of the Company’s
website.
The NRC oversees the policies and practices regarding the
remuneration of non-executive directors, and the remuneration of
executive directors and other senior executives.
Compliant
The Company operates an ESOP in which directors and senior
management participate. In accordance with the Company’s
Share Trading Policy, participants are not permitted to enter into
transactions which limit economic risk without written clearance.
Compliant
Grant Thornton Audit Pty Ltd
Chartered Accountants
M A Cunningham
Partner – Audit & Assurance
Melbourne, 13 September 2021
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
4243
Webcentral Group Limited and its controlled entities
ABN: 21 073 716 793
FINANCIAL STATEMENTS FOR THE 18
MONTHS ENDED 30 JUNE 2021
4544 Consolidated Statement of Comprehensive Income
Consolidated Statement of Comprehensive Income
For the 18 months ended 30 June 2021
For the 18 months ended 30 June 2021 (Continued)
Notes
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
Notes
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
CONTINUING OPERATIONS
Domains
Email
Hosting
Digital
Reversal of revenue from settlement of customer dispute
Net revenue from contracts with customers
Direct costs
Domain registration costs
Cloud and hosting costs
Software and licencing costs
Direct labour costs
External labour costs
Other direct costs
Gross profit
Other income
Gain/(loss) on reassessment of contingent consideration liability
Salaries and employee benefits expenses
Depreciation expense
Amortisation Expenses
Other expenses
Finance costs
Transaction costs
Restructuring costs
Impairment of goodwill
Net impairment losses on financial assets
Gain/(loss) on disposal of assets
Loss before tax
Income tax (expense) / benefit
Loss after tax from continuing operations
DISCONTINUED OPERATION
Loss from discontinued operation, net of tax
Loss after tax for the period
3
3
3
3
3
9
5
5
5
5
5
14
10
6
26
35,052
16,737
23,707
11,863
(9,096)
78,263
(13,236)
(4,779)
(8,167)
(2,311)
(2,033)
(1,190)
46,547
7,291
-
(35,098)
(9,870)
(2,598)
(21,723)
(5,799)
(5,930)
(2,721)
(33,000)
(727)
(784)
30,289
16,495
23,104
13,727
-
83,615
(12,863)
(8,235)
(914)
(2,948)
(2,314)
(398)
55,943
1,315
98
(30,576)
(7,026)
(3,511)
(11,450)
(5,810)
(2,259)
(365)
(41,123)
(1,503)
554
(64,412)
(45,713)
2,490
(61,922)
(238)
(45,951)
(1,127)
(63,049)
(85,272)
(131,223)
OTHER COMPREHENSIVE INCOME
Items that may be reclassified to the profit or loss in subsequent periods (net of tax):
Currency translation differences
Changes in fair value of cash flow hedges, net of tax
Items that will not be reclassified to profit or loss in subsequent periods (net of tax):
Net (loss)/gain on equity instruments designated at fair value through other
comprehensive income
15
Other comprehensive income / (loss) for the period, net of tax
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD
Profit / (loss) for the period attributable to:
Members of the parent
Non-controlling interests
Total comprehensive loss attributable to:
Members of the parent
Non-controlling interests
Loss per share from continuing operations
Basic loss per share
Diluted loss per share
Loss per share attributable to members of the parent
Basic loss per share
Diluted loss per share
8
8
8
8
197
392
(650)
(61)
19
(297)
10
(268)
(63,110)
(131,491)
(63,080)
(131,303)
31
80
(63,049)
(131,223)
(63,141)
(131,571)
31
80
(63,110)
(131,491)
30-Jun-21
cents per
share
31-Dec-19
cents per
share
(45.95)
(45.95)
(38.01)
(38.01)
(46.81)
(46.81)
(108.62)
(108.62)
The above Consolidated Statement of Profit and Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
The above Consolidated Statement of Profit and Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
4647
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
As at 30 June 2021
As at 30 June 2021 (Continued)
Notes
30-Jun-21
31-Dec-19
$’000
$’000
Notes
30-Jun-21
31-Dec-19
$’000
$’000
Non-Current Liabilities
Income received in advance
Provisions
Interest bearing loans and borrowings
Deferred tax liabilities
Lease liabilities
Total Non-Current Liabilities
TOTAL LIABILITIES
NET (LIABILITIES)/ASSETS
EQUITY
Contributed equity
Foreign currency translation reserve
Share based payments reserve
Other reserves
Retained earnings
Equity attributable to members of the parent
Non-controlling interests
TOTAL EQUITY
17
21
6
13
19
20
20
20
8,551
2,535
15,000
1,323
3,051
30,460
11,297
3,187
-
7,549
12,970
35,003
96,147
158,151
(26,595)
30,881
96,566
(336)
597
(536)
(122,886)
(26,595)
-
(26,595)
91,179
(533)
193
(278)
(59,806)
30,755
126
30,881
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Prepayments of domain name registry charges
Lease receivables
Current tax refund
Contract assets
Other assets
Assets held for sale
Total Current Assets
Non-Current Assets
Plant and equipment
Right-of-use assets
Intangible assets
Prepayments of domain name registry charges
Lease receivables
Deferred tax assets
Other financial assets
Other assets
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Income received in advance
Provisions
Derivative financial instruments
Current tax payable
Interest bearing loans and borrowings
Other financial liabilities
Current lease liabilities
Liabilities directly associated with assets held for sale
Total Current Liabilities
27
10
13
11
12
12
13
14
13
6
15
16
17
23
21
22
13
26
2,412
1,718
5,398
1,965
-
476
680
12,649
87
12,736
2,191
3,513
41,596
2,428
1,076
3,794
725
1,493
8,949
13,910
7,810
2,064
375
75
2,953
36,036
38,674
74,710
8,198
16,554
77,804
678
1,830
7,323
1,375
560
56,816
114,322
69,552
189,032
11,419
22,437
1,270
-
511
26,627
-
3,423
65,687
-
65,687
8,692
22,792
1,585
510
-
61,929
5,549
6,160
107,217
15,931
123,148
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes
4849
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
For the 18 months ended 30 June 2021
For the 18 months ended 30 June 2021
FOREIGN
CURRENCY
RESERVE
SHARE BASED
PAYMENTS
RESERVE
OTHER
RESERVES
CONTRIBUTED
EQUITY
RETAINED
EARNINGS
TOTAL
NON-
CONTROLLING
INTERESTS
TOTAL
Note
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
AS AT 1 JANUARY 2020
(533)
193
(278)
91,179
(59,806)
30,755
126
30,881
(Loss) / profit for the period
Other comprehensive income
Total comprehensive income for
the period
-
197
197
-
-
-
-
(258)
(258)
Transactions with owners in their capacity as owners:
Share based compensation
Issue of shares – Capital Raising
Share issue costs
Disposal of subsidiary
19
26
-
-
-
-
404
-
-
-
-
-
-
-
-
-
-
-
5,614
(227)
-
(63,080)
(63,080)
-
(61)
(63,080)
(63,141)
31
-
31
-
-
-
(63,049)
(61)
(63,110)
404
5,614
(227)
(157)
404
5,614
(227)
-
-
-
-
-
(157)
As at 30 June 2021
(336)
597
(536)
96,566
(122,886)
(26,595)
-
(26,595)
AS AT 1 JANUARY 2019
(552)
1,136
(Loss) / profit for the period
Other comprehensive income
Total comprehensive income for the
period
-
19
19
Transactions with owners in their capacity as owners:
Share based payment/(writeback)
Issue of shares for long term
incentive plan
Issue of shares for Infoready earn out
liability settlement
Dividend reinvestment plan
Dividend associated with InfoReady
earn out
Equity dividends
-
-
-
-
-
-
-
-
-
(471)
(472)
-
-
-
-
9
-
(287)
(287)
-
-
-
-
-
-
-
-
-
-
472
4,000
983
-
-
85,724
76,964
163,821
126
163,407
(131,303)
(131,303)
80
(131,223)
-
(268)
-
(268)
-
-
-
-
(110)
(471)
-
4,000
983
(110)
-
-
-
-
-
(471)
-
4,000
983
(110)
(5,357)
(5,357)
(80)
(5,431)
NET CASH FLOWS FROM / (USED IN) OPERATING ACTIVITIES
27
(16,870)
CASH FLOWS FROM OPERATING ACTIVITIES
Receipt of service revenue and recoveries
Receipt of government grants
Payments to suppliers and employees
Interest received
Interest paid
Bank charges and credit card merchant fees
Income tax paid
Payments for transaction costs – Enterprise sale
Payments for transaction costs – restructuring activities
Payments for transaction costs – TPP Wholesale sale
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of plant and equipment and intangible assets
Sublease payments received
Payment of financial liability for InfoReady earn out
Return of capital from Tiger Pistol
Proceeds from disposal of the Enterprise business
Proceeds from sale of the TPP Wholesale business
NET CASH FLOWS FROM / (USED IN) INVESTING ACTIVITIES
Proceeds from borrowings
Proceeds from capital raise
Payment of capital raising costs
Repayment of borrowings
Payment of borrowing costs
Payment of dividend on ordinary shares
Payment of dividend to non-controlling interests
Payment of lease liabilities
Notes
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
9
93,428
1,393
187,353
-
(93,045)
(168,489)
253
(3,841)
(1,365)
(297)
(3,621)
(9,775)
-
(31)
5,290
(5,979)
116
35,506
-
202
(3,390)
(1,135)
(3,269)
-
-
(2,394)
8,877
(3,423)
1,869
(4,110)
505
-
21,268
34,902
16,110
62,628
5,614
(227)
(82,978)
(165)
-
-
(9,244)
7,375
-
-
(21,292)
-
(4,378)
(80)
(5,961)
22
26
21
21
As at 31 December 2019
(533)
193
(278)
91,179
(59,806)
30,755
126
30,881
CASH AND CASH EQUIVALENTS AT END OF PERIOD
27
2,412
8,949
The above statement of cash flows includes cash flows from both continuing and discontinued operations. Refer to note 26 for the
cash flows relating to discontinued operations.
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
NET CASH FLOWS FROM / (USED IN) FINANCING ACTIVITIES
(24,372)
(24,336)
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS
Net foreign exchange differences
Cash and cash equivalents at beginning of period
(6,340)
(197)
8,949
651
19
8,279
(131,303)
(131,571)
80
(131,491)
CASH FLOWS FROM FINANCING ACTIVITIES
5051
Notes to the Financial Statements
Notes to the Financial Statements
1. Corporate Information
The consolidated financial statements of Webcentral Group
Limited (‘the Company’ or ‘Webcentral’) and its subsidiaries
(collectively, ‘the Group’) for the 18 month period ended
30 June 2021 were authorised for issue in accordance
with a resolution of the directors on 13 September 2021.
Webcentral Group Limited is a limited company,
incorporated and domiciled in Australia, whose shares are
publicly traded on the Australian Securities Exchange (ASX).
The Company is a for-profit entity.
Operations and Principal Activities
The principal activities of the Group during the period
are described as follows:
Continuing operations
Webcentral provides domain name registrations and
renewals, website and email hosting, website development,
search engine marketing and social advertising campaigns
for businesses in Australia and New Zealand.
Discontinued operations – Enterprise
Enterprise provides services including cloud, mobile
application development, data and analytics to Australian
enterprise and government organisations. The Enterprise
division is represented by the net assets of Arq Group
Enterprise Pty Ltd, which was sold on 2 March 2020. The
sale included the rights to the Arq brand.
Registered Office and Principal
Place of Business
Level 7, 505 Little Collins Street, Melbourne VIC 3000
Acquisition by 5G Networks Limited
On 28 October 2020, 5G Networks Limited (“5GN”) obtained
control over the Company and Group. As at 30 June 2021,
5GN owns 44.75% of the Company’s shares. Despite the
reduction in 5GN’s share ownership to below 50% since 28
October 2020, the Directors consider that 5GN maintains
effective control over the Company in accordance with the
requirements of Australian Accounting Standards.
2. Statement of Significant
Accounting Policies
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 (IFRS) as issued by the
International Accounting Standards Board (‘IASB’).
Except for cash flow information, the financial statements
have been prepared on an accruals basis and are based on
historical costs.
The Financial Statements were authorised for issue,
in accordance with a resolution of the Directors on
10 September 2021.
New Accounting Standards adopted
in the current financial period
The Group applied for the first time in 2021, amendments
to AASB 16 Leases, which provides entities a practical
expedient to not account for rent concessions occurring
as a direct consequence of the COVID-19 pandemic as
lease modifications, provided certain conditions are
met. Although the amendments are effective for annual
reporting periods beginning on or after 1 June 2020, earlier
application is permitted. Therefore, the Group has elected
to early apply the amendments as it has received some
rental concessions during the period in the form of changes
in lease payments as a direct consequence of the COVID-19
pandemic. Refer to note 13 for further information.
Several other amendments and interpretations also applied
to the Group for the first time in 2021, but do not have
an impact on the consolidated financial statements of
the Group.
Accounting Standards not yet
adopted in the period
At the date of authorisation of these financial statements,
several new, but not yet effective, Standards and
amendments to existing Standards, and Interpretations
have been published by the AASB.
None of these Standards or amendments to existing
Standards have been adopted early by the Group.
Management anticipates that all relevant pronouncements
will be adopted for the first period beginning on or after
the effective date of the pronouncement. New Standards,
amendments and Interpretations not adopted in the current
year have not been disclosed as they are not expected to
have a material impact on the Group’s financial statements.
International Financial Reporting
Standards Interpretations Committee
final agenda decisions not yet adopted
In April 2021, the International Financial Reporting
Standards Interpretations Committee (IFRIC) issued a final
agenda decision, Configuration or customisation costs in
a cloud computing arrangement. The decision discusses
whether configuration or customisation expenditure
relating to cloud computing arrangements is able to be
recognised as an intangible asset and if not, over what time
period the expenditure is expensed. The Group’s accounting
policy has historically been to capitalise labour and other
directly attributable costs related to cloud computing
arrangements as intangible assets in the Statement of
Financial Position.
The adoption of this agenda decision could result in a
reclassification of these intangible assets to either a
prepaid asset in the Statement of Financial Position
and/or recognition as an expense in the Statement of
Comprehensive Income, impacting both the current and/or
prior periods presented.
As at 30 June 2021, the Group has not adopted this
IFRIC agenda decision. The impact of the change is not
reasonably estimable as the Group has yet to complete its
assessment of the impact of the IFRIC agenda decision.
The Group expects to adopt this IFRIC agenda decision in its
half year financial statements ending on 31 December 2021.
Intangible assets relating to cloud computing arrangements
of $1.7 million have been capitalised on the Statement
of Financial Position and are subject to this detailed
assessment. The Group’s preliminary analysis indicates that
the impact is not material.
Change of financial year end
In accordance with s323D(3) of the Corporations Act
2001, on 14 December 2020 the Company has changed its
financial year end to 30 June to be aligned with the financial
year end of 5GN.
For the 18 months ended 30 June 2021, the Group presents
an 18 month financial period covering the period beginning
1 January 2020 to 30 June 2021, with a comparative
12 month period of 1 January 2019 to 31 December 2019.
Thereafter from 1 July 2021 the Group will report on a
standard 12 month financial year-end period.
Going concern
The financial report for the 18 month period to 30 June
2021 has been prepared on a going concern basis that
assumes the continuity of normal business activities and
the realisation of assets and settlement of liabilities in the
ordinary course of business.
The Group recorded a loss after tax of $63,049,000 from
continuing operations during the financial year and had
net operating cash outflows of $16,870,000. Cash balances
decreased from $8,949,000 to $2,412,000 as at 30 June
2021. The loss from continuing operations was primarily due
to the significant non-recurring transaction, restructuring
and integration costs incurred from the strategic review
activities undertaken, the transaction and integration costs
associated with the divestment of the TPP Wholesale and
Enterprise Services businesses and the impairment of
intangible assets.
The Group’s net current liability position at 30 June 2021
was $52,951,000, primarily due to the classification of the
Group’s loan from 5GN of $26,627,000 as a current liability
and the treatment of contract liabilities of $22,437,000.
The classification of contract liabilities is as a result of the
application of the revenue accounting standard (AASB 15)
to domain, hosting and email services which requires the
recognition of revenue evenly across the contracted period.
The Directors regularly monitor the Group’s cash position
and cash forecast and on an ongoing basis consider a
number of strategic and operational plans and initiatives to
ensure that adequate funding continues to be available for
the Group to meet its business objectives.
The non-recurring restructuring activities that led to the
loss for the period are now complete and the business has
recorded an operating profit and has generated positive
operating cashflows each month since the change of
control by 5GN in October 2020. The specific initiatives that
have been implemented by the Directors to date include:
• Focus on profitable revenue and product lines;
• Reduction in direct costs, overhead and property
costs;
• Reduction in labour headcount;
•
Improved collection of debtors and more frequent
monitoring of operating cashflows;
• Disposal of Netalliance business;
• Equity capital raising in November and December
2020; and
• Debt capital raising in June 2021.
The Group’s cash forecast for the period to August 2022 (i.e.
12 months after the issue of the Group’s accounts) indicates
that is generating a positive operating cashflow and that
it does not require additional funding from its controlling
shareholder 5GN or from external debt or equity providers.
5253 Notes to the Financial Statements
Notes to the Financial Statements
The Group is reliant on the ongoing financial support from
5GN and has received a letter of financial support from 5GN.
The Directors have taken the factors above into
consideration and determined that there are reasonable
grounds to believe that the Group will be able to pay its
debts as and when they become due and payable and the
Directors consider the going concern basis of preparation
to be appropriate for this financial report.
Significant accounting
policies
Accounting policies are selected and applied in a manner
that ensures that the resulting financial information
satisfies the concept of relevance and reliability, thereby
ensuring that the substance of the underlying transactions
or other events is reported.
The below describes significant accounting policies
applicable to the Group’s financial statements. Other
specific significant accounting policies are described in
respective notes to the financial statements.
(a) Basis of consolidation
The consolidated financial statements comprise the
financial statements of Webcentral Group Limited and
its subsidiaries (the Group) as at 30 June 2021 and 31
December 2019. During the period, the balance date of
the Group was changed to 30 June, prior to this date the
balance date was 31 December.
The Group controls a subsidiary if and only if the Group has:
•
•
•
power over the subsidiary (i.e. existing rights that give
it the current ability to direct the relevant activities of
the subsidiary);
exposure or rights to variable returns from its
involvement with the subsidiary; and
the ability to use its power over the subsidiary to
affect its returns.
The financial statements of subsidiaries are prepared
for the same reporting period as for the parent company,
using consistent accounting policies. In preparing the
consolidated financial statements, all intercompany
balances and transactions, including unrealised profits
arising from intra-group transactions, have been eliminated
in full.
Subsidiaries are fully consolidated from the date on
which control is transferred to the Group and cease to be
consolidated from the date on which control is transferred
out of the Group.
Investments in subsidiaries held by the Group are
accounted for at cost in the separate financial statements
of the parent entity less any impairment charges. Dividends
received from subsidiaries are recorded as a component
of other revenues in the separate income statement of
the parent entity, and do not impact the recorded cost of
the investment. Upon receipt of dividend payments from
subsidiaries, the parent will assess whether any indicators
of impairment of the carrying value of the investment in
the subsidiary exist. Where such indicators exist, to the
extent that the carrying value of the investment exceeds
its recoverable amount, an impairment loss is recognised.
(b) Business Combinations
The acquisition of subsidiaries is accounted for using the
acquisition method of accounting. The acquisition method
of accounting involves recognising at acquisition date,
separately from goodwill, the identifiable assets acquired,
the liabilities assumed, and any non-controlling interest
in the acquiree. The identifiable assets acquired, and the
liabilities assumed, are measured at their acquisition date
fair values. The difference between the above items and the
fair value of the consideration (including the fair value of
any pre-existing investment in the acquiree) is goodwill or a
discount on acquisition.
After initial recognition, goodwill is measured at cost less
any accumulated impairment losses. For the purpose
of impairment testing, goodwill acquired in a business
combination is, from the acquisition date, allocated to
each of the Group’s cash-generating units (CGUs) that are
expected to benefit from the combination, irrespective
of whether other assets or liabilities of the acquirer are
assigned to those units. Where goodwill forms part of a
CGU, and part of the operation within that unit is disposed
of, the goodwill associated with the operation disposed of
is included in the carrying amount of the operation when
determining the gain or loss on disposal of the operation.
Goodwill disposed of in this circumstance is measured
based on the relative values of the operation disposed of,
and the portion of the cash-generating unit retained.
Acquisitions of subsidiaries that include put options
to acquire non-controlling interests in the future are
accounted for in accordance with AASB 10: Consolidated
Financial Statements (AASB 10).
Where there is loss of control of a subsidiary, the
consolidated financial statements include the results for
the part of the reporting period during which Webcentral
Group Limited has control. A change in the ownership
interest of a subsidiary that does not result in a loss of
control is accounted for as an equity transaction.
On the loss of control of a subsidiary, the Group
derecognises the assets and liabilities of the subsidiary,
and the other components of equity related to the
subsidiary. Any surplus or deficit arising on the loss of
control is recognised in profit or loss.
(c) Foreign currency transactions
Both the functional and presentation currency of the Group
and its Australian subsidiaries is Australian dollars (AUD).
Transactions in foreign currencies are initially recorded
in the functional currency at the exchange rates ruling at
the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the
rate of exchange ruling at the reporting date. Non-monetary
items that are measured in terms of historical cost in a
foreign currency are translated using the exchange rate as
at the date of the initial transaction.
The functional currency of the Group’s New Zealand
subsidiaries is New Zealand dollars (NZD).
The assets and liabilities of overseas subsidiaries are
translated into the presentation currency of the Group at
the rate of exchange ruling at the reporting date, and the
statement of comprehensive income is translated at the
weighted average exchange rates for the period.
The exchange differences arising on retranslation are taken
directly to other comprehensive income. On disposal of a
foreign entity, the deferred cumulative amount recognised
in other comprehensive income relating to that particular
foreign operation is recognised in the determination of
profit and loss for the period.
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities, and
of borrowings and other financial instruments designed
as hedges of such investments, are taken to the foreign
currency translation reserve in equity. When a foreign
operation is sold, or any borrowings forming part of the
net investment are repaid, a proportionate share of such
exchange differences is recognised in the statement of
comprehensive income, as part of the gain on sale or loss
on sale where applicable.
(d) Financial assets
(i) Recognition and measurement
Financial assets are classified at initial recognition as
subsequently measured at amortised cost, fair value
through other comprehensive income (OCI), and fair value
through profit or loss.
The classification of financial assets at initial recognition
depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for
managing them. With the exception of trade receivables
that do not contain a significant financing component or
for which the Group has applied the practical expedient,
the Group initially measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value through
profit or loss, transaction costs.
In order for a financial asset to be classified and measured
at amortised cost or fair value through OCI, it needs to give
rise to cash flows that are ‘solely payments of principal
and interest (SPPI)’ on the principal amount outstanding
on specified dates. This assessment is referred to as the
SPPI test and is performed at an instrument level.
The Group’s business model for managing financial assets
refers to how it manages its financial assets in order to
generate cash flows. The business model determines
whether cash flows will result from collecting contractual
cash flows, selling the financial assets, or both.
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group
measures financial assets at amortised cost if both of the
following conditions are met:
• The financial asset is held within a business model
with the objective to hold financial assets in order to
collect contractual cash flows.
• The contractual terms of the financial asset give
rise on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding.
Financial assets at amortised cost are subsequently
measured using the effective interest (EIR) method, and
are subject to impairment. Gains and losses are recognised
in profit or loss when the asset is derecognised, modified
or impaired.
The Group’s financial assets at amortised cost include
trade receivables (note 10).
Financial assets designated at fair value through OCI
(equity instruments)
Upon initial recognition, the Group can elect to classify
irrevocably its equity investments as equity instruments
designated at fair value through OCI when they meet the
definition of equity under AASB 132: Financial Instruments:
Presentation and are not held for trading. The classification
is determined on an instrument-by-instrument basis.
5455 Notes to the Financial Statements
Notes to the Financial Statements
Gains and losses on these financial assets are never
recycled to profit or loss. Dividends are recognised as
other income in the statement of profit or loss when the
right of payment has been established, except when the
Group benefits from such proceeds as a recovery of part of
the cost of the financial asset, in which case such gains are
recorded in OCI. Equity instruments designated at fair value
through OCI are not subject to impairment assessment.
The Group elected to classify irrevocably its non-listed
equity investments (note 15) under this category.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include
financial assets held for trading, financial assets designated
upon initial recognition at fair value through profit or loss,
or financial assets mandatorily required to be measured
at fair value. Financial assets are classified as held for
trading if they are acquired for the purpose of selling
or repurchasing in the near term. Derivatives, including
separated embedded derivatives, are also classified as held
for trading unless they are designated as effective hedging
instruments. Financial assets with cash flows that are not
solely payments of principal and interest are classified and
measured at fair value through profit or loss, irrespective of
the business model.
Notwithstanding the criteria for debt instruments to be
classified at amortised cost or at fair value through OCI
as described above, debt instruments may be designated
at fair value through profit or loss on initial recognition
if doing so eliminates, or significantly reduces, an
accounting mismatch.
(iii) Impairment of financial assets
The Group recognises an allowance for expected credit
losses (ECLs) for all debt instruments not held at fair value
through profit or loss. ECLs are based on the difference
between the contractual cash flows due in accordance with
the contract and all the cash flows that the Group expects
to receive, discounted at an approximation of the original
effective interest rate. The expected cash flows will include
cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures
for which there has not been a significant increase in credit
risk since initial recognition, ECLs are provided for credit
losses that result from default events that are possible
within the next 12 months (a 12-month ECL). For those credit
exposures for which there has been a significant increase
in credit risk since initial recognition, a loss allowance is
required for credit losses expected over the remaining life
of the exposure, irrespective of the timing of the default
(a lifetime ECL).
For trade receivables and contract assets, the Group
applies a simplified approach in calculating ECLs.
Therefore, the Group does not track changes in credit risk,
but instead recognises a loss allowance based on lifetime
ECLs at each reporting date. The Group has established a
provision matrix that is based on its historical credit loss
experience, adjusted for forward-looking factors specific to
the debtors and the economic environment.
A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows.
Financial assets at fair value through profit or loss are
carried in the statement of financial position at fair value,
with net changes in fair value recognised in the statement
of profit or loss.
(e) Financial liabilities
(i) Recognition and measurement
Financial liabilities are classified at initial recognition as
financial liabilities at fair value through profit or loss, loans
and borrowings, or payables, or as derivatives designated as
hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value,
and, in the case of loans and borrowings and payables, net
of directly attributable transaction costs.
The Group’s financial liabilities include trade and other
payables, loans and borrowings, derivative financial
instruments and contingent consideration.
The Group has not designated any financial asset as at fair
value through profit or loss.
(ii) Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets)
is primarily derecognised (i.e. removed from the Group’s
consolidated statement of financial position) when:
• the rights to receive cash flows from the asset have
expired, or
• the Group has transferred its rights to receive cash
flows from the asset or has assumed an obligation
to pay the received cash flows in full without
material delay to a third party under a ‘’pass-through”
arrangement, and either
•
•
the Group has transferred substantially all the
risks and rewards of the asset, or
the Group has neither transferred nor retained
substantially all the risks and rewards of the asset
but has transferred control of the asset.
Loans and borrowings
This is the category most relevant to the Group. After initial
recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the EIR
method. Gains and losses are recognised in profit or loss
when the liabilities are derecognised, as well as through the
EIR amortisation process. Amortised cost is calculated by
taking into account any discount or premium on acquisition,
and fees or costs that are an integral part of the EIR.
The EIR amortisation is included as finance costs in the
statement of profit or loss.
This category generally applies to interest-bearing loans
and borrowings (note 21).
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss
include financial liabilities held for trading, and financial
liabilities designated upon initial recognition as at fair value
through profit or loss. Financial liabilities are classified
as held for trading if they are incurred for the purpose of
repurchasing in the near term. This category also includes
derivative financial instruments entered into by the Group
that are not designated as hedging instruments in hedge
relationships as defined by AASB 9. Gains or losses on
liabilities held for trading are recognised in the statement
of profit or loss. Financial liabilities designated upon
initial recognition at fair value through profit or loss are
designated at the initial date of recognition, and only if the
criteria in AASB 9 are satisfied.
(ii) Derecognition
A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another
from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified,
such an exchange or modification is treated as the
derecognition of the original liability and the recognition
of a new liability. The difference in the respective carrying
amounts is recognised in the statement of profit or loss.
(iii) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the
net amount is reported in the consolidated statement of
financial position if there is a currently enforceable legal
right to offset the recognised amounts, and there is an
intention to settle on a net basis, to realise the assets and
settle the liabilities simultaneously.
(f) Prepayment of domain name
registry charges
Domain name registry charges are deferred in the
statement of financial position and are recognised in
the statement of comprehensive income using the same
principles as revenue from the sale of domain names, as
explained in accounting policy in note 3.
(g) Leases
(i) Right-of-use assets
The Group recognises right-of-use (‘ROU’) assets at the
commencement of a lease. Subsequently, ROU assets are
measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any remeasurement of
lease liabilities.
The cost of ROU assets includes:
•
the amount of lease liabilities recognised;
• any lease payments made at or before the
commencement date less any lease incentives
received;
• any initial direct costs incurred by the lessee; and
• an estimate of costs to be incurred by the lessee in
dismantling and removing the underlying asset.
Unless the Group is reasonably certain to obtain ownership
of the leased asset at the end of the lease term, the
recognised ROU assets are depreciated on a straight-line
basis over the shorter of its estimated useful life and the
lease term. ROU assets are subject to impairment.
(ii) Lease liabilities
At the commencement date of a lease, the Group
recognises lease liabilities measured at the present
value of lease payments to be made over the lease term.
The lease payments include fixed payments (including
in-substance fixed payments) less any lease incentives
receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under
residual value guarantees. The lease payments also include
the exercise price of a purchase option reasonably certain
to be exercised by the Group and payments of penalties
for terminating a lease, if the lease term reflects the Group
exercising the option to terminate.
5657 Notes to the Financial Statements
Notes to the Financial Statements
The variable lease payments that do not depend on an
index or a rate are recognised as expense in the period in
which the event or condition that triggers the payment
occurs. In calculating the present value of lease payments,
the Group uses the incremental borrowing rate at the
date of initial application if the interest rate implicit in the
lease is not readily determinable. After the date of initial
application, the amount of lease liabilities is increased to
reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease
liabilities is remeasured if there is a modification, which is
not accounted for as a separate lease, a change in the lease
term, a change in the in-substance fixed lease payments,
a change in future lease payments resulting from a change
in an index or a rate used to determine those payments, or a
change in the assessment to purchase the underlying asset.
(iii) Lease receivable
The Group is an intermediate lessor of some subleases.
The Group accounts for a head lease and sublease as
two separate contracts, applying both lessee and lessor
accounting requirements respectively.
The Group recognises the net investment in the sublease
equal to the present value of lease receivables. Where the
interest rate implicit in the sublease cannot be readily
determined, the Group utilises the incremental borrowing
rate from the head lease (adjusted for any initial direct
costs associated with the sublease) to discount the
lease receivable to its present value.
(iv) Short-term leases and leases
of low-value assets exemptions
The Group applies the short-term lease recognition
exemption made by class of underlying assets to the
right-of-use asset related to its short-term leases (i.e. those
leases that have a lease term at the commencement date of
12 months or less from the date of initial application and do
not contain a purchase option).
The Group applies the lease of low-value assets recognition
exemption to leases that are considered of low value.
Lease payments on short-term leases and leases of low-
value assets are recognised as expense on a straight-line
basis over the lease term.
Significant accounting
estimates and judgements
The preparation of the financial statements requires
management to make judgements, estimates and
assumptions that affect reported amounts in the
financial statements. Management continually evaluates
its judgements and estimates in relation to assets,
liabilities, contingent liabilities, revenues and expenses.
Management bases its judgements and estimates on
historical experience and on other various factors it
believes to be reasonable under the circumstances, the
result of which forms the basis of the carrying values
of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these
estimates under different assumptions and conditions.
Management has identified the following critical accounting
policies for which significant judgements, estimates and
assumptions are made. Actual results may differ from these
estimates under different assumptions and conditions
and may materially affect financial results or the financial
position reported in future periods.
Information on significant estimates and judgements
considered when applying the accounting policies can
be found in the following notes:
Accounting estimates and judgments
Notes
Revenue
Taxation
Trade and other receivables
Leases
Intangibles and useful lives
Impairment of goodwill
Other financial liabilities
Share-based payment transactions
3
6
10
13
14
14
15
29
3. Revenue from contracts
with customers
(b) Contract balances
Set out below is the amount of revenue from contracts with
customers recognised from:
(a) Disaggregation of revenue from
contracts with customers
Continuing operations
Set out below is the disaggregation of the Group's revenue
from contracts with customers:
Amounts included in contract liabilities
at the beginning of the year
30-Jun-21
31-Dec-19
18 months
12 months
$’000
$’000
24,749
32,853
30-Jun-21
31-Dec-19
Notes
18 months
12 months
$’000
$’000
CONTINUING OPERATIONS
Types of goods of service
Domains
Email
Hosting
Digital
Reversal of revenue from
settlement of customer dispute
10
Total revenue from contracts
with customers
Timing of revenue recognition
Goods and services
transferred at a point in time
Services transferred over time
Total revenue from contracts
with customers
35,052
16,737
23,707
11,863
(9,096)
30,289
16,495
23,104
13,727
-
78,263
83,615
-
291
78,263
78,263
83,324
83,615
The Group’s revenues are primarily generated from its
Australian customers, with less than 5% of the Group’s
revenues generated from its customers in New Zealand.
As described in note 10 to the financial statements,
the Group has reversed the entire balance of trade
receivables that was subject to a customer dispute
that has now been settled. The gross amount of the
receivables reversed was $10,006,000, inclusive of GST.
The changes in circumstances leading to the settlement,
as described in note 10, results in a reassessment of the
consideration for those disputed services, from fixed to
variable consideration. As a result of the reassessment,
the variable consideration becomes highly constrained to
the point that no consideration would be receivable from
the performance of those disputed services. Therefore,
the impact of the settlement is a reversal of revenue of
the GST-exclusive portion, being $9,096,000. No revenue
was recognised in relation to those disputed services
provided during the period. In accordance with Australian
Accounting Standards, the reversal of revenue is required
to be recognised entirely during the current reporting
period as the change in circumstance (i.e. the settlement
of the Customer Dispute) only occurred during the current
reporting period.
Set out below is the amount of cost of sales recognised from:
Continuing operations
Amounts included in prepaid costs to
fulfil contract at the beginning of the year
30-Jun-21
31-Dec-19
18 months
12 months
$’000
$’000
7,206
7,925
Prepayments of domain name registry charges are
considered costs to fulfil a contract and is deferred as
an asset, and income received in advance is considered
a contract liability. The amounts included in contract
liabilities reflect a significant portion of the aggregate
amount of performance obligations not yet satisfied
at the end of the reporting period. For any remaining
contracts, the Group has applied the practical expedient
available under AASB 15.121 whereby the performance
obligations are not disclosed as they have an original
expected duration of one year or less.
(c) Accounting policy
(i) Rendering of services – domain name registration
Domains revenue primarily consists of domain
registrations and renewals, as well as aftermarket sales.
Domain registrations are assessed as a distinct service
that provides a customer with the exclusive use of the
domain name over the contracted period, including the
provision of Domain Name System services.
Consideration is recorded as income received in
advance when it is received, which is typically at
the time of sale and revenue, with the exception
of aftermarket sales, is recognised evenly over the
contract period as performance obligation is satisfied.
As the customer simultaneously receives and consumes
the benefits of the domain services provided, this revenue
is recognised evenly over the contract period.
Aftermarket sales are recognised as revenue when
ownership of the domain has been transferred.
Prepayments of domain name registry charges are direct
costs to fulfil a contract. See Key judgement and estimates
section for further information.
5859
Notes to the Financial Statements
Notes to the Financial Statements
(ii) Rendering of services – hosting (email and web)
(vi) Principal versus agent considerations
Hosting revenue primarily derives from website and
email hosting services provided over a contracted period
of time. Where consideration is received in advance of
performance, it is initially recorded as income received
in advance. Revenue is recognised as the performance
obligations are satisfied, which is considered to be evenly
over the contracted term that the hosting services are
provided.
The Group sells products and services both directly to
customers, and in some instances, through resellers.
The Group assesses each arrangement to determine
whether the Group acts as principal or agent, based on
whether the Group controls the product or service before
transferring it to the end customer. Where the Group acts
as principal, revenue is recorded on a gross basis versus
on a net basis where the Group acts as agent.
Key judgement and estimates
Prepayments of domain name registry charges are direct
costs to fulfil a contract. The Group defers these costs as
an asset and amortises the asset over the contract period,
consistent with the satisfaction of performance obligations
and the recognition of revenue. The Group re-assesses
costs to fulfil contracts on a periodic basis to reflect
significant changes in the expected timing of satisfying
performance obligations to which the asset relates, and
when there is a significant change in the carrying amount
of the asset.
4. Segment reporting
An operating segment is a component of an entity that
engages in business activities from which it may earn
revenues and incur expenses, whose operating results
are regularly reviewed by the entity's chief operating
decision maker to make decisions about resources to be
allocated to the segment and assess its performance,
and for which discrete financial information is available.
Operating segments have been identified based on the
information provided to the chief operating decision maker,
being the CEO.
Following the sale and disposal of the Enterprise business
on 2 March 2020 and its presentation as a discontinued
operation during the 18 months ended 30 June 2021,
the Group’s continuing operations as presented in the
Statement of Comprehensive Income represent only
one operating segment, being the Webcentral business.
(iii) Rendering of services – online marketing
Online marketing revenue consists of search engine
optimisation (SEO), pay-per-click (PPC) advertising, and
social media advertising. Where consideration is received
in advance of performance, it is initially recorded as
income received in advance. Revenue is recognised as the
performance obligations are satisfied, which is considered
to be evenly over time in line with the contracted term as
the customer simultaneously receives and consumes the
benefits of online marketing services.
(iv) Rendering of services – website build
Website build revenues consist of fees charged for the
creation of websites for customers. Where the Group has an
enforceable right to payment for performance completed
to date, and no alternative use for the asset, it recognises
revenue over the period of the build based on time incurred,
because there is a direct relationship between the Group’s
effort and the transfer of service to the customer. In the
absence of such a right, the Group recognises revenue at a
point in time being transfer of the website to the customer.
Revenue from the build of websites are recognised over an
average build period of three months.
Contract fulfilment costs incurred in advance of revenue
recognition are capitalised when they are directly
attributable to the contract, generate the resources to
satisfy the performance obligations, and will be recovered.
These costs are expensed over the period when revenue
is recognised.
(v) Transaction prices
The Group’s customer contracts may include multiple
performance obligations. In these cases, the Group
allocates the transaction price to each performance
obligation based on the relative stand-alone selling prices
of each distinct service. Stand-alone selling prices are
determined based on prices charged to customers for
individual products and services, taking into consideration
the size and length of contracts, service rate cards, and the
Group's overall go-to-market strategy.
5. Expenses
(a) Salaries and employee benefits
Continuing operations
Included in cost of sales:
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
Salaries and employee benefits expenses
2,128
Superannuation expense
183
2,133
181
Included in Salaries and employee
benefits expenses:
Salaries and employee benefits expenses
33,078
24,325
Superannuation expense
Share-based payments1
2,030
(10)
2,096
(438)
1.
Included in this amount for the 18 months ended 30 June 2021 and
the prior comparative period are writebacks associated with LTIs and
short-term deferred share rewards for both key management personnel
(KMP), as well as non-KMP eligible to receive short-term deferred share
rewards.
(b) Depreciation of non-current assets
Continuing operations
Right-of-use assets
Plant and equipment
Leasehold improvements
Furniture
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
5,283
1,230
2,581
776
2,996
1,756
1,748
526
7,026
Total depreciation of non-current assets
9,870
(d) Other Expenses
Continuing operations
Included in other expenses:
Marketing
Software licences
Consulting fees
Foreign exchange gains
Foreign exchange losses
(e) Finance costs
Continuing operations
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
202
5,476
2,769
(168)
124
3,357
2,275
2,569
(298)
212
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
Interest expense on debt and borrowings
Interest expense on lease liabilities
Interest expense on Infoready
financial liability
Loss on modification of debt facility
3,967
426
-
-
Bank charges and credit card merchant fees
1,365
Unwinding of discount on other
financial liabilities
41
2,488
492
676
968
1,131
55
Total finance costs
5,799
5,810
6. Income tax
The major components of income tax expense are:
(c) Amortisation of identifiable intangible assets
(a) Statement of comprehensive income
Continuing operations
Capitalised software
Customer contracts
Total amortisation of identifiable
intangible assets
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
2,076
522
2,598
2,117
1,394
3,511
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
400
-
638
(486)
(2,697)
(2,350)
-
(2,297)
2,666
468
Current income tax
Current income tax charge
Adjustments in respect of current
income tax of previous periods
Deferred income tax
Relating to origination and reversal
of temporary differences
Derecognition of deferred tax asset
Income tax expense reported in the
statement of comprehensive income
6061
Notes to the Financial Statements
Notes to the Financial Statements
(b) Statement of changes in equity
(c) (Continued)
(d) (continued)
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
Deferred income tax related to items charged or
credited directly to equity
Derecognition of deferred tax asset
-
2,666
Net gain on revaluation of cash flow
hedges
Deferred tax asset recognised on
equity raise costs
Income tax expense reported
in equity
-
-
-
(129)
145
16
(c) A reconciliation between tax expense and the product of
accounting profit before income tax multiplied by the Group’s
applicable income tax rate is as follows
Unrecognised tax loss for the year
Other
Income tax expense at the effective
income tax rate
8,635
(191)
(2,297)
Income tax expense / (credit) reported in the
statement of comprehensive income:
From continuing operations
From discontinued operations
Income tax expense at the effective
income tax rate
(2,490)
193
(2,297)
868
(73)
468
238
230
468
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
(64,412)
(45,713)
As at 30 June 2021, the Group has unrecognised income tax
losses of $9,856,208 tax-effected at 30% (2019: $868,000),
and capital losses of $88,228,395 arising from the sale of
the TPP Wholesale Reseller business, and the sale of the
Enterprise business (2019: $499,000).
(935)
(85,042)
(d) Deferred tax assets and liabilities
Loss before income tax from
continuing operations
(Loss) / profit before income tax
from discontinued operations
(Loss) / profit before income tax
(65,347)
(130,755)
30-Jun-21
$’000
31-Dec-19
$’000
(19,604)
(39,227)
Deferred tax assets relate to the following:
At the Group's statutory income tax
rate of 30% (2019: 30%)
Adjustments in respect of current
income tax of previous years
Non-assessable income
Non-deductible loss on revaluation
of disposal group held for sale
Non-deductible goodwill
impairment charge
(3,626)
(486)
(5)
-
(107)
24,375
9,900
12,337
Other non-deductible expenses
2,573
Reassessment of contingent
consideration
Adjustment for sale of TPPW
Reseller business
Unwinding of discount on other
financial liabilities
Adjustments in deferred tax balances
-
-
12
9
372
(30)
(166)
16
(77)
Unrealised foreign exchange gains
Employee benefits
Lease liabilities
Blackhole expenditure
Accruals
Intangible assets
Other
(35)
700
134
845
1,942
5,740
304
478
33
372
-
-
604
-
3,794
7,323
Deferred tax liabilities relate to
the following:
Intangible assets
Lease assets (incl. make-good)
Unrealised foreign exchange losses
Other
30-Jun-21
$’000
31-Dec-19
$’000
29
1,276
-
18
1,285
6,134
65
65
1,323
7,549
Current taxes
Current tax assets and liabilities for the current period are
measured at the amount expected to be recovered from
or paid to the taxation authorities based on the current
period's taxable income. The tax rates and tax laws used
to compute the amount are those that are enacted or
substantively enacted at the reporting date.
Current income tax relating to items recognised directly
in equity is recognised in equity and not in profit or loss.
Management periodically evaluates positions taken in the
tax returns with respect to situations in which applicable
tax regulations are subject to interpretation and establishes
provisions where appropriate.
Deferred taxes
Deferred income tax is provided on all temporary
differences at the reporting date between the tax bases
of assets and liabilities and their carrying amounts for
financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable
temporary differences:
• except where the deferred income tax liability arises
from the initial recognition of an asset or liability in
a transaction that is not a business combination,
and at the time of the transaction, affects
neither the accounting profit nor taxable profit or
loss, and
•
in respect of taxable temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures, except
where the timing of the reversal of the temporary
differences can be controlled and it is probable that
the temporary differences will not reverse in the
foreseeable future.
Deferred income tax assets are recognised for all deductible
temporary differences, carry-forward of unused tax assets
and unused tax losses, to the extent that it is probable that
taxable profit will be available against which the deductible
temporary differences, and the carry-forward of unused tax
assets and unused tax losses can be utilised:
• except where the deferred income tax asset relating
to the deductible temporary difference arises from
the initial recognition of an asset or liability in a
transaction that is not a business combination, and
at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss, and
•
in respect of deductible temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures, deferred
tax assets are only recognised to the extent that it is
probable that the temporary differences will reverse
in the foreseeable future and taxable profit will be
available against which the temporary differences
can be utilised.
The carrying amount of deferred income tax assets is
reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit
will be available to allow all or part of the deferred income
tax asset to be utilised. Unrecognised deferred income
tax assets are reassessed at each reporting date and are
recognised to the extent that it has become probable that
future taxable profit will allow the deferred tax asset to be
recovered.
Deferred income tax assets and liabilities are measured at
the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax
rates (and tax laws) that have been enacted or substantively
enacted at the reporting date. Income taxes relating to
items recognised directly in equity are recognised in equity
and not in the statement of comprehensive income.
Tax consolidation
The Group and its wholly-owned Australian controlled
entities have implemented the tax consolidation legislation
as of 1 January 2006. Members of the tax consolidated
group have entered into a tax-funding agreement. Each
entity is responsible for remitting its share of the current
tax payable (receivable) assumed by the head entity.
In accordance with UIG 1052 and Group accounting policy,
the Group has applied the ‘separate taxpayer within group
approach’, in which the head entity, Webcentral Group
Limited, and the controlled entities in the tax consolidated
group continue to account for their own current and
deferred tax amounts.
6263
Notes to the Financial Statements
Notes to the Financial Statements
In addition to its own current and deferred tax amounts, the
Group also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax credits
assumed from controlled entities in the tax consolidated
group. The allocation of taxes to the head entity is
recognised as an increase/decrease in the controlled
entity’s inter-company accounts with the tax consolidated
Group head entity.
Members of the Group have entered into a tax-sharing
agreement that provides for the allocation of income tax
liabilities between the entities should the head entity
default on its tax payment obligations. No amounts have
been recognised in the financial statements in respect
of this agreement, on the grounds that the possibility
is remote.
Other taxes
Revenues, expenses and assets are recognised net of the
amount of GST except:
• where the GST incurred on a purchase of goods
and services is not recoverable from the taxation
authority, in which case the GST is recognised as part
of the cost of acquisition of the asset or as part of
the expense item as applicable, and
•
receivables and payables are stated with the amount
of GST included.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables or
payables in the statement of financial position.
Cash flows are included in the statement of cash flows on
a gross basis and the GST component of cash flows arising
from investing and financing activities, which is recoverable
from, or payable to, the taxation authority, is classified as
operating cash flows.
Key judgement and estimates
The Group's accounting policy for taxation requires
management's judgement in assessing whether deferred
tax assets and certain deferred tax liabilities are recognised
in the statement of financial position. Deferred tax assets
are recognised only when it is considered more likely than
not that they will be recovered, which is dependent on the
generation of sufficient future taxable profits.
7. Dividends
Equity dividends on ordinary shares
(a) Dividends declared and paid during the period on
ordinary shares
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
(i) Nil paid during the 18 months ended
30 June 2021 (2019: Final franked
dividend paid for the financial year
ended 31 December 2018 - 4.5 cents
per share)
(ii) Dividend paid for the Infoready earn
out year ended 31 December 2019:
Total dividends paid during the period
-
-
-
5,357
109
5,466
(b) Dividends proposed and not recognised as a liability
No dividends were declared and not paid, nor any
dividends proposed and not paid during the period
ended 30 June 2021 (2019: None).
(c) Franking credit balance
The amount of franking credits
available for the subsequent financial
period are:
Franking account balance at the end of
the period at 30% (2019: 30%)
18
3,134
8. Earnings/(loss) per share
30-Jun-21
18 months
Cents
31-Dec-19
12 months
Cents
From continuing operations
Basic loss per share
Diluted loss per share
Attributable to members of the parent
Basic loss per share
Diluted loss per share
(45.95)
(45.95)
(46.81)
(46.81)
(38.01)
(38.01)
(108.62)
(108.62)
The following reflects the income and share data used in the
calculations of basic and diluted earnings per share:
9. Other income
30-Jun-21
18 months
$'000
31-Dec-19
12 months
$'000
(61,922)
(45,951)
(1,127)
(85,272)
(31)
(80)
(63,080)
(131,303)
Dividend income
Interest income
Management fees - TPPW Reseller
Management fees - Enterprise
Government grants
Sundry income
Total other income
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
115
254
3,119
2,121
1,393
289
7,291
125
202
587
-
-
401
1,315
Number of shares
30-Jun-21
Number
31-Dec-19
Number
134,746,724
120,887,297
Under the terms of the Transitional Services Agreement
for the sale of the TPP Wholesale Reseller business, the
Group is entitled to receive ongoing management fees
associated with the separation of the business until the
Agreement ceases.
Loss for the period from
continuing operations
(Loss) / profit for the period
from discontinued operations
Less profit attributed to non-
controlling interests
Loss for the period
attributable to members
of the parent
Weighted average number of
ordinary shares used in the
calculation of basic earnings
per share
Adjusted weighted average number
of ordinary shares used in calculating
diluted earnings per share
134,746,724
120,887,297
Basic earnings/(loss) per share is calculated as profit/(loss)
for the year attributable to members of the parent, divided
by the weighted average number of ordinary shares.
Under the terms of the Transitional Services Agreements
for the sale of the Enterprise business, the Group is entitled
to receive ongoing management fees associated with the
separation of the business until the Agreement ceases.
Grants from the government are recognised at their fair
value where there is a reasonable assurance that the
grant will be received and the group will comply with
all attached conditions.
Diluted earnings/(loss) per share is calculated as profit/
(loss) for the year attributable to members of the parent,
divided by the weighted average number of ordinary
shares and the dilutive potential ordinary shares.
10. Trade and other
receivables
Performance rights and options granted to employees are
considered to be potential ordinary shares and have been
included in the determination of diluted earnings per share
to the extent that they are dilutive. Where an operating
loss is incurred, performance rights are not dilutive.
These performance rights have not been included in the
determination of basic earnings per share.
There have been no transactions involving ordinary shares
or potential ordinary shares that would significantly change
the number of ordinary shares or potential ordinary shares
outstanding between the reporting date and the date of
completion of these financial statements.
(a) Disaggregation of trade and
other receivables
30-Jun-21
$’000
31-Dec-19
$’000
Trade receivables
Allowance for expected credit
losses (ECLs)
Trade receivables subject to
customer dispute
Other receivables
Total other receivables
1,788
(1,113)
4,834
(1,840)
-
10,006
1,043
1,718
910
13,910
Other receivables principally relate to the Group’s
subleasing activities, as well as activities related to
transitional services agreements for certain of the Group’s
former businesses (refer to note 9).
6465
Notes to the Financial Statements
Notes to the Financial Statements
Set out below is the movement in the allowance for ECLs of trade receivables:
12. Plant and equipment
Opening balance
Net additional provision for ECLs taken to the P&L
Closing balance
At period end, the ageing analysis of trade receivables is as follows:
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
1,840
(727)
1,113
1,370
470
1,840
Continuing Operations
Current
0-30 days past due
31-60 days past due
61-90 days past due
91 days + past due
Closing balance
ECL
Rate
30-Jun-21
Gross
$’000
ECL
$’000
ECL
Rate
31-Dec-19
Gross
$’000
ECL
$’000
65.3%
13.5%
15.0%
30.0%
74.2%
200
193
107
34
1,254
1,788
(131)
(26)
(16)
(10)
(930)
(1,113)
13.3%
5.4%
5.5%
5.6%
13.5%
1,025
958
704
356
11,797
14,840
(136)
(52)
(39)
(20)
(1,593)
(1,840)
The ECL rate is higher than the prior period because the overdue receivables balances at 30 June 2021 reflects receivables that
are considered unlikely to be collected as they are legacy amounts receivable following the sale of businesses and due to the
shift from post-paid to prepaid billing for most customers. Information about credit exposures are disclosed in note 18.
Customer Dispute
11. Other current assets
The Group’s annual report for the year ended 31 December
2019 disclosed a customer dispute pursuant to a contract
for the provision of services by the Group to the customer in
respect of which, as at 31 December 2019, a trade receivable
balance of $10,006,000 was held (“Customer Dispute”).
The Group also received notice of a cross claim from
the customer.
On 20 August 2020, Webcentral Pty Ltd (a wholly owned
subsidiary of the Group) entered into a release and
settlement agreement (“Settlement Agreement”) in relation
to the Customer Dispute.
The terms of the Settlement Agreement provide for the
release by both parties of any and all claims they may have
in relation to the Customer Dispute for nil payment to the
other party. Accordingly, the trade receivable balance held
in respect of the amounts claimed by Webcentral Pty Ltd
under the Customer Dispute has been reversed to nil.
30-Jun-21
$’000
31-Dec-19
$’000
Accrued revenue
Total other assets (current)
680
680
2,853
2,853
Accrued revenue is defined as a contract asset under AASB 15.
At cost
At 1 January 2019
Additions
Transfers
Disposals
Transfers to disposal group held for sale
At 31 December 2019
Additions
Transfers
Disposals
Transfer from held for sale
Transfers to disposal group held for sale
At 30 June 2021
Accumulated depreciation and impairment
At 1 January 2019
Depreciation charge for the year
Transfers
Disposals
Transfers to disposal group held for sale
At 31 December 2019
Depreciation charge for the year
Transfers and other adjustments
Disposals
Transfer from held for sale
Transfers to disposal group held for sale
At 30 June 2021
Net book value
At 31 December 2019
At 30 June 2021
Leasehold
improvements
$’000
Plant and
equipment
$’000
Furniture and
fittings
$’000
Capital work in
progress $’000
Total
$’000
8,072
194
151
(34)
-
8,383
50
4
(2,314)
-
-
6,123
2,202
1,752
(7)
(34)
3
3,916
2,581
-
(1,514)
-
-
4,983
4,467
1,140
21,137
697
9
(123)
(1,180)
20,540
135
(21)
(1,652)
1,180
(314)
19,868
16,721
1,752
(10)
(123)
(244)
18,096
1,230
409
(370)
-
(228)
19,137
2,444
731
2,370
24
-
-
-
2,394
-
(675)
-
(1)
1,718
564
526
17
-
-
1,107
776
-
(482)
-
-
1,401
1,287
317
160
-
(160)
-
-
-
-
90
-
-
-
90
-
-
-
-
-
-
-
-
-
-
-
-
-
90
31,739
915
-
(157)
(1,180)
31,317
185
73
(4,641)
1,180
(315)
27,799
19,487
4,030
-
(157)
(241)
23,119
4,587
409
(2,366)
-
(228)
25,521
8,198
2,278
6667
Notes to the Financial Statements
Notes to the Financial Statements
Plant and equipment are stated at cost less accumulated
depreciation and any impairment in value.
Depreciation is provided on a straight-line basis on all plant
and equipment. Major depreciation periods are:
2021
Leasehold improvements
The lease term
Plant and equipment
Furniture and fittings
2 to 4 years
2 to 5 years
An item of plant and equipment is derecognised upon
disposal, or when no future economic benefits are expected
from its use or disposal. Any gain or loss arising from the
derecognition of the asset (calculated as the difference
between net disposal proceeds and the carrying amount of
the asset) is included in the statement of comprehensive
income upon derecognition. The residual values, useful
lives, and methods of depreciation of plant and equipment
are reviewed at each financial year end and adjusted
prospectively, if appropriate.
13. Leases
As at 1 January 2020
Adjustments during the year
Disposals during the year
Depreciation expense
Interest expense
Payments
As at 30 June 2021
As at 1 January 2019
Disposals during the year
Depreciation expense
Interest expense
Payments
As at 31 December 2019
Right-of-use assets
Lease liabilities
Premises
$’000
16,490
(821)
(6,937)
(5,219)
-
-
3,513
Other
equipment
$’000
64
-
-
(64)
-
-
-
Right-of-use assets
Premises
$’000
16,058
5,500
(5,068)
-
-
16,490
Other
equipment
$’000
283
-
(219)
-
-
64
Total
$’000
16,554
(821)
(6,937)
(5,283)
-
-
3,513
Total
$’000
16,341
5,500
(5,287)
-
-
16,554
$’000
19,130
(109)
(4,142)
-
840
(9,245)
6,474
Lease liabilities
$’000
19,564
5,527
-
796
(6,757)
19,130
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
5,283
840
-
-
1,382
7,505
5,287
796
48
32
1,958
8,121
Set out below are the amounts recognised in profit and loss during the period:
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
Rent expense - short-term leases
Rent expense - leases of low-value assets1
Rent expense - variable lease payments
Total amount recognised in profit or loss
1.
Included in this amount is depreciation of right-of-use assets associated with discontinued operations of $2,302,000 for the 18 months ended 30 June 2021.
2. Leases of low-value assets excludes short-term leases of low value.
3.
Included in this amount is rent expense related to variable lease payments associated with discontinued operations of $956,000 for the 18 months ended
30 June 2021, which has already been included in the discontinued operations result.
Set out below is a maturity analysis of lease liabilities:
Set out below is a maturity analysis of lease receivables
for finance leases where the Group is a lessor:
31-Dec-19
$'000
Leases
committed
to but not yet
commenced
Leases
in effect
during year
ended
-
-
-
-
-
Total
6,782
13,611
91
6,782
13,611
91
20,484
20,484
-
(1,354)
19,130
6,160
12,970
30-Jun-21
$'000
Leases
committed
to but not yet
commenced
Leases in
effect
during year
ended
Total
Maturity analysis
- contractual
undiscounted
cash flows
Less than one year
One to five years
More than five years
Total undiscounted
lease liabilities at
31 Dec 2019
Total Interest expense
Lease liabilities included in the
Statement of Financial Position at
31 Dec 2019
Current
Non-current
Maturity analysis
- contractual
undiscounted
cash flows
Less than one year
One to five years
More than five years
Total undiscounted
lease liabilities at
30 June 2021
Total Interest expense
Lease liabilities included in the
Statement of Financial Position
at 30 June 2021
Current
Non-current
-
-
-
-
3,593
3,191
91
6,875
3,593
3,191
91
6,875
(401)
6,474
3,423
3,051
Set out below are amounts related to finance leases where
the Group is a lessor:
Finance income on the net investment in the lease
Total amount recognised in profit or loss
2021
18 months
$’000
236
236
2021
$’000
2019
$’000
Maturity analysis - contractual undiscounted cash flows
Less than one year
One to two years
Two to three years
More than three years
Total undiscounted lease receivable at
the end of the period
Unearned finance income
Net investment in lease
2,041
378
391
437
2,170
1,298
580
-
3,247
4,048
(206)
3,041
(154)
3,894
Set out below is a reconciliation of lease receivables for
finance leases where the Group is a lessor:
Reconciliation of lease receivables
At 31 December 2019
Additions on entering into sublease during the year
Interest income
Receipts from lessees
Lease receivables as at 30 June 2021
Reconciliation of lease receivables
At 31 December 2019
Additions on entering into sublease during the year
Termination of sublease during the year
Interest income
Receipts from lessees
Lease receivables as at 30 June 2021
2019
$’000
5,343
421
174
(2,044)
3,894
2021
$’000
3,894
4,579
(1,123)
236
(4,545)
3,041
(a) Sydney office leases
In January 2021 the Group signed a Heads of Agreement
in relation to the surrender of the property lease with
the landlord of Levels 22 & 23, 680 George Street,
Sydney. The surrender was completed on 17 June 2021.
The property leases were due to expire in November 2022.
The net annualised saving to WCG is $2 million following the
surrender of the property lease (net of the current sublease
rental income). In addition, bank guarantees issued to the
landlord in relation to the property leases totalling $1.74
million were returned to the Group in June 2021.
The net Surrender Fee payable by the Group was $123,564
(including a contribution from the sub-lessor of the
property to WCG of $142,028). The surrender of the lease
also resulted in the ceasing of the sub-lease arrangement
the Group held with Arq Group Enterprise Pty Ltd.
The Group has recorded a net loss on disposal of the
leasehold improvements in relation to the property lease
and the costs payable in relation to the surrender of
the property lease totalling $1.7 million included within
Transaction and restructuring costs.
6869
Notes to the Financial Statements
Notes to the Financial Statements
(b) Sub-leases with Arq Group
Enterprise Pty Ltd
Following the sale of the Enterprise business on 2 March
2020, the Group entered in sub-leasing arrangements
with Arq Group Enterprise Pty Ltd (being the former Group
subsidiary disposed of in the Enterprise sale) for part of the
Group’s office premise space. The term of the sub-leasing
arrangements varies with each arrangement, with expiration
dates ranging from 2022 to 2026. The sub-lease in relation to
Level 22 George Street, Sydney was terminated in June 2021
following the surrender of the George St leases in June 2021.
As a result of the sub-leasing arrangements, the Group
concurrently de-recognised $4,438,000 of right-of-use (ROU)
lease assets and recognised $4,579,000 of lease receivables,
resulting in a net gain of $141,000 recognised in profit and loss.
(c) COVID-19 lease payment
concessions
During the period, the Group negotiated an acceleration
of lease incentives with its landlords associated with
the Group’s office premises due to the ongoing COVID-19
pandemic, resulting in no base rents payable for the
impacted months and have the character of deferring the
Group’s lease payments to future periods. The balance of
lease payment deferrals obtained at 30 June 2021 is nil.
(d) Reassessment of lease liability
During the period, the Group received notice of a market
rent review from one of its landlords in relation to office
premise space in Sydney, in accordance with the terms
and conditions of the Group’s lease agreements. The
result of the market rent review changed future lease
payments arising from a change in the market rental rate.
In accordance with AASB 16, the Group remeasured the
lease liability associated with these premises based on the
revised lease payments over the remainder of the lease
term and recognised a net $15,000 gain in profit and loss.
(e) Lease modifications
During the period, certain tenants of the Group formally
notified the Group of their intention to exit part of the Group’s
office premise spaces in Melbourne. For one of the tenants,
the Group received up to the amount of the bank guarantee
provided to the landlord to cover any remaining debts
outstanding from the tenant. For the other tenant, the Group
receive the balance of issued invoices outstanding from the
tenant (up to the date of lease termination). As a result, the
Group has written off the present value of its lease receivables
related to these premises not covered by the bank guarantee
or owed invoices. The net loss recognised in profit and loss was
$409,000 included within Transaction and restructuring costs.
Key judgement and estimates
Significant judgement in determining the lease term of
contracts with renewal options
The Group determines the lease term as the non-cancellable
term of the lease, together with any periods covered by an
option to extend the lease if it is reasonably certain to be
exercised, or any periods covered by an option to terminate
the lease, if it is reasonably certain not to be exercised.
The Group has the option, under some of its premises
leases to lease the assets for additional terms of five
years. The Group applies judgement in evaluating whether
it is reasonably certain to exercise the option to renew.
That is, it considers all relevant factors that create an
economic incentive for it to exercise the renewal. The Group
reassesses the lease term if there is a significant event
or change in circumstances that is within its control and
affects its ability to exercise (or not to exercise) the option
to renew (e.g., a change in business strategy). The Group
excluded the renewal period as part of the lease term for
leases of rental premises as the Group is not reasonably
certain to exercise the renewals.
Significant judgement in determining the incremental
borrowing rate
The Group has applied judgement to determine the
incremental borrowing rate, which significantly affects
the amount of lease liabilities or ROU assets recognised.
The Group applies the incremental borrowing rate on a
lease by lease basis based on the remaining lease term
from the initial date of application. The Group reassesses
the incremental borrowing rate for any leases with
commencement dates after the initial date of application.
14. Intangible assets
30-Jun-21
$’000
31-Dec-19
$’000
Goodwill
37,924
70,923
Market-related intangibles
Accumulated amortisation
Customer contracts
Accumulated amortisation
Capitalised software
Accumulated amortisation
22
-
22
6,536
(6,535)
1
17,435
(13,786)
3,649
1,494
-
1,494
9,224
(8,702)
522
16,632
(11,767)
4,865
Total intangible assets
41,596
77,804
Reconciliation of carrying amounts at the beginning and end of the period
Net balance at 1 Jan 2019
Transfer to assets held for sale
Adjustments to assets previously classified as held
for sale
Additions
Amortisation (continuing operations)
Impairment of goodwill
Net balance at 31 December 2019
Additions
Amortisation (continuing operations)
Impairment loss
Net balance at 30 June 2021
Capitalised
Software
Customer
Contracts
Market-related
Intangibles
$’000
Goodwill
Total
$’000
$’000
$’000
$’000
8,468
(3,588)
-
2,102
(2,117)
-
4,865
861
(2,077)
-
3,649
3,211
(1,296)
-
-
(1,394)
-
521
-
(520)
-
1
1,889
-
(395)
-
-
-
1,494
22
-
(1,494)
22
211,671
(101,727)
2,103
-
-
(41,123)
70,924
-
-
(33,000)
37,924
225,239
(106,611)
1,708
2,102
(3,511)
(41,123)
77,804
883
(2,597)
(34,494)
41,596
(a) Goodwill
The Group performed an impairment test as at 31 December
2020 over the carrying value of goodwill because there
were indicators of impairment, being the impact of
COVID-19 on the business and historical declining revenues.
Under the impairment testing, the carrying amount of
the SMB cash generating unit (CGU) was compared to its
recoverable amount. The recoverable amount of the SMB
CGU was determined based on a value in use model. The key
assumptions used to determine the recoverable amount
were the revenue and profit forecast of the group, the
discount rate used and forecast capital expenditure.
As a result of the Group’s impairment test, the Group
recognised an impairment charge of $33,000,000 for the
period ended 31 December 2020 against the carrying value
of goodwill in profit and loss for the interim 12 month period
ended 31 December 2020.
Following the disposal of the Arq Enterprise
business in March 2020, the Group has one operating
segment, Webcentral. In future reporting periods this
segment will be referred to as Webcentral or the Group.
The goodwill allocated to each operating segment, the
recoverable amount of each operating segment and
the growth rate and discount rate assumptions are set
out below. In 2019 goodwill was valued in accordance
with the fair value less costs of disposal method and
accordingly there are no growth rate and discount rate
assumptions applicable.
30-Jun-21
31-Dec-20
31-Dec-19
$’000
$000
$’000
Goodwill allocated to operating segments
Webcentral / SMB
37,924
70,923
112,047
Enterprise
-
-
101,727
Recoverable amount of each operating segment
Webcentral / SMB
108,550
37,924
70,923
Enterprise
n/a
-
20,469
Long-term growth rates
Webcentral / SMB
Enterprise
Discount rates
Webcentral / SMB
Enterprise
2.5%
n/a
10%
n/a
(5.0%)
n/a
9.5%
n/a
n/a
n/a
n/a
n/a
7071
Notes to the Financial Statements
Notes to the Financial Statements
Intangible assets acquired both
separately and from a business
combination
Intangible assets acquired separately are capitalised at cost,
and from a business combination are capitalised at fair value
as at the date of acquisition. Following initial recognition, the
cost model is applied to the class of intangible assets. Where
amortisation is charged on assets with finite lives, this
expense is taken to profit and loss through the ‘amortisation
of identifiable intangible assets’ line item.
Gains or losses arising from derecognition of an intangible
asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset
and are recognised in the profit and loss when the asset
is derecognised.
Internally generated intangible assets
Costs relating to the research phase of the project are
expensed while costs relating to the development phase are
capitalised as Capitalised Software when the project meets
the definition of an asset; and is identifiable. The costs
capitalised are being amortised over a useful life of four to
six years.
A summary of the policies applied to the Group’s intangible
assets is as follows:
Customer contracts
Useful lives
Finite
Amortisation
Amortised over the estimated
churn of the customer base
Impairment testing
When indicators exist
Market-related Intangibles
Useful lives
Indefinite
Amortisation
No amortisation
Impairment testing
Annually and more frequently
when indicators exist
Capitalised software projects
Useful lives
4-6 years
Impairment testing
Amortisation method reviewed
annually and when indicators exist
The recoverable amount of the cash-generating units is
determined based on value-in-use calculations. These
calculations use the present value of cash flow projections
over a 6 year period, based on a one-year budget approved
by the Board followed by an extrapolation of expected cash
flows for the units’ remaining useful lives using growth rates
of 2.5% per annum for years to 2 onward. The present value
of the expected cash flows of each cash-generating unit is
determined by applying a suitable discount rate.
The discount rate has been based upon an estimate of the
entity’s weighted average cost of capital, being 10%.
Impairment Charge for Goodwill
As a result of the impairment testing and evaluation, the
Group has determined that the carrying value of Goodwill
does not exceed their value-in-use, and no impairment
charge is required at 30 June 2021 other than the
$33,000,000 impairment charge recognised for the interim
12-month period to 31 December 2020.
Impact of possible changes in key assumptions
If the discount rate, based on an estimate of the entity’s
weighted average cost of capital was increased by 50%
(from 10% to 15)%, there would still be no impairment
charge required at 30 June 2021.
(b) Marketing-related intangibles
Marketing-related intangibles represent brand names of
past acquisitions. They have been assessed as having
indefinite useful lives as they are expected to contribute to
future economic benefits indefinitely as Webcentral Group
Limited continues to sell its products under these brand
names indefinitely, and therefore invests in these brands
through its marketing activities. An annual impairment
assessment is required for intangible assets with an
indefinite useful life.
On 5 July 2021, Webcentral Group, Netregistry and Web
Marketing Experts transitioned into a single brand as the
company moves to a more simplified model of service
delivery. As a result, the useful life of the NetRegistry brand
has been revised to zero as at 30 June 2021. As a result
$1.4 million of accelerated amortisation expense has been
recognised in the statement of comprehensive income
for the 18 months ended 30 June 2021.
(c) Customer contracts
Customer contracts are amortised over the period of 3-5
years based on the historical attrition rate.
(d) Capitalised software
Included in capitalised software is $893,270 of capitalised
labour and other directly attributable costs. The capitalised
labour in progress which has not started amortisation
relates to product and service customer platform
enhancements. The remaining balance of capitalised
software relates to legacy software and cloud platforms
from acquired entities, as well as newly developed software
platforms eligible to begin amortisation during the year.
Reconciliation of fair value measurement of non-current
financial assets
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
Opening balance
Foreign exchange gain on
revaluation of the Investment in
Tiger Pistol
Loss on Revaluation
Return of capital
Closing balance
1,375
-
(650)
-
725
1,870
10
-
(505)
1,375
16. Trade and other payables
30-Jun-21
31-Dec-19
$’000
$’000
Trade creditors
Sundry creditors
Deposits received in advance
Accrued expenses
Total trade and other payables
3,864
5,225
304
2,026
11,419
1,574
4,325
477
2,316
8,692
Terms and conditions relating to trade and sundry creditors:
• Trade creditors are non-interest bearing and are
normally settled within agreed trading terms.
• Sundry creditors are non-interest bearing and are
normally settled within agreed trading terms.
The carrying amount of trade and other payables is
a reasonable approximation of fair value.
The carrying value of any intangible assets denominated in
foreign currencies is revalued at the year-end spot rate of
each reporting period, leading to changes in the carrying
value of the intangible assets in reporting currency.
Any revaluation amounts are recognised directly in the
foreign currency translation reserve.
Impairment of assets
At each reporting date, the Group assesses whether there
is any indication that an asset may be impaired. Where an
indicator of impairment exists, the Group makes a formal
estimate of recoverable amount. Where the carrying
amount of an asset exceeds its recoverable amount, the
asset is considered impaired and is written down to its
recoverable amount.
The carrying values of assets are reviewed for impairment
when events or changes in circumstances indicate the
carrying value may not be recoverable. For an asset that
does not generate largely independent cash inflows, the
recoverable amount is determined for the CGU to which
the asset belongs. If any such indication exists, and where
the carrying values exceed the estimated recoverable
amount, the assets or CGUs are written down to their
recoverable amount.
Recoverable amount is the greater of fair value less costs
to sell and value in use. It is determined for an individual
asset, unless the asset's value in use cannot be estimated
to be close to its fair value less costs to sell, and it does not
generate cash inflows that are largely independent of those
from other assets, or groups of assets; in which case, the
recoverable amount is determined for the CGU to which the
asset belongs.
In assessing value in use, the estimated future cash flows
are 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.
15. Non-current
financial assets
Investment in Tiger Pistol -
ordinary shares
30-Jun-21
31-Dec-19
$’000
$’000
725
725
1,375
1,375
The Group holds 603,205 shares in Tiger Pistol. These
shares have been accounted for as a financial asset at fair
value through other comprehensive income and valued by
reference to the most recent arm’s length transaction of
Tiger Pistol shares. A loss of $650,000 has been recorded
during the period.
7273
Notes to the Financial Statements
Notes to the Financial Statements
17. Provisions
Current
Employee benefits
Non-current
Employee benefits
Other
30-Jun-21
31-Dec-19
$’000
$’000
1,270
1,270
234
2,301
2,535
1,585
1,585
528
2,659
3,187
Total provisions
3,805
4,772
30-Jun-21
31-Dec-19
$’000
$’000
The aggregate employee benefit liability comprises:
Provisions (current)
Provisions (non-current)
1,270
234
1,504
1,585
528
2,113
Employee benefits
Provision is made for employee benefits accumulated as a
result of employees rendering services up to the reporting
date. These benefits include wages and salaries, annual
leave, and long service leave.
Liabilities arising in respect of wages and salaries, annual
leave and any other employee benefits expected to be
settled within twelve months of the reporting date, are
measured at their nominal amounts based on remuneration
rates, which are expected to be paid when the liability is
settled. All other employee benefit liabilities are measured
at the present value of the estimated future cash outflow
to be made in respect of services provided by employees
up to the reporting date. In determining the present value
of future cash outflows, the market yield as at the reporting
date on corporate bonds is used, which has terms to
maturity approximating the terms of the related liability.
Employee benefit expenses arise in respect of the following
categories:
• Wages and salaries, non-monetary benefits, annual
leave, long service leave and other entitlements;
•
Other types of employee entitlements are
recognised against profits on a net basis in their
respective categories.
Leasehold make good provision
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event.
It is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of
the obligation.
Other non-current provisions include leasehold make-good
provisions. Properties occupied by the Group are subject
to make-good costs when vacated at the termination of
the lease. A make-good provision is recognised at the
present value of the provision as at 30 June 2021, with
the asset capitalised as part of the right-of-use lease
asset. Movements in the liability, as the time to make-
good payment advances one period, are recognised as a
finance expense. Any difference between the provision
and the amount paid in the final settlement is recognised
as a make-good expense or gain in the statement of
comprehensive income.
A reconciliation of other provisions is shown below:
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
Opening balance at 1 January
2,659
Reversal of surplus lease provision
on adoption of AASB 16
Additions to make-good provision
Additions to surplus lease provision
Unwinding of the discount
Closing balance at 30 June
-
37
(395)
-
2,301
2,323
(124)
407
-
53
2,659
18. Financial risk management
objectives and policies
The Group's principal financial instruments comprise
of receivables, payables, interest-bearing loans, cash,
short-term deposits, derivatives, non-current financial
assets and other financial liabilities. The Group manages
its exposure to key financial risks in accordance with the
Group's financial risk management policy. The objective of
the policy is to support the delivery of the Group's financial
targets, whilst protecting financial security.
The purpose is to manage the financial risks arising from
the Group's operations. The main risks arising from the
Group's financial instruments are interest rate risk, foreign
currency risk, liquidity risk and credit risk. The Group uses
different methods to measure and manage different types
of risks to which it is exposed. These include monitoring
levels of exposure to foreign exchange risk and interest rate
risk, assessments of market forecasts for foreign exchange
and interest rates. Liquidity risk is monitored through the
development of rolling cash flow forecasts.
The Board reviews and agrees policies for managing each
of these risks as summarised below. Primary responsibility
for identification and control of financial risks rests with
management under the supervision of the Audit and Risk
Management Committee and under the authority of the
Board. The Board reviews and agrees policies for managing
each of the risks identified below, including the setting of
limits for trading in derivatives, hedging cover of foreign
currency and interest rate risk, credit allowances and cash
flow forecast projections.
Capital management
For the purpose of the Group's capital management,
capital includes issued capital, all other equity reserves
attributable to the equity holders of the parent and
debt capital, principally raised from the Group’s banking
partners, but inclusive of other debt-like instruments,
such as earn-outs due. As a result of the ongoing Strategic
Review of the Group’s businesses, the Board’s current
primary objective is to maximise the value of the Group’s
operations to its shareholders. This may involve the sale
of one or more of its operations, restructuring its cost
base, all whilst maintaining sufficient liquidity for ongoing
operations for the short to medium term as well as returning
surplus cash flows (or, in the event of a sale of assets,
proceeds from sales) to shareholders and debt providers.
The Group manages its capital structure and financing
facilities and makes adjustments in light of changes in
economic and market conditions, requirements of the
business operations and requirements of its financial
covenants. To maintain or adjust the capital structure, the
Group may raise or repay debt, adjust the dividend payment
to shareholders, return capital to shareholders, issue new
shares, or sell assets to fund these activities.
During 2021, the Group paid no dividends to members of the
parent Company (2019: $5,357,000 at 4.5 cents per share in
relation to the period ended 31 December 2018).
The Group's exposure to market interest rates is related
primarily to the Group's short-term deposits held and
drawdowns on available financing facilities. Refer to note 21
for details of available financing facilities.
Risk exposures and responses
Credit risk
Credit risk arises from the financial assets of the Group,
which comprise of cash and cash equivalents, trade and
other receivables and derivative instruments. The Group's
exposure to credit risk arises from potential default of
the counterparty, with a maximum exposure equal to the
carrying amount of these instruments. Exposure at balance
date is addressed in each applicable note.
The Group provides credit only with recognised,
creditworthy third parties and as such collateral is not
required, nor is it the Group's policy to securitise its trade
and other receivables.
It is the Group's policy that all customers who wish to trade
on credit terms are subject to credit verification procedures,
which may include an assessment of their financial position,
past experience and industry reputation, depending on the
amount of credit to be granted.
Outstanding customer receivables are regularly monitored.
Receivables are written off when the Group determines that
there is no reasonable expectation of recovering the trade
receivable in full. Indicators that there is no reasonable
expectation of recovery include, amongst others, the
referral of a debtor to an external debt collection agency.
The Group considers that there is a correlation between
credit risk and the contractual payments past due, which is
reflected in the ECL provision matrix. Historical evidence
indicates trade receivables remain collectable more than
90 days past due.
Foreign currency risk
The Group conducts some of its business in US dollars
('USD') and is therefore exposed to movements in the AUD/
USD dollar exchange rate. The Group actively manages the
gross margin risk by its foreign currency risk management
strategy. Please refer to note 23 for further details.
Both the functional and presentation currency of
Webcentral Group Limited is in Australian dollars (AUD).
The consolidated Group contains functional currencies
in USD and NZD. Transactions in foreign currencies are
initially recorded in the functional currency at the exchange
rates ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies
are retranslated at the rate of exchange ruling at the
reporting date.
The exchange differences arising on the retranslation are
taken directly to other comprehensive income. On disposal
of a foreign entity, the deferred cumulative amount
recognised in other comprehensive income relating to
that particular foreign operation is recognised in the
determination of profit and loss for the year.
At 30 June 2021, the Group had the following exposures
to USD denominated assets and liabilities, where the
functional currency is not USD. The Group's exposure to
foreign currency changes for all other currencies is not
material. Assets and liabilities that are designated in cash
flow hedges are not included:
30-Jun-21
$’000
31-Dec-19
$’000
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Net exposure
103
10
113
(615)
(502)
533
24
557
(1,814)
(1,257)
7475
Notes to the Financial Statements
Notes to the Financial Statements
The following sensitivity is based on foreign currency risk
exposures in existence at the reporting date.
Liquidity risk
At 30 June 2021, had the AUD moved as illustrated in the
table below with all other variables held constant, post-tax
profit and equity would have been affected as follows:
Net profit
Higher / (Lower)
Equity
Higher / (Lower)
2021
$’000
2019
$’000
2021
$’000
2019
$’000
45
(55)
113
(139)
45
(55)
113
(139)
Consolidated
- AUD/USD +10%
- AUD/USD -10%
The Group also has exposures to foreign exchange when
retranslating foreign currency subsidiaries into AUD.
The sensitivity range has been determined using an expected
range of 0.641 to 0.784 USD/AUD for the retranslation of USD
denominated balances for the forthcoming year. The Group
has determined that the sensitivity for the Group’s exposure
to the NZD is not material.
Liquidity risk is managed via the regular review of
forecasted cash inflows and outflows, with any surplus
funds being placed in short term deposits to maximise
interest revenue.
The risk implied from the values shown in the table below,
reflects a balanced view of cash inflows and outflows. Trade
payables and other financial liabilities mainly originate from
the financing of assets used in ongoing operations such
as plant, equipment and investments in working capital
(e.g. trade receivables). These assets are considered in the
Group's overall liquidity risk. To monitor existing financial
assets and liabilities, as well as to enable an effective
controlling of future risks, the Group has established
comprehensive risk reporting covering its business units
that reflects expectations of settlement of financial assets
and liabilities. The amounts disclosed in the table are the
contractual undiscounted cash flows including interest.
< 6 months
$’000
6 to 12 months
$’000
1 to 5 years
$’000
> 5 years
$’000
Total
$’000
30 JUNE 2021
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Borrowings
Net inflow/(outflow)
31 DECEMBER 2019
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Borrowings
Other financial liabilities
Derivative liability (foreign exchange contract)
Net inflow/(outflow)
2,412
1,718
-
4,130
(11,419)
(26,978)
(38,397)
(34,267)
8,949
13,910
-
22,859
(8,692)
(62,870)
(5,549)
-
(77,111)
(54,252)
-
-
-
-
-
(351)
(351)
(351)
-
-
-
-
-
-
-
-
-
-
-
-
725
725
-
(15,351)
(15,351)
(14,626)
-
-
1,375
1,375
-
-
-
(510)
(510)
865
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,412
1,718
725
4,855
(11,419)
(42,680)
(54,099)
(49,244)
8,949
13,910
1,375
24,234
(8,692)
(62,870)
(5,549)
(510)
(77,261)
(53,837)
19. Contributed equity
Ordinary shares
Issued and paid-up capital
Ordinary shares each fully paid
Movements in ordinary shares on issue
30-Jun-21
31-Dec-19
$’000
$’000
96,566
91,179
30-Jun-21
18 months
31-Dec-19
12 months
Number of
shares
$’000
Number of
shares
$’000
Beginning of the financial period
122,131,124
91,179
118,876,222
85,724
Issued during the period:
Capital raising
Employee Share Plan
Performance rights vested
Dividend reinvestment plan
Transaction costs for capital raising and share repurchase, net of tax
33,025,542
5,614
271,100
209,013
-
-
-
-
-
-
-
544,778
2,439,024
(227)
-
End of the financial period
155,365,679
96,566
122,131,124
472
-
983
4,000
-
91,179
20. Reserves
Share-based payments reserve
Foreign currency translation reserve
Fair value reserve - financial assets at FVOCI
Hedging reserve
30-Jun-21
31-Dec-19
$’000
$’000
597
(336)
(536)
-
(275)
193
(533)
79
(357)
(618)
Share-based payments reserve
Other reserves
The share-based payments reserve is used to recognise the value
of equity-settled share-based payment transactions provided to
employees, including KMP, as part of their remuneration. Refer to
note 29 for further details of these plans.
Foreign currency translation reserve
The foreign currency translation reserve is used to record
exchange differences arising from the translation of the financial
statements of foreign subsidiaries.
Other reserves represent the hedging reserve and fair value reserve
(for equity investments at fair value through equity). The hedging
reserve contains the effective portion of the hedge relationships
incurred as at the reporting date. The fair value reserve of
financial assets at FVOCI is used to record changes to the fair
value of non-current financial asset as disclosed in note 18 to the
financial statements.
7677
Notes to the Financial Statements
Notes to the Financial Statements
21. Interest bearing loans and borrowings
Interest bearing loans and borrowings
Financing facilities available
At reporting date, the following financing facilities had been negotiated and were available:
Current
Interest-bearing loan - external parties
Interest-bearing loan - related parties
Non-current
Interest-bearing loan - external parties
Fees paid on the establishment of loan facilities are
included as part of the carrying amount of the loans and
borrowings. Borrowings are classified as current liabilities,
unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the
reporting date.
Borrowing costs are recognised as an expense when
incurred in the Statement of Comprehensive Income.
Borrowing costs consist of interest and other costs that
an entity incurs in connection with the borrowing of funds.
Interest rate is based on the relevant period BBSY rate.
The Group repaid $22.1 million of its debt facilities with ANZ
and NAB in March 2020 using proceeds from the sale of the
Enterprise business. The remaining balance was repaid in
October 2020 following drawdown of loans totalling $47.6
million from 5G Networks Finance Pty Ltd, a wholly owned
subsidiary of 5GN.
In addition, in September 2020, 5GN provided a $500,000
unsecured loan to the Company to fund the break fee that
was paid on termination of the unsuccessful Scheme
of Arrangement with Web.com. This loan was repaid in
November 2020.
18 month period ended
30-Jun-21
$’000
31-Dec-19
$’000
-
26,627
26,627
15,000
15,000
61,929
-
61,929
-
-
In December 2020, following the return of $5.3 million
from ANZ, the issuer of the Group’s property lease bank
guarantees issued on behalf of Webcentral, $5.3 million was
repaid to 5GN.
On 30 June 2021, the Group executed debt facility
agreements with Commonwealth Bank of Australia (“CBA”)
in relation to a $16.6 million debt facility, comprising a
$15 million Market Rate Loan Facility, a $1.5 million Bank
Guarantee Facility and a $0.1 million Credit Card Facility.
On 30 June 2021 the Company made a $15 million drawdown
under the Market Rate Loan Facility and repaid $15 million
to 5GN.
During the period an interest expense of $398,870 was
accrued in relation to the loans provided by 5GN to WCG.
Security arrangements
CBA holds a first ranking General Security Agreement (GSA)
over all of the assets of the Group and 5G Networks Finance
Pty Ltd, a wholly owned subsidiary of 5GN holds a second
ranking General Security Agreement (GSA) over all of the
assets of the Group. Under an Intercreditor deed between
CBA and 5G Networks Finance Pty Ltd, a wholly owned
subsidiary of 5GN, the loan from 5G Networks Finance Pty
Ltd is subordinated to the loan from CBA.
Market rate loan facility - CBA
Bank guarantee facility - CBA
Credit card facility - CBA
Secured loan facility - 5GN
Business lending - cash advance facility (committed)
Business lending - cash advance facility (uncommitted)
Business lending - bank guarantees
Standby letters of credit
Commercial cards
Performance guarantees
22. Other financial liabilities
Current
Contingent consideration liability
Reconciliation of fair value measurement of other financial liabilities
Opening balance
Payment of consideration liability for InfoReady - cash
Payment of consideration liability for InfoReady - equity issue
(Gain) / Loss on reassessment of consideration liability recognised in profit and loss
Interest on consideration liability for Infoready
Settlement of consideration liability for InfoReady
Closing balance
Total facilities
Facilities used at reporting
date
2021
$’000
2019
$’000
2021
$’000
2019
$’000
15,000
1,500
100
48,348
-
-
-
-
-
-
-
-
-
-
61,200
7,500
4,485
1,130
2,000
385
15,000
-
-
26,627
-
-
-
-
-
-
-
-
-
-
61,075
-
4,369
1,130
64
-
64,948
76,700
41,627
66,638
30-Jun-21
31-Dec-19
$’000
$’000
-
-
5,549
5,549
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
5,549
-
-
-
430
(5,979)
-
12,971
(4,000)
(4,000)
(98)
676
-
5,549
7879
Notes to the Financial Statements
Notes to the Financial Statements
23. Derivative financial
liabilities and assets
(a) Disaggregation of derivative
financial liabilities
Interest rate swap
30-Jun-21
31-Dec-19
$’000
$’000
-
-
(510)
(510)
Interest rate swap
At 30 June 2021, the Group held no interest rate swap
contracts designated as cash flow hedges designed to
hedge the variable interest rate exposure relating to the
interest-bearing bank loan (2019: one).
At the inception of a hedge relationship, the Group formally
designates and documents the hedge relationship to
which it wishes to apply hedge accounting and the risk
management objective and strategy for undertaking the
hedge. The documentation includes identification of the
hedging instrument, the hedged item, the nature of the
risk being hedged and how the Group will assess whether
the hedging relationship meets the hedge effectiveness
requirements (including the analysis of sources of hedge
ineffectiveness and how the hedge ratio is determined).
A hedging relationship qualifies for hedge accounting if it
meets all of the following effectiveness requirements:
• There is ‘an economic relationship’ between the
hedged item and the hedging instrument
• The effect of credit risk does not ‘dominate the value
changes’ that result from that economic relationship
• The hedge ratio of the hedging relationship is the
same as that resulting from the quantity of the
hedged item that the Group actually hedges and the
quantity of the hedging instrument that the Group
actually uses to hedge that quantity of hedged item.
As part of the retirement of the external drawn-down debt
on 26 October 2020, the Group closed out its interest rate
swap arrangement. The Group recognised a net loss of
$215,000 included in other comprehensive income on the
closure of the swap (2019: $297,000 loss).
For the purposes of hedge accounting, the Group has
classified the hedges applicable to the year ending 30
June 2021 as cash-flow hedges. Hedges that meet all the
qualifying criteria for hedge accounting are accounted for
as described in the following.
(b) Accounting policy
The Group uses derivative financial instruments, such as
forward currency contracts and interest rate swaps, to
hedge its foreign currency risks and interest rate risks
respectively. Such derivative financial instruments are
initially recognised at fair value on the date on which a
derivative contract is entered into and are subsequently
remeasured at fair value. Derivatives are carried as financial
assets when the fair value is positive and as financial
liabilities when the fair value is negative. For the purpose of
hedge accounting, hedges are classified as:
•
fair-value hedges, when hedging the exposure to
changes in the fair value of a recognised asset or
liability or an unrecognised firm commitment
• cash-flow hedges, when hedging the exposure to
variability in cash flows that is either attributable to
a particular risk associated with a recognised asset
or liability or a highly probable forecast transaction
or the foreign currency risk in an unrecognised firm
commitment
• hedges of a net investment in a foreign operation.
Cash-flow hedges
The effective portion of the gain or loss on the hedging
instrument is recognised in OCI in the cash-flow hedge
reserve, while any ineffective portion is recognised
immediately in the statement of profit or loss. The
cash-flow hedge reserve is adjusted to the lower of the
cumulative gain or loss on the hedging instrument and the
cumulative change in fair value of the hedged item.
The Group uses forward currency contracts as hedges of its
exposure to foreign currency risk in forecast
transactions and firm commitments. The ineffective
portion relating to foreign currency contracts is recognised
as other expense.
The Group designates the entire forward contract as a
hedging instrument. The amounts accumulated in OCI are
accounted for, depending on the nature of the underlying
hedged transaction. If the hedged transaction subsequently
results in the recognition of a non-financial item, the
amount accumulated in equity is removed from the separate
component of equity and included in the initial cost or other
carrying amount of the hedged asset or liability. This is not a
reclassification adjustment and will not be recognised in OCI
for the period. This also applies where the hedged forecast
transaction of a non-financial asset or non-financial liability
subsequently becomes a firm commitment for which cash
flow hedge accounting is applied.
For any other cash flow hedges, the amount accumulated
in OCI is reclassified to profit or loss as a reclassification
adjustment in the same period or periods during which
the hedged cash flows affect profit or loss. If cash flow
hedge accounting is discontinued, the amount that has
been accumulated in OCI must remain in accumulated OCI
if the hedged future cash flows are still expected to occur.
Otherwise, the amount will be immediately reclassified
to profit or loss as a reclassification adjustment. After
discontinuation, once the hedged cash flow occurs, any
amount remaining in accumulated OCI must be accounted
for depending on the nature of the underlying transaction as
described above.
There is an economic relationship between the hedged
items and the hedging instruments as the terms of the
foreign exchange and interest rates match the terms of the
hedged item (i.e., notional amount and expected payment
date). The Group has established a hedge ratio of 1:1 for the
hedging relationships as the underlying risk of the foreign
exchange and interest rates are identical to the hedged risk
components. To test the hedge effectiveness, the Group
uses the hypothetical derivative method and compares the
changes in the fair value of the hedging instruments against
the changes in fair value of the hedged items attributable to
the hedged risks.
The hedge ineffectiveness can arise from:
• differences in the timing of the cash flows of the
hedged items and the hedging instruments
• different indexes (and accordingly different curves)
linked to the hedged risk of the hedged items and
hedging instruments
•
the counterparties’ credit risk differently impacting
the fair value movements of the hedging instruments
and hedged items.
• Changes to the forecasted amount of cash flows of
hedged items and hedging instruments
(c) Impact of hedging on financial statement items
The impact of the hedging instrument on the statement of financial position is as follows:
Derivative
Notional amount
Carrying amount
Line item in the statement of financial
position
$’000
$’000
Change in the value of
the hedging instrument
used for measuring hedge
ineffectiveness for the period:
$’000
Interest rate swap
-
-
Derivative financial instruments
297
The impact of the hedged item on the statement of financial position is as follows:
Hedged item
Carrying amount
Accumulated
fair value
adjustments
Line item in the statement of financial
position
$’000
$’000
Change in the value of
the hedged item used
for measuring hedge
ineffectiveness for the period:
$’000
Fixed-rate borrowing
-
-
Interest-bearing loans and borrowings
297
The entire change in the value of the hedging instrument was taken to OCI. Because the terms of the hedged item and the
hedging relationship continue to perfectly match, and the effect of credit risk is neither material nor dominant in the economic
relationship, the hedge was highly effective during the year.
8081
Notes to the Financial Statements
Notes to the Financial Statements
24. Fair value measurement
The Group measures financial instruments such as
derivatives at fair value at each reporting date. Fair value
is 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. The fair-
value measurement is based on the presumption that the
transaction to sell the asset or transfer the liability takes
place either:
• in the principal market for the asset or liability, or
• in the absence of a principal market, in the most
advantageous market for the asset or liability.
The fair value of an asset or liability is measured using the
assumptions that market participants would use when
pricing the asset or liability, assuming that the market
participants act in their economic best interest.
The Group uses valuation techniques that are appropriate
in the circumstances and for which sufficient data are
available to measure fair value, maximising the use of
relevant observable inputs and minimising the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorised within
their fair-value hierarchy, described as follows, based on
the lowest level of input that is significant to the fair value
measurement as a whole:
• Level 1 - Quoted (unadjusted) market prices in active
markets for identical assets or liabilities.
• Level 2 - Valuation techniques for which the lowest
level input that is significant to the fair value
measurement is directly or indirectly observable.
• Level 3 - Valuation techniques for which the lowest
level input that is significant to the fair value
measurement is unobservable.
For assets and liabilities that are recognised in the financial
statements at fair value on a recurring basis, the Group
determines whether transfers have occurred between
levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to the
fair value measurement as a whole) at the end of each
reporting period.
The following table provides the fair value measurement hierarchy of the Group’s financial assets and liabilities as at 30 June 2021:
Note
Date of
valuation
TOTAL
Fair value measurement using
Quoted prices
in active
markets
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
$’000
$’000
$’000
$’000
Assets / (liabilities) measured at fair value
Financial assets
Investment in Tiger Pistol shares
30 June 21
725
-
-
725
Fair value measurement hierarchy for assets as at 31 December 2019:
Date of valuation
TOTAL
Fair value measurement using
Quoted prices in
active markets
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
$’000
$’000
$’000
$’000
Assets/ (liabilities) measured at fair value:
Derivative financial instruments
Foreign exchange contracts1
Interest rate swap1
Financial assets
31 December 2019
31 December 2019
-
(510)
Investment in Tiger Pistol shares2
31 December 2019
1,375
Other financial liabilities
Other Financial liablity3
31 December 2019
(5,548)
-
-
-
-
-
(510)
-
-
-
-
1,375
(5,548)
1. Reflects the fair value of interest rate swaps contracts (31 December 2019: interest rate swaps), which have been designated as cash-flow hedges.
2. Reflects the fair value by reference to the most recent arms-length transaction basis of Tiger Pistol shares and subsequent Tiger Pistol’s financial performance
of the investee compared with budget.
3. The fair value of the financial liability (representing the Infoready earn-out) was estimated based on the excess of the EBITDA performance during the earn out
periods over the EBITDA threshold amount specified in the Share Purchase Agreement (SPA) for each of the earn out period multiplied by three. The earn out
periods start from 1 April to 31 March the following year until 31 March 2019. Significant unobservable inputs used in the determination of the financial liability
include forecast EBITDA performance for the first earn out period (1 April 2017 to 31 March 2018) and revenue and EBITDA growth rates for the second and third
earn out periods from the first earn out period. The fair value is determined using the discounted cash flow method.
As part of the retirement of the external drawn-down debt on 26 October 2020, the Group closed out its interest rate swap
arrangement. The Group recognised a net loss of $215,000 on the closure of the swap, after recycling the cumulative cash flow
hedge reserve movement from other comprehensive income to profit & loss.
The Group holds 603,205 shares in Tiger Pistol Pty Ltd. These shares have been accounted for as a financial asset and valued
by reference to the most recent arm’s length transaction of Tiger Pistol shares. A loss of $650,000 has been recorded during
the period.
There have been no transfers between Level 1, 2 and 3 during the period.
8283
Notes to the Financial Statements
Notes to the Financial Statements
25. Controlled entities
26. Disposal groups held for sale and discontinued operations
Investments in controlled entities are initially recognised at cost, being the fair value of the consideration given.
Following initial recognition, investments are measured at cost less any accumulated impairment losses.
The consolidated financial statements include the financial statements of Webcentral Group Limited and the subsidiaries
in the following table:
Name
ACN 063 963 039 Pty Ltd
Webcentral Pty Ltd
Netregistry Group Pty Ltd
Netregistry Pty Ltd
TPP Wholesale Pty Ltd
Planet Domain Pty Ltd
TPP Domains Pty Ltd
NetAlliance Pty Ltd
Ziphosting Pty Ltd
Uber Global Pty Ltd
Uber Australia E1 Pty Ltd
Uber Business Pty Ltd
Uber Enterprise Pty Ltd
ubergeek.com.au Pty Ltd
Uber Reseller Network Pty Ltd
Uber Wholesale Pty Ltd
Outware Systems Pty Ltd
InfoReady Pty Ltd
Web Marketing Experts Pty Ltd
Nothing But Web Pty Ltd
Arq Group Enterprise Pty Ltd
Netregistry Operations Pty Ltd
Netregistry Services Pty Ltd
Results First Limited
Domainz Ltd
Internet Names Worldwide (US), Inc
Melbourne IT GP Holdings Pty Ltd
Names By Request Pty Ltd
Advantate Pty Ltd
Country of
incorporation
Equity interest %
2021
2019
(a)
(a)
Australia
Australia
(a),(c)
Australia
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(b)
(b)
(b)
(a)
(a)
(a)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
USA
Australia
Australia
Australia
100
100
100
100
100
100
100
-
-
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(a) Investments in controlled entities are initial capital investments and are eliminated in the consolidated financial statements.
(b) Investments in foreign entities are revalued to the year-end foreign exchange spot rates.
(c) Netregistry Pty Ltd held a 50% interest in Netalliance Pty Ltd until disposal.
The Group classifies non-current assets and disposal
groups as held for sale if their carrying amounts will be
recovered principally through a sale transaction rather than
through continuing use. Non-current assets and disposal
groups classified as held for sale are measured at the lower
of their carrying amount and fair value, less costs to sell.
Costs to sell are the incremental costs directly attributable
to the disposal of an asset (disposal group), excluding
finance costs and income tax expense.
The criteria for held for sale classification is regarded as
met only when the sale is highly probable, and the asset
or disposal group is available for immediate sale in its
present condition. Actions required to complete the sale
should indicate that it is unlikely that significant changes
to the sale will be made or that the decision to sell will be
withdrawn. Management must be committed to the plan to
sell the asset and the sale expected to be completed within
one year from the date of the classification.
Property, plant and equipment and intangible assets are
not depreciated or amortised once classified as held for
sale. Assets and liabilities classified as held for sale are
presented separately as current items in the statement of
financial position.
(a) Sale of Arq Group Enterprise
Pty Limited
On 11 February 2020, the Company announced that it
had entered into a binding agreement to sell Arq Group
Enterprise Pty Limited to an entity owned by a consortium
comprising Quadrant Private Equity and certain members
of the Enterprise leadership team for $35,000,000 (less a
final payment of $5,979,000 that was due to the vendors of
InfoReady Pty Limited, which was acquired by the Company
in 2016) on a cash free, debt free basis. The net assets of
Arq Group Enterprise Pty Limited represents the Group’s
former Enterprise business. The sale included the rights
to the Arq brand. The sale completed on 2 March 2020 and
the net proceeds were used to reduce the amounts drawn
under the Group’s existing debt facilities. A transitional
services agreement was also entered into in connection
with the sale which has now been substantially completed.
Due to the significance of the operations, and financial
contribution, of the Enterprise business to the Group, the
results associated with the Enterprise business during
the 18 month period ended 30 June 2021, up until the
date of disposal (2 March 2020), has been presented as a
discontinued operation.
The amount of the adjusted transaction consideration
after finalisation of the completion accounts and the
net loss on disposal of Arq Group Enterprise Pty Ltd was
$1,565,000 recognised in profit and loss and presented
in the Statement of Comprehensive Income as part of
discontinued operations.
The major classes of assets and liabilities of Arq Group
Enterprise Pty Ltd (comprising the Enterprise business)
that was disposed on 2 March 2020 are as follows:
Notes
$’000
Assets
Trade and other receivables
Accrued revenue
Prepayments and other current assets
Plant and equipment
Intangible assets
Goodwill on acquisition
Deferred tax asset
Total assets disposed
Liabilities
Trade and other payables
Income received in advance
Provisions
Total liabilities directly associated with
assets disposed
Net assets disposed
10,052
4,668
621
490
2,889
20,469
1,008
40,197
(3,519)
(1,033)
(2,977)
(7,529)
32,668
8485
Notes to the Financial Statements
Notes to the Financial Statements
The results of the discontinued operations during the period
(up until the date of disposal) and for the comparative period
is presented below:
The net cash flows generated by the discontinued
operations are as follows:
30-Jun-21
31-Dec-19
18 months
12 months
$’000
$’000
12,781
86,167
(7,406)
5,375
(4,388)
-
(51,822)
34,345
(33,083)
(81,258)
987
(79,996)
(306)
(4,742)
(50)
631
(193)
438
(1,565)
-
(1,565)
(304)
(85,042)
(230)
(85,272)
-
-
-
(1,127)
(85,272)
Revenue from contracts with
customers
Cost of sales
Gross profit
Other operating expenses
Loss on revaluation of disposal group
net assets to fair value
Earnings before interest, tax,
depreciation and amortisation
Depreciation and amortisation
expense
Interest expense
Profit / (loss) before tax from
discontinued operations
Tax expense
Profit / (loss) after tax of
discontinued operations
Gain/(loss) on sale of the Enterprise
business
Attributable tax expense
Post-tax loss on the sale of
discontinued operations
Loss for the period from
discontinued operations
The net cash flows generated from the sale of Arq Group
Enterprise Pty Ltd are as follows:
30-Jun-21
31-Dec-19
18 months
12 months
$’000
$’000
Net cash (outflows) / inflows from
operating activities
Net cash outflows from investing
activities
(882)
-
9,166
(450)
Net cash flows
(882)
8,716
(b) Sale of Netalliance Pty Limited
On 20 November 2020, the Group sold its 50% interest in
Netalliance Pty Limited (“Netalliance”) to Trellian Pty Ltd
for $500,000 in cash consideration. Netalliance’s principal
operations relate to the purchase and resale or auction
of specific domain names that have expired but not
renewed (also known in the industry as the “drop catching”
of domain names). The sale comprises both the Group’s
interest in Netalliance, as well as Netalliance’s wholly owned
subsidiary, Ziphosting Pty Ltd.
During the current and prior reporting periods, Netalliance
contributed to less than 1% of the Group’s revenues and
underlying EBITDA. Therefore, the Group is not required
to separately present the results of Netalliance as a
discontinued operation for the current reporting period.
The Group recognised a gain of $384,000 on disposal of its
interest in the Netalliance business.
Details of the assets and liabilities disposed during the
reporting period associated with the Netalliance business
are presented below:
Notes
$’000
$’000
Proceeds from disposal of net assets
(investing activities)
Less: settlement of InfoReady earn-out
(financing activities)
Less: repayment of borrowings
(financing activities)
Less: payment of transaction costs
(incl. GST) (investing activities)
Net cash inflow
35,506
(5,979)
Assets
Cash and cash equivalents
Trade and other receivables
Prepayments and other current assets
21
(22,108)
Intangible assets
(3,950)
3,469
Deferred tax assets
Total assets disposed
Liabilities
Trade and other payables
Income received in advance
Total liabilities directly associated with assets
disposed
Net assets disposed
64
63
79
33
3
242
(3)
(8)
(11)
231
(c) Sale of TPP Wholesale Reseller
business
In the prior comparative period the Group completed the
sale of the TPP Wholesale Reseller business.
(d) Sale of equipment to 5G Networks
Assets held for sale of $87K as at 30 June 2021 consist of
IT assets to be transferred to 5G Networks at their written
down value.
27. Cash Flow Statement
information
Continuing and discontinued
operations1
30-Jun-20
18 months
$’000
31-Dec-19
12 months
$’000
Reconciliation of the operating profit
after tax to the net cash flow from
operations1:
Loss for the year
(63,049)
(131,223)
Depreciation of non-current assets
Amortisation of non-current assets
Loss on revaluation of disposal group
held for sale to fair value
Impairment of goodwill
(Credit writeback) / expense of share-
based payments
Transaction costs
Derecognition of deferred tax asset
Infoready contingent consideration
Proceeds from sale of the Enterprise
business
Unwinding of discount on other
financial liabilities
Reversal of Telstra income
Gain/Loss on sale of businesses
Leasing Impact AASB 16
Other income
Other expenses
9,870
2,598
9,774
5,505
-
81,258
33,000
(10)
-
-
-
-
41,123
(471)
2,016
2,666
577
(554)
9,096
784
(7,422)
(116)
(894)
Changes in assets and liabilities
Decrease/(Increase) in trade debtors
3,096
Decrease/(Increase) in prepayments
Decrease/(Increase) in current tax
receivables / liabilities
Decrease/(Increase) in provisions
662
886
967
Decrease/(Increase) in deferred tax asset
3,529
(Decrease)/Increase in deferred tax
liability
(6,226)
(3,931)
Continuing and discontinued
operations1
(Decrease)/Increase in accounts
payable
(Decrease)/Increase in income
received in advance
30-Jun-20
18 months
$’000
31-Dec-19
12 months
$’000
(2,290)
2,458
(3,101)
(2,359)
Decrease/(Increase) in other assets
1,240
(326)
Net cash flow from operating
activities
(16,870)
11,272
1
Included in net cash flow from operating activities are $9,166,000 (31
December 2019: $9,166,000) of net operating cash inflows related to
discontinued operations. Refer to Note D2 for further information.
Reconciliation of cash and cash equivalents
Cash and short-term deposits in the statement of financial
position comprise cash-at-bank and on-hand, and short-
term deposits with an original maturity of three months or
less.
For the purposes of the Statement of Cash Flows, cash and
cash equivalents comprise the following:
30-Jun-21
$’000
31-Dec-19
$’000
2,412
2,412
8,949
8,949
Cash and cash equivalents
on hand
Closing cash and cash
equivalents balances
28. Related party
disclosures
Controlled entities
510
55
Details relating to controlled entities are included in note 25.
-
-
-
(125)
24
3,318
1,538
(2,267)
639
1,577
Ultimate parent
The ultimate parent entity is 5G Networks Limited, an
Australian entity listed on the Australian Securities
Exchange (ASX: 5GN). 5G Networks Limited has an
ownership interest of 44.75% at 30 June 2021 (2019: nil).
The ultimate Australian parent entity in the wholly owned
Group is Webcentral Group Limited. During the year various
intercompany transactions were undertaken between
companies in the wholly owned Group. These transactions
were undertaken on a net-margin basis. The effects of
these transactions are fully eliminated on consolidation.
All intercompany balances, payable and receivable, are on
an arm's length basis with standard terms and conditions.
8687
Notes to the Financial Statements
Notes to the Financial Statements
Other related party transactions
During the year the group has conducted the following
related party transactions:
• Mr Tristan Sternson, the Group’s Interim CEO
(until 11 February 2020), was one of the previous
owners of Infoready Pty Ltd (Infoready) before its
acquisition by the Group. As part of the Share
Purchase Agreement (SPA) with the previous
owners of Infoready, three earn-out payments
have been agreed. For further details, please refer
to section 3(d) in the Remuneration Report and
note C5 in the financial statements. The Enterprise
business was sold on 2 March 2020 to a consortium
of buyers, of which Mr Tristan Sternson has a direct
interest in.
• A total of $1,686,745 (2019: nil) was paid to
5G Networks Limited for management fees,
managed IT services and network services during
the period. All transactions are carried at commercial
third-party rates.
• A total of $51,351 (2019: nil) was paid to Studio Inc.,
an entity related to Joe Demase, for the design of
marketing materials for the Group. All transactions
are carried at commercial third-party rates.
Key management personnel
compensation
29. Performance Rights and
Options
Long term incentive plans (LTIP)
In December 2020 the Group adopted a new LTIP or
Executive and Director Share Option Plan (ESOP) to
directors, executives and senior leaders of the Group. The
Group’s previous Executive LTI Plan and Executive STI Plan
(“LTI Plans”) were terminated and there are no outstanding
performance rights under either plan.
The key criteria for options issued under the LTIP during the
year are as follows:
• Performance Rights – achieve normalised annualised
EBITDA of at least $10 million.
• Options - completion of tenure periods of two years.
The Performance Rights and options will not give the holder
a legal or beneficial interest in ordinary fully paid shares in
the Company until those Performance Rights and options
vest. Prior to vesting, Performance Rights and options do
not carry a right to vote or receive dividends. When the
Performance Rights and options have vested, ordinary fully
paid shares will be allocated, and these shares will rank
equally with existing Company shares.
(a) Rights held at the beginning of the
reporting period
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
There were 169,156 rights held as at 1 January 2020 in
relation to the Group’s 2018 and 2017 LTI Plans.
Compensation of key management personnel
Short-term benefits
Post-employment benefits
Termination payments
Long-term benefits
Share-based payments
1,692
101
154
-
386
2,333
2,353
177
1,099
86
(495)
3,220
Detailed remuneration disclosures are provided in the
remuneration report on pages 31 to 37.
There were no other transactions with related parties
during the periods ended 30 June 2021 or 31 December
2019, other than detailed within the annual report.
(b) Movement of rights and options
during the reporting period
The following table summarises the movement in
performance rights and options issued during the year:
2021 Number
2019 Number
Outstanding at the beginning of
the year
169,156
1,185,303
Granted during the year
13,400,000
-
Vested during the year
-
(271,100)
Lapsed during the year
(169,156)
(745,047)
Outstanding at year end
13,400,000
169,156
(c) Rights and options vested during the reporting period
During the 18 months ended 30 June 2021 no rights were vested (2019: 271,100 rights).
(d) Rights and options lapsed during the reporting period
During the period, 169,156 rights lapsed (2019: 757,057) with a weighted average exercise price of Nil (2019: Nil) by employees
during the year in relation to the Group’s previous LTI Plans.
(e) Rights and options held at the end of the reporting period
The following table summarises information about performance rights and options held by Directors and employees as at
30 June 2021. None of the performance rights or options are exercisable at period end (2019: nil):
Issue Date and Type
Number
Grant date
Vesting date
Expiry date
2020 Performance Rights - Director
10,000,000
18/12/2020
-1
18/12/2025
2020 Options - Director
2,000,000
18/12/2020
18/12/2022
18/12/2025
2021 Options - Executive (1)
1,300,000
01/02/2021
01/02/2023
01/02/2026
2021 Options - Executive (2)
100,000
29/03/2021
29/03/2021
29/03/2026
1.
Vesting period is dependent on the achievement of normalised annualised EBITDA of at least $10 million.
13,400,000
Weighted
average
exercise price
$0.20
$0.20
$0.485
$0.485
$0.23
(f) Pricing model: LTI grants
The fair values of options granted were determined using a variation of the binomial option pricing model that takes into account
factors specific to the Executive Share Plan, such as the vesting period. The following principal assumptions were used in
the valuation:
The following table lists the inputs to the models used for the LTI Grants:
Share price
Dividend yield
Expected volatility
Risk-free interest rate
2020 Rights
2020 Options
2021 Options (1)
2021 Options (2)
$0.415
0%
73.4%
0.375%
$0.415
0%
73.4%
0.375%
$0.44
0%
73.4%
0.42%
$0.53
0%
73.4%
0.42%
The dividend yield is zero as the Group has not paid a dividend for the previous two reporting periods. The expected volatility was
determined using the group's average five-year share price. The risk-free rate is derived from the yield on Australian Government
Bonds of an appropriate term. The weighted average fair value of the performance rights and options granted during the year
was $0.30 (2019: Nil).
The total share based expense for the year was $404,000.
Key judgement and estimates
The fair value is determined by an external valuer using a binomial model and/or Monte Carlo simulation model. In valuing equity-
settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares
of Webcentral Group Limited.
8889
Notes to the Financial Statements
Notes to the Financial Statements
30. Auditors' remuneration
30-Jun-21
18 months
$
31-Dec-19
12 months
$
Amounts received or due and receivable by the auditors of
Webcentral Group Limited (2021: Grant Thornton; 2019: Ernst &
Young) for:
Audit or review of the statutory
financial report of Webcentral Group
Limited and its controlled subsidiaries
(Grant Thornton)
Audit or review of the statutory
financial report of Webcentral Group
Limited and its controlled subsidiaries
(Ernst & Young)
296,772
-
189,280
522,000
486,052
522,000
Other assurance and agreed-upon
procedure services under other
legislation or contractual arrangement
39,343
Other services in relation to Webcentral Group Limited and its
controlled subsidiaries
Taxation compliance and due diligence
services (Grant Thornton)
8,350
-
-
Taxation compliance and due diligence
services (Ernst & Young)
87,080
28,709
Digital advisory and implementation
-
129,986
Compliance (Grant Thornton)
1,500
-
136,273
158,695
622,325
680,695
31. Contingent assets
and liabilities
The Group is not aware of the existence of any contingent
assets at balance date.
The Group is subject to claims from time to time in the
ordinary course of business. There are currently no claims
of individual significance against the Group.
32. Events subsequent
to reporting date
On 15 July 2021 the Company issued 4,950,000 options
to Executives under the Company’s Executive and Share
Option Plan and 1,000,000 Options to a services provider as
consideration for consulting services.
On 16 July 2021, the Group entered into a Merger
Implementation Agreement with 5G Networks Limited
under which it is proposed they will merge by way of a
scheme of arrangement (Scheme). Under the Scheme,
Webcentral will acquire 100% of the ordinary shares in 5GN
and 5GN shareholders will receive 2 new Webcentral shares
for each 5GN share held. The Scheme is subject to several
conditions including 5GN shareholder approval, Court
approval in accordance with Part 5.1 of the Corporations
Act 2001, Webcentral shareholder approval of a reverse
takeover resolution under ASX Listing Rule 7.1 and the
acquisition of related party shares under ASX Listing
Rule 10.1, and the Independent Expert concluding that
the Scheme is in the best interests of 5GN shareholders.
The Scheme is expected to be implemented in late October
or early November 2021 if these conditions are met.
On 30 July 2021, the Group announced that it held 8.86%
of the ordinary shares in Cirrus Networks Holdings Limited
(ASX: CNW) and launched an on-market takeover bid
(“Takeover Bid” for Cirrus Networks Holdings Limited (ASX:
CNW) at an offer price of 3.2 cents per share. On the same
day, the Group received credit approval for a $10.5 million
debt facility with Commonwealth Bank of Australia for the
purpose of funding the Takeover Bid, and a Debt Facility
Amendment Deed was subsequently executed with CBA.
On 31 August 2021, 125,000 ordinary shares were issued at
$0.20 per share following the exercise of 125,000 options.
Other than the above, there has not been any other matter
or circumstance in the interval between the end of the
year and the date of this report that has materially affected
or may materially affect the operations of the Group, the
results of those operations or the state of affairs of the
Group in subsequent financial periods.
33. Information relating to
Webcentral Group Limited
(the Parent Entity)
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
12,226
68,960
69,636
100,096
96,566
597
(872)
11,879
186,487
175,517
195,604
91,179
1,067
(278)
(127,427)
(101,085)
(31,136)
(35,699)
(35,730)
(9,117)
(99,463)
(99,731)
Current assets
Total assets
Current liabilities
Total liabilities
Contributed equity
Share-based payments reserve
Other reserves
Retained earnings
Loss of the parent entity
Total comprehensive loss of the
parent entity
34. Closed group class order
disclosures
Entities subject to class order relief
Pursuant to Class Order 98/1418, Webcentral Group Limited,
Webcentral Group Pty Ltd, Webcentral Pty Ltd, Netregistry
Group Limited and its controlled entities, Uber Global Pty
Ltd and its controlled entities, InfoReady Pty Ltd, Outware
Systems Pty Ltd, Web Marketing Experts Pty Ltd and
Nothing But Web Pty Ltd have entered into a Deed of Cross
Guarantee. The effect of the deed is that Webcentral Group
Limited has guaranteed to pay any deficiency in the event
of winding up of any controlled entity, or if they do not
meet their obligations under the terms of overdrafts, loans,
leases or other liabilities subject to the guarantee. The
controlled entities have also given a similar guarantee in the
event that Webcentral Group Limited is wound up, or if it
does not meet its obligations under the terms of overdrafts,
loans, leases or other liabilities subject to the guarantee.
These entities form the Closed Group and are relieved
from the Corporations Act (2001) requirements for the
preparation, audit and lodgement of their financial reports.
The consolidated statement of comprehensive income of the
entities that are members of the Closed Group are as follows:
Closed Group
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
(715)
-
Net impairment losses on financial
assets
Gain on disposal of assets
(784)
554
Loss before tax
(66,660)
(47,259)
Income tax benefit/(expense)
2,490
(238)
Net loss for the period
(64,170)
(47,497)
Loss from discontinued operation,
net of tax
(1,127)
(85,272)
Net profit for the year
(65,297)
(132,769)
Retained earnings/(losses) at the
beginning of the period
Transfers into closed group
Adjustments on adoption of new
accounting standards
Dividends provided for or paid
(62,847)
73,252
68
-
-
1,225
911
(5,466)
Retained earnings/(losses) at the
end of the period
(128,076)
(62,847)
Closed Group
30-Jun-21
18 months
$’000
31-Dec-19
12 months
$’000
The consolidated statement of financial position of the
entities that are members of the Closed Group are as follows:
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Continuing operations
Revenue from contracts with
customers
84,472
80,959
Reversal of revenue from settlement
of customer dispute
(9,096)
-
Cost of sales
Gross profit
Other income
Gain/(loss) on reassessment of
contingent consideration liability
Salaries and employee benefits
expenses
Depreciation expenses
Amortisation of intangible assets
Other expenses
Finance costs
Transaction costs
Restructuring costs
(31,453)
(27,209)
43,923
53,750
7,289
-
1,277
98
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayment of domain name
registry charges
Lease receivable
(35,098)
(30,392)
Current tax receivables
Other assets
Assets held for sale
Total current assets
(9,870)
(2,598)
(7,026)
(3,511)
(21,407)
(12,458)
(5,749)
(5,804)
(5,930)
(2,259)
(2,721)
(365)
Impairment of goodwill
(33,000)
(41,123)
Closed Group
30-Jun-21
$’000
31-Dec-19
$’000
2,322
1,590
5,108
1,965
476
678
87
12,226
8,663
9,572
7,302
2,064
942
2,924
38,674
70,141
9091
Notes to the Financial Statements
Directors’ Declaration
(continued)
Non-current assets
Plant and equipment
Right-of-use asset
Intangible assets
Deferred tax assets
Lease receivable
Prepayment of domain name
registry charges
Non-current financial assets
Other assets
Closed Group
30-Jun-21
$’000
31-Dec-19
$’000
EQUITY
Closed Group
30-Jun-21
$’000
31-Dec-19
$’000
Contributed equity
96,566
91,178
Foreign currency translation reserve
Share-based payments reserve
Other reserves
Non-controlling interest
Retained earnings
TOTAL EQUITY
(336)
597
(536)
-
(309)
193
(278)
126
(127,427)
(62,847)
(31,136)
28,063
2,191
3,513
41,596
3,781
1,076
2,359
725
1,493
8,198
16,554
77,804
7,310
1,830
678
1,375
561
1.
In the Directors’ opinion:
The financial statements and notes of Webcentral Group Limited for the 18 months ended 30 June 2021 are in accordance
with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the Group's financial position as at 30 June 2021 and of its performance for the 18 months
ended on that date; and
complying with Australian Accounting Standards (Including the Australian Accounting Interpretations) and the
Corporations Regulations 2001; and
There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
2. The Directors have been given the declaration required by Section 295A of the Corporations Act 2001 from the Chief
Executive Officer and Chief Financial Officer for the 18 months ended 30 June 2021.
3. Note 2 confirms that the consolidated financial statements also comply with international financial reporting standards.
Signed in accordance with a resolution of the Directors made pursuant to section 303(5) of the Corporations Act 2001.
Total non-current assets
56,734
114,310
On behalf of the Board of Directors
Joe Demase
Managing Director
Melbourne, 13 September 2021
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Interest-bearing loans and
borrowings
Provisions
Current tax liabilities
Derivative financial instruments
Other financial liabilities
Income received in advance
Current lease liabilities
Liabilities directly associated with
assets held for sale
68,960
184,451
15,368
26,627
1,270
511
-
-
22,437
3,423
-
8,688
61,929
1,585
-
510
5,549
21,091
6,160
15,931
Total current liabilities
69,636
121,443
Non-current liabilities
Interest-bearing loans and
borrowings
Deferred tax liability
Provisions
Income received in advance
Non-current lease liabilities
15,000
-
1,323
2,535
8,551
3,051
7,549
3,187
11,237
12,972
Total non-current liabilities
30,460
34,945
TOTAL LIABILITIES
100,096
156,388
NET (LIABILITIES)/ASSETS
(31,136)
28,063
9293
Independent Auditors’ Report
Independent Auditors’ Report
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of Webcentral Group Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Webcentral Group Limited (the Group), which comprises the consolidated
statement of financial position as at 30 June 2021 the consolidated statement of profit or loss and other comprehensive
income, consolidated statement of changes in equity and consolidated statement of cash flows for the period then ended,
and notes to the consolidated financial statements, including a summary of significant accounting policies, and the
Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its performance for the period
ended on that date; and
b complying with International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB) 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Revenue recognition – Note 3
In the financial period ended 30 June 2021, the Group
recorded revenue of $78.3 million.
There is a risk of potential overstatement of revenue given
there is pressure placed on the performance of the Group
against market expectations.
The Group offers diverse products and services to its
customers that require different patterns of revenue
recognition due to varying contractual terms, which require the
identification of performance obligations and the determination
of how the Group satisfies those obligations.
This is a key audit matter due to the financial significance of
revenue to the consolidated statement of profit or loss and
other comprehensive and the judgement involved in
determining appropriate revenue recognition for these various
services.
Goodwill – Note 14
As at June 2021, Webcentral Group Limited's goodwill balance
is $38 million, which represents a significant portion of the
total assets.
Goodwill valuation is a significant risk due to the judgement
required by management in preparing a value in use model to
satisfy the impairment test as prescribed in AASB 136
Impairment of Assets. This includes forecasting of future cash
flows and applying an appropriate discount rate which
inherently involves a high degree of estimation and judgement
by management.
An impairment charge of $33 million was recorded in
December 2020. Management impaired goodwill as a
significant of the existing goodwill in 2019 related to previous
acquisitions that occurred when the Group still owned the
Enterprise Segment. Following disposal of this segment
Management deemed it appropriate to record an in
impairment charge and has identified the Group having only
one cash generating unit (“CGU”).
Our procedures included, amongst others:
(cid:120) Obtaining an understanding of the processes and controls
used by the Group in evaluating contracts under the five-
step model of AASB 15 Revenue from Contracts with
Customers;
(cid:120) Reviewing revenue recognition policies of individual
customer agreements and contractual arrangements to
ensure compliance with AASB 15;
(cid:120) Selecting a sample of revenue transactions to verify that
revenue was being recognised in accordance with revenue
recognition policies;
(cid:120) Analytically reviewing revenue streams against forecasts
and prior corresponding period to identify and assess
potential anomalies;
(cid:120) Testing the accuracy of deferred revenue recorded by the
Group during the period; and
(cid:120) Evaluating the disclosures in the financial statements for
appropriateness and consistency with accounting
standards.
Our procedures included, amongst others:
(cid:120) Assessing management’s determination of the Group
having one CGU based on the nature of the business and
the economic environment in which the units operate;
(cid:120) Reviewing the impairment model for compliance with AASB
136;
(cid:120) Assessing whether management has the requisite
expertise to prepare the impairment model;
(cid:120) Assessing the reasonableness and appropriateness of
inputs and assumptions to the model, with involvement of
our internal valuation specialist;
(cid:120) Evaluating management’s future cash flow forecasts and
obtain an understanding of the process by which they were
developed;
o Assessing management’s key assumptions for
reasonableness and obtaining available evidence to
support key assumptions;
o Considering the reasonableness of the revenue and
cost forecasts against current period actuals;
o Performing a sensitivity analysis on the key
assumptions; and
o Testing the underlying calculations for mathematical
accuracy of the model; and
(cid:120) Evaluating the disclosures in the financial statements for
appropriateness and consistency with accounting
standards.
9495
Independent Auditors’ Report
Independent Auditors’ Report
Information other than the financial report and auditor’s report thereon
Responsibilities
The Directors of the Group 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.
Grant Thornton Audit Pty Ltd
Chartered Accountants
M A Cunningham
Partner – Audit & Assurance
Melbourne, 13 September 2021
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the period ended 30 June 2021, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The Directors of the Group 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 Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: https://www.auasb.gov.au/auditors_responsibilites/ar1_2020.pdf. This description forms part of
our auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 31 to 37 of the Directors’ report for the period ended
30 June 2021.
In our opinion, the Remuneration Report of Webcentral Group Limited, for the period ended 30 June 2021 complies with
section 300A of the Corporations Act 2001.
9697
Shareholder information
Shareholder information
The shareholder information set out below was applicable
as at 2 September 2021.
Voting Rights
Webcentral Group Limited
The voting rights attached to each class of equity securities
are set out below:
Issued capital ordinary shares: 155,490,679 as at
2 September 2021.
Ordinary Shares
Substantial Shareholders
Substantial shareholders and the number of equity
securities in which it has an interest, as shown in the
Company’s register of Substantial Shareholders is:
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.
The Number and Class of Restricted Securities
Subject to Voluntary Escrow that are on Issue
Shares
%
Voluntary Escrow
There are no securities subject to Voluntary Escrow.
5G Networks Limited
69,231,266
44.56%
J D Management Pty Ltd and
Joseph Demase
11,764,706
7.58%
Total
80,995,972
52.14%
Distribution of Equity Shares
Ordinary Shares
Number Held
Number of Holders
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
544,877
2,928,890
2,979,675
15,163,199
100,001 – and over
133,874,038
Total
155,490,679
There were 882 unmarketable parcels as at
2 September 2021
1,123
1,154
391
503
94
3,265
The 20 Largest Holders of Each Class
of Quoted Equity Securities
5G NETWORKS LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
J D MANAGEMENT GROUP PTY LTD
CAPITAL H MANAGEMENT PTY LTD
ARKTREE NOMINEES PTY LTD
MR BERNARD WILLIAM LIVY & MRS DESMA LEA LIVY
THE TRUST COMPANY (AUSTRALIA) LIMITED
GANGI SERVICES PTY LTD
GIUSEPPE GANGI & DANIELA DONA
BUCWIT PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR CHRISTOPHER JOHN SHANNON
Ordinary Shares
69,524,461
12,228,472
11,764,706
2,750,000
2,512,438
1,930,000
1,675,051
1,470,588
1,470,588
1,411,764
1,177,535
1,111,320
MR GIANNI ANDREA VERROCCHI & MRS DEANNE JOSELYN VERROCCHI
1,000,000
BCMD PTY LTD
BRUCE ONE PTY LTD
GREENHOUSE PRODUCTIONS FIVE PTY LTD
THE DE VRIES FAMILY INVESTMENTS PTY LTD
NEVRAN PTY LTD
DYMONDO PTY LTD
FOUNTAIN PLASTICS AUSTRALIA PTY LTD
971,402
823,529
823,529
800,000
784,111
743,529
702,301
44.75%
7.86%
7.57%
1.77%
1.62%
1.24%
1.08%
0.95%
0.95%
0.91%
0.76%
0.71%
0.64%
0.62%
0.53%
0.53%
0.51%
0.50%
0.48%
0.45%
Total
115,675,324
74.39%
Unissued equity securities
Number of options issued: 21,225,000
Securities exchange
The Company is listed on the Australian Securities Exchange.
9899 Image Credits
Front Cover: Tim Douglas - www.pexels.com/@tim-douglas
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Page 6: Michael Wilson
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100 Webcentral Head Office
Level 7, 505 Little Collins Street,
Melbourne VIC 3000 Australia
102