2023 ANNUAL REPORT
Webcentral Limited and its controlled entities
FOR THE YEAR ENDED 30 JUNE 2023
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
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 Registrar
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 Report
Board of Directors
Directors’ Report
Corporate Governance Statement
Auditors' Independence Declaration
Financial Statements
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∙
∙
∙
∙
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Directors' Declaration
Independent Auditors’ Report
Shareholder Information
2
4
7
16
19
34
39
42
44
46
47
48
80
81
86
23
Chairman's Address
As Chairman of Webcentral, I am proud to present to
you the Annual Report for Financial Year 2023. 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.
This year has been a consolidation period for our
SME sector with the successful launch of the .au Top
Level Domain (TLD) in September 2022. On the back
of this growth of 100,000 new .au domains we have
also seen the growth of our SME hosting and email
services. We have migrated over 20,000 Microsoft
email product users to our internal OX mail platform
producing significant margin improvement and we
have provided certainty for these users as their
previous email product was no longer offered.
In December 2022 we acquired a domains business
‘New Domain’ and, as the owners, have taken charge
of our Melbourne IT brand with a focus on corporate
clients providing much needed service and support
with brand protection.
Webcentral has made significant progress in FY23
building on the transformation of the business
in FY22 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 has faced several challenges during
the year, which have seen a decline in revenue
at one of the Group’s data centres servicing the
digital currency market and pricing pressure from
government contracts. However, the company has
seen an improvement in hardware supply chain
resulting in faster delivery times and project work
across the business.
The significant achievements in FY23 is shown by
the Company’s strong financial performance with
revenue growth across the Company’s customer
segments and 134% improvement in operating
cash flows in FY23.
The Board’s ongoing focus on capital management
and returns to shareholders was demonstrated by
the resumption of dividends to shareholders.
Looking forward to FY24, 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 FY23.
Yours sincerely,
Joe Gangi
Chairman
"Looking forward to FY24, Webcentral
is focused on continued organic
revenue growth and the ongoing
improvement of systems and
processes to enhance and simplify
customer experience."
45 Managing Director’s Report
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 50
people in Melbourne, Sydney and Brisbane, further
enhancing the customer experience.
Strong organic revenue growth was achieved across
the Company’s customer segments delivering overall
revenue growth for the company of 2.9% to $96.1M
for FY23. Operating cashflows significantly improved
in the second half of FY23 on the back of this
revenue growth with operating cashflows of $8.0M
for FY23.
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
As Managing Director of Webcentral, I am proud
to present our Annual Report on the business
operations for Financial Year 2023.
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 2023 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 $4.6M 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% of all sales, 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
"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."
67 Webcentral customer segments
and product offerings
Webcentral provides a broad range of digital services to more than 330,000 Retail, Enterprise and Wholesale
customers across Australia, New Zealand, Asia and the USA.
Revenue growth was achieved across all customer segments in 2023:
Domains
Cloud, Email
& Webhosting
Data
Centre
Networks
& Voice
Managed
Services
Hardware
& Software
Digital
Marketing
Services /
Segment
Retail
Enterprise
Wholesale
TOTAL
REVENUE
$'000
98,000
96,000
94,000
92,000
90,000
88,000
96,138
93,428
2022
2023
Growth
2.9%
98WWW Revenue growth across all customer segments
Retail customer growth in ARPU in FY23 and significant increase in lifetime
value per customer
$400
$350
$300
$250
$200
$150
$100
$50
$0
13%
ARPU Growth
15%
FY21
FY22
FY23
FY21
FY22
FY23
Lifetime value per customer $4.0k
Lifetime value per customer $2.7k (+41%)
Enterprise and Wholesale: Strong new sales, customer re-signs and pipeline
Enterprise and Wholesale Pipeline
• New sales of $7.4M
TCV1 in FY23
• Existing customer
re-signs of $4.9M TCV1
• Strong sales pipeline of
$8.9M recurring revenue
4.0
3.5
3.0
2.5
$M
2.0
1.5
1.0
0.5
0.0
Cloud
Data Centre
MIT
Networks and Voice
Wholesale
Enterprise
1. Total Contract Value
101110 Webcentral in the Community
Webcentral is committed to making sustainability
a priority across all of its operations. The Company
has formed an Environmental, Social and Governance
Committee (ESG Committee) to support it in fulfilling
its ESG responsibilities, meeting stakeholder
expectations and fostering an approach of
continuous improvement, for the benefit of its
shareholders, customers, employees, suppliers and
host communities.
Webcentral’s key ESG initiatives are as follows.
Environmental Initiatives
Data Centre Power Usage
Webcentral acknowledges that it is a significant
consumer of electricity, particularly arising from
its Data Centre (DC) operations. Accordingly,
Webcentral is taking ongoing action to minimise its
power consumption.
In the ever-evolving digital landscape, our DCs play
a crucial role in supporting the storage, processing
and transmission of vast amounts of data. As the
demand for computing resources continues to soar,
we are actively undertaking initiatives to optimise
our infrastructure. Our main focus in this regard is
improving our Power Usage Effectiveness (PUE).
PUE is a metric that quantifies the energy efficiency
of a data centre by comparing the total power
consumed by the facility to the power consumed by
its IT equipment. Reducing PUE not only contributes
to cost savings but also decreases environmental
impact. We have undertaken the following initiatives
to improve our PUE across all our data centres
over time:
• Hot Aisle/Cold Aisle Containment: Cooling
constitutes a significant portion of a data centre's
energy consumption. To improve PUE, we have so
far installed cold aisle containment at our North
Sydney Data Centre (NSDC), Sydney Data Centre
(SDC) and Adelaide Data Centre (ADC). Plans are
in progress to install cold aisle containment at
Melbourne Data Centre (MDC) and Brisbane Data
Centre (BDC). These measures ensure that cooling
resources are directed precisely where they are
needed, minimising wastage.
• Blanking plates: Blanking plates are a crucial
element of hot aisle/cold aisle containment
strategies. In this configuration, server racks are
arranged in alternating rows with hot exhaust air
expelled into the hot aisle and cool air delivered
to the front of the racks through the cold aisle.
Blanking plates prevent hot air from recirculating
back to the cold aisle, ensuring that the cooling
system operates efficiently and reduces energy
waste. We have manufactured our own 5GN
branded blanking plates and installed them in
all our racks across all our data centres.
• Building Management System: Accurate
temperature monitoring using a Building
Management System (BMS) promotes energy
efficiency and cost savings. By closely monitoring
temperature levels, we can fine-tune our cooling
operations to avoid overcooling and excessive
energy consumption. This contributes to reduced
electricity bills and a more sustainable operational
footprint. We have installed a BMS including
temperature and humidity sensors in all our data
centres which are monitored 24/7.
• Optimisation of Computer Room Airconditioning
Units: We constantly monitor the temperature
of our cold aisle via the BMS system and adjust
temperature setpoints on the Computer Room
Airconditioning (CRAC) units according to the IT
load fluctuations on the DC floor to ensure we are
not overcooling and wasting energy. In all our DC’s
except SDC, we have variable speed drives on all
the CRAC unit motors which automatically adjust
their speed according to the air flow required to
maintain our temperature SLA’s and prevent the
motors from running at 100% 24/7 unnecessarily.
•
Improved lighting quality: By replacing outdated
lighting fixtures with LEDs, data centres can
achieve substantial energy savings, contributing
to the overall reduction in PUE. SDC has an LED
lighting system with sensor control and we have
recently installed the same system at MDC,
with plans in place to do the same at our other
data centres.
•
IT Equipment Upgrades and Consolidation:
Upgrading and consolidating IT equipment is
a crucial initiative in data centre optimisation.
This involves modernising hardware,
streamlining infrastructure, and maximising
resource utilisation. Our networks team
has identified legacy systems, outdated
equipment and redundant or underutilised
equipment that consume space, energy, and
maintenance resources.
• Monitoring: As a result of all the improvements
mentioned we are noticing a steady overall
improvement in our data centre power usage
efficiency which is contributing to cost savings
and improving our energy footprint. The monthly
PUE for FY23 MDC and SDC is shown below:
MDC PUE Change 2022-2023
1.62
1.60
1.60
1.58
1.56
1.64
1.61
1.59
1.56
1.54
1.53
1.52
Jul
Aug
Sept
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
SDC PUE Change 2022-2023
1.98
1.99
1.98
1.96
1.96
1.96
1.94
1.94
1.96
1.95
1.88
1.86
Jul
Aug
Sept
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
PUE - total electricity consumption / UPS load
Other Environmental Initiatives
Webcentral procures significant volumes of IT
equipment and is consequently responsible for
the disposal of significant volumes of obsolete
equipment. At all locations and facilities operated
by Webcentral we maintain processes to recycle
obsolete equipment through appropriate e-waste
disposal services.
Several of Webcentral’s ‘data
centres maintain ISO 9001 (Quality
Management Systems) and 14001
(Environmental Management
Systems) accreditations
demonstrating that it has appropriate
systems in place to maintain quality
operational standards and manage its
environmental impact.
Webcentral’s offices in Melbourne, Sydney and
Brisbane are in modern, high-quality buildings with
high National Australian Build Environment Ratings
System (NABERS) ratings.
Social Initiatives
Diversity & Inclusion
Webcentral continues to support the increased
representation of women in the technology sector
and convened two events during the year with
industry-leading female host speakers. These events
continue to provide a valuable means for female staff
from across the Company’s operations to network
with one another, exchange ideas, raise any concerns
they have and listen to inspiring as well as 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.
Other initiatives included the convening of ‘Wear
it Purple Day’, to provide a visible sign of support
to a diverse range of staff across the organisation
and celebrations to acknowledge other causes
and initiatives.
1213
In addition, Webcentral’s domain name
services, data centres and managed
services business maintain ISO 27001
(Information Security Management
System) accreditation.
By retaining accreditations under these
internationally recognised standards, Webcentral can
demonstrate that it has appropriate systems in place
to maintain quality information security management
systems, in the core business areas so accredited.
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. Funds were also donated to The Toccolan
Club, a not-for-profit group devoted to raising funds
for Australian charities.
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, and is working with AFL Cape York
foundation, providing domains, hosting and a
free website.
Other initiatives included the convening of ‘RUOK’
morning tea, to support the charity that encourages
people to stay connected, have conversations
and help others through difficult times; and ‘Pink
Ribbon’ afternoon tea, to support the National Breast
Cancer Foundation.
A number of Committees have also been active during
the year, each with significant staff representation.
The committees are the Culture Committee,
Environment, Social and Governance Committee,
and Work Health and Safety Committee
Governance Initiatives
As an ASX listed company, Webcentral is bound by
various legislative and regulatory requirements,
including the Corporations Act 2001, ASX Listing
Rules, Telecommunications (Interception and Access)
Act 1979 and the requirements of our Registrar
Agreements with auDA (.au Domain Administration
Limited) and ICANN. Webcentral also complies with
the ASX Corporate Governance Council’s ‘Corporate
Governance Principles and Recommendations’
(4th Edition) - further detail is provided at pages
34 to 38 of this report.
Flexible and Safe Workplaces
Webcentral recognises that there is no one-size-fits-
all solution to the way we work. 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 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.
Webcentral’s offices also maintain
ISO 45001 (Work Health and Safety
Management System) accreditation.
Webcentral is keen to celebrate staff achievements
and conducts Staff Recognition Awards on a quarterly
basis. All staff have the opportunity to vote for high-
achieving staff and prizes are awarded for the top
three nominations. In addition, each year Webcentral
hosts a Service Awards event to celebrate the
achievements of our employees with ten or more
years of service.
Webcentral also offers employees free shares
annually under its Employee Share Scheme.
Other Social Initiatives
Webcentral is committed to giving back to
the community.
Webcentral’s Managing Director, Joe Demase, is
passionate about supporting 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 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
1415
Board of Directors
Managing Director
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 telecommuni-
cations sector amongst both the Australian
and UK divisions, along with over 25 years
of business experience, allowing Joe to skil-
fully identify market opportunities across
the board. Joe displays an abundance of
experience, having succeeded in a broad
range of executive positions.
Non-Executive Director
Natalie has over 20 years experience in the
online space having held senior manage-
ment 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 Na-
talie has been the CEO of Vivi International,
an Australian owned EdTech software or-
ganisation. Natalie has been an independent
director of Webcentral since October 2020.
Joe
Demase
Natalie
Mactier
Company Secretaries
Glen
Dymond
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, Broadspec-
trum Limited and ConnectEast Group. Glen's
commercial finance and operations expe-
rience 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 undergo-
ing rapid growth and change.
Chairman
Joe has over 30 years’ experience in corpo-
rate 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.
Non-Executive Director
Jason has deep knowledge and experience
in the IT and Telecommunications indus-
tries. 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.
Joe
Gangi
Jason
Ashton
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.
Michael
Wilton
1617 Directors' Report
Your Directors submit their report for the year ended
30 June 2023.
Directors were in office for the entire period unless
otherwise stated.
Directors
Mr. J. Gangi
Mr. J. Demase
Ms. N. Mactier
Mr. J. Ashton
Managing Director and Chief Executive Officer
Mr. J. Demase
Chief Executive Officer – Melbourne IT
Mr. Jonathan Horne (from 1 December 2022)
Chief Financial Officer
Mr. G. Dymond
Chief Operating Officer
Mr. J. Stevens
Company Secretaries
Mr. M. Wilton
Mr. G. Dymond
Details of Directors'
experience, expertise
and directorships
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 20 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
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.
Other Current Listed Company Directorships
• Nil
Former Listed Company Directorships In Last Three Years
• 5G Networks Limited
1918 Directors’ Report
Directors’ Report
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; and
• 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
Year ended
30-Jun-23
$’000
30-Jun-22
$’000
96,138
12,825
93,428
17,561
(19,019)
(24,738)
(19,019)
(24,883)
CONTINUING
OPERATIONS
Total revenue from
contracts with customers
Underlying EBITDA(1) from
Continuing Operations
Loss after tax from
continuing operations
Loss after tax attributable
to members of the parent
1. Refer section below – Management performance measures – underlying EBITDA
Revenue for the period was $96.14 million, representing
growth of 2.9% compared to the prior comparative
period (PCP) of $93.43 million. The loss of the Group for
the period after providing for income tax amounted to
$19.02 million (2022: $24.74 million loss). The underlying
EBITDA of the Group for the period of $12.83 million was
27.0% lower than the prior comparative period of $17.56
million, after adjusting for non-operating items including
a non-cash goodwill impairment expense of $14.08 million,
non-cash share-based payments expense of $1.55 million,
and acquisition, restructuring other non-recurring costs
of $3.5 million.
The major contributors to the decline in underlying EBITDA
was the $3.26 million reduction in non-recurring hosting
revenue and transitional services income and the reduction
in networks and data centre revenue.
The goodwill impairment charge has arisen due to the
assessment of the carrying value of goodwill and intangible
assets at year-end and the impact of higher discount rates.
The non-cash impairment expense recognises the decline
in revenue at one of the Group’s data centres servicing the
crypto mining market and pricing pressure from government
contracts. The non-cash impairment charge has no impact
on the Group's debt facilities, covenants or liquidity.
Segment Revenue
Data Centres, Network & Cloud
Managed Services
Webcentral
Intersegment eliminations
Total Revenue
FY23
$’000
22,117
20,239
53,782
-
96,138
FY22
$’000
24,638
19,465
50,106
(781)
93,428
Alternative segment presentation
The Group has restructured its operations into the following
customer segments following the merger between
Webcentral and 5G Networks Limited in November 2021:
• Retail: domains, web hosting, email hosting and digital
marketing services to consumer and small and medium
enterprise customers
• Enterprise: cloud hosting, domain names, data centre,
networks and voice, IT managed services, hardware and
software and digital marketing products and services
provided to Enterprise and Government customers
• Wholesale: cloud hosting, data centre, networks and
voice products and services provided to wholesale
telecommunications and Segment information is
provided below in relation to these segments.
These reporting segments will apply from reporting periods
from 1 July 2023.
Segment Revenue
Retail
Enterprise
Wholesale
FY23
$000
51,118
37,108
7,912
FY22
$000
48,863
37,022
7,543
Change
4.6%
0.2%
4.9%
The Group achieved revenue growth across its Retail,
Enterprise and Wholesale customer segments in FY23 due
to the following initiatives:
• The successful launch of the new .au domain name TLD
generating more than $4.6 million in sales from more than
100,000 new .au domain names registered;
• Growth in SME hosting and email services including the
migration of 20,000 Microsoft email product users to our
internal OX mail platform with significant gross margin
increase;
• Improvement in hardware supply chain resulting in faster
delivery times and project work across the business, with
hardware revenue up 21% to $8.15 million in FY23;
• 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;
• 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;
• Strong wholesale and enterprise customer growth with
more than $5.9 million annual recurring revenue sold in
FY23, existing customer renewals of $4.9 million and
sales pipeline of $8.9 million; and
• Customer value increase with 13 to 15% ARPU growth
achieved for Melbourne IT and Webcentral respectively
compared to the PCP.
Other key strategic and financial growth highlights for the
year ended 30 June 2023 were as follows:
• Acquisition of New Domain Services, a premium domain
email and webhosting services business with the owner
taking the charge of the Melbourne IT brand with a focus
on corporate clients and providing much needed service
and support with brand protection;
• Ongoing automation of customer portals, the launch
of the Dark Fibre product and completion of the fibre
network with more than 120 kilometres of fibre installed
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; and
• Strong capital position with $4.5 million cash and $4.5
million of available debt at 30 June 2023 (of which $1.5
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:
Year ended
30-Jun-23
$’000
30-Jun-22
$’000
(22,217)
12,447
1,546
3,475
184
3,313
14,077
(24,382)
13,630
8,833
2,798
904
3,706
12,072
CONTINUING OPERATIONS
(Loss) / Profit before tax
Depreciation and
amortisation expense
Share based expenses
Finance costs
(excl. bank charges
and merchant fees)
Acquisition costs
Non-recurring costs
Impairments of financial
assets, goodwill, fixed assets
and intangible assets
Underlying EBITDA
12,825
17,561
2021 Directors’ Report
Directors’ Report
Acquisitions and investing
activities
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 1 December 2022, the Company announced the
acquisition of New Domain Services, a premium domain
email and webhosting services business with 25,000
customers with normalised revenue of $2 million and
normalised EBITDA of $1.2 million. The acquisition price was
$5 million with $3.5 million paid in cash at Completion and
up to $1.5 million payable within 12 months of Completion.
The acquisition was funded from existing cash reserves and
from the Group’s acquisition debt facility with CBA.
New Domain Services has been integrated with the Group’s
Melbourne IT business and New Domain vendor Jonathan
Horne has been appointed as Chief Executive Officer of the
combined business to drive growth in corporate domains
services. It is expected that the acquisition will also benefit
the broader Webcentral business as customer services
changes, process improvements and product innovation
are rolled out to Webcentral’s business.
During the period the Group also continued to invest in its
fibre network build throughout several capital cities and
had completed more than 120 km and connected more than
50 data centres as at the date of this report.
Capital structure
On 3 August 2022, the Company announced the launch of
an on-market share buyback (Buyback). During the year
the Company acquired a total of 5,401,820 ordinary shares
on-market pursuant to the Buyback for total consideration
of $955,278. All shares acquired were cancelled during
the period.
During the year, the following ordinary shares were issued:
• 1,000,000 ordinary shares were issued on 11 October 2022
to the vendors of the ColoAu business at an issue price
of $0.1366 per share to satisfy the earn-out payable in
respect of the ColoAu acquisition in July 2020;
• 346,611 ordinary shares were issued on 4 November 2022
pursuant to the Dividend Reinvestment Plan at an issue
price of $0.15 per share; and
• 2,088,646 ordinary shares were issued on 31 March 2023
under the Employee Share Plan at an issue price of $0.09
per share.
During the year, the following unlisted options were issued:
• 900,000 options under the Executive and Director Share
Option Plan (ESOP) at an exercise price of $0.20, subject
to the satisfaction of service vesting conditions and
expiry date of five years after grant;
• 2,000,000 options under the Executive Equity Plan (EEP)
at an exercise price of $0.20, subject to the satisfaction
of service vesting conditions and expiry date of five years
after grant;
• 260,000 options under the EEP at an exercise price of
$0.20, subject to the satisfaction of performance and
service vesting conditions and expiry date of three years
after grant;
• 4,000,000 options under the EEP at an exercise price
of $0.17, subject to the satisfaction of service vesting
conditions and expiry date of five years after grant;
• 250,000 options under the EEP at an exercise price of
$0.17, subject to the satisfaction of performance and
service vesting conditions and expiry date of three years
after grant;
• 250,000 unlisted options at an exercise price of $0.20
during the period to service providers of the Group;
• 1,750,000 options under the ESOP at an exercise price
of $0.11, subject to the satisfaction of service vesting
conditions and expiry date of five years after grant; and
• 1,500,000 options under the EEP at an exercise price
of $0.11, subject to the satisfaction of service vesting
conditions and expiry date of five years after grant.
During the year, 1,700,000 unlisted options issued under the
ESOP and EEP were forfeited and cancelled.
On 24 February 2023 a variation of the Company’s debt
facilities with Commonwealth Bank of Australia (CBA) was
approved in order to reallocate limits from the acquisition
facility to the market rate loan facility of $2.0 million and
from the bank guarantee facility to the equipment lease
facility of $0.55 million. In addition, the maturity date for
the acquisition facility was extended to 31 March 2024.
On 23 August 2023, CBA approved an amendment to the
Net Leverage Ratio covenant in relation to the period
ended 30 June 2023 to increase it to 3.50 times. There
was no financial impact to the Group and all other financial
covenants and undertakings under the Debt Facility
Agreement were met in relation to the period ended 30
June 2023. The Group expects to comply with all financial
covenants for FY24. As the amendment was received after
reporting date, the Group is required to classify an amount
of $25.1 million as a current liability in the Statement of
Financial Position even though these amounts are not
repayable within 12 months of reporting date.
Material Business Risks
The material business risks that have the potential to
impact on the future prospects of the Group include:
Customer retention and revenue growth
The continued strong growth in sales and profitability
of the Group depends on a number of factors, including
attracting new customers on a sufficiently profitable
basis, and retaining and increasing revenue from existing
customers. Customer revenue growth is particularly
dependent upon the provision of consistently high-quality
customer service and continued satisfaction of sales
objectives. If these growth factors were to be impaired,
the financial performance and reputation of Group would
be adversely affected.
The Group’s success is heavily reliant on its positive
reputation, and particularly its customer satisfaction, in
relation to its operating brands. The occurrence of any
unforeseen issue or event which impacts the performance
of the Group’s services may result in a diminution of
customer satisfaction and loyalty and place the reputation
of the Group’s brands at risk. These implications bear a risk
of adversely impacting the financial performance of the
Group’s business.
Competition
The digital services industry is rapidly evolving with a
heightened environment of change characterised by
disruptive technologies. The Group therefore faces
potential loss of its competitive or market position
as a result of potential product innovation by existing
competitors or new entrants to the market. The Group
may not anticipate or respond to any such developments
with sufficient speed to maintain its market position.
Other competitive risks faced by the Group include price
competition, competitor marketing campaigns, mergers of,
or acquisitions by, competitors and possible new entrants
to the market.
Changes in technology
The digital services industry is evolving rapidly with the
frequent introduction of new technologies, products and
innovations. Consumer behaviours, preferences and trends
are also constantly changing upon the onset of new methods
of communication and digital platforms. The Group must
likewise evolve and adapt its products and service offering to
maintain pace with the industry in which it operates and to
maintain its competitive position. Given the pace of change,
there is no guarantee that the Group will be able to continue
to introduce new and superior products, or products that
are perceived to be new and superior by consumers, at the
rate seen by other competitors in the market generally. The
Group’s ability to do so is constrained by factors including its
available capacity, resources and capital to invest in product
development, innovation and design. This may adversely
impact on the Group’s long- and short-term business
performance.
The Group’s businesses are heavily dependent on
information communication technology for the delivery
of their various services, across large geographic
distance, and it has invested significantly in technology
to maximise the efficiency of its operations. Should these
systems not be adequately maintained, secured and
updated, or the Group’s disaster recovery processes
not be adequate, system failures may negatively impact
the Group’s performance.
The Group has undertaken IT transformation programs
in recent years which are still in progress and may cause
unexpected disruptions, fail to provide anticipated benefits
or otherwise be unsuccessful. A significant implementation
and migration failure could result in a major impact on the
Group’s customer retention, revenues, costs and reputation.
Infrastructure and technology failure
The Group relies on its technical infrastructure and networks
to provide its customers with a highly reliable service.
There may be a failure to deliver this level of service as a
result of numerous factors, including human error, power
loss, failure of third-party equipment, services or networks,
improper maintenance by landlords and security breaches.
Service interruptions, regardless of their cause, may cause
contractual and other losses to the Group.
Cyber and security risks
Protection of customer and third-party data is critical to
the Group’s ongoing business and any breaches of this
could have significant negative financial ramifications.
The Group retains a significant amount of sensitive
customer and third-party information. Customers and
third parties have high expectations regarding the
protection of their information. Additionally, the legal and
regulatory environment surrounding information security
and privacy is increasingly complex and demanding.
Failures or breaches of data protection systems can result
in reputational damage, regulatory impositions (such as
for breaches of the Privacy Act 1988 (Cth)) and financial
loss, including claims for compensation by customers
or penalties by telecommunications regulators or
other authorities.
As a technology business, the Group’s business may be
particularly adversely affected by technological disruptions,
including through impacts of malicious third-party
applications or other form of cyber-attack on the Group
that could result in failures and interfere with its systems,
products and platforms. It is possible that the measures
taken by the Group will not prevent unauthorised access to
its systems and technologies, risking third party access to
confidential or otherwise sensitive data. This could lead to
loss of key business or customer information, reputational
damage and claims from customers or other third parties
whose data may be affected.
If, as a consequence, the Group is unable to provide
services to its customers, it may experience loss of
market share, damage to reputation and brand, customer
compensation claims and regulatory action. This may result
in the Group incurring significantly increased expenses or
suffering reduced revenue.
Compliance risks
The Group relies on certain accreditations and licences
to operate their businesses. In particular, the Group
holds a carrier licence under the Telecommunications
Act 1997 which is essential to operate as a carrier of
telecommunications infrastructure. If this licence or other
licences were to be cancelled it could severely restrict the
ability of the Group to operate and could result in the Group
breaching a number of its contractual obligations.
Several of the Group’s domain registry businesses are
ICANN and .auDA accredited Registrars. Such accreditation
is essential for the Group to operate as a domain registrar
business and provide customers with domain name
services. If accreditation were to be lost, it could severely
restrict the Group’s ability to operate as a domain name
service provider and could result in the Group breaching its
contractual obligations.
2223 Directors’ Report
Directors’ Report
The Group’s businesses are reliant on wholesale licences
to provide digital services to customers and cannot be
assured that it will continue to be provided with these brand
licences. If the Group were to not have such brand licences,
its ability to attract customers or provide attractive
offerings could be negatively affected, which in turn could
have a material adverse effect on its business, financial
condition and results or operations of the Group.
The Group operates in a highly regulated environment with
several accreditation and licensing compliance obligations.
These compliance obligations have strong penalties for
non-compliance, including undertakings or the imposition
of substantial civil and criminal penalties. Possible changes
to existing regulation may impose substantial risks to the
Group’s businesses and increased compliance costs.
The Group is also exposed to risks from unexpected
regulatory policies, outcomes or decisions by regulators
empowered to regulate the telecommunications sector,
including the Australian Competition & Consumer
Commission and the Australian Communications and
Media Authority which may result in an increase in
compliance costs and delays in having to seek additional,
or variations to, government approvals, adverse impacts
upon the Group’s ability to continue to acquire goods and
services from existing suppliers from foreign countries, or
fines and penalties being imposed for contraventions of
relevant laws.
Availability of equipment
The Group is dependent upon third party suppliers
for IT and network infrastructure and, in some cases,
licences, services, equipment and content from parties
over whom the Group may have no direct operational or
financial control. If any of these third party providers fail
to maintain their products, solutions, services or offerings
properly or fails to respond and adapt quickly to any of the
Group’s requirements, customers may experience service
interruptions.
The dependence on these third party suppliers for support
and delivery of certain core business functions means
that the impact of the COVID-19 pandemic, regulatory
changes or issues with the Group’s supply chain could have
a significant adverse impact on the timeliness or cost of
building or maintaining the Group’s network.
There is also a risk that third party suppliers may provide
services or products with defects, which may lead to
network underperformance or other impacts on customers.
This could, in turn, adversely affect the Group’s market
share or revenue.
Equity and debt market risks
The Group’s ability to service its existing debt depends
upon its financial performance and cash flows which to
some extent are subject to general economic, financial,
regulatory and other factors beyond the control of the
Group. If the Group is unable to generate sufficient cash
flow to meet specific debt repayment obligations, it may
face additional financial penalties, higher interest rates or
difficulty obtaining further funding in the future.
The Group is subject to the risk that it may not be able to
refinance its bank debt facilities when they fall due or that
the terms (including in relation to pricing) on refinancing
will be less favourable than the existing terms. If there is a
deterioration in the level of debt market liquidity, this may
prevent the Group from being able to refinance some or all
of its debt. In addition, the Group may in the future require
additional debt or equity capital in order to fund growth
strategies, in particular for acquisition opportunities that
may arise from time to time. There is a risk that the Group
may be unable to access debt or equity funding from the
capital markets on favourable terms, or at all.
Financial and economic conditions
The financial performance of the Group and the value of
its shares may fluctuate due to various factors, including
movements in the Australian and international capital
markets, recommendations by brokers and analysts,
interest rates, exchange rates, inflation, Australian and
international economic conditions, change in international
economic conditions, change in government, fiscal,
monetary and regulatory policies, prices of commodities,
global geo-political events and hostilities, global health
pandemics and acts of terrorism, investor perceptions and
other factors that may affect the Group’s financial position
and earnings. In the future, these factors may affect the
Group and may cause the price of its shares to fluctuate
and trade below current prices.
In light of recent global macroeconomic events, including
the impact of the recent COVID-19 pandemic, Australia may
experience an economic recession or downturn of uncertain
severity and duration which could impact the Group’s ability
to attract and retain customers, to invest sufficiently to
develop, adopt and integrate the latest technologies into
existing infrastructure, and to secure and maintain third
party suppliers for IT and network infrastructure over whom
the Group may have no direct operational or financial control.
These economic disruptions may adversely impact the
Group’s earnings and assets, as well as the value of its shares.
Employee relations and personnel risks
The Group’s ongoing success depends in part upon its
ability to retaining its key employees. If there is a departure
of key employees the Group’s business could be adversely
affected. The Group may have to incur significant costs
in identifying, hiring and retaining replacements for
departing employees and may lose significant expertise
and talent relating to the business. Certain key executives
and other employees of the Group may terminate their
management positions or their employment contracts
on their own initiative. If members of the Group’s senior
management depart, the Group may not be able to find
effective replacements in a timely manner, or at all, and
its business may be disrupted.
Dividends
No final dividend was or is proposed to be declared
with respect to the current period. No interim dividend
was paid. A dividend of $0.005 per share was paid on
4 November 2022 in respect of the year ended 30 June
2022, franked to 20%. No dividends were paid in the prior
corresponding period.
Significant changes in affairs
There were no significant changes in the state of affairs of the Group during the year ended 30 June 2023.
Significant events after reporting date
On 23 August 2023, CBA approved an amendment to the Net Leverage Covenant in relation to the period ended 30 June 2023
to increase it to 3.50 times.
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 Group, the results of those operations, or the state of affairs of the Group in future financial years.
Likely devlopments, business strategies and prospects
The Company’s strategy for FY24 and future years is to achieve revenue and EBITDA growth across each of its customer
segments to deliver growth in returns to its shareholders. The Company believes that the continued growth in demand for digital,
cloud and network services will support the growth in demand for the Company’s products and services. The Board also expects
to focus on EBITDA-accretive acquisition of businesses that complement the Company’s existing products and services.
Further information on the Group’s future prospects are contained in the Chairman’s and Managing Director’s Reports on pages 4
and 7 respectively.
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 2023, 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
11
5
1
Name of Director
Joseph Gangi
Joe Demase
Natalie Mactier
Jason Ashton
Eligible
Attended
Eligible
Attended
Eligible
Attended
11
11
11
11
11
11
11
11
5
5
5
5
5
5
5
5
1
1
1
1
1
1
1
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 not, during or since the end of the financial
year, indemnified or agreed to indemnify the auditor of the
Group or any related entity against a liability incurred by
the auditor.
During the financial year, the Group has not paid a premium
in respect of a contract to insure the auditor of the Group or
any related entity.
2425 Directors’ Report
Remuneration Report (Audited)
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 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 Audit Pty Ltd.
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; and
• 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
2023
$
2022
$
-
-
75,000
75,000
114,111
114,111
203,155
203,155
114,111
278,155
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
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 39.
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
22 September 2023
The Directors present the Webcentral Limited
2023 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
Other key management personnel:
Jonathan Horne – CEO, Melbourne IT
(appointed 1 December 2022)
Glen Dymond - Chief Financial Officer and Company
Secretary
Garry White - National Sales Director
John Stevens – Chief Operating Officer
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.
Group performance and link to remuneration
In considering the Group's performance and benefit of
shareholder's wealth, the Nomination and Remuneration
Committee had regard to the following measures in respect of
the current financial year and the previous four financial years:
Measure
2023
$'000
2022
$'000
20211
$'000
20191
$'000
20181
$'000
Underlying EBITDA
from continuing
operations2
12,825
17,561
11,928
14,794
24,564
Net loss after tax
(19,109)
(24,738)
(61,922)
(131,222)
(2,326)
Measure
Dividend
Change in share
price
2023
Cents
2022
Cents
20211
Cents
20191
Cents
20181
Cents
-
0.5
-
-
8.0
(8.5)
(26.5)
9.5
(158.0)
(166.0)
Share price close
12.5
21.0
47.5 38.0
196.0
1. The financial year end date for the Group was changed from 31 December to 30 June
after the financial year ended 31 December 2019. The measures for 2021 represent the
18-month period ended 30 June 2021
2. Underlying EBITDA from continuing operations is a management performance
measure (Earnings before Interest, Tax, Depreciation and Amortisation) that the
Group believes 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.
2627 Remuneration Report (Audited)
Remuneration Report (Audited)
(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 short-term performance objectives implemented for the following KMP in relation to FY23 were as follows:
KMP
STI targets for the year
STI achieved and forfeited for the year
Glen Dymond (i) Projects to increase revenue or reduce operating costs
(i) Achieved: 87.5% / $35,000
This target reflects the importance of ongoing
improvement of systems and processes and the
identification and achievement of revenue and cost
synergies
Forfeited: 12.5% / $5,000
Assessed by reference to the actual achievement of
revenue increase or cost savings compared to project
targets
(ii) Group Revenue and EBITDA targets
(ii) Achieved: 0% / $0
This target reflects the importance of achieving Revenue
and EBITDA growth and the Group’s financial performance
Forfeited: 100% / $40,000
Assessed by reference to the Group’s revenue and EBITDA
for FY23
Garry White
(i) Projects to increase revenue or reduce operating costs
This target reflects the importance of ongoing
improvement of systems and processes and the
identification and achievement of revenue and cost
synergies
(iii) Total achieved: 43.8% / $35,000
Total forfeited: 56.2% / $45,000
(i) Achieved: 100% / $7,500
Forfeited: 0% / $0
Assessed by reference to the actual achievement of
revenue increase or cost savings compared to project
targets
(ii) Group Revenue and EBITDA targets
(ii) Achieved: 0% / $0
This target reflects the importance of achieving Revenue
and EBITDA growth and the Group’s financial performance
Forfeited: 100% / $80,000
Assessed by reference to the Group’s revenue and EBITDA
for FY23
(iii) Total achieved: 8.6% / $7,500
Total forfeited: 91.4% / $80,000
(i) Achieved: 69% / $41,136
Forfeited: 31% / $18,864
Assessed by reference to the actual achievement of
revenue targets and industry funding to support marketing
objectives
(ii) Achieved: 40% / $24,000
Forfeited: 60% / $36,000
Assessed by reference to the successful project delivery
and lower than forecast product revenue for FY23
(iii) Total achieved: 54.3% / $65,136
Total forfeited: 45.7% / $54,864
John
Stevens
(i) Delivery of .AU TLD launch
This target reflects the importance of the .AU TLD domain
launch to the Group’s revenue growth
(ii) NBN Product Launch
This target reflects the importance of the NBN product
launch to the Group’s revenue growth
The grant dates following bonuses were paid in respect of FY23:
• Glen Dymond - 31 August 2022 and 28 February 2023;
• Garry White - 31 August 2022; and
• John Stevens - 30 November 2022 and 30 April 2023.
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. The Webcentral Executive Equity Plan (EEP) was adopted in April 2022 for executives and senior leaders of the Group.
During the year ended 30 June 2023 the Group issued 6,100,000 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.
(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
$
$
$
$
$
Options and
Performance
Rights3
$
Termination
Pay
Total
Performance
Based4
$
$
%
Managing Director
Joe Demase
2023
2022
291,667
276,923
Other Management personnel
-
-
-
-
50,000
4,934
25,292
302,934
23,077
7,559
23,568
1,657,422
23,077
2,534
14,834
62,663
122,756
-
225,306
35,000
208,992
76,800
228,819
7,500
-
19,671
19,319
16,159
217,773
38,400
10,537
276,923
65,136
23,077
-
6,134
6,278
6,134
5,335
6,134
-
25,292
23,568
-
39,413
28,475
25,292
138,397
23,568
123,391
25,292
99,028
189,615
-
10,385
4,272
16,784
94,916
1,145,471
107,636
131,984
25,870
116,002
642,435
2022
893,303
115,200
63,318
23,444
87,488
1,904,204
2023
2022
2023
2022
2023
2022
2023
2022
2023
Jonathan Horne5
Glen Dymond
Garry White
John Stevens6
Total KMP
excluding
Non-Executive
Directors
Total Non-
Executive Directors
(Section E)
2023
281,818
2022
234,236
-
-
-
-
-
-
8,591
490,119
4,962
701,573
Total KMP
2023
1,427,289
107,636
131,984
25,870
124,593
1,132,554
2022
1,127,539
115,200
63,318
23,444
92,450
2,605,777
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
674,827
1,988,549
225,864
-
350,816
363,432
422,301
419,004
495,590
315,972
2,169,398
3,086,957
780,528
940,771
2,949,926
4,027,728
45%
83%
28%
-
21%
29%
35%
39%
33%
30%
35%
65%
63%
75%
42%
68%
1. Represents STIs accrued in relation to the 2023 financial period.
2. Represents the cost to the business of any non-cash business benefits provided.
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 Jonathan Horne commenced on 1 December 2022.
6. Mr John Stevens commenced on 1 November 2021.
2829
Remuneration Report (Audited)
Remuneration Report (Audited)
Options and Rights Granted as Remuneration
The following table lists the inputs to the Black-Scholes-Merton models used for the LTI Grants:
Name
Balance at
1 July 2022
Grant Details
Exercised
Exercised
Lapsed
Balance at
30 June 2023
No.
Grant Date
No.
Fair Value
$000
No.
Value
$000
No.
No.
Key Management
Personnel
Joe Gangi
Joe Demase
Natalie Mactier
Jason Ashton
Jonathan Horne
Glen Dymond
John Stevens
KMP Total
Garry White
1,300,000
1,500,000
20,000,000
1,500,000
1,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
14/12/2022
4,000,000
308
300,000
01/09/2022
29/06/2023
01/09/2022
29/06/2023
1,000,000
29/06/2023
300,000
500,000
300,000
500,000
500,000
23
32
23
32
32
27,100,000
-
6,100,000
450
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,500,000
20,000,000
1,500,000
1,500,000
4,000,000
1,100,000
2,100,000
1,500,000
33,200,000
The key criteria for performance rights and options granted during the period are as follows:
• 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 $0.16 for the 6,100,000 performance rights and options granted during the period.
The following table summarises information about performance rights and options held by KMP as at 30 June 2023.
5,000,000 performance rights are exercisable at period end (2022: 5,000,000 performance rights):
Issue Date and Type
Number
Grant Date
Vesting Date
Expiry Date
Weighted Average
Exercise Price
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
21/12/2026
2021 Options - Director
4,500,000
22/12/2021
22/12/2023
21/12/2026
2021 Options – Executive (3)
2,600,000
15/07/2021
15/07/2023
15/07/2026
2022 Options – Executive (3)
600,000
01/09/2022
01/09/2024
01/09/2027
2022 Options – Executive (5)
2,000,000
14/12/2022
14/12/2023
14/12/2027
2022 Options – Executive (6)
2,000,000
14/12/2022
14/12/2024
14/12/2027
2023 Options – Executive (1)
1,500,000
29/06/2023
29/06/2025
29/06/2028
1. Vesting period is dependent on the achievement of inclusion in the S&P ASX300 Index.
23,700,000
$0.20
$0.45
$0.45
$0.45
$0.20
$0.17
$0.17
$0.11
$0.37
2020 Rights
2021 Rights
2021 Options
2021 Options (3)
2022 Options (3)
2022 Options (5)
2022 Options (6)
2023 Options (1)
Share price
Dividend yield
Expected volatility
Risk-free interest
rate
Fair value per
option
$0.415
$0.465
$0.465
$0.475
$0.175
$0.16
$0.16
$0.13
0.0%
0.0%
0.0%
0.0%
2.9%
3.1%
3.1%
3.8%
73.4%
45.0%
45.0%
73.4%
96.1%
93.3%
93.3%
92.8%
0.38%
1.27%
1.27%
0.69%
3.50%
3.06%
3.06%
3.93%
$0.3031
$0.192
$0.3031
$0.205
$0.08
$0.07
$0.08
$0.06
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.
(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
Mr Joe Gangi
Ms Natalie Mactier
Mr Jason Ashton1
Total
Period
Cash Salary
& fees
$
110,000
103,333
90,000
81,288
81,818
49,615
281,818
2023
2022
2023
2022
2023
2022
2023
2022
234,236
Cash
STI
$
Annual
leave
Superannuation
Long service
leave
$
$
$
Options and
Performance
Rights
$
Total
Performance
related
$
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,591
4,962
8,591
4,962
-
-
-
-
-
-
-
-
163,373
273,373
308,041
411,374
163,373
253,373
308,041
389,329
163,373
253,782
85,491
140,068
490,119
780,528
701,573
940,771
60%
75%
64%
79%
64%
61%
63%
75%
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.
1. Mr Jason Ashton was appointed on 24 November 2021.
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.
3031
Remuneration Report (Audited)
Remuneration Report (Audited)
(F) Other Statutory Information
Shareholdings
The numbers of shares in the Group held (directly, indirectly or beneficially) during the financial year by KMP, including their
related parties, are set out below.
Balance at 1 July 2022 or
date of appointment
Received on the exercise
of option or right
Net Other Changes
Balance at 30 June 2023
Directors
Joe Gangi
Joe Demase
Natalie Mactier
Jason Ashton
Total Directors
Other Management Personnel (OMP)
Jonathan Horne
Glen Dymond
Garry White
John Stevens
Total OMP
Group Total
7,745,040
55,793,184
1,000,000
4,967,147
69,505,371
-
1,539,813
6,235,048
-
7,774,861
77,280,232
-
-
-
-
-
-
-
-
-
-
-
-
2,875,535
-
-
7,745,040
58,668,719
1,000,000
4,967,147
2,875,535
72,380,906
-
-
-
74,000
74,000
-
1,539,813
6,235,048
74,000
7,848,861
2,949,535
80,229,767
Voting and comments made at the Company’s Annual General Meeting
The Company received 96.3% of ‘yes’ votes on its Remuneration Report for the financial year ending 30 June 2022. The Company
received no specific feedback on its Remuneration Report at the Annual General Meeting.
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
2023
$000
128
-
128
Other Transactions with Key
Management Personnel
During the year, the Group has conducted the following
related party transactions:
• A total of $213,191 (2022: $154,294) was paid to Studio
Inc., an entity related to Joe Demase, for the design of
marketing materials for the Group.
• A total of $18,315 (2022: nil) was paid to Mr Hunter
Demase for sales consulting services.
All transactions are carried at commercial third-party rates.
There were no other transactions with KMP during the year
ended 30 June 2023.
End of Remuneration Report
This report, incorporating the Remuneration Report is
signed in accordance with a resolution of Directors.
Joe Gangi
Chairman
22 September 2023
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
$350,000
Unspecified
6 months
Jonathan Horne
$250,000
Unspecified
3 months
Glen Dymond
$270,000
Unspecified
3 months
Garry White
$270,000
Unspecified
3 months
John Stevens
$300,000
Unspecified
3 months
Loans to Key Management Personnel
(i) Executive and Direct 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 year no loans were provided under the
Executive and Director Share Plan (2022: $400,000)
(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. Loan repayments of $148,400 were made
during the year ended 30 June 2022 ($74,200 from Glen
Dymond and $74,200 from Garry White). No repayments
were made during the year ended 30 June 2023. The loans
are full recourse loans and repayable on termination of
employment of the relevant employees.
3233
Corporate Governance Statement
Corporate Governance Statement
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.
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
3435 Corporate Governance Statement
Corporate Governance Statement
Compliant
Principle 6 – Respect the rights of security holders
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
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 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.
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.
External auditors attend the Company’s Annual General Meeting and are
available to answer reasonable questions from security holders in relation
to the conduct of the audit, the preparation and content of the independent
audit report and the accounting policies adopted by the Company.
Compliant
Principle 4 – Safeguard the integrity of corporate reports
The Board has established an Audit and Risk Committee (‘ARC’) which
operates under an audit and risk committee charter.
Compliant
Principles and Recommendations
Compliance
Comply
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
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.
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.
Compliant
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.
3637 Corporate Governance Statement
Auditors' Independence Declaration
Principles and Recommendations
Compliance
The ARC meets at least four times each year and a risk review is
conducted in relation to each reporting period.
Comply
Compliant
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 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
Grant Thornton Audit Pty Ltd
Level 22 Tower 5
Collins Square
727 Collins Street
Melbourne VIC 3008
Grant Thornton Audit Pty Ltd
GPO Box 4736
Level 22 Tower 5
Melbourne VIC 3001
Collins Square
727 Collins Street
T +61 3 8320 2222
Melbourne VIC 3008
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
Auditor’s Independence Declaration
To the Directors of Webcentral Limited
Auditor’s Independence Declaration
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 2023, I declare that, to the best of my knowledge and belief,
To the Directors of Webcentral Limited
there have been:
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to
a
of Webcentral Limited for the year ended 30 June 2023, I declare that, to the best of my knowledge and belief,
the audit; and
there have been:
b
a
no contraventions of any applicable code of professional conduct in relation to the audit.
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
Grant Thornton Audit Pty Ltd
Chartered Accountants
M A Cunningham
Partner – Audit & Assurance
Melbourne, 22 September 2023
M A Cunningham
Partner – Audit & Assurance
Melbourne, 22 September 2023
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.
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or
refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL).
ACN-130 913 594
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
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.
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
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or
556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards
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).
Legislation.
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
w
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.
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3839 Webcentral Limited and its controlled entities
ABN: 21 073 716 793
FINANCIAL STATEMENTS FOR THE
YEAR ENDED 30 JUNE 2023
4041 Consolidated Statement of Comprehensive Income
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2023
For the year ended 30 June 2023 (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
Year ended
Notes
30-Jun-23
$’000
30-Jun-22
$’000
(19,019)
(24,883)
-
145
(19,019)
(24,738)
(17,953)
(25,862)
-
145
(17,953)
(25,717)
30-Jun-23
cents per
share
30-Jun-22
cents per
share
(5.79)
(5.79)
(5.47)
(5.47)
(8.50)
(8.50)
(8.56)
(8.56)
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
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 assets
Share-based payment expenses
Acquisition costs
Non-recurring 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
Year ended
Notes
30-Jun-23
$’000
30-Jun-22
$’000
5
6
10
14
8
22
22
96,138
38
96,176
93,428
3,304
96,732
(26,035)
(24,285)
(7,198)
(751)
(5,067)
(722)
(435)
(604)
(2,493)
(34,371)
(5,675)
-
(14,077)
(1,546)
(184)
(3,313)
(8,529)
(3,918)
(3,475)
(118,393)
(22,217)
3,198
(19,019)
(6,225)
(1,461)
(4,999)
(814)
(373)
(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)
52
(36)
1,014
1,066
(943)
(979)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
(17,953)
(25,717)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
4243
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
As at 30 June 2023
As at 30 June 2023 (Continued)
Notes
30-Jun-23
30-Jun-22
$’000
$’000
Notes
30-Jun-23
30-Jun-22
$’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
TOTAL EQUITY
27
13
19
11
8
21
22
-
13,229
487
9,698
-
23,414
25,359
14,784
451
8,072
2,507
51,173
106,580
101,684
10,270
28,933
200,521
201,301
(132,049)
(134,661)
(58,202)
10,270
(37,707)
28,933
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Prepayments of domain name registry charges
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
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
11
16
12
13
15
8
14
27
16
17
27
13
19
11
18
4,498
5,088
6,279
1,089
3,998
20,952
9,805
10,376
21,067
2,719
890
50,280
725
36
95,898
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
116,850
130,617
14,666
29,158
3,937
3,536
124
25,440
2,182
4,123
83,166
14,893
571
3,456
3,907
35
23,409
1,250
2,990
50,511
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
4445
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
For the year ended 30 June 2023
For the year ended 30 June 2023
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
Year ended
Notes
30-Jun-23
$’000
30-June-22
$’000
BALANCE AT 1 JULY 2022
Loss for the period
Other comprehensive income
Dividend paid
201,301
-
-
-
Total comprehensive income for the period
201,301
Transactions with owners in their capacity as owners:
Shares issued on exercise of Options
Share issued - Dividend reinvestment plan
137
52
Cancellation of shares pursuant to on-market buy back
(955)
Share issue costs
Share based compensation
Balance at 30 June 2023
BALANCE AT 1 JULY 2021
Loss for the period
Other comprehensive income
(14)
-
200,521
80,061
-
-
Total comprehensive income for the period
80,061
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(134,661)
(37,707)
28,933
-
(19,019)
(19,019)
1,066
-
1,066
-
(1,476)
(1,476)
(133,595)
(58,202)
9,504
-
-
-
-
1,546
-
-
-
-
-
137
52
(955)
(14)
1,546
(132,049)
(58,202)
10,270
-
-
-
-
-
-
-
-
-
-
-
28,933
(19,019)
1,066
(1,476)
9,504
137
52
(955)
(14)
1,546
10,270
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income tax paid
Payments for acquisition and restructuring costs
NET CASH FLOWS FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash on purchase of New Domain
Purchase of plant and equipment
Purchase of intangible assets
Sublease payments received
Net Cash on Purchase of ColoAU
Net Cash on Purchase of Intergrid
12,300
(12,824)
79,537
(29,681)
49,856
Consideration paid in relation to deferred capital payments of North Sydney Data Centre
-
(24,883)
(24,883)
145
(24,738)
Investments in listed companies
(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
reorganization
132,340
(11,196)
(150,680)
Cancellation of treasury shares held by 5G Networks
Limited
(11,196)
11,196
Shares issued on exercise of Options
Cancellation of shares under unmarketable parcel
facility
Share issue costs
Share based compensation
Balance at 30 June 2022
1,115
(1,005)
(14)
-
201,301
-
-
-
-
-
-
-
-
(124)
4,822
(29,536)
29,536
-
-
-
-
-
-
-
1,115
(1,005)
(138)
4,822
-
-
1,115
(1,005)
(138)
4,822
28,933
-
-
-
-
-
-
(134,661)
(37,707)
28,933
Return of capital and dividends received from investments
Proceeds from sales of CNW shares
NET CASH FLOWS USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of shares on exercise of options
Proceeds from borrowings
Payment of performance rights
Payment of security deposit
Payments of share buyback
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
NET DECREASE IN CASH AND CASH EQUIVALENTS
Net foreign exchange differences
Cash and cash equivalents at beginning of period
CASH AND CASH EQUIVALENTS AT END OF PERIOD
105,455
(94,019)
4
(3,235)
-
(184)
8,021
(3,500)
(3,746)
(2,411)
60
-
-
-
-
33
5,487
106,865
(98,087)
111
(2,856)
(57)
(2,554)
3,422
-
(5,856)
(1,336)
1,835
(8)
(602)
(499)
(5,417)
136
-
(4,077)
(11,747)
-
8,800
-
(40)
(1,914)
(5,539)
-
-
(1,476)
(4,696)
(4,865)
1,025
5,412
(4,013)
(376)
-
(1,095)
(182)
(305)
-
(5,925)
(5,459)
(921)
(13,784)
52
5,367
4,498
(19)
19,170
5,367
20
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.
4647
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 2023
were authorised for issue in accordance with a resolution
of the directors on 22 September 2023.
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.
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; and
• 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
22 September 2023.
Going concern
The financial report for the financial year ended 30 June
2023 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 2023 the Group recorded a
loss after tax of $19,019,000 (2022: Loss $24,738,000),
operating cash inflows of $8,021,000 (2022: $3,422,000),
financing cash outflows of $4,865,000 (2022: $5,459,000),
and a deficit of current assets to current liabilities
of $62,214,000 (2022: $31,432,000). At year end the
Group had $4.5 million of cash on hand and available
debt facilities of $4.5 million, of which $1.5 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 $14.08 million, acquisition, restructuring and
other non-recurring costs of $3.5 million, and non-cash
share-based payments expense of $1.55 million.
The major contributors to the decline in underlying EBITDA
was the $3.26 million reduction in non-recurring hosting
revenue and transitional services income and the reduction
in networks and data centre revenue.
The goodwill impairment charge has arisen due to the
assessment of the carrying value of goodwill and intangible
assets at year-end and the impact of higher discount rates.
The non-cash impairment expense recognises the decline
in revenue at one of the Group’s data centres servicing
the digital currency market and pricing pressure from
government contracts. The non-cash impairment charge
has no impact on the Group's debt facilities, covenants
or liquidity.
The acquisition, restructuring and non-recurring costs are
considered to be one-off and non-recurring in nature.
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 2024
(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:
• annual renewal of .au domain names following launch in
the period from March to September 2022;
• continued growth in CPanel hosting products;
• wholesale and enterprise customer growth with more
than $5.9 million annual recurring revenue sold in FY23;
• enterprise and wholesale sales pipeline of $8.9 million;
and
• continued growth in hardware sales with sales closed of
$2.0 million in FY23 for delivery in FY24.
A conservative cash forecast for the period to September
2024 (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 2023 which
indicates a positive operating cashflow for the period to
September 2024 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 $4.5 million
(excluding $1.5 million acquisition facility), and other
available sources of funding and indicate that the Group has
sufficient funding headroom. 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 $11.3 million,
borrowings and other financial liabilities not expected to be
payable or settled in cash of $30.7 million, trade payables
and other creditors not payable of $4.3 million, payroll
provisions of $3.1 million, property lease liabilities of $3.7
million and deferred revenue balances of $26.4 million.
The Directors have also considered the Group’s compliance
with its debt facility agreement with CBA and the
amendment to the Net Leverage Ratio covenant in relation
to the period ended 30 June 2023 to increase it to 3.50
times. As the amendment was received after reporting
date, the Group is required to classify an amount of $25.1
million as a current liability in the Statement of Financial
Position even though these amounts are not repayable
within 12 months of reporting date.
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 2023 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
4849 Notes to the Financial Statements
Notes to the Financial Statements
classified as an asset or liability is recognised in profit or
loss. Contingent consideration classified as equity is not
remeasured and its subsequent settlement is accounted
for within equity.
The difference between the acquisition date fair value
of assets acquired, liabilities assumed and any non-
controlling interest in the acquiree and the fair value of
the consideration transferred and the fair value of any
pre-existing investment in the acquiree is recognised
as goodwill. If the consideration transferred and the
pre-existing fair value is less than the fair value of the
identifiable net assets acquired, being a bargain purchase
to the acquirer, the difference is recognised as a gain
directly in profit or loss by the acquirer on the acquisition
date, but only after a reassessment of the identification
and measurement of the net assets acquired, the non-
controlling interest in the acquiree, if any, the consideration
transferred and the acquirer’s previously held equity
interest in the 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.
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) Hardware and software sales
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 – cloud hosting
(email and web including website build)
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.
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.
(v) Rendering of Services – digital 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
5051 Notes to the Financial Statements
Notes to the Financial Statements
to be evenly over time in line with the contracted term as
the customer simultaneously receives and consumes the
benefits of online marketing services.
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 income 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) Dividend
Dividend is defined as distributions of profits to holders
of equity investments in proportion to their holdings of a
particular class of capital and it is recognised as dividend
income on the basis when the shareholder’s right to receive
payment is established.
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 accounts for a head lease and sublease as
two separate contracts, applying both lessee and lessor
accounting requirements respectively.
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.
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.
5253 Notes to the Financial Statements
Notes to the Financial Statements
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 Tiger 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 comprehensive income 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 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.
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.
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
5455 Notes to the Financial Statements
Notes to the Financial Statements
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 2022. 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. 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.
Segment information for the reporting period is as follows:
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, 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
2023
Segment Revenue
Cost of goods sold
Gross margin
Other income
Rent and office expenses
Marketing and travel expenses
Employee benefits expenses
Other expenses
Total Adjusted EBITDA1
Data Centres,
Network & Cloud
$'000
Managed Services
Webcentral
$'000
$'000
Total
$'000
22,117
(16,105)
6,012
-
(139)
(249)
(11,036)
20,239
(9,930)
10,309
-
(127)
(249)
(7,433)
53,782
(14,173)
39,609
38
(338)
(1,995)
(15,902)
Impairment of goodwill, fixed assets and intangible assets
(14,077)
-
-
Share-based payment expenses
Acquisition costs
Restructuring costs
Depreciation and amortisation expenses
(7,517)
(790)
(4,140)
Finance costs
Loss before income tax expense
Total Segment assets
Total Segment liabilities
23,361
21,308
8,385
7,648
85,104
77,624
96,138
(40,208)
55,930
38
(604)
(2,493)
(34,371)
(5,675)
12,825
(14,077)
(1,546)
(184)
(3,313)
(12,447)
(3,475)
(22,217)
116,850
106,580
5657 Notes to the Financial Statements
Notes to the Financial Statements
2022
Segment Revenue
Cost of goods sold
Gross margin
Other income
Rent and office expenses
Marketing and travel expenses
Employee benefits expenses
Other expenses
Total Adjusted EBITDA1
Impairment of financial assets
Impairment of goodwill, fixed assets and
intangible assets
Share-based payment expenses
Acquisition costs
Restructuring costs
Data Centres,
Network & Cloud
$'000
Managed
Services
$'000
Webcentral
$'000
Elimination
$'000
Total
$'000
24,638
(15,888)
8,750
-
(107)
(179)
(11,546)
(578)
(11,494)
19,465
(8,405)
11,060
-
(85)
(179)
(7,777)
-
-
50,106
(13,872)
36,234
3,304
(218)
(1,430)
(16,637)
-
-
(781)
8
(773)
-
-
-
-
-
-
-
-
-
93,428
(38,157)
55,271
3,304
(410)
(1,788)
(35,960)
(2,856)
17,561
(578)
(11,494)
(8,833)
(904)
(3,706)
(13,630)
(2,798)
(24,382)
130,617
101,684
Depreciation and amortisation expenses
(6,887)
(1,169)
(5,574)
Finance costs
Loss before income tax expense
Total Segment assets
Total Segment liabilities
38,494
29,967
14,355
11,175
77,768
60,542
1. 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.
Alternative segment presentation
The Group has restructured its operations into the following
customer segments following the merger between
Webcentral and 5G Networks Limited in November 2021:
• Retail: domains, web hosting, email hosting and digital
marketing services to consumer and small and medium
enterprise customers
• Enterprise: cloud hosting, domain names, data centre,
networks and voice, IT managed services, hardware and
software and digital marketing products and services
provided to Enterprise and Government customers
• Wholesale: cloud hosting, data centre, networks and
voice products and services provided to wholesale
telecommunications and Segment information is
provided below in relation to these segments.
These reporting segments will apply from reporting periods
from 1 July 2023.
5. Revenue from contracts
with customers
The revenue breakdown by product and service line for the
year ended 30 June 2023 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
2023
$'000
2022
$'000
32,039
24,360
8,661
7,638
12,089
3,201
8,150
96,138
29,407
22,595
10,168
7,989
11,994
4,512
6,763
93,428
8,150
6,763
87,988
96,138
86,665
93,428
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 2023
Goods transferred at a point in time
-
-
Services transferred over time
32,039
24,360
-
8,661
-
-
7,638
12,089
For the year ended 30 June 2022
Goods transferred at a point in time
-
-
-
-
-
Services transferred over time
29,407
22,595
10,168
7,989
11,994
-
3,201
-
4,512
8,150
-
6,763
-
8,150
87,988
6,763
86,665
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.
8. Income tax
Consolidated
2023
$’000
2022
$’000
Dividend income
Interest income
Sublease income
Management fees from transitional
service agreements in relation to the
sale of Enterprise and TPP Wholesale
businesses
Sundry income
Total Other Income
Consolidated
2023
$’000
2022
$’000
33
5
-
-
-
38
168
21
197
2,460
458
3,304
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 (2022: 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
2023
2022
Number
Number
328,328,188 291,056,455
Weighted average number of shares
used in calculating earnings per share
and diluted earnings per share
(A) INCOME TAX BENEFIT / (EXPENSE)
(Loss) / profit before income tax
(22,217)
(24,382)
Tax at the Group's statutory income tax rate
of 30% (2022: 30%)
6,665
7,315
Tax effect amounts which are not deductible in calculating taxable income:
Non-deductible goodwill impairment charge
(1,644)
(3,448)
Other tax-exempt income
Expense on performance rights and options
Other non-deductible expenses
Net under/over
Unrecognised tax loss for the year
Over provision from period and business
combination
(10)
(464)
(10)
848
(2,187)
-
10
(2,650)
(343)
(313)
(994)
67
Actual tax benefit / (expense)
3,198
(356)
Tax expense comprises:
- Current tax
- Deferred tax - origination and reversal of
temporary differences
Aggregate Income tax expense at the
effective income tax rate
(B) DEFERRED TAX ASSETS AND LIABILITIES
-
3,198
-
(356)
3,198
(356)
Deferred tax assets are comprised of the following temporary differences:1
Allowable section 40-880 (blackhole)
deductions – written down value
Accrued expenses and provisions
Other
946
7,540
609
870
7,439
20
Tangible and intangible assets
(3,028)
(5,229)
ACA impact on depreciating asset – written
down value
R&D capitalised labour
(89)
-
(122)
(3)
Brand and Customer contract
(5,088)
(5,482)
NET DEFERRED TAX ASSET / DEFERRED TAX
LIABILITY
890
(2,507)
As at 30 June 2023, the Group has unrecognised income tax
losses of $42,019,217 tax-effected at 30% (2022: $34,807,742),
and capital losses of $87,869,863 arising from the sale of
businesses in previous financial years (2022: $87,869,863).
5859
Notes to the Financial Statements
Notes to the Financial Statements
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:
10. Trade and other
receivables
Trade receivables
Consolidated
Allowance for impairment of receivables
Cash at bank and in hand
Total cash and cash equivalents
2023
$’000
2022
$’000
4,498
4,498
5,367
5,367
Unsecured loans – at call1
Other receivables
Consolidated
2023
$’000
2022
$’000
4,747
(238)
4,509
424
155
5,020
(1,768)
3,252
424
373
(b) Reconciliation of loss after tax to net cash flows from
operating activities
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.
Total trade and other receivables
5,088
4,049
Consolidated
2023
$’000
2022
$’000
Loss after income tax
(19,019)
(24,883)
Non-cash flows in profit:
Depreciation and amortisation
12,447
13,683
Employee benefits expenses
Share-based payment expenses
Impairment expenses
Deferred tax movement
371
1,546
14,077
(3,245)
854
8,833
11,494
(332)
Other non-cash expenses / (income)
475
(2,409)
Changes in assets and liabilities net of effects of purchases and
disposals of controlled entities:
Movement in trade and other
receivables
1,039
1,243
Movement in other assets
1,283
(1,572)
Movement in deferred tax asset
Movement in trade and other payables
Movement in employee benefits
provisions
Movement in Income tax payable
Movement in other Liabilities
Net cash from operating activities
1,617
(977)
(371)
(89)
(1,133)
8,021
379
(1,839)
(854)
(57)
(1,119)
3,422
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 2023
and 1 July 2022 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.
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 2023 and 30 June 2022 was
determined as follows:
30-Jun-23
30-Jun-22
ECL
Rate
Gross
$’000
ECL
$’000
ECL
Rate
Gross
$’000
ECL
$’000
Current
0.0%
1,751
0.1%
946
-
(1)
0.0% 2,475
0.0%
324
1-30 days
past due
31-60 days
past due
61-90 days
past due
91 days +
past due
Closing
balance
6.0%
92
(5)
0.0%
171
39.9%
133
(53)
0.0%
132
9.8% 1,825
(179) 92.2%
1,918
(1,768)
4,747
(238)
5,020 (1,768)
Contract liabilities consist of the following:
Deferred revenue
Consolidated
2023
$’000
2022
$’000
25,440
23,409
Contract liabilities - current
25,440
23,409
Deferred revenue
Contract liabilities - non-current
9,698
9,698
8,072
8,072
Movement of contract liabilities during the period
Balance as at 1 July
Add: customer payments received
Consolidated
2023
$’000
2022
$’000
23,409
60,734
23,748
56,609
Less: revenue released to P&L
(58,963)
(57,390)
Reclassification from non-current
liabilities
260
442
Contract liabilities (current)
25,440
23,409
Balance as at 1 July
Reclassification to current liabilities
Net customer payments received
Contract liabilities (non-current)
8,072
(260)
1,886
9,698
8,551
(442)
(37)
8,072
The large ECL in 91 days + in 2022 was a result of large
write-offs of legacy historical debtor balances that had
been fully provided for in previous financial years.
The closing balance of the trade receivables loss allowance
as at 30 June 2023 reconciles with the trade receivables
loss allowance opening balance as follows:
Opening loss allowance as at 1 July 2021
Net additional provision for ECL’s taken to the P&L
Loss allowance as at 30 June 2022
Transfer to other receivables/trade receivables
Loss allowance as at 30 June 2023
$’000
1,190
578
1,768
(1,530)
238
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
2023
$’000
2022
$’000
1,089
1,089
669
669
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.
Movement of contract assets during the period
-
-
-
-
As at 1 July
Additions
Cash received
As at 30 June
Consolidated
2023
$’000
2022
$’000
669
1,967
(1,547)
1,089
620
1,730
(1,681)
669
6061 Notes to the Financial Statements
Notes to the Financial Statements
12. Property, Plant and
Equipment
Leasehold
improvements
$'000
Plant and
equipment
$'000
Total
$'000
Gross carrying amount
At 1 July 2022
4,427
27,103
31,530
Assets acquired in the
business acquisition
Additions
Disposals
Closing Value at
30 June 2023
-
2
(19)
4,410
8
8
3,893
(10)
3,895
(29)
30,994
35,404
Depreciation and impairment
(3,430)
(12,430)
(15,860)
(434)
-
-
(3,970)
(5,344)
(4,404)
(5,344)
9
9
(3,864)
(21,735)
(25,599)
At 1 July 2022
Depreciation
Impairment (refer
note 14)
Disposals
Closing value at
30 June 2023
Carrying Amount
30 June 2023
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
Depreciation and impairment
Balance at 1 July 2021
Depreciation
Disposals
Closing value at
30 June 2022
Carrying Amount
30 June 2022
(1,943)
(1,487)
-
(8,477)
(3,989)
36
(10,420)
(5,476)
36
(3,430)
(12,430)
(15,860)
997
14,673
15,670
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:
Depreciation expense of right-of-use
assets
2023
$’000
2022
$’000
3,879
4,722
Interest expense on lease liabilities
Rent expense - short-term leases
1,166
(167)
1,166
28
Right-of-use asset
Right-of-use assets
Building
$’000
IT
equipment
$’000
Total
$'000
Additions during the year
Disposals during the year
Depreciation expense
14,626
2,277
(89)
(3,751)
Impairment (refer note 14)
(3,109)
As at 30 June 2023
9,954
551
-
-
15,177
2,277
(89)
(129)
(3,880)
-
422
(3,109)
10,376
Right-of-use assets
Premises
$’000
Other
equipment
$’000
Total
$'000
As at 1 July 2021
Additions during the year
Derecognition of lease
receivables
Disposals during the year
Depreciation expense
As at 30 June 2021
14,930
3,205
1,127
(43)
(4,593)
14,626
548
132
-
-
(129)
551
15,478
3,337
1,127
(43)
(4,722)
15,177
The impairment charge against Lease Right-of-use assets
has arisen due to the allocation of an impairment charge
against other assets of the Cash Generating Unit (CGU)
pro-rata based on the carrying amount of assets of
the CGU. Refer to note 14 for further details.
546
9,259
9,805
As at 1 July 2022
Lease receivables
Lease liabilities
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
2023
$’000
2022
$’000
2,993
-
-
(1,127)
94
(1,960)
-
-
-
-
-
-
-
-
1. Disposals due to early termination of sublease and the balance was transferred to ROU
Consolidated
2023
$’000
2022
$’000
3,903
34
3,937
3,319
137
3,456
Current
Obligations under property leases
Obligations under equipment leases
Non-current
Obligations under property leases
13,191
14,713
Obligations under equipment leases
38
71
13,229
14,784
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
8
2
1-7 years
4 years
1-4 years
2 years
2 years
2 years
4
6
0
4
6
0
0
0
0
The lease liabilities are secured by the related underlying assets. Future minimum lease payments at 30 June 2023 were as follows:
Within 1 year
1-2 year
2-3 year
3-4 years
4-5 years
After 5 years
Total
Minimum lease payments due
30 June 2023
Lease payments
Finance charges
Net present values
30 June 2022
Lease payments
Finance charges
Net present values
4,989
(1,037)
3,952
4,554
(1,098)
3,456
4,825
(756)
4,069
4,500
(866)
3,634
4,058
(491)
3,567
4,124
(630)
3,494
3,375
(286)
3,089
3,288
(412)
2,876
1,438
(133)
1,305
3,364
(257)
3,107
1,305
(122)
1,183
1,909
(236)
1,673
19,990
(2,825)
17,165
21,739
(3,499)
18,240
6263
Notes to the Financial Statements
Notes to the Financial Statements
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
2023
$’000
2022
$’000
167
167
28
28
14. Goodwill
The following table shows the movements in goodwill:
The recoverable amount of the CGU is determined based on
value-in-use calculations. To determine the value-in-use,
management estimates expected future cash flows from
each CGU 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 2028 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 CGU and reflect current
market assessments of the time value of money and asset-
specific risk factors.
CGU
Discount Rate
Consolidated
2023
$’000
2022
$’000
Data Centres, Networks and Cloud
Managed Services
Webcentral
10.5%
13.1%
11.5%
Impairment Charge for Goodwill
An impairment charge of $14.08 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 FY23 compared 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 FY23.
The impairment is allocated first to reduce the carrying
amount of goodwill to the CGU and to other assets of the
CGU pro rata on the basis of the carrying amount of assets
in the CGU.
There has been no other individual assets available to
reduce to below its fair value.
Gross carrying amount
Balance at beginning of period
61,706
61,706
Acquired through business combination
(refer note 20)
5,547
-
Balance at end of the period
67,253
61,706
Accumulated impairment
Balance at beginning of period
(11,494)
-
Impairment loss recognised
(5,479)
(11,494)
Balance at end of the period
(16,973)
(11,494)
Carrying amount at end of the period
50,280
50,212
Impairment Disclosures and Testing of Goodwill
Goodwill is allocated to the Group’s cash generating units
(CGU), 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
2023
$’000
2022
$’000
-
5,536
44,744
50,280
5,479
5,536
39,197
50,212
Item / $000
Goodwill
Lease right of use asset:
Various
Fixed assets
Oher intangibles:
Customer contract
Brand name
Total
CGU1
5,479
3,109
5,344
44
101
14,077
No impairment charge was recorded for the Managed
Services and Webcentral segments as their respective
recoverable amounts exceeds their carrying values by
$8.0 million and $92.6 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 21% and 19%
respectively and the revenue growth rate would need to
decrease to 2.6% and 1.1% 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 2022
Additions
Disposals
Closing Value at 30 June 2023
Amortisation and impairment
At 1 July 2022
Amortisation
Impairment loss recognised (refer note 14)
Closing value at 30 June 2023
Carrying Amount at 30 June 2023
Gross carrying amount
At 1 July 2021
Additions
Disposals
18,932
1,554
-
20,486
(3,295)
(1,918)
(101)
(5,314)
15,172
4,017
-
-
4,017
(1,380)
(620)
(44)
(2,044)
1,973
18,932
4,017
-
-
-
-
Closing Value at 30 June 2022
18,932
4,017
Amortisation and impairment
Balance at 1 July 2021
Amortisation
Impairment loss recognised
Closing value at 30 June 2022
Carrying Amount at 30 June 2022
(1,377)
(1,918)
-
(3,295)
15,637
(577)
(803)
-
(1,380)
2,637
4,856
806
(230)
5,432
(1,214)
(490)
-
(1,704)
3,728
3,775
1,081
-
4,856
(542)
(672)
-
(1,214)
3,642
180
51
-
231
(37)
-
-
(37)
194
-
180
-
180
-
(37)
-
(37)
143
27,985
2,411
(230)
30,166
(5,926)
(3,028)
(145)
(9,099)
21,067
26,724
1,261
-
27,985
(2,496)
(3,430)
-
(5,926)
22,059
6465 Notes to the Financial Statements
Notes to the Financial Statements
(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 $2.59m 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 internal 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
2023
$’000
2022
$’000
3,057
2,878
201
123
617
200
74
257
Other assets - current
3,998
3,409
Other prepayments
Other assets - non-current
36
36
835
835
17. Trade and other payables
20. Business Acquisitions
Details of the net assets acquired and goodwill are as follows:
Trade creditors
Accrued liabilities
Deposits received in advance
Other creditors
Total trade and other payables
Consolidated
2023
$’000
2022
$’000
11,737
1,442
289
1,198
14,666
11,917
888
231
1,857
14,893
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
Consolidated
2023
$’000
2022
$’000
GST and PAYG due to ATO
3,904
2,804
Payroll tax provision
Other
111
108
186
-
Other liabilities - current
4,123
2,990
19. Employee Benefits
Provisions
Current
Annual leave
Long service leave
Wages payable
Superannuation payable
Accrued bonuses and sales commission
Consolidated
2023
$’000
2022
$’000
1,796
2,007
935
13
682
110
934
61
738
167
Employee benefits provisions - current
3,536
3,907
Non-current
Long service leave
Employee benefits provisions
- non-current
487
487
451
451
New Domain Services
On 7 December 2022, the Company completed the
acquisition of New Domain Services, a premium domain
email and webhosting services business with 25,000
customers with normalised revenue of $2 million and
normalised EBITDA of $1.2 million. The Company acquired all
of the shares in Bachco Pty Ltd and Terrific.com.au Pty Ltd.
The acquisition was funded from existing cash reserves and
from the Group’s acquisition debt facility with CBA.
The acquisition price was $5 million with $3.5 million paid
in cash at Completion and deferred payments of $1.5 million
payable within 12 months of Completion. A deferred
payment of $0.5 million was paid on 14 July 2023.
An earn-out may be payable in respect of revenue growth
for the six-months ended 30 June 2023 and for the financial
year ending 30 June 2024.
The purpose of the acquisition is to drive revenue growth
in corporate domains services. New Domain Services has
been integrated with the Group’s Melbourne IT business and
New Domain vendor Jonathan Horne has been appointed
as Chief Executive Officer of the combined business. It is
expected that the acquisition will also benefit the broader
Webcentral business as customer services changes,
process improvements and product innovation are rolled
out to Webcentral’s business.
The goodwill value of $5.55 million identified in relation to
the acquisition is provisional as the Company continues
to obtain information in relation to the acquisition and
determine the fair value of assets and liabilities.
The acquisition of New Domain Services has been assessed
under the requirements of AASB 3: Business Combinations
and has been assessed to meet the requirements of a
business combination.
Fair value of consideration transferred
Note
$000
Amount settled in cash
Deferred payments
Contingent consideration
Total consideration
Recognised amounts of identifiable net assets
Other assets
Total current assets
Prepayment of domain name registrations
Property, plant and equipment
Deferred tax asset
Intangible assets
Total non-current assets
Contract liabilities – current
Trade and other payables
Deferred tax liability
Employee benefits
Provisions
Total current liabilities
Contract liabilities – non-current
Total non-current liabilities
Identifiable net assets
Goodwill on acquisition
Consideration transferred settled in cash
Net cash outflow on acquisition
Acquisition costs charged to expenses
3,500
1,500
203
5,203
32
32
88
8
619
a
1,554
2,269
(1,201)
(57)
(466)
(76)
(70)
(1,870)
(775)
(775)
(344)
5,547
3,500
3,500
20
6667 Notes to the Financial Statements
Notes to the Financial Statements
a. Identifiable intangible asset – customer contracts
An intangible asset has been recognised in relation to the
customer relationships held by New Domain Services at the
time it was acquired by the Company. The asset has been
valued under the Multi-Period Excess Earnings Method
(MPEEM) whereby an estimate of future cash flows has been
discounted to present-value. The key assumptions used in
the valuation are the forecast revenue growth of 2.5% p.a.,
observed customer churn of 20% p.a. and weighted average
cost of capital of 10-11%.
Acquisition-related costs of $20,000 are not included as
part of consideration transferred and have been recognised
as an expense in the consolidated statement of profit or
loss, as part of acquisition expenses.
The purchase agreement included two potential earn-out
amounts payable in cash if the combined Melbourne IT and
New Domain Services businesses achieve revenue growth
targets for the six-month period ending 30 June 2023 and
for the financial year ending 30 June 2024. The contingent
consideration amount has not been adjusted to present
value amount as the adjustment would be immaterial.
The goodwill that arose on the combination can be
attributed to the revenue synergies and growth in the
corporate domains services business expected to be
derived from the combination and the value of the
workforce of New Domain Services which cannot be
recognised as an intangible asset. Goodwill has been
Movements in ordinary shares on issue
allocated to the cash-generating unit of Webcentral
as at 30 June 2023. The goodwill that arose from this
business combination is not expected to be deductible
for tax purposes.
From the date of the acquisition to 30 June 2023,
New Domain Services contributed $0.9 million revenue
and $0.5 million profit to the Group’s EBITDA. If the business
was acquired at the beginning of the financial year, New
Domain Services would have contributed $1.54 million
revenue and $0.86 million profit to the Group’s EBITDA.
21. Issued Capital
During the period, 1,000,000 ordinary shares were issued
to the vendors of the ColoAu business to satisfy the earn-
out payable in respect of the ColoAu acquisition in July
2020, 346,611 ordinary shares were issued pursuant to the
Dividend Reinvestment Plan and 2,088,646 ordinary shares
were issued under the Employee Share Plan. During the
year, 5,401,820 ordinary shares were cancelled pursuant
to an on-market buy-back.
Consolidated
2023
$’000
2022
$’000
Issued and paid-up capital
Ordinary shares each fully paid
200,521
201,301
30 June 2023
30 June 2022
Number of shares
$'000
Number of shares
$'000
Beginning of the financial period
331,092,792
201,301
114,261,123
80,061
- Issue of shares to vendor
- Issues of shares under Dividend Reinvestment Plan
- Acquisition of subsidiaries through internal
reorganisation
1,000,000
346,611
-
137
52
-
-
-
-
-
212,902,341
121,144
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 31 March 2023, 2,088,646 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 6,100,000 options to key
management personnel under the Executive and Director
Share Option 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 26,995,000
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. No treasury shares were
issued during the year (2022: 2,000,000).
Movements in treasury shares:
30 June 2023
30 June 2022
22. Reserves
Share-based payments reserve
Other reserve
Foreign currency reserve
Reorganisation reserve
Total
Share-based payment reserve
Balance at the beginning of the period
Arising on share-based payments
Balance at the end of the year
Consolidated
2023
$’000
2022
$’000
13,017
5,450
288
11,471
4,436
236
(150,804)
(150,804)
(132,049)
(134,661)
2023
$’000
2022
$’000
11,471
1,546
13,017
6,649
4,822
11,471
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
2023
$’000
2022
$’000
4,436
1,014
5,379
(943)
Balance at the end of the year
5,450
4,436
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.
- Cancellation of shares through share buyback
(5,401,820)
(955)
- Shares issued following exercise of options
- Share issued as consideration for services
- Shares issued following exercise of performance rights
- Cancellation of shares – unmarketable parcel facility
- Transaction costs for share issue
-
-
-
-
-
-
125,000
200,000
5,000,000
(4,278,509)
-
-
-
-
(14)
-
Shares issued and fully paid
327,037,583
200,521
328,209,955
- Issue of shares to employees under Employee Share Plan
2,088,646
-
-
-
882,837
2,000,000
- Issue of shares under ESOP
End of the financial period
329,126,229
200,521
331,092,792
201,301
-
25
90
1,000
(1,005)
(14)
201,301
-
-
Number of
shares
2,000,000
-
-
-
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
$'000
Number of
shares
$'000
Foreign currency reserve
Balance at the beginning of the period
-
-
-
-
Currency translation differences
69,524,461
(11,196)
Balance at the end of the year
2023
$’000
2022
$’000
236
52
288
272
(36)
236
The foreign currency translation reserve is used to record
exchange differences arising from the translation of the
financial statements of foreign subsidiaries.
-
(69,524,461)
11,196
-
-
2,000,000
2,000,000
-
-
6869
Notes to the Financial Statements
Notes to the Financial Statements
Forfeited during the year2
(1,700,000)
(900,000)
2022 Options – Executive (4)
260,000
3/10/2022
N/A
3/10/2025
Outstanding at year end
44,070,000 35,110,000
2022 Options – Executive (5)
2,000,000
14/12/2022
14/12/2023
14/12/2027
Reorganisation reserve
2023
$’000
2022
$’000
Balance at the beginning of the period
(150,804)
-
Acquisition of subsidiaries
Elimination of Non-Controlling Interest
Reclassification of shares still held by
5GN in WCG
Share issue costs
-
-
-
-
(132,340)
(29,536)
11,196
(124)
Balance at the end of the year
(150,804)
(150,804)
Reorganisation reserve is used to record any difference
arising when applying a book-value method to business
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. The Webcentral Executive Equity
Plan (EEP) was adopted in April 2022 for executives and
senior leaders of the Group.
The key criteria for options issued under the ESOP and
EEP during the year are the completion of tenure periods
between one and three years and the achievement of
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.
(a) Rights and options held at the
beginning of the reporting period
There were 35,110,000 rights and options held as at 1 July
2022 in relation to the ESOP and EEP.
(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:
2023
Number
2022
Number
Outstanding at the beginning of the year
35,110,000 13,400,000
Granted during the year1
10,660,000 29,610,000
Vested and exercised during the year
Lapsed during the year
- (7,000,000)
-
-
1. During the year, 6,650,000 Options were issued under the ESOP and 4,010,000 Options
were issued under the EEP.
2. During the year, 600,000 Options were forfeited under the ESOP and 1,100,000 were
forfeited under the EEP.
(c) Rights and options vested during
the reporting period
During the year, no Performance Rights were vested (2022:
10,000,000) and 350,000 Options were vested (2022:
2,000,000).
(d) Rights and options forfeited during
the reporting period
During the year, 600,000 Options were forfeited by
employees (2022: 900,000) with a weighted average
exercise price of zero (2022: nil) under the ESOP and
1,100,000 Options were forfeited by employees (2022: nil)
with a weighted average exercise price of zero (2022: nil)
under the EEP.
(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 2023. 5,000,000 Performance Rights and 350,000 Options are exercisable at 30 June 2023 (2022: 5,000,000 Rights):
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
22/12/2023
21/12/2026
2021 Options - Executive (1)
250,000
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)
4,500,000
15/07/2021
15/07/2023
15/07/2026
2022 Options – Executive (1)
260,000
13/04/2022
N/A
13/04/2025
2022 Options – Executive (2)
4,100,000
02/06/2022
02/06/2024
02/06/2027
2022 Options – Executive (3)
2,600,000
1/09/2022
1/09/2024
1/09/2027
2022 Options – Executive (6)
2,000,000
14/12/2022
14/12/2024
14/12/2027
2022 Options – Executive (7)
250,000
14/12/2022
14/12/2024
14/12/2025
2023 Options – Executive (1)
3,250,000
29/06/2023
29/06/2025
29/06/2028
44,070,000
2.47
3.48
3.36
2.59
2.75
3.04
1.79
3.92
4.17
2.26
4.46
4.46
2.46
5.00
3.56
$0.45
$0.485
$0.485
$0.45
$0.26
$0.25
$0.20
$0.20
$0.17
$0.17
$0.17
$0.11
$0.26
(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:
Share price
Dividend yield
Expected
volatility
Risk-free interest
rate
Fair value per
option
2020 Rights
2021 Rights
2021 Options
2021 Options (1)
2021 Options (2)
2021 Options (3)
2022 Options (1)
2022 Options (2)
2022 Options (3)
2022 Options (4)
2022 Options (5)
2022 Options (6)
2022 Options (7)
2023 Options (1)
2023 Options (2)
$0.415
$0.465
$0.465
$0.44
$0.53
$0.475
$0.275
$0.225
$0.175
$0.145
$0.16
$0.16
$0.16
$0.13
$0.13
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
2.9%
3.6%
3.1%
3.1%
3.1%
3.8%
3.8%
73.4%
45.0%
45.0%
73.4%
73.4%
73.4%
73.4%
73.4%
96.1%
94.6%
93.3%
93.3%
93.3%
92.8%
92.8%
0.38%
1.27%
1.27%
0.42%
0.68%
0.69%
2.74%
3.28%
3.50%
3.70%
3.06%
3.06%
3.06%
3.93%
3.93%
$0.3031
$0.192
$0.3031
$0.16
$0.23
$0.205
$0.20
$0.09
$0.08
$0.06
$0.07
$0.08
$0.07
$0.06
$0.05
7071 Notes to the Financial Statements
Notes to the Financial Statements
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 $0.15 (2022: $0.42).
The total consolidated share-based payment expense
for the year was $1.55 million (2022: $8.83 million).
24. Dividends
During the year a dividend of $0.005 (half a cent) per
ordinary share was paid in respect of the year ended
30 June 2022 (2022: nil).
The Directors have not recommended the payment of
a final dividend in respect of the financial year ended
30 June 2023.
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.
The parent entity for the group is Webcentral Limited
and following information is the financial position for
Webcentral Limited.
Parent Entity Statement of Financial
Position
As at 30 June 2023
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
2023
$’000
2022
$’000
72,415
73,273
17,219
16,063
89,634
89,336
82,502
6,382
71,479
4,823
88,884
76,302
750
13,034
Contributed equity
218,859
219,646
Share-based payments reserve
5,830
4,285
Reorganisation reserve
(104,762)
(104,762)
Foreign currency reserve
Profit reserve
Retained earnings
Total Equity
53
200
(1,941)
(1,479)
(117,289)
(104,856)
750
13,034
Loss of the parent entity
Total comprehensive loss of the parent
entity
(11,746)
(14,160)
(10,680)
(15,139)
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 2023 (30 June 2022: 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 2023
Equity Holding at 30
June 2022
5G Networks Pty Ltd
5G Network Operations Pty Ltd
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
Uber Global 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
Netregistry Domains Pty Ltd
Webcentral Services Pty Ltd
ACN 132 400 787 Pty Ltd
Planetdomain Pty Ltd
ACN 063 963 039 Pty Ltd
ACN 139 714 686 Pty Ltd
Bachco Pty Ltd
Terrific.com.au Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
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%
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.
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
N/A
N/A
7273 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 2023 or 30 June 2022.
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 2023
Cash and cash equivalents
Trade and other receivables
Unsecured loans
Other investments
Total financial assets
30 JUNE 2023
Non-current borrowings
Non-current lease liabilities
Current borrowings
Trade and other payables
Lease liabilities
Other financial liabilities
Total financial liabilities
30 JUNE 2022
Cash and cash equivalents
Trade and other receivables
Unsecured loans
Other investment
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
4,498
4,664
-
-
9,162
-
13,229
29,158
14,666
3,937
-
60,990
5,367
3,625
-
-
8,992
25,359
14,784
571
14,893
3,456
-
59,063
-
-
424
-
424
-
-
-
-
-
2,182
2,182
-
-
424
-
424
-
-
-
-
-
1,250
1,250
-
-
-
725
725
-
-
-
-
-
-
-
5,198
5,198
-
-
-
-
-
-
-
4,498
4,664
424
725
10,311
-
13,229
29,158
14,666
3,937
2,182
63,172
5,367
3,625
424
5,198
14,614
25,359
14,784
571
14,893
3,456
1,250
60,313
Borrowings include the following financial liabilities:
CURRENT
At amortised cost:
Obligations under bank loan1
NON-CURRENT
At amortised cost:
Obligations under bank loan1
Consolidated
2023
$’000
2022
$’000
29,158
29,158
571
571
-
-
25,359
25,359
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.
On 23 August 2023, CBA approved an amendment to the
Net Leverage Ratio covenant in relation to the period
ended 30 June 2023 to increase it to 3.50 times. There
was no financial impact to the Group and all other financial
covenants and undertakings under the Debt Facility
Agreement were met in relation to the period ended 30
June 2023. The Group expects to comply with all financial
covenants for FY24. As the amendment was received after
reporting date, the Group is required to classify an amount
of $25.1 million as a current liability in the Statement of
Financial Position even though these amounts are not
repayable within 12 months of reporting date.
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
The fair value of an asset or liability is measured using the
assumptions that market participants would use when
pricing the asset or liability, assuming that the market
participants act in their economic best interest.
The Group uses valuation techniques that are appropriate
in the circumstances and for which sufficient data are
available to measure fair value, maximising the use of
relevant observable inputs and minimising the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorised within
their fair-value hierarchy, described as follows, based on
the lowest level of input that is significant to the fair value
measurement as a whole:
• Level 1 - Quoted (unadjusted) market prices in active
markets for identical assets or liabilities.
• Level 2 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement
is directly or indirectly observable.
• Level 3 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement
is unobservable.
For assets and liabilities that are recognised in the financial
statements at fair value on a recurring basis, the Group
determines whether transfers have occurred between
levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to the
fair value measurement as a whole) at the end of each
reporting period.
The following table provides the fair value measurement hierarchy of the Group’s financial assets and liabilities as at 30 June 2023:
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
Unsecured loans
Financial liabilities
30-Jun-23
30-Jun-23
725
424
Contingent consideration
30-Jun-23
2,182
There have been no transfers between Level 1, 2 and 3 during the period.
-
-
-
-
-
-
725
424
2,182
7475
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 2023:
Total facility
amount
Amount drawn
$’000
34,600
$’000
30,067
Unused
financing
facilities
$’000
4,533
34,600
30,067
4,533
CBA loan
facilities
Total
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 2023 or 30 June 2022.
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.
Consolidated
2023
$’000
2022
$’000
4,498
4,498
5,367
5,367
The table below sets out the maturity periods of the financial liabilities of the consolidated Group as at 30 June 2023 and
30 June 2022. All carrying amounts of IT equipment finance are undiscounted contractual cash flows.
Aa3 rated cash & cash equivalents
Total
Contracted maturities at 30 June 2023
< 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
14,666
281
37
-
-
289
29
2,182
-
566
37
-
-
28,022
18
-
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
14,893
315
37
-
-
256
30
1,250
-
497
43
-
-
24,862
12
-
Total
$’000
14,666
29,158
121
2,182
Total
$’000
14,893
25,930
122
1,250
-
-
-
-
-
-
-
-
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 nil (2022:
Loss of $578,000) in profit and loss in respect of impairment
provision for receivables for the year ended 30 June
2023. 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 2023, 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 $24,150,000
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 March 2024 in
respect of the acquisition facility and July 2025 in respect
of the Term Facility.
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 2023, 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-23
30-Jun-22
$’000
$’000
235
200
435
344
234
578
(2,381)
(2,534)
(1,946)
(1,956)
7677
Notes to the Financial Statements
Notes to the Financial Statements
29. Auditors' remuneration
2023
$’000
2022
$’000
During the year ended 30 June 2023, the following fees were
paid or payable for services provided by Grant Thornton:
Audit and review
Taxation compliance services
Due diligence services
443,481
114,111
-
427,535
203,155
75,000
557,592
705,690
30. Events subsequent to
reporting date
On 23 August 2023, CBA approved an amendment to the
Net Leverage Covenant in relation to the period ended 30
June 2023 to increase it to 3.50 times.
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.
The following sensitivity is based on foreign currency risk
exposures in existence at the reporting date.
At 30 June 2023, 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)
2023
$000
2022
$000
2023
$000
2022
$000
175
(214)
173
(211)
175
(214)
173
(211)
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 0.636 to 0.778 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. The Group is not
expected to have a material exposure to this risk in respect
of the Group’s debt facilities with CBA as it is forecast to
comply with all financial covenants and other obligations
under these facilities and it has a strong relationship
with CBA.
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
2023
$’000
2022
$’000
Short-Term Employee Benefits
1,693
1,330
Post-Employment Benefits
Termination Payments
Share based Payments
Total
125
-
1,132
2,950
92
-
2,606
4,028
Detailed remuneration disclosures are provided in the
remuneration report on pages 27 to 33.
Transactions with related parties
During the year, the Group has conducted the following
related party transactions:
• A total of $213,191 (2022: $154,294) 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 total of $18,315 were paid to Mr Hunter Demase for
sales consulting services (2022: nil). All transactions
are carried at commercial third-party rates.
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
2023
$’000
128
-
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.
7879 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 2023 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 2023 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 2023.
Independent Auditor’s Report
To the Members of Webcentral Limited
Report on the audit of the financial report
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
3. Note 2 confirms that the consolidated financial statements also comply with international financial reporting standards.
Opinion
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, 22 September 2023
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 2023, the consolidated
statement of profit or loss and other comprehensive income, consolidated statement of changes in equity
and consolidated statement of cash flows for the 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 2023 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.
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.
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Independent Auditors’ Report
Independent Auditors’ Report
Key audit matter
How our audit addressed the key audit matter
Going Concern – Note 2
Revenue Recognition – Note 5
In the financial year ended 30 June 2023, the Group recorded
Our procedures included, amongst others:
revenue of $96,138,000. There is a risk of potential
overstatement of revenue given there is pressure placed on
• Obtaining an understanding of the processes and controls
used by the Group in evaluating contracts under the five-
the performance of the Group against market expectations.
step model of AASB 15 Revenue Contracts with
The Group offers diverse and services to its customers that
Customers;
require different patterns of revenue recognition due to
• Reviewing revenue recognition policies of individual
varying contractual terms, which require the identification of
customer agreements and contractual arrangements to
performance obligations and the determination of how the
ensure compliance with AASB 15;
Group satisfies those obligations.
This area is a key audit matter because of the financial
• Selecting a sample of revenue transactions to verify that
revenue was being recognised in accordance with revenue
significance of revenue to the consolidated statement of profit
recognition policies;
or loss and other comprehensive income, and the judgement
involved in determining appropriate revenue recognition for
these various services.
• 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.
Goodwill and Other Long-Lived Assets Impairment
Assessment – Note 14 and Note 15
As disclosed in Note 14 and Note 15 of the financial report,
Our procedures included, amongst others:
goodwill amounted to $50,280,000 following the acquisition of
• Assessing management’s determination of the Group
New Domains and the impairment loss recognised during the
period.
having three CGUs based on the nature of the business
and the economic environment in which they operate;
At 30 June 2023, Webcentral Limited also has other
• Reviewing the impairment model for compliance with
intangibles of $21,067,000 consisting of customer contracts,
AASB 136 Impairment of Assets;
brand names, capitalised software and marketing related
intangibles.
In accordance with AASB 136 Impairment of Assets, goodwill
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
• 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;
− Assessing management’s key assumptions for
reasonableness and obtaining available evidence to
support key assumptions;
− Considering the reasonableness of the revenue and
forecasting of future cash flows and applying an appropriate
cost forecasts against prior year forecasts and current
discount rate which inherently involves a high degree of
year actuals;
estimation and judgement by management.
− Performing sensitivity analysis of the key assumptions;
− Testing the underlying calculations for mathematical
accuracy of the model; and
• Evaluating the disclosures in the financial statements for
appropriateness and consistency with accounting
standards.
For the year ended 30 June 2023, the Group recorded a loss
Our procedures included, amongst others:
after tax of $19,019,000, operating cash inflows of
• Assessing the cash flow forecast prepared by
$8,021,000, financing cash outflows of $4,865,000 and a
deficit of current assets to current liabilities of $62,214,000.
management for at least 12 months from the anticipated
date of signing the financial statements and evaluating the
At the year end, the Group had cash on hand of $4,498,000,
reasonableness of inputs and assumptions used in the
and available debt facilities of $4.5 million, of which
forecast;
$1.5 million is for the purpose of business acquisitions.
Accordingly, testing the availability of sufficient funding for the
Group to meet its key obligations is considered to be 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.
• Analysing and challenging key assumptions in Webcentral
Limited’s budget for the twelve-month period from the
expected date of signing;
• Discussing with management their future plans for the
Group;
• Reviewing ASX announcements to gather an
understanding of the strategy of the business;
•
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;
• Reviewing the solvency position of the Group and
assessing the solvency position paper prepared by
management;
• Substantively testing the balances included in the solvency
workings prepared by management and evaluating any
items which have been excluded/included from this
assessment; and
• Evaluating the disclosures in the financial statements for
appropriateness and consistency with accounting
standards.
Acquisition of New Domains – Note 20
On 7 December 2022, the Group acquired New Domain
Our procedures included, amongst others:
Services, a premium domain reseller and hosting provider.
The acquisition price was $5,000,000 and goodwill recognised
in respect of the acquisition was $5,547,000.
• Reading the executed acquisition agreements and
determining if the transaction meets the business
combination requirement in line with the Australian
The transaction requires management to consider if the
Accounting Standards (AASBs);
purchase consideration constitutes an acquisition of a
business combination under AASB 3 Business Combinations.
•
Testing the accuracy of the purchase consideration against
the executed acquisition agreements;
Accounting for these transactions is a complex and
judgmental exercise requiring management to determine the
fair value of acquired assets and liabilities as well as the
goodwill arising on acquisition and as a result has been
assessed as a key audit matter.
• Assessing the fair values of the acquired assets and
liabilities recognised, including:
− Assessing the valuation of identified intangible assets
recognised as part of the purchase price allocation
calculations; and
− Assessing the mathematical accuracy of any identified
intangibles calculations;
• Assessing the appropriateness of accounting policies,
including compliance with the AASBs; and
• Evaluating the disclosures in the financial statements for
appropriateness and consistency with the accounting
standards.
#10212419v2
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Independent Auditors’ Report
Independent Auditors’ Report
Information other than the financial report and auditor’s report thereon
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Grant Thornton Audit Pty Ltd
Chartered Accountants
M A Cunningham
Partner – Audit & Assurance
Melbourne, 22 September 2023
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 2023, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report, or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the Directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the 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 27 to 33 of the Directors’ report for the year
ended 30 June 2023.
In our opinion, the Remuneration Report of Webcentral Limited, for the year ended 30 June 2023 complies
with section 300A of the Corporations Act 2001.
#10212419v2
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8485
Shareholder information
Shareholder information
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.
The shareholder information set out below was applicable
as at 15 September 2023.
Webcentral Limited
Issued capital ordinary shares: 329,126,229 as at 15
September 2023.
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
Boutique Capital Pty Ltd ATF
Tectonic Opportunities Fund
Shares
%
56,515,128
17.27%
24,320,007
6.05%
Total
80,835,135
23.32%
Distribution of Equity Shares
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Ordinary Shares
Number Held
Number of Holders
228,065
11,530,718
13,227,013
66,026,225
238,114,208
329,126,229
394
3,992
1,773
2,303
308
8,770
There were 4,554 unmarketable parcels as at
15 September 2023.
The 20 Largest Holders of Each Class of Quoted Equity Securities
%
17.5%
8.4%
6.2%
2.0%
2.0%
1.9%
1.1%
0.8%
0.8%
0.8%
0.6%
1.0%
0.6%
0.5%
0.5%
0.5%
0.4%
0.4%
0.4%
0.4%
1,504,284
1,474,333
1,470,588
1,470,588
1,460,204
154,382,984
46.9%
Holder
J D MANAGEMENT GROUP PTY LTD
BNP PARIBAS NOMINEES PTY LTD
PACIFIC CUSTODIANS PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR ALBERT SAYCHUAN CHEOK & MR ERIC VICTOR CHEOK
ECKERT INVESTMENTS PTY LTD
ARKTREE NOMINEES PTY LTD
MOLINI INVESTMENTS PTY LTD
MR GARRY EDWIN WHITE
HL GANGI PTY LTD
NZAU INVESTMENTS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
Number
57,628,060
27,715,876
20,330,076
6,503,131
6,479,979
6,341,709
3,714,018
2,526,666
2,512,438
2,500,001
2,000,000
3,356,064
1,833,334
1,788,323
MR GIANNI ANDREA VERROCCHI & MRS DEANNE JOSELYN VERROCCHI
1,773,312
ALBERT CHEOK
MR GIUSEPPE ANTHONY MAZZACCA
GANGI SERVICES PTY LTD
PAC EQUITIES PTY LTD
MR SAMUEL SCOTT NUNAN
Total
Unissued equity securities
Number of options issued: 46,995,000
Securities exchange
The Company is listed on the Australian Securities Exchange.
8687 Webcentral Head Office
Level 7, 505 Little Collins Street, Melbourne 3000
88