2022 ANNUAL REPORT
Webcentral Limited and its controlled entities
FOR THE YEAR ENDED 30 JUNE 2022
Corporate Directory
Directors
Joseph Gangi (Non-Executive Chairman)
Joseph Demase (Managing Director)
Natalie Mactier (Non-Executive Director)
Jason Ashton (Non-Executive 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
ABN 21 073 716 793
Country of Incorporation
Australia
ASX Code: WCG
Company Domicile and Legal Form
Webcentral Limited is the parent entity
and an Australian Company limited by shares
Legal Advisors
Cornwalls
Level 4, 380 Collins 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.au
Contents
Corporate Directory
Chairman’s Address
Managing Director's Operational Report
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
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91
23
"With further improvements to
customer journey and support,
the successful launch of new
product bundles and a major
refresh of the Company ’s
digital marketing strategy."
The significant achievements in FY22 were shown
by the Company’s strong financial performance with
underlying EBITDA growth of 13.5% to $17.6M and
revenue growth of 5.5% to $97M for FY22.
The Board’s ongoing focus on capital management
and returns to shareholders was demonstrated
by the resumption of dividends to shareholders,
with the Company very pleased to announce a final
dividend of 0.5 cents per share for FY22 payable in
November 2022. The Company also completed an
unmarketable parcel share sale facility for small
shareholders during the year.
Looking forward to FY23, Webcentral is focused on
continued organic revenue growth and the ongoing
improvement of systems and processes to enhance
and simplify customer experience.
On behalf of the Board, I am extremely grateful
for the support of our shareholders, customers,
suppliers and business partners and thank our
Managing Director, staff and executives for their
outstanding achievements in FY22.
Yours sincerely,
Joe Gangi
Chairman
Chairman's Address
As Chairman of Webcentral, I am proud to
present to you the Annual Report for Financial
Year 2022. The successful merger of Webcentral
with 5G Networks Limited in November 2021
completed the integration of the two businesses,
creating the largest Australian owned digital
services business and operator of fibre networks,
cloud and data centres.
The merger brought together the resources and
strengths of Webcentral and 5G Networks with
the combined business focused on profitable
revenue growth. The benefits of the merger are
now being realised including integrated product and
marketing strategies, one highly motivated team and
simplified organisational structure, consolidation
onto 5GN’s cloud and network infrastructure, and
a consolidated equity and debt capital base and
associated corporate cost synergies.
Webcentral has made significant progress in FY22
building on the transformation of the business in
FY21 with further improvements to customer journey
and support, the successful launch of new product
bundles and a major refresh of the Company’s
digital marketing strategy, and continued platform
and system improvements to improve customer
experience and improve efficiencies.
The Company’s continued focus during the year on
simplifying the customer journey and purchasing
process included website cart development, process
automation and customer self-service options
and other innovations such as customer chatbots.
These improvements have resulted in increased
customer engagement and retention as evidenced
by customer satisfaction metrics including Net
Promoter Score (NPS) and customer reviews and
ratings on third party customer review websites.
Most pleasing has been the return to profitable
organic revenue growth following the relaunch of
the Company’s digital marketing strategy across the
Company’s brands including Webcentral, Melbourne
IT Corporate and 5G Networks. This strategy was the
cornerstone of the successful launch of the new .au
domain in March 2022.
45 Managing Director’s Report
As Managing Director of Webcentral, I am proud
to present our Annual Report on the business
operations for Financial Year 2022.
This year has been transformational for Webcentral
with the successful integration of the business with
5G Networks following the merger of the companies
in November 2021, a return to profitable revenue
growth following the implementation of strategic
marketing initiatives including new products
and the launch of .au, and continued customer
service improvements and simplification of
business processes.
In early 2022 a multi-channel marketing initiative
was implemented across online and digital, radio
advertising and the strategic St Kilda Football Club
sponsorship, delivering a significant increase in
brand awareness and online traffic.
This initiative was the cornerstone of the successful
.au domain launch in late-March 2022 resulting in
10% of eligible Webcentral customers registering
their new .au in the first three months, generating
more than $1.2M of sales. These marketing
initiatives have also resulted in an uplift in
new customers, growing by over 12%.
The continued simplification and bundling of
product offerings resulted in significant organic
growth including the 250% uplift in new hosting
customers from bundling with new domain name
registrations. We have seen hosting products grow
from 6% of domain sales to 25%, the refresh of our
hosting products and communication strategy have
led to this significant uplift.
Significant progress has also been achieved in
5G Networks with the successful launch of new
products including Cloudport and the ongoing
automation of customer portals, the launch of
the Dark Fibre product connecting over 50 Data
centres in Sydney, Melbourne, Brisbane and Adelaide
coupled with simplification of the customer journey.
Continued work on the strategic business
transformation programs initiated in 2021 to simplify
and automate customer interactions have led to
further customer service improvements efficiencies
and have delivered Webcentral’s highest ever
customer satisfaction ratings, with more than 95%
of customers satisfied after contacting our care
team. These strategic programs are critical to our
ongoing success and will continue to underpin the
sustained achievement of profitable revenue growth.
As the largest Australian based online service
provider, Webcentral continues to invest in our
onshore customer care team with more than
70 people in Melbourne, Sydney, Brisbane and
Townsville. further enhancing the customer
experience.
Webcentral’s strong financial performance in
FY22 reflects the successful strategic initiatives
implemented during the year, the merger and
integration benefits realised and continued focus on
cost management, with underlying EBITDA growth
of 13.5% to $17.6M achieved in FY22.
Strong organic revenue growth was achieved in
domains, email and hosting services delivering
overall revenue growth for the company of 5.5% to
$97M for FY22. Operating cashflows significantly
improved in the second half of FY22 on the back
of this revenue growth with underlying operating
cashflows of $8.5M for FY22.
In conclusion, I am very excited about the future
for Webcentral. 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
commitment and hard work, and our shareholders
who continue to back our strategy and enjoy the
exciting ride we are on.
Yours sincerely,
Joe Demase
Managing Director
67 "We’re unashamedly Australian,
offering local support and
infrastructure to local customers."
An Aussie Brand for Aussie Customers
Webcentral is an Australian owned digital services
company and a leading provider of cloud enabling
solutions offering businesses a full product suite
of innovative and scalable digital services across
Australia and New Zealand.
Webcentral services more than 330,000 small and
medium businesses (SMB) and 2,500 Enterprise,
Wholesale and Government customers, empowering
them to grow and thrive in the online world.
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.
Webcentral currently owns and operates its own
Nationwide highspeed Data Network with points
of presence in all major Australian capital cities.
In addition, the Company offers managed cloud
solutions through its Cloud and Data Centre
capabilities as well as managed services to optimise
customers’ IT and network environments. Supporting
this is the Company’s combined rack capacity of
over 1,000 racks through its owned and operated
Data Centres across Melbourne, Sydney, Brisbane
and Adelaide.
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 and the
5G Networks brand established in 2017.
The Webcentral mission is dedicated to leading
online success for our customers. We achieve this
by building trusted and valued client relationships
which convert successful business outcomes at each
milestone across the customers’ digital journey.
Webcentral is proudly Australian as one of the first
domain and hosting providers established in 1997
combined with the 5G Networks business established
in Melbourne in 2017.
Webcentral’s Australian contact centre teams are
based in Melbourne, Sydney, Brisbane and Townsville
and are available 24 hours a day, 7 days a week to meet
the needs of our valuable customers.
Our data centres are located in inner-city and
suburban locations in Melbourne, Sydney, Adelaide
and Brisbane, providing quick and convenient access
for our Enterprise, Government and Wholesale
customers.
We’re unashamedly Australian, offering local support
and infrastructure to local customers.
"Our customer
"Our customer
focussed heritage
focussed heritage
has been built
has been built
on expertise,
on expertise,
innovation and
innovation and
personalised
personalised
service."
service."
89 "We work with our customers
to realise their business
ideas and help them optimise
every opportunity within
the online space."
Oliver Thompson – Account Manager
Customer Centric Focus
Significant improvement in customer ratings since 2020
75
50
25
0
-25
-50
-75
75
50
25
0
-25
-50
-75
25
20
25
22
24
21
20
22
24
29
31
30
27
29
26
28
42
35
47
39
41
44
48
48
51
47
57
53
58
53
43
48
48
49
54
52
29
43
41
33
32
39
2017
2018
2019
2020
2021
2022
25
24
22
22
17
25
28
21
54
52
51
63
63
61
60
51
44
39
34
34
36
44
39
35
49
50
58
58
52
42
40
32
40
45
46
35
42
22
28
20
22
17
2017
2018
2019
2020
2021
2022
* Melbourne IT
Continued customer service improvements
Webcentral has continued to invest in its onshore Customer Care team:
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
70+
More than 70 onshore
support staff in our
Customer Care teams
95%
of customers are
satisfied after speaking
to a member of our
offline sales team*
1011 Webcentral in the Community
Webcentral is committed to making sustainability
a key priority across all of its operations.
Social Initiatives
Webcentral is committed to giving back to the
community.
Webcentral’s Managing Director, Joe Demase, is
passionate about supporting the vulnerable youth
in Australia and giving them the opportunity to
succeed. He has had a longstanding relationship
with the Lighthouse Foundation and has taken his
passion with him to Webcentral. The Lighthouse
Foundation provides homes and therapeutic care
programs to children and young people impacted
by long-term neglect, abuse and homelessness.
Through Joe’s careful guidance, Webcentral
continues to provide support to the Lighthouse
Foundation. Webcentral supplies laptops and
provides free internet access to young people living
in Lighthouse Foundation homes, and also provides
job opportunities to Lighthouse Foundation youth to
work in customer care roles across the business.
In addition, Webcentral employees are passionate
about giving time and money to address the many
issues that face our world today. To support
employees’ passion for giving, Webcentral matches
employee donations of time and money to non-profit
organisations. Webcentral has matched funds raised
by its employees for the Beach2Beach fundraising
event for children with San Filippo syndrome and
supported several employees participating in Dry
July, an initiative encouraging people to go alcohol-
free in July to raise funds for people affected
by cancer.
Webcentral’s strategic partnership with the St Kilda
Football Club includes its ongoing support of the
Danny Frawley Centre for Health and Wellbeing.
The Centre aims to lead the national conversation
on mental health and create a sustainable
fundraising platform to help grow a resilient and
thriving community to achieve better mental health
outcomes. In support of the Centre, Webcentral
donated 100% of the proceeds from the sale of .au
domain registrations associated with the Spud’s
Lunch event.
Webcentral has also supported AFL House by
refurbishing and donating surplus IT equipment
for students.
Fostering diversity and inclusion
Webcentral recognises that women are
underrepresented in the technology industry.
To address the issue of underrepresentation of
women in technology, Webcentral implemented the
Women in Technology and Women Rising programs.
Natalie Mactier, a Director of the Board of Webcentral
and the Chair of the Audit and Risk Committee
recently convened the inaugural Women in
Technology event. This event gathers together more
than 70 women across the Company’s operations
to network with one another, exchange ideas, raise
any concerns they have and listen to inspiring and
influential keynote speakers.
Webcentral also sponsors the participation
of employees in the Women Rising program, a
leadership development course overseen by
Microsoft for women to equip them with the tools
they need to rise through the ranks and succeed in
the technology industry.
Flexible and safe workplaces
Webcentral recognises that there is no one-size-
fits-all solution to the way we work. As such, it
has been responsive to the constantly changing
landscape of the modern workplace as a result
of the COVID-19 pandemic. To meet the changing
realities of the modern-day working environment,
Webcentral has established work-from-home policy
to provide further and ongoing flexibility to all of its
employees. Each team is allocated onsite days that
require employees of those teams to attend office in
person, otherwise employees have the flexibility to
work from home.
In addition, Webcentral’s data centres are certified
to ISO45001 Standards for the Work Health and
Safety Management System.
"Webcentral is proud of its
contributions to the communities
in which we operate and will
continue to develop partnerships
with important community
organisations"
– Joe Demase, Managing Director
Environmental Initiatives
Webcentral’s operations have potential impact on
the environment in a number of ways. The most
significant of these is climate change. Webcentral
recognises that it is a significant consumer of
electricity, particularly through its data centre
operations, and is actively seeking ways to reduce
its power consumption.
Webcentral’s Kidman Park Data Centre, Sydney Data
Centre and Melbourne Data Centre are ISO 14001
certified data centres. ISO 14001 is an internationally
recognised standard that sets out the criteria for
an environmental management system. Being ISO
14001 certified at these three data centres means
that Webcentral has systems in place to ensure
that it can constantly identify, manage, monitor
and control environmental issues so as to improve
its environmental impact. ISO 14001 accreditation
also helps Webcentral improve its environmental
performance at these data centres through more
efficient use of resources and reduction of waste.
Webcentral recently upgraded 5 of its Computer
Room Airconditioning (CRAC) Units at its Sydney
Data Centre (SDC). These CRAC Units were replaced
with state-of-the-art Electronically Commutated
(EC) fans. The main benefits of these new EC
fans are that they are highly efficient and have an
extended service life.
The Company is also in the process of installing
a new cold aisle containment system at its North
Sydney Data Centre (NSDC). Introducing a new cold
aisle containment system at NSDC means that hot
and cold airstreams are separated and prevents the
mixing of both kinds of air streams. The containment
of cold air within the aisles will provide significant
energy savings over the original traditional
uncontained configuration of the NSDC.
These initiatives will significantly improve the
Company’s energy efficiency at these data centres.
Webcentral is also a significant consumer of IT
equipment and is responsible for the disposal of a
significant amount of obsolete equipment each year.
At all locations and facilities operated by Webcentral
we have implemented processes to recycle
obsolete equipment through appropriate e-waste
disposal services.
In addition, Webcentral is conscious of minimising
the environmental impact of its office spaces across
the country. Webcentral’s offices in Brisbane and
Melbourne are housed in state-of-the-art buildings
with high National Australian Build Environment
Ratings System (NABERS) ratings.
vv1213 Global Network Connectivity and Data Centres
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.
Our customers are also increasingly aware of the
significant risks associated with growing online
services such as data security. Our merger with
5G Networks provided 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.
“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
Global Points of
Presence (PoPs)
Webcentral / 5GN has deployed
global network infrastructure with
an ever-increasing list of on-net data
centres and PoPs. Our infrastructure
is located in major Australian
metropolitan areas and extends to
Singapore, New Zealand, Japan and
the United States. Once connected to
this network, a customer can create
virtual network connections to any
PoP and its connected services.
Tokyo
Brisbane
Los Angeles
Dallas
Singapore
Perth
Adelaide
Melbourne
Auckland
Sydney
5GN CloudPort provides scalable connectivity between multiple data centres, clouds and network environments.
CloudPort enables the creation of private point-to-point connectivity by utilising 5GN’s state-of-the-art Ethernet
fabric network between a customer connected on any of 5GN’s Points of Prescence (POPs) and a host of Data
Centres, 5GN private cloud, multiple public clouds and other services.
JAPANNEW ZEALANDAUSTRALIASINGAPOREUNITED STATESAUSTRALIAAUSTRALIAAUSTRALIAUNITED STATESAUSTRALIA1415 Cloud
Domains
Email
Hosting
Digital
Marketing
Web
Hosting
A Complete Array of Products and Services
for Your Business Journey
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 .au, .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.
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.
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.
1617 Managed
Services
Data
Networks
Data Centre
Hardware and
Software
Cloud
Data Centres and Cloud
The 5GN Cloud solution seamlessly combines private
cloud, public cloud and national data centres, or-
chestrated and governed from a single management
platform. 5GN Cloud is a multi-cloud ecosystem
that seamlessly integrates globally recognised
hyper-scalers such as Alibaba, AWS and Azure
with high speed connectivity and market leading
data centres.
Locally hosted in the 5GN data centres across
Sydney, Melbourne, Brisbane and Adelaide, the
solution creates simplicity, flexibility and control
for organisations seeking to optimise cloud tech-
nologies for modernising existing infrastructure
or updating legacy digital operations.
The 5GN Cloud Federation offers customer choice
and the flexibility to deploy workloads across
multi-cloud architectures. Public and private clouds
are easily managed in combination with data centres
and networks, enabling you to deploy workloads
across any of the platforms within the federated
marketplace.
5GN’s five data centres are located in critical capital
city locations in Sydney, Melbourne, Brisbane
and Adelaide and are built as true Tier 3 N+2
facilities, coupled with ISO accreditation and 24/7
onsite security to meet the highest uptime and
performance standards.
Data Networks
A range of secure data network solutions are offered
in Australia and international locations in Singapore,
Japan, New Zealand and the United States to
including 5GN’s CloudPort solution and Dark Fibre
service.
CloudPort provides scalable connectivity between
multiple data centres, clouds and network environ-
ments and enables the creation of private point-to-
point connectivity by utilising 5GN’s state-of-the-
art Ethernet fabric network between a customer
connected on any of 5GN’s Points of Prescence
(POPs) and a host of Data Centres, 5GN private cloud,
multiple public clouds and other services.
5GN Dark Fibre service provides a dedicated fibre
pair to each customer which they can use and
manage entirely, offering connectivity to over 80
Data Centres in major metro areas with bandwidth
scalability and route diversity.
Managed Services
Solutions which optimise our customers’ ICT
environments to accelerate the future opportuni-
ties presented by digital transformation through
strategic consulting, hybrid IT, migration services
and 24/7 dedicated Australian based service
management and support.
Webcentral offers a range of Managed Services
which empower its customers on their digital
journey and unlock the success of their business.
These services assist in developing, implementing
and managing customers’ IT strategies and including
consulting services, embedded support teams with
dedicated on-site resources and expert business
application support.
End to end service management for data networks,
cloud and data centre services assists in the opti-
misation of customers’ technology and platforms,
supporting their critical internal systems and
processes with onsite and remote service
management, combined with Australian based
24/7 technical support teams. Digital platform
& service monitoring services ensure optimal
business performance and business continuity
through dedicated support teams and committed
service levels.
Tailored business solutions can be implemented for
any project or business requirement including the
installation and maintenance of complex hardware
and software solutions.
1819 Kick the .com
Kick the .com
goodbye
goodbye
. c o m
yourbusiness .au
. c o m
yourbusiness .au
The home of .au
The home of .au
Have you got your ?
.au
AUsome launch of .au
Cut out flap
The new .au top level domain name was released
in late March 2022 by auDA, the Australian domain
administrator. The launch of .au has been a huge
success for Webcentral with 10% of eligible
Webcentral customers registering their new .au
domain name in the first three months after release.
For the period to June 2022 nearly 25,000 new .au
domains were registered generating $1.22 million
in sales.
In addition 12% of .au registrations were new
customers to Webcentral helping to increase
Webcentral’s domains market share.
A significant revenue opportunity remains with over
200,000 existing Webcentral customers still eligible
to register their new .au domain.
The .au launch was led by a multi channel marketing
approach across digital, radio advertising and the
strategic sponsorship agreement with the St Kilda
Football Club, delivering a significant increase in
brand awareness and online traffic.
Many Webcentral customers are already
experiencing the benefits of their .au including:
∙ Stronger cyber security for their business and
protection of their customer base from cyber
attacks and cybercriminals – indeed the the
Australian Cyber Security Centre recommends all
Australian businesses register their .au domain
immediately to protect their customers and their
business
∙ Better search engine optimisation (SEO) results
and more users directed to their websites
∙ Great ecommerce conversion rates and online
sales transactions
∙ A shorter, more concise domain
∙ Highlighting their Australian presence
Webcentral has itself experienced the strong
benefits of moving to .au with a 30% increase in
Google Page 1 rankings, 15% more website users,
a 41% increase in ecommerce conversion rates
and 32% greater online sales transactions.
SINCE THE LAUNCH OF WEBCENTRAL.AU
25,000+
.au domains
sold1
$1.2M
sales1
15%
32%
41%
New Users on
our website
Increase in
transactions
Ecommerce
conversions rate
1. To 30 June 2022
2021 RESILIENCE
Our People
HONESTY
COLLABORATION
INTEGRITY
ACCOUNTABILITY
RESPECT
Making a difference
Making a difference
everyday
everyday
Webcentral is a dynamic place for passionate people committed
to supporting and growing our customers’ businesses across
small and medium business, enterprise and government.
Our values are key to the commitment to service excellence by our people
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.
2223 “ Our people continuously strive
to collaborate and work as one
to make a difference to our
customers every day to drive
their success.“
Steve Marchese, Head of People & Culture
Board Members
Managing Director
Chairman
Joe comes from a background in building a host of
successful businesses, including the completion of
two ASX listings in the telecommunications sector.
Joe has been Managing Director of Webcentral
since October 2020. 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.
Joe has over 30 years’ experience in corporate management
and governance and has been an independent director of
Webcentral since October 2020. Joe is a Non-Executive
Director of Assisi Aged Care, a member of the Industry
Advisory Committee to the Faculty of Chemical and
Environmental Engineering at RMIT University and an active
advisor to several private sector boards. He also provides
consulting services to the Local Government sector. 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
Gangi
Non-Executive Director
Non-Executive Director
Joe
Demase
Natalie
Mactier
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. Natalie has
been an independent director of Webcentral since
October 2020.
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 5G Networks Limited,
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.
Glen
Dymond
Jason has deep knowledge and experience in the
IT and Telecommunications industries. Jason was
co-founder (1993) and Managing Director of leading
ISP Magna Data which was acquired in 1999. Jason
was also co-founder (2002) of ASX listed BigAir
Group Limited and was its Chief Executive Officer
from 2006 until its acquisition by Superloop
Limited in 2016 (ASX: SLC). Jason served as an
Executive Director at Superloop from 2016 to 2018
prior to joining the Board of 5G Networks Limited
in 2019. Jason has been an independent director
of Webcentral since November 2021.
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 a partner in the Melbourne
office of Cornwalls Lawyers.
Jason
Ashton
Michael
Wilton
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.
Our team is supported by a highly competent and
talented Board and Executive Team with a broad range
of experience in technology, telecommunications and
IT businesses, leading and guiding the Webcentral
business through a period of enormous change
and improvement.
Executive Team
By embracing the company's core 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. Throughout the company's
transformation journey over the last few years, our
people, our processes and our business has become
more resilient.
Chief Operating Officer
Sales Director
John has over 30 years of industry experience,
including several executive roles within
telecommunications, managed services and
networking companies. Previously John was
the General Manager for Service Assurance and
Operations at nbnCo, where he was responsible for
the transformation and restoration of nbn customer
services nationally. Prior to that he was Head of
Operations for Macquarie Cloud Services.
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.
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.
Marco
Mattiuzzo
Joel
Bruce
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.
Executive National Field Manager
Joel has over 20 years’ experience in the ICT industry,
with a strong background in providing IT support
and consulting services to some of Australia’s
largest organisations. A significant proportion
of Joel’s career has been dedicated to managing
large technical teams to ensure customers achieve
successful business outcomes through the use of
digital technology.
John
Stevens
Chris
Demase
Steve
Marchese
2425 Directors' Report
Your Directors submit their report for the year ended
30 June 2022.
Directors were in office for the entire period unless
otherwise stated.
Directors
Mr. J. Gangi
Mr. J. Demase
Ms. N. Mactier
Mr. J. Ashton - appointed 24 November 2021
Chief Executive Officer
Mr. J. Demase
Chief Financial Officer
Mr. G. Dymond
Chief Operating Officer
Mr. J. Stevens – appointed 1 November 2021
Company Secretaries
Mr. M. Wilton
Mr. G. Dymond
Details of Directors'
experience, expertise
and directorships
Details of Directors in office during the period are
presented below:
Joe Gangi
Non-Executive Director and Chair
Member of the Audit & Risk Committee and Member of the
Nomination & Remuneration Committee
Experience and Expertise
Mr Gangi has over 30 years’ experience in corporate
management and governance and has been an independent
director of the Company since October 2020. He is a
member of the RMIT University, Engineering Faculty,
Industry Advisory Committee and is an active advisor to
several private sector boards. He also provides consulting
services to the Local Government sector.
His expertise lies in business management and leadership
with a focus on business sustainability, growth and
development, strategic and client relationship management
and risk management. Joe’s business management skills
are underpinned by the management of several business
units across the Asia Pacific region in the professional
engineering services sector while his technical experience
is demonstrated by the successful delivery of several
industrial manufacturing projects.
Other Current Directorships
• Assisi Aged Care
Previous Directorships In Last Three Years
• 5G Networks Limited
Natalie Mactier
Non-Executive Director
Chair of the Audit & Risk Committee and Member of the
Nomination & Remuneration 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 EdTech software organisation
helping drive student engagement and build teacher
capacity globally.
Other Current Listed Company Directorships
• Nil
Former Listed Company Directorships In Last Three Years
• Nil
Joe Demase
Managing Director & CEO
Member of the Audit & Risk Committee and Member of the
Nomination & Remuneration 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
• Powerhouse Ventures Limited
Former Listed Company Directorships In Last Three Years
• 5G Networks Limited
Jason Ashton
Non-Executive Director
Appointed 24 November 2021
Member of the Audit & Risk Committee and Chair of the
Nomination & Remuneration Committee
Experience and Expertise
Mr Ashton has deep knowledge and experience in the IT
and Telecommunications industries. Jason was co-founder
(1993) and Managing Director of leading ISP Magna Data
which was acquired in 1999. Jason was also co-founder
(2002) of ASX listed BigAir Group Limited and was its
Chief Executive Officer from 2006 until its acquisition by
Superloop Limited in 2016 (ASX: SLC). Jason Ashton served
as an Executive Director at Superloop from 2016 to 2018
prior to joining the Board of 5G Networks Limited in 2019.
2726
Directors’ Report
Directors’ Report
Other Current Listed Company Directorships
• Nil
Former Listed Company Directorships In Last Three Years
• 5G Networks Limited
Company Secretaries
Mr Glen Dymond
Company Secretary since 2020
Mr Dymond 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. Mr Dymond’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.
Mr Michael Wilton
Company Secretary since 2020
Mr Wilton has a wealth of domestic and international
experience, spanning across mergers and acquisitions
and equity capital market strategies, most recently as a
partner at Cornwalls and Norton Rose Fulbright prior to
that. His expertise includes public company takeovers,
private treaty sales and acquisitions, joint ventures and
corporate reconstructions. His ECM experience includes
a number of IPOs and many secondary capital raisings for
ASX listed companies. In the IT and Telecommunications
sector, Michael has worked with the Commonwealth
Government on a number of major transactions including
the Telstra privatisation and the State of Victoria where
he was engaged in a number of large government IT and
Telecommunications projects.
Principal activities
The Group’s principal activities during the year were:
• the supply of cloud-based solutions, managed services
and network services
• the operation of fibre and wireless infrastructure and
management of cloud computing environment
• the operation of data centre facilities
• the supply of 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
There have been no significant changes in the nature of
these activities.
Review and results of
operations
12 months ended
30-Jun-22
$’000
30-Jun-21
$’000
93,428
17,561
87,089
15,466
CONTINUING
OPERATIONS
Total revenue from
contracts with customers
Underlying EBITDA(1) from
Continuing Operations
1. Refer section below – Management performance measures – underlying EBITDA
A review of the operations of the Group during the period and
the results of those operations found that the revenue and
other income for the period was $96.73 million, consisting
of revenue of $93.43 million and other income of $3.3 million
and representing growth of 5.5% compared to the prior
comparative period of $91.69 million. The loss of the Group
for the period after providing for income tax amounted
to $24.74 million (2021: $5.86 million loss). The underlying
EBITDA of the Group for the period of $17.6 million was 13.5%
higher than the prior comparative period of $15.46 million,
after adjusting for non-operating items including a non-cash
goodwill impairment expense of $11.49 million, share-based
payments expense of $8.83 million, restructuring costs of
$3.71 million in relation to the merger between the Group and
5G Networks Limited (5GN) and other non-recurring items,
and acquisition costs of $0.90 million.
The goodwill impairment charge has arisen due to the
assessment of the carrying value of goodwill and intangible
assets at year-end. The non-cash impairment expense
recognises the uncertainty caused by the COVID-19
pandemic and the potential impacts to the Group's revenue
and operating results. The non-cash impairment charge
has no impact on the Group's debt facilities, covenants
or liquidity.
The share-based payments expense was significantly higher
than the prior comparative period as they represent costs
for two listed companies for a portion of the year and due to
the accelerated vesting of performance rights and options
and the cancellation of options pursuant to the merger
between the Group and 5GN during the period. The ongoing
annual share-based payments expense is expected to be
significantly lower at approximately $1.5 million.
The key strategic and growth highlights for the year ended
30 June 2022 were as follows:
• Organic growth initiatives including the launch of the
new .au domain name generating more than $1.2 million
in sales, the successful launch of hosting products in
April 2022 and the continued development of other new
product releases
• A multi-channel marketing initiative was implemented
across online and digital, radio advertising and the
strategic St Kilda Football Club sponsorship, delivering a
significant increase in brand awareness and online traffic
• Ongoing automation of customer portals, the launch of
the Dark Fibre product connecting over 50 Data centres
in Sydney, Melbourne, Brisbane and Adelaide coupled with
simplification of the customer journey
• Improved customer retention from focus on customer
service improvement including the introduction of
website chatbots and simplifying the customer journey,
together with improved systems and billing processes
• Customer value increase with ARPU growth achieved
compared to the prior comparative period
• Strong wholesale and enterprise customer growth with
more than $4.0 million sales in FY22
• Significant improvement to customer satisfaction and
net promoter scores
• Continued fibre network rollout with more than 100
kilometres rolled out and more than 50 data centres
connected
• Completion of integration and merger with 5G Networks
Limited in November 2021
• Strategic acquisition of 18.5% of Cirrus Networks
Holdings
The key financial highlights for the year ended 30 June 2022
included:
• Underlying EBITDA of $17.6 million was 13.5% higher
than the prior comparative period, after adjusting for
non-operating items including a non-cash goodwill
impairment expense of $11.49 million, share-based
payments expense of $8.83 million, restructuring costs of
$3.71 million in relation to the merger between the Group
and 5GN, and acquisition costs of $0.90 million
• Cost reductions due to initiatives to reduce third party
data centre, cloud and network costs, labour cost
efficiencies from customer service improvements and
other automation synergies, and overhead cost savings
following the merger with 5GN
• Significant reduction in property lease costs from the exit
of surplus office space
• Revenue of $96.73 million, representing growth of 5.5%
compared to the prior comparative period
• Growth in average revenue per customer
• Strong capital position with $5.4 million cash and
$10.8 million of available debt at 30 June 2022 of which
$10.5 million is for the purpose of business acquisitions.
Management performance
measures – underlying
EBITDA
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:
12 months ended
30-Jun-22
$’000
30-Jun-21
$’000
(24,382)
13,630
8,833
2,798
904
3,706
12,072
(5,545)
12,188
2,874
2,027
2,207
1,715
-
CONTINUING
OPERATIONS
(Loss) / Profit before tax
Depreciation and
amortisation expense
Share based expenses
Finance costs
(excl. bank charges
and merchant fees)
Acquisition costs
Restructuring costs
Impairment of financial
assets and goodwill
Underlying EBITDA
17,561
15,466
Merger with 5G Networks
Limited
On 16 July 2021, the Company announced that it had
entered into a Merger Implementation Agreement
(MIA) with 5G Networks Limited (5GN) under which it
was proposed that the two companies merge by way
of a scheme of arrangement (Scheme), subject to 5GN
shareholder approval and court approval in accordance
with Part 5.1 of the Corporations Act 2001.
On 12 November 2021, the merger (Merger) between 5GN
and the Company was effected by way of scheme of
arrangement between 5GN and its shareholders, with each
5GN shareholder receiving two new Webcentral shares for
each 5GN share held. The record date was 16 November
2021, the new Webcentral shares were allotted on 23
November 2021 and all 5GN shares were transferred to
Webcentral on the same day. From this date 5GN has
been a wholly-owned subsidiary of the Company. 5GN was
suspended from trading on ASX on 12 November 2021 and
subsequently delisted from ASX on 25 November 2021.
The shares in the Company held by 5GN were subsequently
cancelled via a selective reduction of capital in January
2022 following shareholder approval at the Company’s 2021
Annual General Meeting held on 21 December 2021.
2829 Directors’ Report
Directors’ Report
Prior to the Merger, 5GN controlled the Group for the
purposes of AASB 10: Consolidated Financial Statements
and accounted for the acquisition of Webcentral under
AASB 3: Business Combinations, conducting acquisition
accounting for the period ended 30 June 2021.
Following the Merger, 5GN shareholders hold approximately
73% of the Company’s ordinary shares and therefore
continue to control the Group. In the company’s judgement,
the continuation of existing accounting values is consistent
with the accounting which would have occurred if the
assets and liabilities had already been in structure
suitable to the Merger, and most appropriately reflects
the substance of the internal restructure.
Accordingly the consolidated financial report of Webcentral
Limited (the accounting acquiree, being the Company)
for the period ended 30 June 2022 has been presented
as a continuation of the pre-existing accounting values
of assets and liabilities in the 5G Networks Limited (the
accounting acquirer) consolidated financial statements
and includes the financial results for the consolidated group
under 5G Networks Limited for the period from 1 July 2021
to 23 November 2021 and the consolidated group under
Webcentral Limited for the period from 24 November 2021
to 30 June 2022. The comparative information presented
in the financial report represents the financial position of
5G Networks Limited as at 30 June 2021; and the financial
performance of 5G Networks Limited for the year ended
30 June 2021.
Acquisitions and investing
activities
On 30 July 2021, the Group announced that it held 8.86%
of the ordinary shares in Cirrus Networks Holdings Limited
(ASX: CNW) (Cirrus) and launched an on-market takeover
bid (Takeover Bid) for Cirrus 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.
The Takeover Bid closed on 16 September 2021 at which
time the Group held 16.74 % of the ordinary shares in Cirrus.
The Group holds 18.5% of the ordinary shares in Cirrus
at year-end. On 22 August 2022, the Company sold all of
the shares held in Cirrus Networks Holdings Limited at
3.2 cents per share for total consideration of $5.5 million.
During the period the Group also continued to invest in its
fibre network build throughout several capital cities and
had completed more than 100 km and connected 51 data
centres as at the date of this report.
Capital structure
During the year, 212,902,341 ordinary shares were issued
pursuant to the Merger with 5GN for consideration of all of
the shares in 5GN, 7,325,000 ordinary shares were issued
following the exercise of options and performance rights
for total consideration of $1,515,000, and 882,837 ordinary
shares were issued to employees under the Employee
Share Plan.
In January 2022, 69,524,461 ordinary shares held by 5GN
were cancelled via a selective reduction of capital pursuant
to the Merger. In June 2022, 4,278,509 ordinary shares were
cancelled pursuant to an unmarketable share sale facility.
During the year, 9,450,000 options were issued under
the Executive and Director Share Option Plan (ESOP) at
an exercise price of $0.45, subject to the satisfaction of
service vesting conditions and expiry date of five years after
grant, 260,000 options were issued under the Executive
Equity Plan (EEP) at an exercise price of $0.26, subject to
the satisfaction of service vesting conditions and expiry
date of three years after grant, 4,900,000 options were
issued under the EEP at an exercise price of $0.25, subject
to the satisfaction of service vesting conditions and expiry
date of five years after grant, and 15,000,000 performance
rights were issued to the Managing Director at an exercise
price of $0.45, subject to the satisfaction of service vesting
conditions and performance conditions and expiry date five
years after grant. In addition, 1,000,000 unlisted options
were issued at an exercise price of $0.45 and 250,000
unlisted options were issued at an exercise price of $0.25
during the year to service providers of the Group.
In September 2021 the Group increased its debt facilities
with Commonwealth Bank of Australia (CBA) by $10.5 million
to $27.0 million. In June 2022 the Group’s debt facilities with
CBA were consolidated following the merger with 5GN and
the maturity date was extended to July 2025.
Dividends
There were no dividends paid during the year (2021: $0.01
(1 cent) per ordinary share paid in respect of the year ended
30 June 2020).
The Directors have recommended the payment of a final
dividend of 0.5 cents per ordinary share declared in respect
of the financial year ended 30 June 2022.
Significant changes in affairs
The Company’s name was changed from Webcentral Group
Limited to Webcentral Limited following approval by the
Company’s shareholders at its general meeting held on
3 November 2021.
On 12 November 2021, the Merger between 5GN and the
Company was effected by way of scheme of arrangement
between 5GN and its shareholders, with each 5GN
shareholder receiving two new Webcentral shares for each
5GN share held. From this date 5GN has been a wholly-
owned subsidiary of the Company.
Other than as stated above, there were no other significant
changes in the state of affairs of the Group during the year
ended 30 June 2022.
Significant events after reporting date
On 3 August 2022 the Company announced the launch of an on-market share buy-back of ordinary fully paid shares (buy-back).
Between 22 August 2022 and 26 September 2022, the Company acquired 5,276,500 ordinary shares on-market for total
consideration of $935,853. On 5 September 2022 the Company cancelled 2,559,460 ordinary shares and on 19 September 2022
the Company cancelled 1,226,573 ordinary shares.
On 22 August 2022, the Company sold all of the shares held in Cirrus Networks Holdings Limited at 3.2 cents per share for total
consideration of $5.5 million.
On 26 August 2022, 2.9 million options were issued under the ESOP and EEP to executives and managers of the Company at an
exercise price of $0.20.
No other matter or circumstance has arisen since the end of the financial year which significantly affected or may significantly
affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future
financial years.
Likely developments, business strategies and prospects
The Chair’s Report on page 4 and the Managing Director’s report on page 7 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 year ended
30 June 2022, and the numbers attended by each Director were:
Full meetings of Directors
Meetings of Committees
Audit and Risk
Nomination and Remuneration
Number of meetings held
13
3
2
Name of Director
Eligible
Attended
Eligible
Attended
Eligible
Attended
Joseph Gangi
Joe Demase
Natalie Mactier
Jason Ashton
13
13
13
6
11
13
12
6
3
3
3
2
3
3
3
2
2
2
2
1
2
2
2
1
Insurance of Officers
During the period, Webcentral 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.
Indemnity of auditors
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.
3031 Directors’ 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 44.
Rounding
The Group is a type of Company referred to in ASIC
Corporations (Rounding in Financial / Directors’ Reports)
Instrument 2016/191 and therefore the amounts contained in
this report and in the financial report have been rounded to
the nearest $1,000, or in certain cases, to the nearest dollar.
Corporate governance
The Company's Corporate Governance Statement is
available on the Company's website www.webcentral.au.
Signed in accordance with a resolution of the Board
of Directors:
Joe Gangi
Chair
Melbourne
28 September 2022
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.
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.
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
2022
$
2021
$
75,000
75,000
124,343
124,343
203,155
203,155
131,895
131,895
278,155
256,238
OTHER ASSURANCE SERVICES
Due Diligence Services
Total Remuneration for Other
Assurance Services
TAXATION SERVICES
Tax Compliance Services
Total Remuneration for Taxation
Services
Total Remuneration for Non-Audit
Services
The Directors present the Webcentral Limited 2022
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
Natalie Mactier - Non-Executive Director
Joseph Demase - Managing Director
Jason Ashton - Non-Executive Director from
24 November 2021
Other key management personnel:
Glen Dymond - Chief Financial Officer and Company
Secretary
Garry White - National Sales Director
John Stevens – Chief Operating Officer from
1 November 2021
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.
(C) Elements of
Remuneration
Fixed Annual Remuneration
Executives may receive their fixed remuneration as cash,
superannuation and fringe benefits.
Short-term Incentives (“STI”) – Operational Bonuses
The following bonuses were paid in respect of FY22:
• A bonus of $76,800 was paid to Glen Dymond
representing 55% achievement of projects and $63,200
was forfeited; and
• A bonus of $38,400 was paid to Garry White representing
27% achievement of projects and $101,600 was forfeited.
The bonuses paid to Glen Dymond and Garry White were
granted on 14 September 2021, 12 November 2021, 11 March
2022 and 13 May 2022 in line with the achievement
of projects.
No other short-term incentives were paid to KMP during
the year.
Long-term Incentives
The Webcentral Executive and Director Share Option Plan
(ESOP) was adopted in December 2020 for directors and
executives of the Group.
In April 2022, the Group adopted an Executive Equity Plan
(EEP) for executives and senior leaders of the Group.
During the year ended 30 June 2022 the Group issued
22,100,000 performance rights and share options to KMP
under the ESOP as a means of rewarding and incentivising
directors and executives.
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.
3233 Remuneration Report (Audited)
Remuneration Report (Audited)
(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.
Key Management Personnel Remuneration
Short Term Benefits
Post
employment
benefits
Share
based
payments
Other
Name
Period Cash salary
Cash STI1
Annual
leave
Other2
Superannuation
$
$
$
$
$
Performance
Rights and
Options3
$
Termination
Pay
Total
Performance
Based4
$
$
%
Managing Director
Mr Joe Demase
Other Management
Glen Dymond
Garry White
John Stevens5
2022
2021
2022
2021
2022
2021
2022
2021
Mr Brett Fenton6
Mr Tristan
Sternson7
2022
2021
2022
Former Key Management Personnel
-
-
-
-
-
-
-
-
-
-
-
-
5,620
-
221,730
94,368
20,302
2021
55,263
Mr Brendan White8
2022
-
2021
222,449
37,151
2,677
Mr Fraser Bearsley9 2022
-
62,978
-
-
-
5,796
2021
2022
Total KMP
excluding
Non-Executive
Directors
276,923
-
-
-
23,077
7,559
23,568
1,657,422
-
1,988,549
-
215,698
-
322,023
537,721
208,992
76,800
19,319
6,278
23,568
28,475
-
105,000
-
102,740
-
-
217,773
38,400
10,537
5,335
23,568
123,391
-
105,000
-
111,301
-
-
189,615
10,385
4,272
16,784
94,916
-
-
-
-
-
-
-
363,432
207,740
419,004
216,301
315,972
-
-
87,694
456,052
-
-
-
-
66,667
-
19,987
307,180
-
-
46,102
123,612
-
-
-
-
-
-
-
-
-
-
-
31,958
-
5,784
-
24,916
-
8,736
-
-
-
-
-
-
-
-
-
893,303
115,200
63,318
23,444
87,488
1,904,204
-
3,086,957
2021
562,420
341,519
34,395
429,739
71,394
322,023
153,783
1,915,273
Total Non-
Executive Directors
(Section E)
2022
234,236
2021
411,356
-
-
-
-
-
-
4,962
701,573
29,738
161,100
Total KMP
2022
1,127,539
115,200
63,318
23,444
92,450
2,605,777
-
-
-
940,771
602,193
4,027,728
2021
973,776
341,519
34,395
429,739
101,132
483,123
153,783
2,517,467
83%
60%
29%
51%
39%
49%
30%
N/A
N/A
21%
N/A
-
N/A
12%
N/A
-
65%
35%
75%
27%
68%
33%
1. Represents STIs accrued in relation to the 2022 and 2021 financial periods.
2. Represents the cost to the business of any non-cash business benefits provided, For 2021 this item also includes the allocation of salary costs charged from 5GN to Webcentral for current
KMP.
3. Represents the expense recorded during the period in relation to the fair value of Performance Rights and Options.
4. Calculated as STI plus Performance Rights and Options expense, 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 and achievement of individual KPIs. They are in addition to the fixed remuneration.
5. Mr John Stevens commenced on 1 November 2021.
6. Mr Brett Fenton was a KMP until 29 October 2020. Their information has been included up to that date.
7. Mr Tristan Sternson was a KMP until 11 February 2020. Their information has been included up to that date.
8. Mr Brendan White was a KMP until 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 that date.
Options and Rights Granted as Remuneration
Name
Balance at 1
July 2021
Grant Details
Exercised
Exercised
Lapsed
Balance at 30
June 2022
Key Management
Personnel
Joe Gangi
Joe Demase
Natalie Mactier
Jason Ashton
Glen Dymond
Garry White
John Stevens
KMP Total
No.
Grant Date
No.
Fair Value
$000
No.
Value
$000
No.
No.
1,000,000
22-Dec-21
1,500,000
308
1,000,000
10,000,000
22-Dec-21
15,000,000
2,880
5,000,000
1,000,000
22-Dec-21
1,500,000
-
-
-
-
22-Dec-21
1,500,000
15-Jul-21
300,000
15-Jul-21
1,300,000
15-Jul-21
1,000,000
308
308
59
257
198
1,000,000
-
-
-
-
303
1,516
303
-
-
-
-
12,000,000
22,100,000
4,318
7,000,000
2,122
-
-
-
-
-
-
-
-
1,500,000
20,000,000
1,500,000
1,500,000
300,000
1,300,000
1,000,000
27,100,000
The key criteria for performance rights and options granted during the period are as follows:
• Performance Rights (Joe Demase) – Webcentral achieves inclusion in the S&P ASX300 Index.
• 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.
• Options (Executives) - – 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 weighted average fair value per option is $0.1953 for the 22,100,000 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 2022.
5,000,000 performance rights are exercisable at period end (2021: nil):
Issue Date and Type
Number
Grant Date
Vesting Date
Expiry Date
2020 Performance Rights - Director
5,000,000
18/12/2020
22/09/2021
18/12/2025
2021 Performance Rights - Director
15,000,000
22/12/2021
-1
22/12/2026
2020 Options - Director
2021 Options - Director
4,500,000
22/12/2021
22/12/2023
22/12/2026
2,600,000
15/07/2021
15/07/2023
15/07/2025
1. Vesting period is dependent on the achievement of inclusion in the S&P ASX300 Index.
27,100,000
Weighted Average
Exercise Price
$0.20
$0.45
$0.45
$0.45
$0.40
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 ESOP, 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
2021 Rights
2021 Options -
Directors
2021 Options -
Executives
$0.415
0%
73.40%
0.375%
$0.465
0%
45.00%
1.265%
$0.465
0%
45.00%
1.265%
$0.45
0%
73.40%
0.69%
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 that this is
indicative of future volatility.
3435
Remuneration Report (Audited)
Remuneration Report (Audited)
(E) Non-Executive Director Arrangements
Current Board fees are $110,000 per annum for Joe Gangi and $90,000 per annum for Natalie Mactier and Jason Ashton.
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
Non-Executive Directors
Period
Salary
& fees
$
STI
$
Annual
leave
Super contri-
bution
Long service
leave
$
$
$
Performance
Rights and
Options
$
Total
Performance
related
$
%
Mr Joe Gangi1
2022
103,333
Ms Natalie Mactier2
Mr Jason Ashton3
Former Directors
Mr Andrew Reitzer4
Mr Karl Siegling5
Mr Andrew Macpherson6
Mr Larry Bloch7
Ms Naseema Sparks8
Total
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
58,333
81,288
40,000
49,615
-
-
113,341
-
76,678
-
55,689
-
48,096
-
19,219
2022
234,236
2021
411,356
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,962
-
-
10,767
-
7,284
-
5,291
-
4,569
-
1,826
4,962
29,737
1. Mr Joe Gangi was appointed 16 October 2020 and has been Chair of the Board since 27 October 2020.
2. Ms Natalie Mactier was appointed on 22 October 2020.
3. Mr Jason Ashton was appointed on 24 November 2021.
4. Mr Andrew Reitzer was Chair until 27 October 2020 and retired on 10 November 2020.
5. Mr Karl Siegling retired on 10 November 2020.
6. Mr Andrew Macpherson retired on 22 October 2020.
7. Mr Larry Bloch retired on 16 August 2020.
8. Ms Naseema Sparks retired on 27 February 2020.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
308,041
411,374
80,550
138,883
308,041
389,329
80,550
120,550
85,491
140,068
75%
58%
79%
67%
61%
-
-
-
-
-
-
-
-
-
-
-
-
-
124,108
-
83,962
-
60,980
-
52,665
-
21,045
-
-
-
-
-
-
-
-
-
-
-
701,573
940,771
161,100
602,193
75%
27%
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.
(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 July 2021 or
date of appointment
Received on the exercise
of option or right
Net Other Changes
Balance at 30 June 2022
Directors
Joe Gangi
Joe Demase
Natalie Mactier
Jason Ashton
Total Directors
Other Management Personnel (OMP)
Glen Dymond
Garry White
Total OMP
Group Total
2,941,176
11,951,206
-
588,235
15,480,617
919,999
1,411,764
2,331,763
17,812,380
Voting and comments made at the
Company’s Annual General Meeting
The Company received 91.6% of ‘yes’ votes on its
Remuneration Report for the financial year ending
30 June 2021. 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
the Company and each executive:
Executive
Base Salary
Term of
agreement
Notice period
Joseph Demase
$300,000
Unspecified
6 months
Glen Dymond
$250,000
Unspecified
3 months
Garry White
$250,000
Unspecified
3 months
John Stevens
$300,000
Unspecified
3 months
1,000,000
5,000,000
1,000,000
3,803,864
38,841,978
-
-
4,378,912
7,745,040
55,793,184
1,000,000
4,967,147
7,000,000
47,024,754
69,505,371
-
-
-
619,814
4,823,284
5,443,098
1,539,813
6,235,048
7,774,861
7,000,000
52,467,852
77,280,232
Loans to Key Management Personnel
(i) Executive and Direct or Share Plan
Under the Executive and Director Share Plan the Company
may loan its Executives some or all of the amount of the
exercise price for options exercised to acquire shares.
Such loans are non-recourse and no interest is charged
in respect of the loan amounts. The executive does not
have a beneficial interest in the shares until the loan is
repaid with any such shares subject to a holding lock. For
accounting purposes, this arrangement is not considered
as loan receivable but considered as share-based payment
in substance. The granting of a loan is considered to be a
modification to the existing option. Any increase in the fair
value of the option recognised as an expense immediately
at the date the loan is granted. If the executive fails to repay
the loan, the Company can sell some of the shares to repay
the loan. In the event that the shares are sold for an amount
less than the value of the loan, the executive is only required
to repay the loan out of the sale proceeds. The Company
has no other recourse against the employee. During the
period two directors were provided with a loan under
the Executive and Director Share Plan for a total amount
of $400,000.
3637
Remuneration Report (Audited)
Corporate Governance Statement
(ii) Other Loans
During the year ended 30 June 2021, the Group granted
loans of $280,000 to key management personnel, $140,000
each (Glen Dymond and Garry White) to allow them to take
up shares in a capital raising being undertaken by the
Company. The loans have been repaid by $74,200 by Glen
Dymond and $74,200 by Garry White during the year ended
30 June 2022.
The table below provides aggregate information relating
to the Company’s loans to KMP during the year:
Balance at the start of the year
Repayment from KMP
Balance at the end of the year
2022
$000
346
(218)
128
Other Transactions with Key
Management Personnel
During the year, the Group has conducted the following
related party transactions:
• A total of $154,294 (2021: $164,129) 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.
• A payment of $4.013 million was made to J D Management
Pty Ltd (JDM), an entity controlled by Joe Demase,
as consideration for the cancellation of 8 million
Performance Rights in relation to shares in 5G Networks
Limited held by JDM that were cancelled pursuant to the
Merger with the Company in November 2021.
There were no other transactions with KMP during the year
ended 30 June 2022.
End of Remuneration Report
This report, incorporating the Remuneration Report is
signed in accordance with a resolution of Directors.
Joe Gangi
Chairman
28 September 2022
The Board of Webcentral 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’s corporate governance practices and policies comply with the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations (4th Edition) (the Governance Principles and Recommendations), the ASX Listing
Rules and the Corporations Act 2001 (Cth). This Statement reflects a summary of Webcentral’s corporate governance framework,
policies and procedures that are in place and operating as at the date of this report.
Further information on Webcentral’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 for
all appointed and future nominated directors.
The Company has published profiles of its directors 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 matters 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 reviewing the performance of its Committees and
the Board and Committee Chairs.
Compliant
The NRC, which operates under a nomination and remuneration
committee charter, currently comprises the following Directors:
• Jason Ashton (Committee Chair, Independent, Non-Executive
Director);
• Joe Gangi (Independent, Non-Executive Director);
• Natalie Mactier (Independent, Non-Executive Director); and
• Joe Demase (Managing Director and CEO).
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.
3839
Corporate Governance Statement
Corporate Governance Statement
Comply
Compliant
Compliant
Principles and Recommendations
Compliance
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.
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:
• Jason Ashton (Committee Chair, Independent Non-Executive
Director);
• Joe Gangi (Independent, Non-Executive Director);
• Natalie Mactier (Independent, 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 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.
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.
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 Board considers Natalie Mactier (Non-Executive Director,
appointed 22 October 2020), Joe Gangi (Non-Executive Director,
appointed 16 October 2020) and Jason Ashton (Non-Executive
Director, appointed 24 November 2021) to be independent directors.
The Board notes that Joseph Demase is not an independent
director for the purposes of the Governance Principles and
Recommendations. Mr Demase is Managing Director and Chief
Executive Officer of the Company.
Compliant
Compliant
2.4 A majority of the Board should be
independent directors.
The Board is presently comprised of four directors, of which three
are independent, non-executive directors.
Compliant
2.5 The Chair of the Board should be an
independent director and should not
be the CEO.
The Chair of the Board, Joe Gangi, is an independent,
non-executive director.
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 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.
The Board Charter is available on the Corporate Governance
page of the Company’s website.
Compliant
Compliant
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.
Compliant
Principles and Recommendations
Compliance
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.
Comply
Compliant
3.3 The Company should have a whistleblower
policy and ensure that the Board is informed
of any material breaches reported under
that policy.
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
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.
The Company encourages directors, senior executives and
employees to speak up about any unlawful, unethical or irresponsible
behaviour within the organisation.
Compliant
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.
The Company recognises the serious criminal and civil penalties that
may be incurred and the reputational damage that may be done, if
the Company and any of its directors, as well as officers, employees,
contractors, consultants and other persons that act on its behalf,
engages in bribery or corruption.
The Company has an Anti-Bribery and Corruption policy that
articulates the standards of behaviour it expects of its directors,
senior executives and employees as regards observing and
upholding the prohibition on bribery and related improper conduct.
The Company’s Anti-Bribery and Corruption Policy is available on the
Corporate Governance page of the Company's website.
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.
Compliant
The Audit and Risk Committee members are:
• Natalie Mactier (Committee Chair, Independent, Non-Executive
Director);
• Joe Gangi (Independent, Non-Executive Director);
• Jason Ashton (Independent, 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
4041 Corporate Governance Statement
Corporate Governance Statement
Principles and Recommendations
Compliance
Comply
Principles and Recommendations
Compliance
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.
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 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.
The Policy is available on the Corporate Governance page of the
Company’s website.
Compliant
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.
Compliant
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
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.
Compliant
The Audit and Risk Committee members are:
• Natalie Mactier (Committee Chair, Independent Non-Executive
Director);
• Joe Gangi (Independent, Non-Executive Director);
• Jason Ashton (Independent, 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.
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.
The ARC meets at least four times each year and a risk review is
conducted in relation to each reporting period.
Comply
Compliant
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
The Board does not believe that the Company has any such material risks.
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.
Compliant
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:
Compliant
• Jason Ashton (Committee Chair, Independent, Non-Executive
Director);
• Joe Gangi (Non-Executive Director);
• Natalie Mactier (Independent, 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 Executive and Director Share Option Plan
(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
4243 Auditors' Independence Declaration
Grant Thornton Audit Pty Ltd
Level 22 Tower 5
Collins Square
727 Collins Street
Melbourne VIC 3008
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
Auditor’s Independence Declaration
To the Directors of Webcentral Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit
of Webcentral Limited for the year ended 30 June 2022, I declare that, to the best of my knowledge and belief,
there have been:
a.
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
b.
no contraventions of any applicable code of professional conduct in relation to the audit.
Grant Thornton Audit Pty Ltd
Chartered Accountants
M A Cunningham
Partner – Audit & Assurance
Melbourne, 28 September 2022
www.grantthornton.com.au
ACN-130 913 594
Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389.
‘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 Limited 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 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards
Legislation.
w
4445
Webcentral Limited and its controlled entities
ABN: 21 073 716 793
FINANCIAL STATEMENTS FOR THE
YEAR ENDED 30 JUNE 2022
4746 Consolidated Statement of Comprehensive Income
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2022
For the year ended 30 June 2022 (Continued)
Loss for the period attributable to:
Members of the parent
Non-controlling interests
Total comprehensive income 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
12 months ended
Notes
30-Jun-22
$’000
30-Jun-21
$’000
(24,883)
145
(24,738)
(25,862)
145
(25,717)
(4,710)
(1,154)
(5,864)
(4,438)
(1,154)
(5,592)
30-Jun-22
cents per
share
30-Jun-21
cents per
share
(8.50)
(8.50)
(8.56)
(8.56)
(4.37)
(4.37)
(0.90)
(0.90)
7
7
7
7
CONTINUING OPERATIONS
Revenue
Other income
Revenue and other income
Network and data centre costs
Domain registration costs
Cloud and hosting costs
Software and licencing costs
Direct labour costs
External labour costs
Other direct costs
Rent and office expenses
Marketing and travel expenses
Employee benefits expenses
Other expenses
Impairment of financial assets
Impairment of goodwill
Share-based payment expenses
Acquisition costs
Restructuring costs
Depreciation expenses
Amortisation expenses
Finance costs
Total expenses
Loss before income tax
Income tax (expense) / benefit
Loss after tax
OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX
Items that will be reclassified to profit or loss in subsequent years:
Currency translation differences
Items that will not be reclassified to profit or loss in subsequent years:
Change in fair value of equity instruments designed at fair value through other
comprehensive income
Other comprehensive income for the year, net of income tax
12 months ended
Notes
30-Jun-22
$’000
30-Jun-21
$’000
5
6
10
14
8
22
22
93,428
3,304
96,732
87,089
4,603
91,692
(24,285)
(25,317)
(6,225)
(1,461)
(4,999)
(7)
(814)
(366)
(410)
(1,788)
(35,960)
(2,856)
(578)
(11,494)
(8,833)
(904)
(3,706)
(10,195)
(3,435)
(2,798)
(121,114)
(24,382)
(356)
(24,738)
(36)
(943)
(979)
(5,432)
(1,456)
(3,030)
(515)
(1,715)
-
(989)
(1,122)
(32,203)
(3,597)
(850)
-
(2,874)
(2,207)
(1,715)
(9,769)
(2,419)
(2,027)
(97,237)
(5,545)
(319)
(5,864)
272
-
272
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
(25,717)
(5,592)
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.
4849
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
As at 30 June 2022
As at 30 June 2022 (Continued)
Notes
30-Jun-22
30-Jun-21
$’000
$’000
Notes
30-Jun-22
30-Jun-21
$’000
$’000
Non-Current Liabilities
Borrowings
Lease liability
Employee benefits
Contract liabilities
Deferred tax liabilities
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Reserves
Accumulated losses
Equity attributable to members of the parent
Non-controlling interests
TOTAL EQUITY
27
13
19
11
8
21
22
25,359
14,784
451
8,072
2,507
51,173
20,579
16,394
547
8,551
12,106
58,177
101,684
117,255
28,933
49,856
201,301
(134,661)
(37,707)
28,933
-
28,933
80,061
12,300
(12,824)
79,537
(29,681)
49,856
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Prepayments of domain name registry charges
Lease receivables
Contract assets
Other assets
Total Current Assets
Non-Current Assets
Plant and equipment
Right-of-use assets
Intangible assets
Prepayments of domain name registry charges
Lease receivable
Deferred tax assets
Goodwill
Other financial assets
Other assets
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Borrowings
Lease liability
Employee benefits
Provision for income tax
Contract liabilities
Other financial liabilities
Other liabilities
Total Current Liabilities
9
10
13
11
16
12
13
15
13
8
14
27
16
17
27
13
19
11
18
5,367
4,049
5,585
-
669
3,409
19,079
15,670
15,177
22,059
2,387
-
-
50,212
5,198
835
111,538
19,170
5,963
5,398
1,892
620
1,056
34,099
15,873
15,478
24,228
2,429
1,101
9,978
61,706
725
1,494
133,012
130,617
167,111
15,643
571
3,456
3,907
35
23,409
500
2,990
50,511
19,293
428
5,885
4,712
146
23,748
1,100
3,766
59,078
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
5051
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
For the year ended 30 June 2022
For the year ended 30 June 2022
Notes
Share
Capital
Treasury
Shares
Reserves
Accumulated
Losses
Total equity
attributable
to owners of
the Company
Non-
controlling
interest
Total
Equity
$’000
$’000
$’000
$’000
$’000
$’000
$’000
BALANCE AT 1 JULY 2021
Loss for the period
Other comprehensive income
80,061
-
-
Total comprehensive income for the period
80,061
-
-
-
-
12,300
(12,824)
79,537
(29,681)
49,856
-
(24,883)
(24,883)
145
(24,738)
(979)
-
(979)
-
(979)
11,321
(37,707)
53,675
(29,536)
24,139
Transactions with owners in their capacity
as owners:
Acquisitions of subsidiaries through internal
reorganisation
Cancellation of treasury shares held by 5G
Networks Limited
Shares issued on exercise of Options
21
21
Cancellation of shares under unmarketable
parcel facility
Share issue costs
Share based compensation
Balance at 30 June 2022
BALANCE AT 1 JULY 2020
Loss for the period
Other comprehensive income
1,115
(1,005)
(14)
-
201,301
38,644
-
-
Total comprehensive income for the period
38,644
Transactions with owners in their capacity
as owners:
Non-controlling interests arising on
acquisition of a subsidiary
Shares issued on exercise of Options
Shares issued pursuant to Dividend
Reinvestment Plan
Share issued to vendors to acquire business
Share issued as consideration for financial
advisory services rendered
Capital raising
Share issue costs
Dividend recognised and paid
Share based compensation
Deemed disposal of partial interests in a
subsidiary arising from issuance of shares
-
1,752
90
9,226
200
31,377
(1,228)
-
-
-
Balance at 30 June 2021
80,061
132,340
(11,196)
(150,680)
(29,536)
29,536
(11,196)
11,196
-
-
-
-
-
-
-
1,115
(1,005)
(138)
4,822
-
-
-
(124)
4,822
-
-
1,115
(1,005)
(138)
4,822
28,933
35,655
-
-
-
-
-
-
-
(134,661)
(37,707)
28,933
5,125
(8,114)
35,655
-
(4,710)
(4,710)
(1,154)
(5,864)
272
-
272
-
272
5,397
(12,824)
31,217
(1,154)
30,063
-
-
-
-
-
-
-
(1,067)
2,874
5,096
-
-
-
-
-
-
-
-
-
-
-
(28,807)
(28,807)
1,752
90
9,226
200
31,377
(1,228)
(1,067)
2,874
5,096
-
-
-
-
-
-
-
-
280
1,752
90
9,226
200
31,377
(1,228)
(1,067)
2,874
5,376
12,300
(12,824)
79,537
(29,681)
49,856
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12 months ended
Notes
30-Jun-22
$’000
30-June-21
$’000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Receipt from government grants
Payments to suppliers and employees
Interest received
Interest paid
Income tax paid
Payments for restructuring and acquisition costs
NET CASH FLOWS FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment and intangible assets
Purchase of intangible assets
Sublease payments received
Consideration paid in relation to deferred capital payments of North Sydney Data Centre
Net Cash on Purchase of ColoAU
Net Cash on Purchase of Intergrid
Net Cash on Purchase of Webcentral Limited
Investments in listed companies
Return of capital and dividends received from investments
Return of pledged bank deposits
Loans from / (to) employees
20
106,865
-
(98,807)
111
(2,856)
(57)
(2,554)
3,422
(5,856)
(1,336)
1,835
(499)
(8)
(602)
-
(5,417)
136
-
-
95,247
432
(83,513)
231
(2,027)
(305)
(1,572)
8,493
(7,619)
-
1,136
(1,083)
(2,400)
(1,748)
1,102
-
115
1,397
(920)
NET CASH FLOWS USED IN INVESTING ACTIVITIES
(11,747)
(10,020)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Proceeds from issues of shares on exercise of options
Proceeds from borrowings
Payment of performance rights
Payment of security deposit
Repayment of borrowings
Payment of capital raising costs
Payment of borrowing costs
Payment of dividend on ordinary shares
Payment of lease liabilities
NET CASH FLOWS USED IN FINANCING ACTIVITIES
-
1,025
5,412
(4,013)
(376)
(1,095)
(182)
(305)
-
(5,925)
(5,459)
36,819
1,752
22,159
-
-
(52,487)
(1,811)
-
(977)
(6,854)
(1,399)
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS
(13,784)
(2,926)
Net foreign exchange differences
Cash and cash equivalents at beginning of period
CASH AND CASH EQUIVALENTS AT END OF PERIOD
(19)
19,170
5,367
(22)
22,118
19,170
9
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.
5253
Notes to the Financial Statements
Notes to the Financial Statements
1. Corporate Information
The consolidated financial statements of Webcentral
Limited (‘the Company’ or ‘Webcentral’) and its subsidiaries
(collectively, ‘the Group’) for the year ended 30 June 2022
were authorised for issue in accordance with a resolution
of the directors on 28 September 2022.
Webcentral 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.
The Company’s name was changed from Webcentral Group
Limited to Webcentral Limited following approval by the
Company’s shareholders at its general meeting held on
3 November 2021.
Operations and Principal Activities
The Group’s principal activities during the year were:
• the supply of cloud-based solutions, managed services
and network services
• the operation of fibre and wireless infrastructure and
management of cloud computing environment
• the operation of data centre facilities
• the supply of 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
Registered Office and Principal Place
of Business
The registered office and principal place of business
of the Company is Level 7, 505 Little Collins Street,
Melbourne VIC 3000.
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 28
September 2022.
Merger of Webcentral and
5G Networks Limited
On 16 July 2021, the Company announced that it had entered
into a Merger Implementation Agreement (MIA) with
5G Networks Limited (5GN) under which it was proposed
that the two companies merge by way of a scheme of
arrangement (Scheme), subject to 5GN shareholder
approval and court approval in accordance with Part
5.1 of the Corporations Act 2001.
On 12 November 2021, the merger (Merger) between
5GN and the Company was effected by way of scheme
of arrangement between 5GN and its shareholders, with
each 5GN shareholder receiving two new Webcentral
shares for each 5GN share held. The record date was
16 November 2021, the new Webcentral shares were allotted
on 23 November 2021 and all 5GN shares were transferred
to Webcentral on the same day. From this date 5GN has
been a wholly-owned subsidiary of the Company. 5GN was
suspended from trading on ASX on 12 November 2021 and
subsequently delisted from ASX on 25 November 2021.
The shares in the Company held by 5GN were subsequently
cancelled via a selective reduction of capital in January
2022 following shareholder approval at the Company’s 2021
Annual General Meeting held on 21 December 2021.
Prior to the Merger, 5GN controlled the Group for the
purposes of AASB 10: Consolidated Financial Statements
and accounted for the acquisition of Webcentral under
AASB 3: Business Combinations, conducting acquisition
accounting for the period ended 30 June 2021.
Following the Merger, 5GN shareholders hold approximately
73% of the Company’s ordinary shares and therefore
continued to control the Group. In the Company’s
judgement, the continuation of existing accounting values
is consistent with the accounting which would have
occurred if the assets and liabilities had already been in
structure suitable to the Merger, and most appropriately
reflects the substance of the internal restructure. In the
Company’s judgement, the Merger between Webcentral
and 5GN is considered to be an internal restructure and
therefore a continuation of the existing 5GN consolidated
business immediately prior to the Merger.
Accordingly the consolidated financial report of Webcentral
Limited (the accounting acquiree, being the Company)
for the period ended 30 June 2022 has been presented
as a continuation of the pre-existing accounting values
of assets and liabilities in the 5G Networks Limited (the
accounting acquirer) consolidated financial statements
and includes the financial results for the consolidated group
under 5G Networks Limited for the period from 1 July 2021
to 23 November 2021 and the consolidated group under
Webcentral Limited for the period from 24 November 2021
to 30 June 2022. The comparative information presented
in the financial report represents the financial position of
5G Networks Limited as at 30 June 2021; and the financial
performance of 5G Networks Limited for the year ended
30 June 2021.
The non-controlling interest recorded in 5G Networks
Limited in relation to other shareholders in Webcentral
prior to the Merger were reversed against Reorganisation
Reserve in equity on consolidation level.
The costs incurred in relation to the issue of new
Webcentral shares to 5GN shareholders were allocated to
the reorganisation reserve account. These costs consist
of ASX listing fees and ASX CHESS settlement charges
of $123,844.
On 30 August 2022 Webcentral and 5GN were granted relief
by the Australian Securities and Investments Commission
(ASIC) analogous to ASIC Corporations (Wholly-Owned
Companies) Instrument 2016/785 (Relief) in respect of
the year ended 30 June 2022. The effect of the Relief is
that 5GN is relieved from certain obligations under the
Corporations Act 2001 in respect of the financial year ending
30 June 2022 (FY22) including:
• the requirement to prepare a standalone financial report
and directors’ report;
• the requirement to have the standalone financial report
audited and to obtain an auditor’s report for 5GN; and
• the requirements to report to its members and send
reports to members as requested.
Webcentral is also relieved from certain obligations under
the Corporations Act 2001 in relation to the reporting of
wholly-owned subsidiaries.
This Relief is only required for 5GN’s current financial year
ending 30 June 2022. Thereafter, 5GN will automatically
become eligible for the exemptions contained in ASIC
Corporations (Wholly-Owned Companies) Instrument
2016/785.
Absent this Relief, 5GN would have been required to prepare
a financial report and comply with other requirements of
the Act, as it was a “disclosing entity” for part of its current
financial year by virtue of being listed on ASX until the
merger of Webcentral and 5GN in November 2021 when 5GN
became a wholly-owned subsidiary of Webcentral.
There has been no changes in ownership of any members
of 5G Networks Pty Ltd to the deed of cross guarantee
between Webcentral and any of its wholly-owned entities
that occurs following the end of 30 June 2022 and before
the lodgement of its consolidated financial statements for
the year ended 30 June 2022.
Going concern
The financial report for the financial year ended 30 June
2022 has been prepared on the going concern basis that
contemplates the continuity of normal business activities
and the realisation of assets and extinguishment of
liabilities in the ordinary course of business.
For the year ended 30 June 2022 the Group recorded a loss
after tax of $24,738,000 (2021: Loss $5,864,000), operating
cash inflows of $3,422,000 (2021: $8,493,000), financing
cash outflows of $5,459,000 (2021: $1,399,000), and a deficit
of current assets to current liabilities of $31,432,000 (2021:
$24,979,000). At year end the Group had $5.4 million of cash
on hand and available debt facilities of $10.8 million, of which
$10.5 million is for the purpose of business acquisitions.
The significant items which contributed to the Group’s loss
after tax for the year were the non-cash goodwill impairment
expense of $11.49 million, acquisition, restructuring and
transaction costs of $4.6 million in relation to the Merger
and associated restructuring activities, acquisition-related
activities, and non-cash share-based payments expense of
$8.83 million. The goodwill impairment charge has arisen
due to the assessment of the carrying value of goodwill and
intangible assets at year-end. The non-cash impairment
expense recognises the uncertainty caused by the COVID-19
pandemic and the potential impacts to the Group's revenue
and operating results. The non-cash impairment charge
has no impact on the Group's debt facilities, covenants or
liquidity. The acquisition, restructuring and transaction
costs are considered to be one-off and non-recurring in
nature. The share-based payment expense was significantly
higher than prior years as they represent two listed
companies and due to the acceleration of options vesting
period due to the Merger. The ongoing annual share-based
payments expense is expected to be significantly lower at
approximately $1.5 million.
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 Group’s cash forecast for the period to September
2023 (i.e. 12 months after the issue of the Group’s financial
report) indicates that is generating a positive operating
cashflow and that it does not require additional funding
from external debt or equity providers.
The specific growth initiatives and sales pipeline that
support the operational growth forecast include:
• release of .au domain name in March 2022
• CPanel hosting product launch in April 2022
• NBN product launch in August 2022
• wholesale customer sales closed in FY22 of $2.3 million
and wholesale sales pipeline of $3.6 million
• direct customer sales closed in FY22 of $1.8 million and
direct sales pipeline of $5.7 million
• hardware sales closed of $1.6 million in FY22 for delivery
in FY23
A conservative cash forecast for the period to September
2023 (i.e. 12 months after the issue of the Group’s
financial report) has also been prepared on the basis of
a continuation of the Group’s revenue in July 2022 which
indicates a positive operating cashflow for the period to
September 2023 and that it does not require additional
funding from external debt or equity providers.
The Directors have undertaken solvency tests at year-
end and as at the signing date of Group’s financial report
which consider the Group’s ability to pay liabilities that are
due within 30 days of each date. These tests consider the
current assets and liabilities expected to be settled within
30 days, available debt funding of $3.8 million (excluding
$10.5 million acquisition facility) and other available sources
of funding and indicate that the Group has sufficient
funding headroom.
5455 Notes to the Financial Statements
Notes to the Financial Statements
The solvency tests consider current assets that are
expected to be converted to cash and current liabilities
that are not payable within 30 days including prepayments
and current assets of $0.4 million, borrowings and other
financial liabilities not expected to be payable or settled in
cash of $1.8 million, trade payables and other creditors not
payable of $3.2 million, payroll provisions of $2.5 million,
property lease liabilities of $2.5 million and deferred
revenue balances of $24.5 million.
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 consolidated financial report.
New or Amended 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 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.
Principles of consolidation
The consolidated financial statements incorporate the
assets and liabilities of all subsidiaries of Webcentral
Limited as at 30 June 2022 and the result of all subsidiaries
for the year then ended.
Subsidiaries are all those entities over which the Group
has control. The group controls an entity when the group
is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect
those returns through its power to direct the activities
of the entity. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
Intercompany transactions, balances and unrealised
gains on transactions between entities in the Group are
eliminated. Unrealised losses are also eliminated unless
the transaction provides evidence of the impairment of the
asset transferred. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with
the policies adopted by the Group.
The acquisition of subsidiaries is accounted for using the
acquisition method of accounting. Refer to the ‘Business
Combinations’ accounting policy for further details.
A change in ownership interest, without the loss of control, is
accounted for as an equity transaction, where the difference
between the consideration transferred and the book value
of the share of the non-controlling interest acquired is
recognised directly inequity attributable to the parent.
Where the Group loses control over a subsidiary,
it derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any
cumulative translation differences recognised in equity.
The Group recognises the fair value of the consideration
received and the fair value of any investment retained
together with any gain or loss in profit or loss.
Business Combinations
The acquisition method of accounting is used to account
for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition
date fair values of the assets transferred, equity
instruments issued or liabilities incurred by the acquirer
to former owners of the acquire and the amount of any
non-controlling interest in the acquiree. For each business
combination, the non-controlling interest in the acquiree is
measured at either fair value or at the proportionate share
of the acquirer’s identifiable net assets. All acquisition
costs are expensed as incurred to profit or loss.
On the acquisition of a business, the Group assesses
the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance
with the contractual terms, economic conditions, the
Group’s operating or accounting policies and other
pertinent conditions in existence at the acquisition date.
Where the business combination is achieved in stages,
the Group remeasures its previously held equity interest
in the acquiree at the acquisition-date fair value and the
difference between the fair value and the previous carrying
amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer
is recognised at the acquisition date fair value. Subsequent
changes in the fair value of contingent consideration
classified as an asset or liability is recognised in profit or
loss. Contingent consideration classified as equity is not
remeasured and its subsequent settlement is accounted
for within equity.
The difference between the acquisition date fair
value of assets acquired, liabilities assumed and any
noncontrolling interest in the acquiree and the fair value
of the consideration transferred and the fair value of any
pre-existing investment in the acquiree is recognised as
goodwill. If the consideration transferred and the preexisting
fair value is less than the fair value of the identifiable net
assets acquired, being a bargain purchase to the acquirer,
the difference is recognised as a gain directly in profit or
loss by the acquirer on the acquisition date, but only after
a reassessment of the identification and measurement
of the net assets acquired, the non-controlling interest in
the acquiree, if any, the consideration transferred and the
acquirer’s previously held equity interest in the acquiree.
Business combinations are initially accounted for on a
provisional basis. The acquirer retrospectively adjusts
the provisional amounts recognised and also recognises
additional assets or liabilities during the measurement
period, based on new information obtained about the
facts and circumstances that existed at the acquisition-
date. The measurement period ends on either the earlier
of (i) 12 months from the date of the acquisition or (ii)
when the acquirer receives all the information possible
to determine fair value.
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.
Income Tax
The income tax expense or benefit for the period is the
tax payable on that period’s taxable income based on the
applicable income tax rate for each jurisdiction, adjusted
by changes in deferred tax assets and liabilities attributable
to temporary differences, unused tax losses and the
adjustment recognised for prior periods, where applicable.
(i) 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.
(ii) Deferred Taxes
Deferred tax assets and liabilities are recognised for
temporary differences at the tax rates expected to apply
when the assets are recovered or liabilities are settled,
based on those tax rates that are enacted or substantively
enacted, except for:
• When the deferred income tax asset or liability arises
from the initial recognition of goodwill or an asset
or liability in a transaction that is not a business
combination and that, at the time of the transaction,
affects neither the accounting nor taxable profits; or
• When the taxable temporary difference is associated with
interests in subsidiaries, associates or joint ventures,
and the timing of the reversal can be controlled and it is
probable that the temporary difference will not reverse in
the foreseeable future.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised
deferred tax assets are reviewed each reporting date.
Deferred tax assets recognised are reduced to the extent
that it is no longer probable that future taxable profits
will be available for the carrying amount to be recovered.
Previously unrecognised deferred tax assets are recognised
to the extent that it is probable that there are future taxable
profits available to recover the asset.
Deferred tax assets and liabilities are offset only where
there is a legally enforceable right to offset current tax
assets against current tax liabilities and deferred tax
assets against deferred tax liabilities; and they relate to
the same taxable authority on either the same taxable
entity or different taxable entities which intend to settle
simultaneously.
(iii) 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 Limited,
and the controlled entities in the tax consolidated group
continue to account for their own current and deferred
tax amounts.
5657 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.
Revenue
Revenue is recognised either at a point in time or over time
when (or as) the Group satisfies performance obligations
by transferring the promised goods or services to its
customers. All revenue is stated net of the amount of
Goods and Services Tax (GST).
(i) Sale of Goods
Sale of hardware and software products for a fixed fee is
recognised as revenue when the goods are delivered and
control is transferred to the customer.
(ii) Rendering of Services – network and voice, data
centre, managed services
The Group provides network, voice, data centre and
managed services under fixed-price and variable price
contracts. Revenue from providing services is recognised
in the accounting period in which the services are
rendered. For fixed-price contracts, revenue is recognised
over time based on the actual service provided to the end
of the reporting period as a proportion of the total services
to be provided because the customer receives and uses the
benefits simultaneously. In case of fixed-price contracts,
the customer pays the fixed amount based on a payment
schedule. If the services rendered by the Group exceed the
payment, a contract asset is recognised. If the payments
exceed the services rendered, a contract liability is
recognised. If the contract includes a variable fee, revenue
is recognised in the amount to which the Group has a right
to invoice. Customers are invoiced on a monthly basis and
consideration is payable when invoiced.
(iii) 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.
(iv) Rendering of Services – hosting (email and web)
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.
(v) 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.
(vi) 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.
Other Income
Other income includes miscellaneous items including
expense recoveries. Other revenue is recognised when
it is received or when the right to receive payment is
established.
(i) Interest
Interest revenue is recognised as interest accrues
under the effective interest method. This is a method of
calculating the amortised cost of a financial asset and
allocating the interest income over the relevant period
using the effective interest rate, which is the rate that
exactly discounts estimated future cash receipts through
the expected life of the financial asset to the net carrying
amount of the financial asset.
(ii) R&D Tax offset income
Non-refundable R&D tax offset is recognised as income
under Government Grant approach (AASB 120) when there is
reasonable assurance that it will be received as a reduction
in current or future income tax liabilities. It is recognised in
the statement of comprehensive income in the same period
that the related costs are recognised as expenses and
relates to refundable amounts on approved expenses.
(iii) Government Grant Income
Government grant income is only recognised when there is
reasonable assurance that the entity will comply with the
conditions attaching to them, and the grant will be received.
Leases
(i) The Group as a lessee
As a lessee, the Group considers whether a contract is,
or contains a lease. A lease is defined as ‘a contract, or
part of a contract. That coveys the right to use as asset
(the underlying asset) for a period of time in exchange for
consideration’.
Measurement and recognition of leases as a lessee
At the commencement date, the Group recognises a right-
of-use asset and a lease liability on the balance sheet.
The right-of-use asset is measured at cost, which is made
up of the initial measurement of the lease liability, any initial
direct costs incurred by the Group, an estimate of any costs
to dismantle and remove the asset at the end of the lease,
and any lease payments made in advance of the lease
commencement date (net of any incentives received).
The Group depreciates the right-of-use assets on a
straight-line basis from the lease commencement date to
the earlier of the end of the useful life of the right-of-use
asset or the end of the lease term.
At the commencement date, the Group measures the lease
liability at the present value of the lease payments unpaid at
that date, discounted lease payments using its incremental
borrowing rate. The weighted-average rate applied is in the
range of 6%-8%.
Lease payments included in the measurement of the
lease liability are made up of fixed payments (including in
substance fixed), and variable payments based on an index
or rate stated in the lease agreements.
Subsequent to initial measurement, the liability will be
reduced for payments made and increased for interest.
It is remeasured to reflect any reassessment or modification,
or if there are changes in in-substance fixed payments.
When the lease liability is remeasured, the corresponding
adjustment is reflected in the right-of-use asset, or profit
and loss if the right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases and
leases of low-value assets using the practical expedients.
Instead of recognising a right-of-use asset and lease
liability, the payments in relation to these are recognised
as an expense in profit or loss on a straight-line basis over
the lease term.
(ii) The Group as a lessor
The Group is an intermediate lessor of some subleases,
which were previously classified as operating leases under
AASB 16: Leases . The Group accounts for a head lease and
sublease as two separate contracts, applying both lessee
and lessor accounting requirements respectively. On the
date of initial application, the Group reassessed its existing
operating subleases to determine whether the sublease is
classified as an operating or finance lease under AASB 16.
The reassessment is based on the remaining contractual
terms of the head lease and sublease with reference to the
right-of-use assets associated with the head lease and not
the underlying asset.
On identifying finance subleases that were previously
classified as operating subleases, the Group derecognises
the ROU asset relating to the head lease that is transferred
to the sublessee and 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.
When finance subleases terminate earlier, the Group apply
the derecognition and impairment requirement in AASB 9 to
the net investment in the lease to derecognise the residual
present value of lease receivables by adding the right to use
asset relating to the head lease.
The Group is required to calculate an expected credit loss
for the lease receivable in accordance with AASB 9 and
elected to apply the simplified approach to recognise the
lifetime expected credit losses of the lease receivable.
The Group considered both historical information and a
forward outlook in determining the lifetime expected credit
loss on lease receivables.
Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits
held at call with financial institutions, other short-term,
highly liquid investments with original maturities of three
months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant
risk of changes in value. For the statement of cash
flows presentation purposes, cash and cash equivalents
also includes bank overdrafts, which are shown within
borrowings of current liabilities on the statement of
financial position.
5859 Notes to the Financial Statements
Notes to the Financial Statements
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost includes all expenses directly attributable to
the manufacturing process as well as suitable portions of
related production overheads, based on normal operating
capacity. Costs of ordinarily interchangeable items
are assigned using the first in, first out cost formula.
Net realisable value is the estimated selling price in
the ordinary course of business less any applicable
selling expenses.
Property, Plant and Equipment
Plant and equipment is stated at historical cost less
accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the
acquisition of the items.
Depreciation is provided on a straight-line or diminishing
value basis on all plant and equipment. Major depreciation
periods are:
Leasehold improvements
Lease term or 6 years if the
lease term is over 6 years
Plant and equipment
2 to 10 years
Furniture and fittings
2 to 5 years
The residual values, useful lives and depreciation methods
are reviewed, and adjusted if appropriate, at each
reporting date.
Leasehold improvements and plant and equipment under
lease are depreciated over the unexpired period of the
lease or the estimated useful life of the assets, whichever
is shorter.
An item of property, plant and equipment is derecognised
upon disposal or when there is no future economic benefit
to the Group. Gains and losses between the carrying amount
and the disposal proceeds are taken to profit or loss.
Intangible Assets
(i) Goodwill
Goodwill arises on the acquisition of a business
combination. Goodwill is calculated as the excess sum of:
• the consideration transferred;
• any non-controlling interest; and
• the acquisition date fair value of any previously held
equity interest; over the acquisition date fair value
of net identifiable assets acquired.
Goodwill is not amortised. Instead, goodwill is tested
annually for impairment, or more frequently if events
or changes in circumstances indicate that it might
be impaired, and is carried at cost less accumulated
impairment losses. Impairment losses on goodwill are
taken to profit or loss and are not subsequently reversed.
Goodwill is allocated to the Group's cash-generating
units representing the lowest level at which goodwill
is monitored.
(ii) Brand name and customer contracts
Brand names and customer contracts acquired in a
business combination that qualify for separate recognition
are recognised as intangible assets at their fair values.
Brand names and customer contracts are amortised on a
straight-line basis over their estimated useful lives of five to
ten years.
(iii) Capitalised Software
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.
Impairment of Non-financial Assets
Goodwill and other intangible assets that have an indefinite
useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or
changes in circumstances indicate that they might be
impaired. Other non-financial assets are reviewed for
impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset’s fair value
less costs of disposal and value-in-use. The value-in-use
is the present value of the estimated future cash flows
relating to the asset using a pre-tax discount rate specific
to the asset or cash-generating unit to which the asset
belongs. Assets that do not have independent cash flows
are grouped together to form a cash-generating unit.
Financial Instruments
(i) Recognition and derecognition
Financial assets and financial liabilities are recognised
when the Group becomes a party to the contractual
provisions of the financial instrument, and are measured
initially at fair value adjusted by transactions costs,
except for those carried at fair value through profit or
loss, which are measured initially at fair value. Subsequent
measurement of financial assets and financial liabilities are
described below.
Financial assets are derecognised when the contractual
rights to the cash flows from the financial asset expire,
or when the financial asset and all substantial risks and
rewards are transferred. A financial liability is derecognised
when it is extinguished, discharged, cancelled or expires.
(ii) Classification and measurement of financial
assets
Except for those trade receivables that do not contain a
significant financing component and are measured at the
transaction price in accordance with AASB 15, all financial
assets are initially measured at fair value adjusted for
transaction costs (where applicable).
Financial assets, other than those designated and effective
as hedging instruments, are classified into one of the
following categories:
• amortised cost
• fair value through profit or loss (FVTPL), or
• fair value through other comprehensive income (FVOCI).
Financial assets at amortised cost
All of the Group’s financial assets are classified as
financial assets at amortised cost as they meet the
following conditions:
• they are held within a business model whose objective
is to hold the financial assets and collect its contractual
cash flows
• the contractual terms of the financial assets give rise
to cash flows that are solely payments of principal and
interest on the principal amount outstanding
After initial recognition, these are measured at amortised
cost using the effective interest method. Discounting is
omitted where the effect of discounting is immaterial.
The Group’s cash and cash equivalents, restricted cash,
trade and other receivables fall into this category of
financial assets.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business
model other than ‘hold to collect’ or ‘hold to collect and sell’
are categorised at FVTPL. Further, irrespective of business
model financial assets whose contractual cash flows are
not solely payments of principal and interest are accounted
for at FVTPL. All derivative financial instruments fall into
this category, except for those designated and effective
as hedging instruments, for which the hedge accounting
requirements apply (see below).
The category also contains an equity investment. The
Group accounts for the investment at FVTPL and did
not make the irrevocable election to account for the
investment in The Pistol and listed equity securities at fair
value through other comprehensive income (FVOCI). The
fair value was determined in line with the requirements
of IFRS 9 ’Financial Instruments’, which does not allow for
measurement at cost.
Assets in this category are measured at fair value with
gains or losses recognised in profit or loss. The fair values
of financial assets in this category are determined by
reference to active market transactions or using a valuation
technique where no active market exists.
Financial assets designated at fair value through OCI (FVOCI)
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.
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 Other non-
listed and listed equity investments under this category.
(iii) Impairment of Financial assets
The Group assesses on a forward-looking basis the
expected credit losses associated with other receivables
carried at amortised cost. The impairment methodology
applied depends on whether there has been a significant
increase in credit risk.
The Group makes use of a simplified approach in
accounting for trade receivables as well as contract
assets and records the loss allowance as lifetime
expected credit losses.
These are the expected shortfalls in contractual cash
flows, considering the potential for default at any point
during the life of the financial instrument. In calculating,
the Group uses its historical experience, external indicators
and forward-looking information to calculate the expected
credit losses using a provision matrix.
The Group assess impairment of trade receivables on
a collective basis as they possess shared credit risk
characteristics they have been grouped based on the days
past due. Refer to Note 10 for a detailed analysis of how the
impairment requirements of AASB 9 are applied.
(iv) Classification and measurement of financial
liabilities
The Group’s financial liabilities include trade and other
payables, loans and borrowings, derivative financial
instruments and contingent consideration.
Financial liabilities are initially measured at fair value, and,
where applicable, adjusted for transaction costs unless the
Group designated a financial liability at fair value through
profit or loss.
Subsequently, financial liabilities are measured at
amortised cost using the effective interest method, which
are carried subsequently at fair value with gains or losses
recognised in profit or loss.
All interest-related charges and, if applicable, changes in an
instrument’s fair value that are reported in profit or loss are
included within finance costs or finance income.
6061 Notes to the Financial Statements
Notes to the Financial Statements
Provisions, Contingent Assets and
Contingent Liabilities
Provisions are recognised when the Group has a present
(legal or constructive) obligation as a result of a past
event, it is probable the Group will be required to settle
the obligation, and a reliable estimate can be made of the
amount of the obligation. The amount recognised as a
provision is the best estimate of the consideration required
to settle the present obligation at the reporting date, taking
into account the risks and uncertainties surrounding the
obligation. If the time value of money is material, provisions
are discounted using a current pre-tax rate specific to the
liability. The increase in the provision resulting from the
passage of time is recognised as a finance cost.
Any reimbursement that the Group is virtually certain to
collect from a third party with respect to the obligation is
recognised as a separate asset. However, this asset may
not exceed the amount of the related provision.
No liability is recognised if an outflow of economic
resources as a result of present obligations is not probable.
Such situations are disclosed as contingent liabilities
unless the outflow of resources is remote.
Employee benefits
(i) Wages and Salaries and Annual Leave
Liabilities for wages and salaries, including non-monetary
benefits, and annual leave expected to be settled within
12 months of the reporting date are recognised in current
liabilities in respect of employees’ services up to the
reporting date and are measured at the amounts expected
to be paid when the liabilities are settled.
(ii) Long Service Leave
The liability for long service leave is recognised in
current and non-current liabilities, depending on the
unconditional right to defer settlement of the liability for
at least 12 months after the reporting date. The liability
is measured as the present value of expected future
payments to be made in respect of services provided by
employees up to the reporting date using the projected unit
credit method. Consideration is given to expected future
wage and salary levels, experience of employee departures
and periods of service.
Expected future payments are discounted using market
yields at the reporting date on high quality Australian
corporate bonds with terms to maturity and currency
that match, as closely as possible, the estimated future
cash outflows.
(iii) Share-based payments
The Group operates equity-settled share-based
remuneration plans for its employees. None of the
Group’s plans are cash-settled.
All goods and services received in exchange for the grant of
any share-based payment are measured at their fair values.
Where employees are rewarded using share-based
payments, the fair value of employees’ services is
determined indirectly by reference to the fair value of the
equity instruments granted. This fair value is appraised
at the grant date and excludes the impact of non-market
vesting conditions (for example profitability and sales
growth targets and performance conditions).
All share-based remuneration is ultimately recognised as
an expense in profit or loss with a corresponding credit
to retained earnings. If vesting periods or other vesting
conditions apply, the expense is allocated over the vesting
period, based on the best available estimate of the number
of share options expected to vest.
Non-market vesting conditions are included in assumptions
about the number of options that are expected to become
exercisable. Estimates are subsequently revised if there is
any indication that the number of share options expected
to vest differs from previous estimates. Any adjustment
to cumulative share-based compensation resulting from a
revision is recognised in the current period.
The number of vested options ultimately exercised by
holders does not impact the expense recorded in any period.
Upon exercise of share options, the proceeds received, net
of any directly attributable transaction costs, are allocated
to share capital up to the nominal (or par) value of the shares
issued with any excess being recorded as share premium.
Issued Capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
Dividends
Dividends are recognised when declared during the
financial year.
Earnings Per Share
Basic earnings per share is calculated by dividing the profit
attributable to the owners of the Group, by the weighted
average number of ordinary shares outstanding during the
financial year.
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account the after income tax effect of interest and
other financing costs associated with dilutive potential
ordinary shares and the weighted average number of
shares assumed to have been issued for no consideration
in relation to dilutive potential ordinary shares.
Goods and Services Tax (‘GST’) and
Other Similar Taxes
Revenues, expenses and assets are recognised net of
the amount of associated GST, unless the GST incurred
is not recoverable from the tax authority. In this case it
is recognised as part of the cost of the acquisition of the
asset or as part of the expense.
Receivables and payables are stated inclusive of the
amount of GST receivable or payable. The net amount
of GST recoverable from, or payable to, the tax authority
is included in other receivables or other payables in the
statement of financial position.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or
financing activities which are recoverable from, or payable
to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net
of the amount of GST recoverable from, or payable to,
the tax authority.
Comparative Figures
When required by Accounting Standards, comparative
figures have been adjusted to conform to changes in
presentation for the current financial year.
In accordance with the accounting treatment of the
merger between the Company and 5G Networks Ltd, the
comparative information presented in the financial report
represents the financial position of 5G Networks Limited
as at 30 June 2021; and the financial performance of
5G Networks Limited for the year ended 30 June 2021.
3. Critical Accounting
Judgements, Estimates and
Assumptions
The preparation of the financial statements requires
management to make judgements, estimates and
assumptions that affect the reported amounts in the
financial statements. Management continually evaluates its
judgements and estimates in relation to assets, liabilities,
contingent liabilities, revenue and expenses. Management
bases its judgements, estimates and assumptions on
historical experience and on other various factors, including
expectations of future events, management believes
to be reasonable under the circumstances and with the
exceptions of income tax and revenue recognition, were the
same as those applied in the Group’s last annual financial
statements for the year ended 30 June 2021. The resulting
accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates
and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
Prepayments of domain name
registry charges
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.
Provision for impairment of
receivables
The provision for impairment of receivables assessment
requires a degree of estimation and judgement. The level
of provision is assessed by taking into account the recent
sales experience, the ageing of receivables, historical
collection rates and specific knowledge of the individual
debtor’s financial position.
Estimation of Useful Lives of Assets
The Group determines the estimated useful lives and related
depreciation and amortisation charges for its property,
plant and equipment and finite life intangible assets.
The useful lives could change significantly as a result of
technical innovations or some other event. The depreciation
and amortisation charge will increase where the useful
lives are less than previously estimated lives, or technically
obsolete or non-strategic assets that have been abandoned
or sold will be written off or written down.
Goodwill and Other Indefinite Life
Intangible Assets
The Group tests annually, or more frequently if events or
changes in circumstances indicate impairment, whether
goodwill and other indefinite life intangible assets
have suffered any impairment, in accordance with the
accounting policy stated in Note 2.
Impairment of non-financial assets
other than goodwill and other
indefinite life intangible assets
The Group assesses impairment of non-financial assets
other than goodwill and other indefinite life intangible assets
at each reporting date by evaluating conditions specific
to the Group and to the particular asset that may lead to
impairment. If an impairment trigger exists, the recoverable
amount of the asset is determined. This involves fair value
less costs of disposal or value-in-use calculations, which
incorporate a number of key estimates and assumptions.
Leases
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.
6263 Notes to the Financial Statements
Notes to the Financial Statements
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.
Income Tax
The Group is subject to income taxes in the jurisdictions
in which it operates. Significant judgement is required
in determining the provision for income tax. There are
many transactions and calculations undertaken during
the ordinary course of business for which the ultimate tax
determination is uncertain. The Group recognises liabilities
based on the Group’s current understanding of the tax law.
Where the final tax outcome of these matters is different
from the carrying amounts, such differences will impact the
current and deferred tax provisions in the period in which
such determination is made.
Recovery of Deferred Tax Assets
Deferred tax assets are recognised for deductible
temporary differences only if the Group considers it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
Long Service Leave Provision
As discussed in Note 2, the liability for long service leave
is recognised and measured at the present value of the
estimated future cash flows to be made in respect of all
employees at the reporting date. In determining the present
values of the liability, estimates of attrition rates and pay
increases through promotion and inflation have been
taken into account.
Business Combinations
Business combinations are initially accounted for on
a provisional basis. The fair value of assets acquired,
liabilities and contingent liabilities assumed are initially
estimated by the Group taking into consideration
all available information at the reporting date. Fair
value adjustments on the finalisation of the business
combination accounting is retrospective, where applicable,
to the period the combination occurred and may have
an impact on the assets and liabilities, depreciation and
amortisation reported.
Merger with 5G Networks Limited
In the Company’s judgement, the Merger between
Webcentral and 5GN is considered to be an internal
restructure and therefore a continuation of the existing
5GN consolidated business immediately prior to the Merger.
Accordingly, the continuation of existing accounting
values is consistent with the accounting which would have
occurred if the assets and liabilities had already been in
structure suitable to the Merger, and most appropriately
reflects the substance of the internal restructure.
4. Segment Information
Management currently identifies the operating segments
monitored by the Group’s Chief Operating Decision Maker
(“CODM”) as being Data Centres, Network and Cloud
Applications and Managed Services, and Webcentral.
• Data Centres, Networks and Cloud Applications: Data
Centres, Networks and Cloud are interrelated and consist
of the provision of data centre services (physical, virtual
machines and colocation in non-5GN owned DCs), network
infrastructure included cross connects, 5GN owned and
non-5GN owned fibre networks and cloud applications.
• Managed Services including Voice, Hardware / Software
and other: Managed IT services including on-site and
remote IT support, professional services and project
management, provision of voice services and hardware
and software procurement. These services are typically
bundled into one product or service.
• Webcentral: Webcentral domains, email, web hosting and
digital marketing business
Segment information for the reporting period is as follows:
a. Adjusted EBITDA
Adjusted EBITDA excludes discontinued operations and
the effects of significant items of income and expenditure
which may have an impact on the quality of earnings such
as restructuring costs, legal expenses and impairments
where the impairment is the result of an isolated, non-
recurring event. It also excludes the effects of equity-
settled share-based payments and unrealised gains or
losses on financial instruments.
Interest income and finance cost are not allocated to segments,
as this type of activity is driven by the central treasury function,
which manages the cash position of the group.
Segment Revenue
Data Centres, Network & Cloud
Managed Services
Webcentral
Intersegment eliminations
Consolidated Revenue
Cost of goods sold
Gross Margin
Other income
Rent and office expenses
Marketing and travel expenses
2022
$'000
2021
$'000
24,638
19,465
50,106
(781)
93,428
(38,157)
55,271
3,304
(410)
(1,788)
27,723
25,326
35,305
(1,265)
87,089
(37,465)
49,624
4,603
(989)
(1,122)
Employee benefits expenses
(35,960)
(32,203)
Other expenses
Total Adjusted EBITDA
Data Centres, Network & Cloud
Managed Services
Webcentral
Total Adjusted EBITDA
(2,856)
17,561
2,613
1,999
12,949
17,561
(4,447)
15,466
3,150
3,946
8,370
15,466
b. Reconciliations of operating profit (loss) before
income tax
Adjusted EBITDA reconciles to operating profit before
income tax as follows:
2022
$'000
2021
$'000
Total adjusted EBITDA
Impairment of financial assets
Impairment of intangible assets
Share-based payment
expenses
Acquisition costs
Restructuring costs
Depreciation and amortisation
expenses
Finance costs
Loss before income tax
expense
17,561
(578)
(11,494)
(8,833)
(904)
(3,706)
(13,630)
(2,798)
(24,382)
16,316
(850)
-
(2,874)
(2,207)
(1,715)
(12,188)
(2,027)
(5,545)
(c) Segment assets
Segment assets are measured in the same way as in the
financial statements. These assets are allocated based on
the operations of the segment.
Data Centres, Network & Cloud
Managed Services
Webcentral
Total segment assets
2022
$'000
2021
$'000
38,494
14,355
86,097
138,946
21,554
17,029
128,528
167,111
5. Revenue from contracts
with customers
The revenue breakdown by product and service line for the
year ended 30 June 2022 is shown below:
CONTINUING OPERATIONS
Types of goods of service
Cloud
Domains
Network & Voice
Data Centres
Managed Services
Digital Marketing
Hardware & Software
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
2022
$'000
2021
$'000
29,407
22,595
10,168
7,989
11,994
4,512
6,763
93,428
27,763
15,012
9,217
8,489
13,378
2,405
10,825
87,089
6,763
10,825
86,665
93,428
76,264
87,089
The Group’s revenue disaggregated by pattern of revenue recognition is as follows:
Cloud
Domains
Network &
Voice
Data Centres
Managed
Services
Digital
Marketing
Hardware &
Software
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
For the year ended 30 June 2022
Goods transferred at a point in time
-
-
-
-
-
-
6,763
6,763
Services transferred over time
29,407
22,595
10,168
7,989
11,994
4,512
-
86,665
For the year ended 30 June 2021
Goods transferred at a point in time
-
-
-
-
-
-
10,825
Services transferred over time
27,763
15,012
9,217
8,489
13,378
2,405
-
10,825
76,264
6465
Notes to the Financial Statements
Notes to the Financial Statements
6. Other Income
Other income includes miscellaneous items including
expense recoveries. Other revenue is recognised when
it is received or when the right to receive payment is
established.
Consolidated
2022
$’000
2021
$’000
-
168
21
-
197
2,460
478
116
99
1,350
132
2,428
Government grant income
Dividend income
Interest income
Gain on remeasuring equity interest
to fair value upon control obtained
Sublease income
Management fees from transitional
service agreements in relation to the
sale of Enterprise and TPP Wholesale
businesses1
Sundry income
Total Other Income
458
3,304
-
4,603
1. 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.
7. Earnings per share
Basic Earnings Per Share (EPS) amounts are calculated by
dividing net loss for the year attributable to ordinary equity
holders of the parent by the weighted average number of
ordinary shares outstanding during the period. Diluted EPS
amounts are calculated by dividing net profit attributable
to ordinary equity holders of the parent by the weighted
average number of ordinary shares outstanding during the
year plus the weighted average number of ordinary shares
that would be issued on the conversion of all the dilutive
potential ordinary shares into ordinary shares. There were
no dilutive potential ordinary shares in existence during the
year (2021: Nil) as the share options and performance rights
of the Company were antidilutive. The following represents
the share data used in the EPS computations:
Consolidated
2022
$’000
2021
$’000
291,056,455 107,668,0001
Weighted average number of shares
used in calculating earnings per share
and diluted earnings per share
1. Due to the number of ordinary shares increasing subsequent to the Merger of the
Company with 5GN, the calculation of basic and diluted earnings per share have been
adjusted as if the Merger took place at the beginning of the comparative period.
8. Income tax
Consolidated
2022
$’000
2021
$’000
(A) INCOME TAX BENEFIT / (EXPENSE)
(Loss) / profit before income tax
(24,382)
(5,545)
At the Group's statutory income tax rate of
30% (2021: 30%)
7,315
1,663
Tax effect amounts which are not deductible in calculating taxable
income:
Non-deductible goodwill impairment charge
(3,448)
Other tax-exempt income
10
Expense on performance rights and options
(2,650)
Other non-deductible expenses
Rate change
Derecognition of DTA
Net under/over
Unrecognised tax loss for the year
Over provision from period and business
combination
(343)
-
-
(313)
(994)
67
-
419
(862)
(645)
157
(166)
(619)
(203)
(63)
Actual tax benefit / (expense)
(356)
(319)
Tax expense comprises:
- Over provision from prior period and
business combination
- Deferred tax - origination and reversal of
temporary differences
Aggregate Income tax expense at the
effective income tax rate
-
(13)
(356)
(306)
(356)
(319)
(B) DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets are comprised of the following temporary
differences:1
Allowable section 40-880 (blackhole)
deductions – written down value
Accrued expenses and provisions
-
-
-
741
9,237
9,978
Deferred tax liabilities are comprised of the following temporary
differences:
Allowable section 40-880 (blackhole)
deductions – written down value
870
Accrued expenses and provisions
7,439
Other
20
-
-
-
Tangible and intangible assets
(5,229)
(5,812)
ACA impact on depreciating asset – written
down value
(122)
R&D capitalised labour
(3)
4
-
10. Trade and other
receivables
Trade receivables
Allowance for impairment of
receivables
Consolidated
2022
$’000
2021
$’000
5,020
(1,768)
4,990
(1,190)
3,252
3,800
Unsecured loans – at call1
Other receivables
Total trade and other receivables
424
373
4,049
983
1,180
5.963
1. Unsecured loans represent loans granted to key management personnel and
employees to allow them to take up shares in a capital raising undertaken
by Webcentral Limited in FY21. The loans are expected to be extinguished following
the payment of FY22 bonuses.
The Group applies the AASB 9 simplified model of
recognising lifetime expected credit losses for all trade
receivables as these items do not have a significant
financing component.
In measuring the expected credit losses, the trade
receivables have been assessed on a collective basis as
they possess shared credit risk characteristics. They have
been grouped based on the days past due and also
according to the geographical location of customers.
The expected loss rates are based on the payment profile
for sales over the past 48 months before 30 June 2022
and 1 July 2021 respectively as well as the corresponding
historical credit losses during that period. The historical
rates are adjusted to reflect current and forwarding looking
macroeconomic factors affecting the customer’s ability to
settle the amount outstanding.
As at 30 June 2022, the Group has unrecognised income
tax losses of $34,807,742 tax-effected at 30% (2021:
$9,856,208), and capital losses of $87,869,863 arising from
the sale of the TPP Wholesale Reseller business, and the
sale of the Enterprise business (2021: $87,869,863).
9. Cash and Cash Equivalents
(a) Reconciliation of cash and cash equivalents
For the purposes of the statement of cash flows, cash
includes cash at bank and in hand net of bank overdrafts.
Cash at the end of the year as shown in the statement
of cash flows is reconciled to the related items in the
statement of financial position as follows:
Cash at bank and in hand
Total cash and cash equivalents
Consolidated
2022
$’000
2021
$’000
5,367
5,367
19,170
19,170
(b) Reconciliation of loss after tax to net cash flows from
operating activities
Consolidated
2022
$’000
2021
$’000
Loss after income tax
(24,883)
(4,710)
Non-cash flows in profit:
Depreciation and amortisation
Employee benefits expenses
Share-based payment expenses
Gain on remeasuring equity interest to
fair value upon control obtained
Impairment expenses
Other expenses
13,683
854
8,833
12,188
864
2,874
-
(1,350)
11,494
(2,740)
-
(822)
Changes in assets and liabilities net of effects of purchases and
disposals of controlled entities:
Movement in trade and other
receivables
Movement in other assets
Movement in deferred tax asset
Movement in intangibles
1,243
(855)
(1,572)
379
-
5,745
(220)
(350)
Brand and Customer contract
(5,482)
(6,298)
Movement in trade and other payables
(1,839)
(2,270)
NET DEFERRED TAX ASSET / DEFERRED
TAX LIABILITY
(2,507)
(12,106)
(2,507)
(2,128)
1
As 5G Networks Ltd and Webcentral Ltd did not form a tax consolidated group until
November 2021 following the merger, deferred tax asset and deferred tax liability for
the period ended 30 June 2021 cannot be offset.
Movement in employee benefits
provisions
Movement in Income tax payable
Movement in other Liabilities
Net cash from operating activities
(854)
(57)
(1,119)
3,422
116
-
(2,717)
8,493
6667 Notes to the Financial Statements
Notes to the Financial Statements
Trade receivables are written off (i.e. derecognised) when there is no reasonable expectation of recovery. Failure to make
payments within 120 days from the invoice date and failure to engage with the Group on alternative payment arrangement
amongst other is considered indicators of no reasonable expectation of recovery.
On the above basis the expected credit loss for trade receivables as at 30 June 2022 and 30 June 2021 was determined as
follows:
Current
0-30 days past due
31-60 days past due
61-90 days past due
91 days + past due
Closing balance
30-Jun-22
Gross
$’000
ECL
Rate
ECL
$’000
ECL
Rate
30-Jun-21
Gross
$’000
ECL
$’000
0.0%
0.0%
0.0%
0.0%
47.9%
2,475
324
171
132
1,918
5,020
-
-
-
-
(1,768)
(1,768)
6.2%
4.1%
5.5%
9.8%
55.1%
2,101
647
296
122
1,824
4,990
(131)
(26)
(16)
(12)
(1,005)
(1,190)
The closing balance of the trade receivables loss allowance as at 30 June 2022 reconciles with the trade receivables loss
allowance opening balance as follows:
Opening loss allowance as at 1 July 2020
Net additional provision for ECL’s taken to the P&L
Loss allowance as at 30 June 2021
Net additional provision for ECL’s taken to the P&L
Loss allowance as at 30 June 2022
$’000
340
850
1,190
578
1,768
In respect of trade and other receivables, the Group is not
exposed to any significant credit risk exposure to any single
counterparty or any group of counterparties having similar
characteristics. Trade receivables consist of a large number
of customers in various industries and geographical areas.
Based on historical information about customer default
rates management consider the credit quality of trade
receivables that are not past due or impaired to be good.
11. Contract Assets and
Liabilities
Contract assets consist of the following:
Contract assets1
Work in progress
Consolidated
2022
$’000
2021
$’000
669
669
620
620
1. The Group makes uses of a simplified approach in accounting for contract assets and
records the loss allowance as lifetime expected credit losses. After the assessment
of contract asset on a collective basis, the Group determined to apply zero as the loss
rate.
Contract liabilities consist of the following:
Deferred revenue
Consolidated
2022
$’000
2021
$’000
23,409
23,748
Contract liabilities - current
23,409
23,748
Deferred revenue
Contract liabilities - non-current
8,072
8,072
8,551
8,551
12. Property, Plant and
Equipment
Leasehold
improvements
$'000
Plant and
equipment
$'000
Total
$'000
Gross carrying amount
At 1 July 2021
Additions
Disposals
Closing Value at
30 June 2022
4,432
-
(5)
21,861
5,969
(727)
26,293
5,969
(732)
4,427
27,103
31,530
13. Leases
The Group has leases for data centres and related facilities,
and offices premises. With the exception of short-term
leases and leases of low-value underlying assets, each lease
is reflected on the balance sheet as a right-of-use asset
and a lease liability. Variable lease payments which do not
depend on an index or a rate (such as lease payments based
on a percentage of Group sales) are excluded from the
initial measurement of the lease liability and asset.
Set out below are the amounts recognised in profit and loss
during the period:
2022
$’000
2021
$’000
4,722
4,897
Depreciation and impairment
Depreciation expense of right-of-use
assets
(1,943)
(1,487)
-
(8,477)
(3,989)
36
(10,420)
(5,476)
36
Interest expense on lease liabilities
Rent expense - short-term leases
1,166
28
1,402
53
(3,430)
(12,430)
(15,860)
Right-of-use asset
At 1 July 2021
Depreciation
Disposals
Closing value at
30 June 2022
Carrying Amount
30 June 2022
Gross carrying amount
At 1 July 2020
Assets acquired
in the business
acquisition
Additions
Disposals
Closing Value at
30 June 2021
997
14,673
15,670
2,002
1,920
522
(12)
11,975
2,887
6,999
-
13,977
4,807
7,521
(12)
4,432
21,861
26,293
Depreciation and impairment
Balance at 1 July
2020
Depreciation
Disposals
Closing value at
30 June 2021
Carrying Amount
30 June 2021
(684)
(4,876)
(5,560)
(1,271)
12
(3,601)
(4,872)
-
12
(1,943)
(8,477)
(10,420)
2,489
13,384
15,873
Right-of-use assets
Building
$’000
Other
equipment
$’000
Total
$'000
14,930
3,205
1,127
(43)
548
132
-
-
15,478
3,337
1,127
(43)
(4,593)
(129)
(4,722)
As at 1 July 2021
Additions during the
year
Derecognition of
lease receivables
Disposals during the
year
Depreciation
expense
As at 30 June 2022
14,626
551
15,177
Right-of-use assets
Premises
$’000
Other
equipment
$’000
Total
$'000
12,369
10,509
(3,178)
645
30
13,014
10,539
-
(3,178)
(4,770)
(127)
(4,897)
As at 1 July 2020
Adjustments during
the year
Disposals during the
year
Depreciation
expense
As at 30 June 2021
14,930
548
15,478
6869 Notes to the Financial Statements
Notes to the Financial Statements
Lease receivables
Lease liabilities
The lease liabilities are secured by the related underlying assets. Future minimum lease payments at 30 June 2022 were as follows:
Set out below is a reconciliation of lease receivables for
finance leases where the Group is a lessor:
Opening balance
Assets acquired in the business acquisition
Additions
Disposals1
Interest income
Receipts from lessees
Closing balance
2022
$’000
2,993
-
-
(1,127)
94
(1,960)
-
2021
$’000
-
5,402
383
(983)
132
(1,941)
2,993
1. Disposals due to early termination of sublease and the balance was transferred to ROU
Set out below is a maturity analysis of lease receivables for
finance leases where the Group is a lessor:
Maturity analysis - contractual undiscounted
cash flows
Within 1 year
1-2 year
2-3 year
After 3 years
Total undiscounted lease receivable at 30 Jun
Unearned finance income
Net investment in lease
2022
$’000
2021
$’000
-
-
-
-
-
-
-
1,987
378
391
439
3,195
(202)
2,993
Current
Obligations under property leases
Obligations under equipment leases
Consolidated
2022
$’000
2021
$’000
3,319
137
3,456
5,641
244
5,885
Non-current
Obligations under property leases
14,713
16,288
Obligations under equipment leases
71
106
14,784
16,394
Each lease generally imposes a restriction that, unless
there is a contractual right for the Group to sublet the asset
to another party, the right-of-use asset can only be used by
the Group. Leases are either non-cancellable or may only
be cancelled by incurring a substantive termination fee.
Some leases contain an option to purchase the underlying
leased asset outright at the end of the lease, or to extend
the lease for a further term. The Group is prohibited from
selling or pledging the underlying leased assets as security.
For leases over data centres and office premises the Group
must keep those properties in a good state of repair and
return the properties in their original condition at the end of
the lease. Further, the Group must insure items of property,
plant and equipment and incur maintenance fees on such
items in accordance with the lease contracts.
The table below describes the nature of the Group’s leasing activities by type of right-of-use asset recognised on balance sheet:
Right-on-use
asset
No of right-on-
use assets leased
Range of
remaining term
Average
remaining lease
term
No of leases
with extension
options
No of leases
with variable
payments linked
to an index
No of leases
with termination
options
Data centres and
related facilities
Office premises
IT Equipment
5
12
2
1-9 years
4 years
1-5 years
2 years
2 years
2 years
5
6
0
5
6
0
0
0
0
30 June 2022
Lease payments
Finance charges
Net present values
30 June 2021
Lease payments
Finance charges
Net present values
Within 1 year
1-2 year
2-3 year
3-4 years
4-5 years
After 5 years
Total
Minimum lease payments due
4,554
(1,098)
3,456
7,098
(1,213)
5,885
4,500
(866)
3,634
5,966
(919)
5,047
4,124
(630)
3,494
3,523
(724)
2,799
3,288
(412)
2,876
3,341
(528)
2,813
3,364
(257)
3,107
2,504
(354)
2,150
1,909
(236)
1,673
4,064
(478)
3,586
21,739
(3,499)
18,240
26,496
(4,216)
22,280
Lease payments not recognised as a liability
The group has elected not to recognise a lease liability
for short term leases (leases with an expected term of 12
months or less) or for leases of low value assets. Payments
made under such leases are expensed on a straight-line
basis. In addition, certain variable lease payments are
not permitted to be recognised as lease liabilities and are
expensed as incurred.
The expense relating to payments not included in the
measurement of the lease liability is as follows:
Short-term leases
Total
Consolidated
2022
$’000
2021
$’000
28
28
53
53
14. Goodwill
The following table shows the movements in goodwill:
Gross carrying amount
Balance at beginning of period
Acquired through business combination
Balance at end of the period
Accumulated impairment
Balance at beginning of period
Impairment loss recognised
Balance at end of the period
Consolidated
2022
$’000
2021
$’000
61,706
-
61,706
-
(11,494)
(11,494)
16,567
45,139
61,706
-
-
-
Carrying amount at end of the period
50,212
61,706
Impairment Disclosures and Testing of Goodwill
Goodwill is allocated to the Group’s cash generating units,
which are the units expected to benefit from the synergies
of the business combinations in which the goodwill arises.
Data Centres, Networks and Cloud
Managed Services
Webcentral
Goodwill allocation at 30 June
Consolidated
2022
$’000
2021
$’000
5,479
5,536
39,197
50,212
16,973
5,536
39,197
61,706
The recoverable amount of the cash-generating units
is determined based on value-in-use calculations.
To determine the value-in-use, management estimates
expected future cash flows from each cash-generating
unit and determines a suitable discount rate in order to
calculate the present value of those cash flows. A value in
use model was developed to provide a forecast of free cash
flows for the five financial years ending on 30 June 2027
and a terminal value, 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 year 2 onward being the long-term
target CPI rate. The present value of the expected cash
flows of each CGU is determined by applying a suitable
discount rate.
The data used for impairment testing procedures are
directly linked to the Group’s latest approved budget,
adjusted as necessary to exclude the effects of future
reorganisations and asset enhancements. Discount factors
are determined individually for each cash-generating unit
and reflect current market assessments of the time value
7071 Notes to the Financial Statements
Notes to the Financial Statements
of money and asset-specific risk factors. The discount rate
has been based upon an estimate of CGU weighted average
cost of capital (WACC). The WACC adopted for each CGU is
summarised below:
to the prior year due to the cessation of legacy customer
contracts, the conversion of higher value data centre
contracts into lower value cloud services contracts, and
forecast revenue growth not achieved in FY22.
Low
High
Data Centres, Networks and Cloud
9.7%
11.0%
Managed Services
Webcentral
12.1%
12.90%
10.6%
12.10%
Impairment Charge for Goodwill
An impairment charge of $11.49 million was recorded for
the Data centres, network and cloud segment based on
impairment testing indicating that the carrying value
exceeded the recoverable amount of the CGU as at 30
June 2022. The underlying reasons for the impairment
charge were the reduction in revenue in FY22 compared
No impairment charge was recorded for the Managed
Services and Webcentral segments as their respective
recoverable amounts exceeds their carrying values by $28.8
million and $83.3 million respectively.
Sensitivity analysis undertaken on the key impairment
model assumptions indicates that in order for the
recoverable amounts to be equal to their carrying values
for the Managed Services and Webcentral segments, the
discount rate would need to increase to 82% and 28%
respectively and the revenue growth rate would need to
decrease to negative 1.8% and negative 0.8% respectively.
Management are not aware of any events that are expected
to have an adverse effect on revenue growth.
15. Other intangible assets
The following table shows the movements in other intangible assets:
Customer
contract
$'000
Brand name
Capitalised
software
Marketing Related
Intangibles
$'000
$'000
$'000
Total
$'000
Gross carrying amount
At 1 July 2021
Additions
Disposals
Closing Value at 30 June 2022
Amortisation and impairment
At 1 July 2021
Amortisation
Closing value at 30 June 2022
Carrying Amount at 30 June 2022
Gross carrying amount
At 1 July 2020
Assets acquired in the business
acquisition
Additions
Disposals
18,932
-
-
18,932
(1,377)
(1,918)
(3,295)
15,637
372
18,560
-
-
4,017
-
-
4,017
(577)
(803)
(1,380)
2,637
-
4,017
-
-
Closing Value at 30 June 2021
18,932
4,017
Amortisation and impairment
Balance at 1 July 2020
Amortisation
Closing value at 30 June 2021
Carrying Amount at 30 June 2021
(78)
(1,299)
(1,377)
17,555
-
(577)
(577)
3,440
3,775
1,081
-
4,856
(542)
(672)
(1,214)
3,642
-
3,425
350
-
3,775
-
(542)
(542)
3,233
-
180
-
180
-
(37)
(37)
143
-
-
-
-
-
-
-
-
-
26,724
1,261
-
27,985
(2,496)
(3,430)
(5,926)
22,059
372
26,002
350
-
26,724
(78)
(2,418)
(2,496)
24,228
(a) Marketing-related intangibles
Market-related intangibles represent website development.
They have been assessed as having an effective life of
five years.
(b) Brand Name and Customer
Contracts
Brand names and customer contracts acquired in a
business combination that qualify for separate recognition
are recognised as intangible assets at their fair values.
Brand names and customer contracts are amortised on a
straight-line basis over their estimated useful lives of five
to ten years.
(c) Capitalised software
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.
Included in capitalised software is $2.59 million 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.
16. Other assets
Other assets consist of the following:
Other prepayments
Inventory
Bond payments
Other
Consolidated
2022
$’000
2021
$’000
2,878
200
74
257
526
172
78
280
Other assets - current
3,409
1,056
Other prepayments
Bond payments
Other assets - non-current
835
-
835
1,044
450
1,494
17. Trade and other payables
Trade creditors
Accrued liabilities
Deferred consideration
Deposits received in advance
Other creditors
Total trade and other payables
Consolidated
2022
$’000
2021
$’000
11,917
10,190
888
750
231
1,857
15,643
3,319
1,941
303
3,540
19,293
All amounts are short-term. The carrying values of trade
and other payables are considered to be a reasonable
approximation of fair value.
18. Other Liabilities
GST and PAYG due to ATO
Payroll tax provision
Other liabilities - current
Consolidated
2022
$’000
2021
$’000
2,804
186
2,990
3,352
414
3,766
19. Employee Benefits
Provisions
Current
Annual leave
Long service leave
Wages payable
Superannuation payable
Accrued bonuses and sales commission
Non-current
Long service leave
Consolidated
2022
$’000
2021
$’000
2,007
934
61
738
167
3,907
451
451
1,883
1,079
201
516
1,033
4,712
547
547
7273 Notes to the Financial Statements
Notes to the Financial Statements
issued following the exercise of options and performance
rights for total consideration of $1,115,000. In January 2022,
69,524,461 ordinary shares held by 5GN were cancelled via
a selective reduction of capital pursuant to the Merger.
These shares were classified as treasury shares from
23 November 2021 at the time the scheme became effective.
In June 2022, 4,278,509 ordinary shares were cancelled
pursuant to an unmarketable parcel share sale facility.
Consolidated
2022
$’000
2021
$’000
Issued and paid-up capital
Ordinary shares each fully paid
201,301
80,061
20. Business Acquisitions
Colocation Australia (“ColoAu”)
On 8 July 2020, the Company acquired the business and
assets of ColoAU. The goodwill value of $3.015 million
identified in relation to the acquisition is final.
Intergrid Group Pty Ltd
On 17 March 2021, the Group completed the acquisition
of 100% of Intergrid Group Pty Ltd. A deferred payment
of $0.60 million was paid on 20 July 2021 due to the
achievement of target revenue and customer churn rates.
The goodwill value of $2.928 million identified in relation to
the acquisition is final.
21. Issued Capital
During the period, 241,322,246 ordinary shares were issued
pursuant to the Merger with 5GN for consideration of all
of the shares in 5GN and 7,325,000 ordinary shares were
Movements in ordinary shares on issue
30 June 2022
30 June 2021
Number of shares
$'000
Number of shares
$'000
Beginning of the financial period
- Acquisition of subsidiaries through internal
reorganisation
- Shares issued following exercise of options
- Share issued as consideration for services
- Shares issued following exercise of performance rights
- Shares cancellation – unmarketable parcel facility
- Issue of shares pursuant to Share purchase plan
- Issue of shares to vendor
- Issue of shares under a Placement
- Issues of shares under Dividend Reinvestment Plan
- Issue of shares as consideration for WCG off-market
takeover
- Issue of shares as consideration of financial advisory
services rendered
- Transaction costs for share issue
114,261,123
212,902,341
125,000
200,000
5,000,000
(4,278,509)
-
-
-
-
-
-
-
80,061
121,144
25
90
1,000
(1,005)
-
-
-
-
-
-
86,748,245
38,644
-
730,000
-
2,000,000
-
3,398,111
777,569
15,279,175
58,788
4,743,253
-
552
-
1,200
-
3,874
980
27,503
90
8,246
114,942
200
(14)
-
(1,228)
80,061
-
-
Ordinary Shares
Ordinary shares entitle the holder to participate in dividends
and the proceeds of winding up the company in proportion
to the number of and amounts paid on the shares held.
The fully paid ordinary shares have no par value.
On a show of hands every member present at a meeting in
person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share Based Payments
– Employee Shares
On 22 March 2022, 882,837 ordinary shares were issued to
employees under an Employee Share Plan as free shares.
Shares acquired under this plan carry all of the same rights
and obligations of other shares, except for any rights
attaching to shares by reference to a record date prior
to the date of issue or transfer.
Share Based Payments – Options
During the year the Group issued 27,100,000 options to
directors and employees under the Executive and Director
Share Plan and the Executive Equity Plan as a means of
rewarding and incentivising key employees.
Further details of the performance rights, including
details of rights issued during the financial year, are set
out in Note 23.
There were 20,000,000 performance rights and 15,110,000
unlisted options on issue at the end of the year.
Treasury Shares
The loans granted under Executive and Director Share Plan
(Note 23) are limited in recourse over the shares issued on
exercise of the options, and the Company placed a holding
lock over these shares to secure repayment. These shares
were treated as treasury shares. During the year, the Group
has issued 2,000,000 treasury shares.
Movements in treasury shares:
30 June 2022
30 June 2021
Number of
shares
$'000
Number of
shares
$'000
69,524,461
(11,196)
(69,524,461)
11,196
Beginning of the
financial period
- Acquisition of
subsidiaries
through internal
reorganisation
- Cancellation of
treasury shares
held by 5G
Networks Limited
- Issue of shares
under ESOP
End of the financial
period
2,000,000
-
-
-
-
-
-
-
-
-
-
22. Reserves
Consolidated
2022
$’000
2021
$’000
Share-based payments reserve
Other reserve
Foreign currency reserve
11,471
4,436
236
Reorganisation reserve
(150,804)
6,649
5,379
272
-
Total
(134,661)
12,300
Share-based payment reserve
Balance at the beginning of the period
Arising on share-based payments
Balance at the end of the year
2022
$’000
2021
$’000
6,649
4,822
11,471
3,775
2,874
6,649
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 23 for further details of
these plans.
Other reserves
Balance at the beginning of the period
Change in fair value of equity
instruments
Dividend recognised and paid
Deemed disposal of partial interests in
a subsidiary arising from issuance of
shares
2022
$’000
2021
$’000
5,379
(943)
-
-
1,350
-
(1,067)
5,096
Balance at the end of the year
4,436
5,379
Other reserves represent the fair value reserve (for equity
investments at fair value through equity). 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 27 to the financial statements.
Foreign currency reserve
Balance at the beginning of the period
Currency translation differences
Balance at the end of the year
2022
$’000
2021
$’000
272
(36)
236
-
272
272
The foreign currency translation reserve is used to record
exchange differences arising from the translation of the
financial statements of foreign subsidiaries
Shares issued and fully paid
328,209,955
201,301
113,850,083
- Issue of shares to employees under Employee Share Plan
- Issue of shares under ESOP
End of the financial period
882,837
2,000,000
-
-
111,040
300,000
331,092,792
201,301
114,261,123
80,061
2,000,000
7475
Notes to the Financial Statements
Notes to the Financial Statements
(a) Rights and options held at the
beginning of the reporting period
There were 13,400,000 rights and options held as at
1 July 2021 in relation to the ESOP.
(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:
2022
Number
2021
Number
Outstanding at the beginning of the year
13,400,000
169,156
Granted during the year1
29,610,000 13,400,000
Vested and exercised during the year2
(7,000,000)
Lapsed during the year
-
-
-
Forfeited during the year3
(900,000)
(169,156)
Outstanding at year end
35,110,000 13,400,000
1.
2
3.
During the year, 15,000,000 Performance Rights and 9,450,000 Options were issued
under the ESOP and 5,160,000 Options were issued under the EEP.
During the year, 10,000,000 Performance Rights were vested of which 5,000,000
Performance Rights were exercised and 2,000,000 Options were vested and
exercised under the ESOP.
During the year, 900,000 Options were forfeited under the ESOP.
(c) Rights and options vested during
the reporting period
During the year, 10,000,000 Performance Rights were
vested (2021: nil) and 2,000,000 Options were vested
(2021: Nil) under the ESOP.
(d) Rights and options forfeited during
the reporting period
During the year, 900,000 Options were forfeited by
employees (2021: 169,156) with a weighted average
exercise price of zero (2021: nil) under the ESOP.
Reorganisation reserve
2022
$’000
2021
$’000
Balance at the beginning of the period
-
Acquisition of subsidiaries1
(132,340)
Elimination of Non-Controlling Interest2
(29,536)
Reclassification of shares still held by
5GN in WCG
Share issue costs3
11,196
(124)
Balance at the end of the year
(150,804)
-
-
-
-
-
-
1
2
3
To eliminate 5GN contributed equity balance as part of accounting for the internal
reorganisation as the contributed equity of the WCG consolidated group will need to
be that of WCG not 5GN
To eliminate the NCI previously recognised in the consolidated financial statements
of 5GN in relation to WCG as part of the internal reorganisation as there is now no
longer an NCI in the WCG consolidated group
Share issue costs associated with the merger and issue of new WCG shares
Reorganisation reserve is used to record any difference
arising when applying a book-value method to busniess
combinations under common control.
23. Share-based Payments
- Performance Rights
and Options
The Group operates two long-term incentive (LTI) plans as a
means of rewarding and incentivising directors, executives
and senior leaders of the Group.
The Webcentral Executive and Director Share Option Plan
(ESOP) was adopted in December 2020 for directors and
executives of the Group.
In April 2022 the Group adopted an Executive Equity Plan
(EEP) for executives and senior leaders of the Group.
The key criteria for options issued under the ESOP during
the year are as follows:
• Performance Rights: Achieve inclusion in the
ASX300 index
• Options: Completion of tenure periods of two years
and individual KPIs
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.
(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 2022. 5,000,000 Performance Rights are exercisable at 30 June 2022 (2021: nil):
Issue Date and Type
Number
Grant date
Vesting date
Expiry date
Weighted
average
exercise price
Weighted
average
remaining
contractual life
2020 Performance Rights - Director
5,000,000
18/12/2020
22/09/2021
18/12/2025
$0.20
2021 Performance Rights - Director
15,000,000
22/12/2021
N/A
21/12/2026
$0.45
2021 Options - Director
4,500,000
22/12/2021
21/12/2023
21/12/2026
2021 Options - Executive (1)
700,000
01/02/2021
01/02/2023
01/02/2026
2021 Options - Executive (2)
100,000
29/03/2021
29/03/2023
29/03/2026
2021 Options – Executive (3)
4,650,000
15/07/2021
15/07/2023
15/07/2026
2021 Options – Executive (4)
260,000
13/04/2022
N/A
13/04/2025
2021 Options – Executive (5)
4,900,000
02/06/2022
02/06/2024
02/06/2027
35,110,000
$0.45
$0.485
$0.485
$0.45
$0.26
$0.25
$0.39
3.47
4.48
4.36
3.59
3.75
4.04
2.79
4.92
4.29
(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:
2020
Rights
2021
Rights
2021
Options
2021
Options
(1)
2021
Options
(2)
2021
Options
(3)
2022
Options
(4)
2022
Options
(6)
2022
Options
(6)
Share price
$0.415
$0.465
$0.415
$0.44
$0.53
$0.465
$0.475
$0.275
$0.225
Dividend yield
0%
0%
0%
0%
0%
0%
0%
0%
0%
Expected volatility
73.40%
45.00%
45.00%
73.40%
73.40%
45.00%
73.40%
73.40%
73.40%
Risk-free interest rate
0.375%
1.265%
0.375%
0.42%
0.68%
1.265%
0.69%
2.74%
3.28%
Fair value per option
$0.3031
$0.192
$0.3031
$0.16
$0.23
$0.205
$0.20
$0.14
$0.09
7677
Notes to the Financial Statements
Notes to the Financial Statements
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 $0.42 (2021: $0.30).
The total consolidated share-based payment expense for
the year was $8.83 million.
24. Dividends
There were no dividends paid during the year (2021: $0.01
(1 cent) per ordinary share paid in respect of the year ended
30 June 2020).
The Directors have recommended the payment of a final
dividend of 0.5 cents per ordinary share in respect of the
financial year ended 30 June 2022.
25. Parent Information
The following information has been extracted from the
books and records of the parent and has been prepared
in accordance with Australian Accounting Standards.
Parent Entity Statement of Financial
Position
As at 30 June 2022
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
2022
$’000
2021
$’000
73,273
51,126
16,063
42,707
89,336
93,833
71,479
4,823
76,302
13,034
1,943
10,118
12,061
81,772
Contributed equity
219,646
80,124
Share-based payments reserve
4,285
6,236
Reorganisation reserve
Foreign currency reserve
Profit reserve
Retained earnings
Total Equity
(104,762)
200
(1,479)
(104,856)
13,034
-
-
283
(4,871)
81,772
Loss of the parent entity
Total comprehensive loss of the parent
entity
(14,160)
(15,139)
(1,453)
(1,453)
Guarantees
During the reporting period, each of the companies in the
Group, including Webcentral Limited provided a cross
guarantee to CBA for the facilities provided by CBA (refer
note 27).
Contingent Liabilities
The parent entity did not have any contingent liabilities as
at 30 June 2022 (30 June 2021: Nil).
26. Controlled entities
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 Limited and the subsidiaries
in the following table:
Name
Country of Incorporation
Equity Holding at 30 June 2022
Equity Holding at 30
June 2021
5G Network Operations Pty Ltd
5G Networks Pty Limited
Enspire Australia Pty Ltd
Asian Pacific Telecommunications Pty Ltd
Anittel Pty Ltd
Hostworks Pty Limited
Hostworks Group Pty Limited
Logic Communications Pty Ltd
Modular IT Pty.Ltd.
Australian Pacific Data Centres Pty Ltd
5G Networks Finance Pty Ltd
Intergrid Group Pty Ltd
Web Marketing Experts Pty Ltd
Nothing But Web Pty Ltd
Domainz Limited
Results First Limited
Uber Global Ltd
Melbourne IT GP Holdings Pty Ltd
Names By Request Pty Ltd
Uber Business Pty Ltd
Netregistry Group Pty Ltd
Netregistry Pty Ltd
Netregistry Wholesale Pty Ltd
Netregistry Services Pty Ltd
Netregistry Operations Pty Ltd
Webcentral Services Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
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%
1. Webcentral Limited and its subsidiaries were controlled by 5G Networks Ltd until the merger of 5G Networks Ltd with Webcentral Limited in November 2021.
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
-1
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
7879 Notes to the Financial Statements
Notes to the Financial Statements
27. Financial Risk Management
The main risks the Group is exposed to through its financial instruments are interest rate risk, liquidity risk and credit risk.
Financial Risk Management Objectives
The Group’s financial instruments consist mainly of deposits with banks, local money market instruments, accounts receivable
and payable, loans to and from subsidiaries, and leases.
The main purpose of non-derivative financial instruments is to raise finance for Group operations.
The Group does not have any derivative instruments at 30 June 2022 or 30 June 2021.
The totals for each category of financial instruments, measured in accordance with AASB 9 as detailed in the accounting policies
to these financial statements, are as follows.
Amortised cost
$’000
FVTPL
$’000
FVOCI
$'000
Total
$’000
30 JUNE 2022
Cash and cash equivalents
Trade and other receivables
Unsecured loans
Other investments
Total financial assets
30 JUNE 2022
Non-current borrowings
Non-current lease liabilities
Current borrowings
Trade and other payables
Lease liabilities
Other financial liabilities
Total financial liabilities
30 JUNE 2021
Cash and cash equivalents
Trade and other receivables
Unsecured loans
Other investment
Total financial assets
30 JUNE 2021
Non-current borrowings
Current borrowings
Trade and other payables
Other financial liabilities
Total financial liabilities
5,367
3,625
-
-
8,992
25,359
14,784
571
15,643
3,456
-
59,813
19,170
5,963
-
-
25,133
20,579
428
19,293
-
40,300
-
-
424
-
424
-
-
-
-
-
500
500
-
-
983
-
983
-
-
-
1,100
1,100
-
-
-
5,198
5,198
-
-
-
-
-
-
-
-
-
-
725
725
-
-
-
-
-
5,367
3,625
424
5,198
14,614
25,359
14,784
571
15,643
3,456
500
60,313
19,170
5,963
983
725
26,841
20,579
428
19,293
1,100
41,400
Borrowings include the following financial liabilities:
CURRENT
At amortised cost:
Obligations under bank loan1
NON-CURRENT
At amortised cost:
Obligations under bank loan1
Consolidated
2022
$’000
2021
$’000
571
571
428
428
25,359
25,359
20,579
20,579
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:
Security arrangements
1
The bank loans are from Commonwealth Bank of Australia (CBA) and they are secured
with a fixed charge over particular assets and a floating charge over other collateral.
• Level 1 - Quoted (unadjusted) market prices in active
markets for identical assets or liabilities.
Fair Value Measurement of Financial
Instruments
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
• 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 2022:
Fair value measurement using
Note
Date of
valuation
TOTAL
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 The Pistol shares
Investment in Cirrus Networks
Holdings Limited
30-Jun-22
30-Jun-22
725
4,473
Unsecured loans
30-Jun-22
424
Financial liabilities
Contingent consideration
30-Jun-22
500
There have been no transfers between Level 1, 2 and 3 during the period.
-
4,473
-
-
-
-
-
-
725
-
424
500
On 22 August 2022, the Company sold all of the shares held in Cirrus Networks Holdings Limited at 3.2 cents per share for total
consideration of $5.5 million.
8081
Notes to the Financial Statements
Notes to the Financial Statements
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. The Board’s primary objective is to maximise the value of the Group’s operations to
its shareholders.
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.
Liquidity Risk
The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised borrowing facilities
are maintained.
Cash flows realised from financial assets in the table below reflect management’s expectation as to the timing of realisation.
Actual timing may therefore defer from that disclosed.
The table below sets out the available financing facilities as at 30 June 2022:
CBA loan facilities
Total
Total facility amount
Amount drawn
Unused financing facilities
$’000
41,600
41,600
$’000
30,815
30,815
$’000
10,785
10,785
The table below sets out the maturity periods of the financial liabilities of the consolidated Group as at 30 June 2022 and
30 June 2021. All carrying amounts of IT equipment finance are undiscounted contractual cash flows.
Contracted maturities at 30 June 2022
< 6 Months
6-12 Months
1-2 Years
2-5 Years
>5 Years
Trade & Other Payables
Borrowings
Interest on Borrowings
Other Financial Liabilities
$’000
$’000
$’000
$’000
$’000
14,912
315
37
-
-
256
30
500
-
497
43
-
-
24,862
12
-
Contracted maturities at 30 June 2021
< 6 Months
6-12 Months
1-2 Years
2-5 Years
>5 Years
Trade & Other Payables
Borrowings
Interest on Borrowings
Other Financial Liabilities
$’000
$’000
$’000
$’000
$’000
18,973
213
27
600
320
216
22
500
-
319
32
-
-
20,254
37
-
Total
$’000
14,912
25,930
122
500
Total
$’000
19,293
21,007
118
1,100
-
-
-
-
-
5
-
-
Treasury Risk
The Board’s overall risk management strategy seeks to
assist the consolidated Group in meeting its financial
targets, whilst minimising potential adverse effects on
financial performance.
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.
Both the functional and presentation currency of the
Group 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 2022, 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:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Net exposure
30-Jun-22
30-Jun-21
$’000
$’000
344
234
578
103
10
113
(2,534)
(1,956)
(615)
(502)
Credit Risk
The maximum exposure to credit risk, excluding the value
of any collateral or other security, at balance date to
recognised financial assets, is the carrying amount, net of
any provisions for impairment of those assets, as disclosed
in the balance sheet and notes to the financial statements.
There are no material amounts of collateral held as security
at 30 June 2022 or 30 June 2021.
Credit risk is managed on a Group basis and reviewed
regularly by the Board. It arises from exposures
to customers as well as through deposits with
financial institutions.
The following table provides information regarding the
credit risk relating to cash and money market securities
based on Moody’s counterparty credit ratings.
Aa3 rated cash & cash equivalents
Total
Consolidated
2022
$’000
2021
$’000
5,367
5,367
19,170
19,170
The Group does not have any material credit risk exposure
to any single receivable or group of receivables under
financial instruments entered into by the Group.
The Group has recognised an impairment loss of $578,000
(2021: Loss of $850,000) in profit and loss in respect of
impairment provision for receivables for the year ended 30
June 2022. The movements in the provision for impairment
of receivables were outlined in Note 10.
Interest Rate and Market Risk
Market risk is the risk that changes in market prices, such
as interest rates will affect the Group’s income or the value
of its holdings of financial instruments. The objective of
market risk management is to manage and control market
risk exposures within acceptable parameters, while
optimising returns.
At 30 June 2022, the Group is exposed to changes in market
interest rates through bank borrowings at variable interest
rates. All of the Group’s equipment loans and leases are at
a fixed interest rate.
The Group’s long-term borrowings, totalling $25,359,000
are interest only payment loans. Monthly cash outlays of
approximately $115,000 per month are required to service
the interest payments. An official increase /decrease in
interest rate of 150 basis points would have an adverse/
favourable effect before tax of $369,000 per annum.
The percentage change is based on the expected volatility
of interest rates using market data and analysis forecasts.
No principal repayments are required until July 2025.
8283
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.
At 30 June 2022, 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)
2022
$000
2021
$000
2022
$000
2021
$000
173
(211)
45
(55)
173
(211)
45
(55)
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.
Sensitivity Analysis
As the Group’s equipment loans are not material to the
Group and at a fixed interest rate, no sensitivity analysis has
been performed, as any +/- variation in interest rates would
not have a material impact on the post-tax profit for the
remaining period of the loans.
A change in interest rates on the Cash on Deposit would
not have a material impact to the Group and therefore no
sensitivity analysis has been performed.
Debt Maturity and Refinancing Risk
Refinancing risk is the risk that the Group is not able to
refinance the full amount of its ongoing debt requirements
on appropriate terms and pricing. These exposures are not
material to the Group’s operations at this point.
28. Related party disclosures
Subsidiaries
Details relating to subsidiaries are included in Note 26.
Ultimate and direct parent
Webcentral Limited is the ultimate parent entity in the
wholly owned Group comprising the Company and its
wholly owned controlled entities.
Key Management Personnel (KMP)
Compensation
Consolidated
2022
$’000
2021
$’000
Short-Term Employee Benefits
1,330
1,779
Post-Employment Benefits
Termination Payments
Share based Payments
Total
92
-
2,606
4,028
101
154
483
2,517
Detailed remuneration disclosures are provided in the
remuneration report on pages 33 to 38.
Transactions with related parties
During the year, the Group has conducted the following
related party transactions:
• A total of $154,294 (2021: $164,129) 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.
• A payment of $4.013 million was made to J D Management
Pty Ltd (JDM), an entity controlled by Joe Demase,
as consideration for the cancellation of 8 million
Performance Rights in relation to shares in 5G Networks
Limited held by JDM that were cancelled pursuant to the
Merger with the Company in November 2021.
Terms and conditions of related party
trading transactions
Purchases from related parties are made at arm’s length
at normal market prices and on normal commercial terms.
The Group settles related party trade payables according
to the payment conditions confirmed by the supplier of
invoices and are non interest bearing and generally on 30
day terms from invoice.
Transactions with key management
personnel
The table below provides aggregate information relating to
the Company’s loans to key management personnel during
the year:
Balance at the start of the year
Repayment from KMP
Balance at the end of the year
2022
$’000
346
(218)
128
Under the Executive Share Plan the Company may loan its
Executives some or all of the amount of the exercise price
for options exercised. Such loans are non-recourse and no
interest is charged in respect of the loan amounts.
During the period, the loans of $0.22 million have been
repaid. Refer to Note 10 for details.
29. Auditors' remuneration
2022
$’000
2021
$’000
Year ended 30 June 2022, the following fees were paid or
payable for services provided by Grant Thornton:
Audit and review
Taxation compliance services
427,535
203,155
513,061
131,895
Due diligence services
75,000
124,343
705,690
769,299
30. Events subsequent to
reporting date
On 3 August 2022, the Company announced an on-
market share buy-back of ordinary shares. Between
22 August 2022 and 26 September 2022, the Company
acquired 5,276,500 ordinary shares on-market for total
consideration of $935,853. On 5 September 2022 the
Company cancelled 2,559,460 ordinary shares and on
19 September 2022 the Company cancelled 1,226,573
ordinary shares.
On 22 August 2022, the Company sold all of the shares
held in Cirrus Networks Holdings Limited at 3.2 cents per
share for total consideration of $5.5 million.
On 26 August 2022, 2.9 million options were issued under
the ESOP and EEP to executives and managers of the
Company at an exercise price of $0.20.
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.
8485 Directors’ Declaration
Independent Auditors’ Report
1.
In the Directors’ opinion:
(a)
The financial statements and notes of Webcentral Limited for the year ended 30 June 2022 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 2022 and of its performance for the
financial year ended on that date; and
complying with Australian Accounting Standards (Including the Australian Accounting Interpretations) and the
Corporations Regulations 2001; and
(b)
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 year ended 30 June 2022.
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Independent Auditor’s Report
To the Members of Webcentral Limited
3. Note 2 confirms that the consolidated financial statements also comply with international financial reporting standards.
Report on the audit of the financial report
Signed in accordance with a resolution of the Directors made pursuant to section 303(5) of the Corporations Act 2001.
On behalf of the Board of Directors
Joe Demase
Managing Director
Melbourne, 28 September 2022
Opinion
We have audited the financial report of Webcentral Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated
statement of comprehensive income, consolidated statement of changes in equity and consolidated
statement of cash flows for the year 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
b
giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its performance
for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
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Independent Auditors’ Report
Independent Auditors’ Report
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 5
In the financial year ended 30 June 2022, the Group recorded Our procedures included, amongst others:
revenue of $93,428,000.
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 because of 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.
(cid:120)
(cid:120)
(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;
Reviewing revenue recognition policies of individual
customer agreements and contractual arrangements to
ensure compliance with AASB 15;
Selecting a sample of revenue transactions to verify that
revenue was being recognised in accordance with revenue
recognition policies;
Analytically reviewing revenue streams against forecasts
and prior corresponding period to identify and assess
potential anomalies;
Testing the accuracy of deferred revenue recorded by the
Group during the period; and
Evaluating the disclosures in the financial statements for
appropriateness and consistency with accounting
standards.
(cid:120)
(cid:120)
(cid:120)
Going Concern – Note 2
For the year ended 30 June 2022 the Group recorded a loss
after tax of $24,738,000, operating cash inflows of
$3,422,000, financing cash outflows of $5,459,000, and a
deficit of current assets to current liabilities of $31,432,000.
At year end the Group had $5,367,000 of cash on hand ,
which in the opinion of the Directors will support the Group’s
funding requirements for twelve months from the date of this
report.
Accordingly, testing the availability of sufficient funding for the
Group to meet its obligations is considered a key part of our
going concern assessment. This has been assessed as a key
audit matter due to the judgement required by management in
preparing their forecasts, preparing their solvency assessment
and evaluating their ability to continue as a going concern.
Our procedures included, amongst others:
(cid:120) Assessing the cash flow forecast prepared by management
for at least 12 months from the anticipated date of signing
the financial statements and evaluating the reasonableness
of inputs and assumptions used in the forecast;
(cid:120) Analysing and challenging key assumptions in Webcentral’s
Limited’s budget for the twelve-month period from the
expected date of signing;
(cid:120) Discussing with management their future plans for the
Group;
(cid:120) Reviewing ASX announcements to gather an understanding
of the strategy of the business;
(cid:120)
Inquiring of management as to whether they are aware of
any events or conditions beyond the period of
Management’s assessment that may cast significant doubt
on Webcentral Limited’s ability to continue as a going
concern;
(cid:120) Reviewing the solvency position of the Group and
assessing the position paper prepared by management;
(cid:120) Substantially test the balances included in the solvency
workings prepared by management and evaluate any items
that have been excluded from this assessment; and
(cid:120) Evaluating the disclosures in the financial statements for
appropriateness and consistency with accounting
standards.
Goodwill and other long-lived assets impairment assessment – Note 14 and note 15
Merger of Webcentral Limited and 5G Networks Limited – Note 2 and note 22
As disclosed in Note 14 and Note 15 of the financial report
Goodwill amounted to $50,212,000 and other intangibles of
$22,059,000 at 30 June 2022 as a result of acquisitions over
recent years.
In accordance with AASB 136 Impairment of Assets, goodwill
and other intangible assets acquired in a business
combination must be allocated to the Group’s cash-generating
units (“CGUs”). For each CGU to which goodwill has been
allocated, the Group is required to assess if the carrying value
of the CGU is in excess of the recoverable value.
The goodwill and other long-lived assets impairment
assessment has been assessed as a key audit matter due to
the judgement required by management in preparing a value
in use model to satisfy the impairment test as prescribed in
AASB 136, including the significant estimation involved in
forecasting of future cash flows and applying an appropriate
discount rate which inherently involves a high degree of
estimation and judgement by management.
Our procedures included, amongst others:
(cid:120) Assessing management’s determination of the Group
(cid:120)
(cid:120)
(cid:120)
(cid:120)
having three CGU based on the nature of the business and
the economic environment in which the units operate;
Reviewing the impairment model for compliance with AASB
136;
Assessing whether management has the requisite expertise
to prepare the impairment model;
Assessing the reasonableness and appropriateness of
inputs and assumptions to the model, with involvement of
our internal valuation specialist;
Evaluating management’s future cash flow forecasts and
obtain an understanding of the process by which they were
developed;
o
o
o
o
Assessing management’s key assumptions for
reasonableness and obtaining available evidence to
support key assumptions;
Considering the reasonableness of the revenue and
cost forecasts against prior years forecasts and current
year actuals;
Performing a sensitivity analysis on the key
assumptions;
Testing the underlying calculations for mathematical
accuracy of the model; and
(cid:120) Assessing the impairment expense that has been recorded
in the period and evaluating if this in line with expectation
from review of the impairment model and the recalculation
of our internal valuation specialist;
(cid:120)
Evaluating the disclosures in the financial statements for
appropriateness and consistency with accounting
standards.
On the 1st of October 2021, 5G Networks Limited and
Webcentral Ltd announced to the market a proposed merger
where Webcentral Ltd acquired all of the issued ordinary
shares by way of scheme of arrangement.
The scheme of arrangement became legally effective on the
12th of November 2021 with 5G Networks Limited delisting
from the Australian Stock Exchange (ASX). This resulted in
consolidated accounts being prepared and lodged with the
ASX for the twelve month period ending 30 June 2022.
Accounting for this transactions is a complex exercise
requiring management to use significant judgment to
determine the treatment under the accounting standards. As
such this has been identified as a key audit matter.
Our procedures included, amongst others:
(cid:120) Reviewing the technical memorandum prepared by
management, the position paper prepare by managements’
expert and the scheme of arrangement lodged with the
ASX;
(cid:120) Evaluating the competency and objectivity of managements
expert;
(cid:120) Evaluating the treatment of the merger in line with
accounting standards and involve an internal technical
expert to review the memorandum prepared by
management;
(cid:120) Assessing the reasonableness and appropriateness of
assumptions utilised by management in the technical
memorandum;
(cid:120) Reviewing the journals recorded as part of this transaction
and agreeing them with the technical memorandum
prepared by management; and
(cid:120) Evaluating the disclosures in the financial statements for
appropriateness and consistency with accounting
standards.
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included
in the Group’s annual report for the year ended 30 June 2022, but does not include the financial report and our
auditor’s report thereon.
Grant Thornton Australia Limited
Grant Thornton Australia Limited
8889
Independent Auditors’ Report
Shareholder information
The shareholder information set out below was applicable
as at 26 September 2022.
Webcentral Limited
Issued capital ordinary shares: 327,306,759 as at
26 September 2022.
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:
Holder
J D Management Pty Ltd, JMD
Superannuation Fund, Studio
Incorporate Pty Ltd and Joseph
Demase
Shares
%
56,515,128
17.27%
Total
56,515,128
17.27%
Distribution of Equity Shares
Voting Rights
The voting rights attached to each class of equity securities
are set out below:
Ordinary Shares
On a show of hands every member present at a meeting
in person, or by proxy, shall have one vote, and upon a poll
each share shall have one vote.
The Number and Class of Restricted
Securities Subject to Voluntary
Escrow that are on Issue
Voluntary Escrow
There are no securities subject to Voluntary Escrow.
Ordinary Shares
Number Held
Number of Holders
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
250,584
13,242,772
15,475,348
73,677,614
100,001 – and over
224,660,441
Total
327,306,759
There were 3,603 unmarketable parcels as at
26 September 2022.
411
4,557
2,067
2,605
302
9,942
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: http://www.auasb.gov.au/auditors_responsibilities/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 33 to 38 of the Directors’ report for the year
ended 30 June 2022.
In our opinion, the Remuneration Report of Webcentral Limited, for the year ended 30 June 2022 complies
with section 300A of the Corporations Act 2001.
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, 28 September 2022
Grant Thornton Australia Limited
9091
Shareholder information
The 20 Largest Holders of Each Class of Quoted Equity Securities
Rank
Holder
Number
55,474,469
18,352,253
14,096,949
11,059,489
6,016,187
4,965,780
3,798,536
3,714,018
3,000,000
2,823,284
2,526,666
2,512,438
2,231,469
2,137,819
1,658,330
1,630,000
1,504,284
1,470,588
1,460,204
%
16.9%
5.6%
4.3%
3.4%
1.8%
1.5%
1.2%
1.1%
0.9%
0.9%
0.8%
0.8%
0.7%
0.7%
0.5%
0.5%
0.5%
0.5%
0.4%
0.4%
142,206,075
43.4%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
J D MANAGEMENT GROUP PTY LTD
PACIFIC CUSTODIANS PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
DANEILA DONA GANGI & GIUSEPPE GANGI
MR ALBERT SAYCHUAN CHEOK & MR ERIC VICTOR CHEOK
NSR INVESTMENTS PTY LTD
MR GARRY EDWIN WHITE
ECKERT INVESTMENTS PTY LTD
ARKTREE NOMINEES PTY LTD
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
B F A PTY LTD
MR WEI CAI
ALBERT CHEOK
GANGI SERVICES PTY LTD
20
PAC EQUITIES PTY LTD
Total
Unissued equity securities
Number of options issued: 40,185,000
Securities exchange
The Company is listed on the Australian Securities Exchange.
MR GIANNI ANDREA VERROCCHI & MRS DEANNE JOSELYN VERROCCHI
1,773,312
92 Webcentral Head Office
Level 7, 505 Little Collins Street, Melbourne 3000
94