2023
ANNUAL
REPORT
Annual Report
For the Year Ended 30 June 2023
Firstwave Cloud Technology Limited
ABN 35 144 733 595
Contents
Chair’s Letter
CEO’s Letter
Directors’ report and remuneration report
Auditor’s independence declaration
Financial report
Directors’ declaration
Independent auditor’s report
Shareholder information
Corporate directory
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Chair’s Letter
2023 was a year in which your Company changed
considerably following the acquisition of Opmantek
Ltd in January 2022.
Under a refreshed strategy articulated by our CEO,
Danny Maher, the Company’s efforts were focused
on the key geographic markets of Australia, the US
and LATAM, its most profitable products in network
management (NMIS), cybersecurity (CyberCision)
email, and reaching our interim goal of reducing
cash usage to under $500,000 per month coming
into the FY24 year.
Over the course of the year, we considerably
strengthened the capacity and capability of the
sales and marketing team, redirected development
resources to our network management platform (as
it became clear the sales pipeline was increasingly
network management focused in North and Latin
America), and reduced cost and increased efficiency
where we could in other parts of the business.
By year end, we achieved our internal revenue, gross
margin, expense and cash usage targets. However,
with our revenue underpinned by a range of one-off
sales we missed our internal annualised recurring
revenue (ARR) target, which is critical to our goal to
be cash flow positive in FY25.
Key announcements
— In July, a 5-year contract for network monitoring
using NMIS with Macquarie Cloud Services, part
of the Macquarie Telecom Group.
— In September, our ‘One Brand Strategy’
bringing together all your Company’s software
intellectual property to provide integrated
solutions for network discovery, management
and cybersecurity for enterprises, managed
services providers and telecommunications
carriers globally. This was accompanied by a new
website www.firstwave.com providing a range
of integrated (back-end) marketing automation
tools to accelerate lead generation and sales
conversion.
— In October, finalisation of a commercial
agreement with a large partner in Australia to
launch a secure, sovereign, ISM compliant email
platform for Australian Government and large
enterprises, and the appointment of a new
North American based Sales Director, James
Morzelewski.
— In November, the appointment of Dino Davanzo
to the position of Chief Revenue Officer, bringing
over 35 years of experience in vendor and
systems integrator sales leadership roles with
companies such as Hewlett Packard Enterprise,
Optus, Dell and NetApp.
— In December, an investment by Claro DR, the
largest telco in the Dominican Republic, into the
next generation of our NMIS Monitoring suite,
Version 9.4.
— In April, an upgrade to CyberCision
incorporating: cutting-edge technology, acquired
as part of the Opmantek acquisition; a new
layer of enterprise level threat intelligence feeds
from Cisco Talos Intelligence Group, one of the
largest commercial threat intelligence providers
in the world; and significant improvement in the
platform’s ‘trace and threat hunting’ capability.
— Also in April, the extension and doubling of our
contract for NMIS with NASA, and extended
contracts for NMIS with John Deere and the
Canadian Imperial Bank of Commerce.
— In our FY23 Q4 update in July, renewal of a
significant contract for CyberCision email with
a large Australian Government client through
an Australian partner, a new contract for NMIS
with a US Government agency through a US
partner, and consolidation of all international and
Australian partner sourced CyberCision users
to our CyberCision platforms in Mumbai and
Sydney.
— Throughout all quarterly updates to shareholders,
we indicated that, subject to good cost controls
and expected revenue growth, we continued to
track toward cash flow break-even in FY25.
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Outlook
In my report to shareholders last year, I stated that
the FY23 year shows “more promise for revenue
growth at higher margins and lower costs than any
in the past. The challenge for the management team
under Danny Maher is to realise this promise”. This
statement was relevant then and remains so now.
The pipeline growth is being driven by NMIS, which
is proving to be truly world class in competitive
terms. Offsetting this, and while we are not losing
any sales, conversion of the pipeline to revenue has
proven to take longer than expected. Forecasts of
economic ‘headwinds’, particularly in the US and
LATAM where our major opportunity lies, play into
decision making and has extended the purchasing
cycle for major companies with whom we can apply
little ‘sales pressure’.
On balance, we remain confident of achieving the
sales targets that will support reaching our goal of
cash flow break-even, but note, it is not without risk.
We will continue to keep shareholders fully informed
as we progress through the current financial year.
The directors and management team will continue to
apply the Company’s resources in a way we believe
is in the Company’s and shareholders’ best interests
and, once again, we give our sincere thanks to all
shareholders for their continued support for the
Company.
My sincere thanks also go to our full team who
continue to deliver to their best ability under
continued pressure – FirstWave remains a very hard-
working Company – and to my fellow directors for
their commitment, contribution and support during
the year.
Kind regards
John Grant
Chair
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CEO’s Letter
2023 was my first full financial year as CEO of
the Company. Our success during the year was
built upon the transformational acquisition of
Opmantek in January 2022, which saw me joining
FirstWave, along with the addition of substantial
IP, shareholders and revenues. I remain a major
shareholder in FirstWave and am excited about our
future. We have transformed the Company and have
significant opportunities to grow our revenues under
a refined operational structure.
Strategic Direction
Our goal is to increase shareholder returns.
Since February 2022, we have operated under three
key strategic principles:
1. Have a sales-led culture
2. Grow faster
3. Be capital efficient
Off the back of these three strategic objectives, a
full strategic plan was developed shaping how we
approached and delivered the 2023 financial year.
We made several key announcements during the
year, resulting in a significantly changed company
compared to the previous year. In line with our
strategic principles, we saw the commencement of
a new Chief Revenue Officer, the recruitment of a
number of key sales and marketing staff, the signing
of several new customers, the launch of a single
brand strategy and new website, the extension and
expansion of key customer agreements and the
always difficult task of restructuring and refining our
capital investments.
Financial Results
I was pleased with the reduction in the Company’s
operating losses, which reduced by 57% (excluding
a non-cash impairment) from $13.46 million to $5.86
million and put us on track to our goal of being
cash flow positive by next financial year. Incredibly,
our revenues grew at a time when our operational
expenditure decreased.
Our revenues grew 34% (to $12.49 million), gross
profit was up 56% (to $9.63 million) and our
expenses (excluding impairment expense) fell 14%
(to $18.13 million) over the same period. Growing
our revenues while reducing our expenses in line
with our strategic plan was the key to reducing
our net cash usage from operating activities and
payments for intangibles by 58% from $11.09
million in FY22 to $4.66 million for FY23. Overall, we
had a strong financial year, which everyone in the
business can be proud of – it is worth noting that,
in particular, due to the acquisition of Opmantek
in FY22, year on year comparisons have several
nuances and shareholders are encouraged to
understand the financials in full.
Outlook
The Company enters the new financial year with
an excellent pipeline, and a business that is more
manageable and more stable than it has been in the
past. I feel that we are well-positioned for success.
Our goal is to be cash flow positive in FY25, and we
are on track to achieve that goal if we deliver on our
sales targets.
We are managing our cash prudently while investing
in growth, with a strong pipeline of new revenue
opportunities.
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Our focus and challenge continues to be the
conversion of the pipeline to deliver clients that
provide ongoing growth – commercial relationships
that grow over time and underpin our future growth.
We have had some success over the past financial
year but must reach another level for the coming
year. I believe we have the people and the pipeline
to do it.
We have diversified revenues, both geographically
and from a product perspective, which de-risks the
business, and, as a listed company, we have levers
we can pull should timing delays impact on reaching
our sales targets. We also have the opportunity
to greatly exceed our sales targets based on the
pipeline in front of us, and there remains a “blue
sky” opportunity in addition to the results we expect
over the next year.
As a software provider in the cybersecurity and
network management sectors, FirstWave is part of
an exciting and growing space. We have exceptional
clients and an excellent pipeline created off the
back of industry-leading products. Our revenues and
margins are growing, our cash usage is decreasing
and the business continues to strengthen.
I am a happy, optimistic MD and shareholder, and
I look forward to the next financial year.
Kind regards
Danny Maher
Managing Director and Chief Executive Officer
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Directors’ report
30 June 2023
The directors present their report, together with
the financial statements, on the consolidated
entity (referred to hereafter as the ‘consolidated
entity’ or ‘FirstWave’) consisting of FirstWave Cloud
Technology Limited (referred to hereafter as the
‘company’, or ‘parent entity’) and the entities it
controlled at the end of, or during, the year ended
30 June 2023.
Directors
The following persons were directors of FirstWave
Cloud Technology Limited during the whole of the
financial year and up to the date of this report,
unless otherwise stated:
John Grant – Non-Executive Chair
Danny Maher – Managing Director
Paul MacRae – Non-Executive Director
Euh (David) Hwang – Non-Executive Director
Ray Kiley – Non-Executive Director
Principal activities
During the financial year, the principal continuing
activities of the consolidated entity comprise of
development and sale of network monitoring and
internet security software.
Dividends
There were no dividends paid, recommended or
declared during the current or previous financial year.
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Review of operations
FirstWave creates intelligent IT Operations and
Cybersecurity software for service provider partners
and end-customers, and offers it as both ‘freemium’
and chargeable products. This software is used
globally by over 150,000 organizations including
household names like Microsoft and NASA.
During the Financial Year 2023 (‘FY23’) FirstWave:
— Launched a refreshed marketing strategy
together with a new brand following the
integration of Opmantek. The Opmantek brand
began being phased out from 15 September
2022. All products and services previously
offered under the Opmantek brand are now
consolidated under the FirstWave brand.
— Implemented the one brand strategy that
aligns to the company’s new strategic focus
on providing integrated solutions for network
discovery, monitoring and security for
enterprises, managed service providers (MSPs),
and telecommunications carriers globally.
— Launched a new website, www.firstwave.com,
that provides an extensive range of integrated,
back-end marketing automation tools to
accelerate lead generation and sales conversion,
and will be accompanied, over time, by further
improvements to the ‘look and feel’ of the
website’s front end.
— Continued to invest in its sales and marketing
team with two senior appointments:
(i) Mr James Morzelewski was appointed
as Sales Director, North America on 26
September 2022, to focus on converting the
strong pipeline in the North America region
into revenue; and
(ii) Mr Dino Davanzo joined the company on 2
November 2022 as the new Chief Revenue
Officer (‘CRO’) based in Sydney, replacing
Craig Nelson the previous CRO. Mr Davanzo
is one of the Company’s key management
personnel (‘KMP’). The appointment of an
Australian based CRO added executive
strength to drive the Telstra relationship
forward and provide global leadership as part
of the key executive team in Australia.
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— Built a sovereign email platform in Australia to
comply with the “information security manual”
as defined by the Australian Cyber Security
Centre’s Information Security Manual (‘ISM’). It
is anticipated the platform will be launched to
the Australian government and large enterprise
market in Q1 FY24.
— Continued to focus on growing revenues faster
while being capital efficient. This resulted in
cash used in FY23 being 54% less than was
used in FY22 (excluding capital raises). These
savings were the result of many initiatives
including rationalisation of the cloud platforms
that are deployed to support CyberCision,
and streamlining partner programs to focus on
those partners and customers that represent the
greatest commercial opportunity.
— FirstWave focused geographically on USA,
LATAM and Australia while continuing to engage
with service providers from anywhere in the
world where it makes commercial sense.
— From a product perspective, spearheaded its
sales effort with CyberCision email protection
and NMIS.
The Opmantek Ltd acquisition was completed on
14 January 2022 hence the prior comparative period
does not include the results of Opmantek Ltd for the
first half of the prior financial year.
Financial review
Profit or loss performance
FirstWave’s revenue for the year was $12,492,797
(2022: $9,351,497), which represents an increase
of 33.6% over the prior comparative period (‘PCP’),
noting however that the prior year included revenue
from the acquisition of Opmantek only for the period
from 14 January 2022 to 30 June 2022 ($1,999,207)
rather than for the full year as is the case for FY23.
Taking this into account, revenue growth year on
year approximates 10% with this primarily made up
of NMIS revenue growth.
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There was an impairment to the CyberCision
capitalised intangible asset of $7,591,178, the loss
excluding this impairment was $5,857,107 which
is a 56.5% improvement over the loss in the prior
year. The loss for the consolidated entity including
the impairment and after providing for income
tax showed a decreased loss from the prior year
of $7,209 at an amount of $13,448,285 (2022:
$13,455,494).
The decreased loss is attributable to the improved
focus on the entity’s most profitable products, cost
rationalisation and synergies from the Opmantek
Ltd acquisition that was completed on 14 January
2022 and lower transaction costs, $99,113 (2022:
$2,173,410).
This decreased loss is against the prior financial year
loss that only includes Opmantek Ltd’s losses from
the date of acquisition being 14 January 2022.
There were several new clients wins in the period
including; L3Harris, Arizona College of Nursing and
Raytheon in North America all of which licensed
FirstWave’s network monitoring products.
A number of existing network monitoring clients
increased the number of devices under their licence
agreements including NASA in North America,
which agreed to an extension and expansion of their
network monitoring licence to support the Artemis
(www.nasa.gov/specials/artemis/) missions.
Dominican Republic’s telecommunication
organisation, Claro, committed to licencing the
recently released NMIS 9.4 suite of products with the
agreement including US$280,000 in up-front fees.
Mexico’s largest telecommunications provider,
Telmex, extended their agreement with FirstWave
for a further 12 months, in a renewal worth
approximately US$300,000 in annual revenues.
Statement of financial position
Cash and cash equivalents decreased by $4,801,170
which was largely due to net cash outflows of
$2,909,358 relating to further investment into
FirstWave’s technology platform, and $1,755,481 to
support operating activities. Net cash used
in operating activities was lower than PCP by
$6,248,090 (67%) and is attributable to significantly
lower one-off transaction costs of $40,756 (2022:
$2,717,781), the improved focus on the entity’s
most profitable products, cost rationalisation, and
synergies from the Opmantek Ltd acquisition. Cash
receipts from customers were $13,257,939 (2022:
$11,156,706).
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Liquidity
The directors consider that the consolidated entity
will continue as a going concern, as explained in
note 1 to the financial statements.
Business risks
The following is a summary of material business risks
that could adversely affect the consolidated entity’s
financial performance and growth potential in future
years and how the consolidated entity proposes to
mitigate such risks.
Macroeconomic risks
As the products sold by the consolidated entity are
discretionary for most customers, the consolidated
entity’s financial performance can be impacted
by current and future economic conditions which
it cannot control, such as increases in interest
rates, inflation and its customers’ actions to adjust
operating costs. The consolidated entity stays
abreast of these conditions, focuses on its internal
debtor controls and is diversifying its customer base
to help manage these risks.
Competitive market and changes to market trends
The consolidated entity operates in a highly
competitive market. Innovation is constant and
new. Competitive products could result in pricing
pressures and unfavourable product positioning
within the market. This risk is managed through
maintaining product development teams that are
highly experienced and remain abreast of the latest
technological advances and implications for our
current and future products. The company also
continue to invest in its brand which continues to be
well regarded within the consolidated entity’s main
markets of USA, LATAM and Australia.
Cybersecurity and Information technology (‘IT’)
infrastructure
The executive has directed substantial effort
into ensuring that the risk and security controls
safeguarding the consolidated entity continue to
meet best practice and meet the high assurance
requirements demanded by our partners and
our ISO 27001 certified Information Security
Management System (‘ISMS’). The consolidated
entity has extended its proactive monitoring of
trends and vulnerabilities, utilising subscriptions
to Threat Intelligence services, the Australian
Cyber Security Centre, as well as regular internal
vulnerability assessments, external penetration
testing, security awareness training, Phishing
simulation tests and (desktop based) BCP/DR tests.
The robust ISO certified ISMS, resilient systems,
continuous review and testing and high level of staff
security awareness all contribute to safeguard and
protect the company’s people, systems and data.
A significant failure in the operation of any of
our products and the subsequent impact on our
customers’ business operations
The executive has directed substantial effort and
investment into ensuring the operational success
and efficiency of all its products and services. This
risk is mitigated by maintaining a highly experienced
and forward-looking development team to ensure
the operational success and efficiency for our
current and future products. The software and
delivery mechanisms are architected in such a
manner to minimise the business impacts of any
failure. Customers have the opportunity to evaluate
the software prior to entering into a commercial
relationship, reducing the instances of the solutions
not meeting their needs.
The availability of skilled staff and expertise, which
can impact on revenue and costs
The consolidated entity operates in a highly
competitive market for skilled staff and expertise.
The business has invested significant time and effort
into hiring and training staff and forming strategic
relationships with advisors who have the relevant
expertise in network monitoring and internet
security software. The executive considers that it
has mitigated this risk so that the consolidated
entity is well positioned to take advantage of the
opportunities available to it in its main markets of
USA, LATAM and Australia.
Significant changes in the state of
affairs
There were no significant changes in the state
of affairs of the consolidated entity during the
financial year.
Matters subsequent to the end of the
financial year
No matter or circumstance has arisen since 30
June 2023 that has significantly affected, or
may significantly affect the consolidated entity’s
operations, the results of those operations, or
the consolidated entity’s state of affairs in future
financial years.
Likely developments and expected
results of operations
Having successfully completed the restructuring and
cost reductions noted in the prior period report, the
consolidated entity is focused on the commitment to
grow revenues faster without significant increase in
costs, and to reaching cash flow positive.
Environmental regulation
The consolidated entity is not subject to any
significant environmental regulation under Australian
Commonwealth or State law.
9
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Information on current directors
Information on the directors of the company as at 30 June 2023 and up to the date of this annual report is set
out below:
Name:
Title:
John Grant
Non-Executive Director and Chair
Qualifications:
John has a degree in Engineering with Honours
Experience and expertise:
Other current directorships:
Former directorships
(last 3 years):
Special responsibilities:
Interests in shares:
Interests in options:
Interests in rights:
Name:
Title:
Qualifications:
Experience and expertise:
John has an extensive career spanning technology, engineering and
construction, and sports administration. He has held leadership positions
including Managing Director and CEO of ASX listed technology company,
Data#3 Limited, and inaugural Chair of the Australian Rugby League
Commission. He has also chaired or been a member of various industry
and government advisory groups and industry associations.
None
None
Member of the Remuneration and Nomination Committee and member of
the Audit, Risk and Compliance Committee
3,995,400 ordinary shares directly held
4,200,000 options over ordinary shares
7,769,983 service rights and 3,600,000 share appreciation rights
Paul MacRae
Non-Executive Director
Paul is a Graduate of the Australian Institute of Company Directors and
holds Business qualifications and a Bachelor of Science in Chemistry from
The University of Glasgow. He is an active advisory board member and
mentor across several sectors.
Paul has a successful history of setting up and running businesses in the IT
industry in Australia and overseas. Paul’s background includes having run
divisions of TechnologyOne Limited. Paul has a strong background in IT
security, application software, software development, outsourcing, cloud
computing and transactional systems. His roles have included establishing
MessageLabs in Australia & NZ (which was acquired by Symantec to
establish its cloud business). He set up the Global reservation system
Galileo in New Zealand. He was involved in selling his successful SAP
Consultancy and has been instrumental in growing business at several
leading software companies.
Other current directorships:
Former directorships
(last 3 years):
None
None
Special responsibilities:
Chair of the Remuneration and Nomination Committee
Interests in shares:
Interests in options:
Interests in rights:
3,682,084 ordinary shares directly held
None
2,525,690 restricted rights and 1,800,000 share appreciation rights
T
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Name:
Title:
Euh (David) Hwang
Non-Executive Director
Qualifications:
Bachelor of Laws from UNSW
Experience and expertise:
David is an experienced executive and corporate lawyer (with particular
expertise in ECM and ASX Listing Rules) and a trusted adviser to ASX
Boards and management of businesses across a range of industries.
Currently, David is a Managing Director at Prandium Capital, a boutique
Sydney-based corporate advisory business focused on helping emerging
Australian companies and their boards to structure, plan, scale and
grow. Prior to this, David was a Managing Principal (Legal and Company
Secretarial) at Automic Group, which, under his leadership, developed
into Australia’s largest and premier service provider in the outsourced
company secretarial space for pre-IPO and ASX listed entities. He is also a
Notary Public.
Other current directorships:
Former directorships
(last 3 years):
None
None
Special responsibilities:
Member of the Audit, Risk and Compliance Committee
Interests in shares:
Interests in options:
Interests in rights:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships
(last 3 years):
Special responsibilities:
None
None
1,800,000 share appreciation rights
Danny Maher
Managing Director
Bachelor of Computing Studies, University of Canberra 1992 – awarded
the University Prize.
Danny has over 25 years’ experience In the IT Industry across the USA,
Asia, UK and Australian markets. He was the only executive shareholder
of the NetStar Group which he led and built into a global Managed
Services business servicing clients in 42 countries eventuating in its sale
to Logicalis in 2009. In 2010, Danny founded Opmantek, a developer
of cloud-enabled automated enterprise network management and IT
audit software. Opmantek was acquired by FirstWave Cloud Technology
Limited on 14 January 2022. At the time of acquisition Opmantek
operated offices in Australia, the US and Mexico, with the software being
used around the world by service providers and enterprise customers
that include Microsoft, Telmex and NASA. Danny is a graduate of the
University of Canberra where he studied a double major in Computing
and a minor in Marketing and won the prestigious University Prize.
None
None
Member of the Audit, Risk and Compliance Committee and member of
the Remuneration and Nomination Committee
Interests in shares:
50,922,171 ordinary shares directly held
Interests in options:
None
Interests in rights:
11,000,000 share appreciation rights
201,233 570 ordinary shares indirectly held
T
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N
A
3
2
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2
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Y
G
O
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1 1
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P
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Name:
Title:
Ray Kiley
Non-Executive Director
Qualifications:
Bachelor of Laws (Hons) and Bachelor of Science from ANU
Experience and expertise:
Ray is an experienced advisor to technology start-ups and scale-ups.
Previously he was CEO of Intelledox – an Australian enterprise software
scale up that was successfully sold to SmartCommunications, an AKKR
company. Ray began his career as a lawyer with Baker & McKenzie and
later with Telstra where he was a Divisional General Counsel. He has since
held senior management roles with Telstra, Medibank and CoreLogic
before joining Intelledox. Ray has a Bachelor of Laws (Hons) and a
Bachelor of Science majoring in Computer Science from the Australian
National University.
Other current directorships:
Former directorships
(last 3 years):
None
None
Special responsibilities:
Chair of the Audit, Risk and Compliance Committee
Interests in shares:
Interests in options:
Interests in rights:
1,044,762 ordinary shares directly held
None
438,730 service rights and 1,800,000 share appreciation rights.
‘Other current directorships’ quoted above are current directorships for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
‘Former directorships (last 3 years)’ quoted above are directorships held in the last 3 years for listed entities
only and excludes directorships of all other types of entities, unless otherwise stated.
Company secretary
Iain Bartram studied at Cambridge University, United Kingdom and has a Master’s degree in Computer and
Management Science and a post graduate diploma in Design and Manufacturing. Iain went on to train as
an accountant with PwC in London and holds an ACA and is a member of Chartered Accountants Australia
and New Zealand. He was appointed as company secretary on 9 November 2020. Iain has over 20 years’
experience as a strategic CFO with international experience in high growth, listed and unlisted technology
businesses. Iain’s previous experience includes CFO of Jaxsta Limited (ASX:JXT).
Meetings of directors
The number of meetings of the company’s Board of Directors (‘the Board’) and of each Board committee held
during the year ended 30 June 2023, and the number of meetings attended by each director were:
Full Board
Remuneration and
Nomination Committee
Audit, Risk and
Compliance Committee
Attended
Held
Attended
Held
Attended
Held
John Grant
Paul MacRae
Euh (David) Hwang
Danny Maher
Ray Kiley
9
10
10
10
10
10
10
10
10
10
3
3
-
3
-
3
3
-
3
-
4
-
3
4
4
4
-
4
4
4
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A
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Y
Remuneration report (audited)
The remuneration report details the key
management personnel (‘KMP’) remuneration
arrangements for the consolidated entity,
in accordance with the requirements of the
Corporations Act 2001 and its Regulations.
KMP are those persons having authority and
responsibility for planning, directing and controlling
the activities of the entity, directly or indirectly,
including all directors.
The remuneration report is set out under the
following main headings:
— Principles used to determine the nature and
amount of remuneration
— Details of remuneration
— Service agreements
— Share-based compensation
— Additional disclosures relating to key
management personnel
Principles used to determine the nature and
amount of remuneration
A major contributor to the performance of the
consolidated entity is the quality of its directors
and executives, and the Board is responsible for
determining and reviewing their remuneration
arrangements.
The consolidated entity’s remuneration framework
aims to attract, motivate, reward and retain high
performing and high-quality personnel, and
consists of a level of fixed remuneration that is
market competitive and appropriate in recognition
of the role and the candidate’s experience, and
a level of variable remuneration that aligns with
sustained increase in shareholder value and rewards
performance for results delivered.
The Board of Directors is also cognisant of
remuneration being within reasonable shareholder
expectations and to best practice levels of
transparency.
Non-executive directors’ remuneration
Fees and payments to non-executive directors
(‘NEDs’) reflect the demands and responsibilities
of their role. Non-executive directors’ fees and
payments are reviewed annually by the Board. The
Board may, from time to time, receive advice from
independent remuneration consultants to ensure
non-executive directors’ remuneration and payments
are appropriate and in line with the market.
The maximum amount of fees that can be paid
to NEDs is capped by a pool approved by
shareholders. At a General Meeting, held on 15
April 2016, shareholders approved the current fee
pool of $400,000 per annum which is recorded on an
accrual basis. The fee pool and the base directors’
fees did not change in FY2023. Grants of options
and share rights approved by shareholders do not
count towards this limit.
Executive remuneration
The consolidated entity aims to reward executives
based on their position and responsibility, with a
level and mix of remuneration which has both fixed
and variable components.
The executive remuneration framework has four
components:
— base pay and non-monetary benefits;
— short-term performance incentives (STI);
— long term incentives (LTI) in the form of options
and share rights; and
— other remuneration such as superannuation and
long service leave.
The combination of these comprises the executive’s
total remuneration.
Fixed remuneration, consisting of base salary,
superannuation and non-monetary benefits,
is reviewed annually by the Board based on
individual and business unit performance, the
overall performance of the consolidated entity and
comparable market remuneration.
Executives may receive their fixed remuneration
in the form of cash or other fringe benefits (for
example motor vehicle benefits) where it does not
create any additional costs to the consolidated entity
and provides additional value to the executive.
The short-term incentive program is designed to
align the targets of the business units with the
targets of those executives responsible for meeting
those business unit targets. STI payments are
granted to executives based on specific annual
targets and key performance indicators (KPI’s) being
achieved. KPI’s relate to qualitative and quantitative
leadership performance and are subject to Board
discretion.
The long-term incentives are in the form of options
and share rights. The Board reviewed the long-term
equity-linked performance incentives specifically for
executives during the year ended 30 June 2023.
1 3
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A
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N
N
A
3
2
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2
–
Y
G
O
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O
N
H
C
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C
E
V
A
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’
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F
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A
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I
A
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S
H
A
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H
O
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D
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R
I
N
F
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A
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I
O
N
C
O
R
P
O
R
A
T
E
D
I
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E
C
T
O
R
Y
Consolidated entity performance and link to remuneration
STIs were linked directly to performance with any payment requiring measurable achievement against the
consolidated entity and individual targets. Any STIs and LTIs granted are at the discretion of the Board.
Voting and comments made at the company’s 2022 Annual General Meeting (‘AGM’)
At the 24 November 2022 AGM, 99.57% of the votes received supported the adoption of the remuneration
report for the year ended 30 June 2022. The company did not receive any specific feedback at the AGM
regarding its remuneration practices.
Details of remuneration
The KMP of the consolidated entity consisted of the directors of FirstWave Cloud Technology Limited and the
following persons:
— Simon Ryan – Chief Technology Officer
— Iain Bartram – Chief Financial Officer
— Dino Davanzo – Chief Revenue Officer (joined 2 November 2022)
— Craig Nelson – Chief Revenue Officer (joined 14 January 2022 and his last date of employment was
23 September 2022)
During the financial year, the KMP in total were granted 35,500,000 Share Appreciation Rights (‘SARs’) with
an exercise price of $0.05.
NEDs were granted SARs on 27 September 2022 that vest in three equal tranches
with vesting dates of 30 June 2023, 30 June 2024 and 30 June 2025 with corresponding
expiry dates of 30 June 2026, 30 June 2027 and 30 June 2028 respectively.
John Grant
Paul MacRae
Euh (David) Hwang
Ray Kiley
Total SARs to NEDs
KMPs were granted SARs on 27 September 2022 that vest in 2 years time being
30 June 2024 and expire 30 June 2027.
Danny Maher
Iain Bartram
Simon Ryan
Total SARs to other KMPs granted 27 September 2022
KMP was granted SARs on 1 October 2022 that vest in 2 years time being
30 September 2024 and expire 30 June 2027.
Dino Davanzo
Total SARs granted to KMPs during 30 June 2023
Number of SARs
3,600,000
1,800,000
1,800,000
1,800,000
9,000,000
11,000,000
9,500,000
3,000,000
23,500,000
3,000,000
35,500,000
FirstWave CEO Danny Maher has agreed that for the FY23 and FY24 years, his contract will be split between
a fixed $360,000 base plus superannuation, an STI against achievement of annualised revenue and EBITDA
targets in each of the two financial years of $180,000 in cash, and a Long-Term Incentive (LTI) equivalent
to $180,000 awarded in Share Appreciation Rights (SARs) to align his remuneration with the rest of the
management team.
T
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O
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E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
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T
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U
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A
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1 4
C
H
A
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C
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O
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T
T
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D
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C
T
O
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S
’
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P
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T
F
I
N
A
N
C
I
A
L
R
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P
O
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T
S
H
A
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E
H
O
L
D
E
R
I
N
F
O
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M
A
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I
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N
C
O
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P
O
R
A
T
E
D
I
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E
C
T
O
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Y
Details of the remuneration of KMP of the consolidated entity are set out in the following tables:
Short-term benefits
Post-
employment
benefits
Long-
term
benefits
Termination
benefits
Cash salary
and fees
Cash
bonus
Annual
leave
Super-
annuation
Long service
leave
Share-
based
payments
Equity-
settled
options/
rights
2023
$
$
$
$
$
$
$
Total
$
-
-
-
-
-
-
-
-
52,600
26,300
185,200
90,390
26,300
26,300
78,500
90,390
137,500
627,132
37,500
425,993
118,750
480,401
29,250
260,854
33,075
26,408
1,534,424
145,384
35,181
60,320
23,324
-
145,275
16,945
59,617
59,617
-
177,605
454,500
2,416,465
Non-Executive Directors:
John Grant
Paul MacRae
Euh (David)
Hwang
Ray Kiley
120,000
58,000
48,000
58,000
Executive Director:
-
-
-
-
-
-
-
-
12,600
6,090
4,200
6,090
-
-
-
-
Danny Maher
360,000
90,000
7,615
25,292
6,725
Other Key Management Personnel:
Simon Ryan
Iain Bartram
355,000
330,000
-
-
1,365
3,173
25,292
25,292
6,836
3,186
172,349
28,976
12,986
17,095
198
Dino
Davanzo*
Craig
Nelson**
* Represents remuneration from the date of appointment of 2 November 2022 to 30 June 2023.
** Represents remuneration from 1 July 2022 to the last date of employment of 23 September 2022.
1 5
T
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O
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E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
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C
E
V
A
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A
I
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’
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O
’
S
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E
T
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D
I
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C
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O
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S
’
R
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P
O
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F
I
N
A
N
C
I
A
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R
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P
O
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S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Short-term benefits
Post-
employment
benefits
Long-
term
benefits
Termination
benefits
Cash salary
and fees
Cash
bonus
Annual
leave
Super-
annuation
Long service
leave
Share-
based
payments
Equity-
settled
options/
rights
2022
$
$
$
$
$
$
$
Total
$
Non-Executive Directors:
John Grant
Paul MacRae
Euh (David)
Hwang
Ray Kiley*
204,845
29,000
48,000
-
Executive Director:
-
-
-
-
Danny
Maher**
172,857
180,000
Other Key Management Personnel:
Simon Ryan
355,000
-
Iain Bartram
330,000
45,000
-
-
-
-
-
-
-
-
19,853
5,800
-
2,900
-
-
-
-
9,498
2,868
23,568
23,568
10,590
1,827
-
-
-
-
-
-
-
-
-
-
-
-
106,355
331,053
51,405
86,205
-
25,885
48,000
28,785
-
365,223
35,005
424,163
157,693
558,088
326,230
368,018
332
170,292
702,905
2,379,827
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
Craig
Nelson***
Neil
Pollock****
16,354
25,434
-
-
-
149,357
20,603
1,156,056
250,434
149,357
105,790
15,285
* Represents remuneration from the date of appointment of 27 January 2022 to 30 June 2022.
** Represents remuneration from the date of appointment of 27 January 2022 to 30 June 2022.
*** Represents remuneration from the date of appointment of 14 January 2022 to 30 June 2022. Craig’s H2 FY22 base salary and his H2 FY22
STI were salary sacrificed and converted into share settled equity-based payments.
**** Represents remuneration from 1 July 2021 the date of resignation of 7 July 2021, which was his effective last date of employment.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
2023
2022
2023
2022
2023
2022
Fixed remuneration
STI
LTI
Non-Executive Directors:
John Grant
Paul MacRae
Euh (David) Hwang
Ray Kiley
Executive Director
Danny Maher
72%
71%
66%
71%
68%
40%
100%
10%
-
-
-
-
-
-
-
-
28%
29%
34%
29%
32%
60%
-
90%
64%
51%
14%
49%
22%
-
Other Key Management Personnel:
Simon Ryan
Iain Bartram
Dino Davanzo
Craig Nelson
Neil Pollock
91%
75%
78%
85%
-
92%
64%
-
4%
100%
1 6
-
-
11%
15%
-
-
8%
-
7%
-
9%
25%
11%
-
-
8%
28%
-
89%
-
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Service agreements
The consolidated entity enters into employment agreements with each KMP. The employment agreements
with the KMP are continuous (i.e., not of fixed duration) and includes a minimum of 4 weeks’ notice on the
part of the employee and the consolidated entity. The employment agreements contain substantially the same
terms which include the usual statutory entitlements, typical confidentiality and intellectual property provisions
intended to protect the consolidated entity’s intellectual property rights and other proprietary information
and non-compete clauses. KMP have no entitlement to termination payments in the event of removal for
misconduct.
Share-based compensation
Issue of shares
There were no shares issued to directors and other KMP as part of compensation during the year ended
30 June 2023.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors
and other KMP in this financial year or future reporting years are as follows:
Name
Number
of options
granted
Grant
date
Vesting
date and
exercisable
date
Expiry
date
Exercise
price
Fair value
per share
right at
grant date
John Grant
1,400,000
20/11/2019
01/07/2022
30/06/2025
$0.547
$0.093
John Grant was granted 1,400,000 options on 20 November 2019 that vested 1 July 2020 with an expiry date
of 1 July 2023. Subsequent to year end 30 June 2023, these options have been expired without exercise or
conversion on 1 July 2023.
Options granted carry no dividend or voting rights. Vesting of the options are subject to service conditions
(continuous employment) and there are no performance conditions.
The number of options over ordinary shares granted to and vested in directors and other KMP as part of
compensation is set out below:
Name
John Grant
Number of options
granted during the
year 2023
Number of options
granted during the
year 2022
Number of options
vested during the
year 2023
Number of options
vested during the
year 2022
-
-
1,400,000
1,400,000
No options granted, exercised or lapsed during the year 30 June 2023.
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
1 7
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Share rights
The terms and conditions of each grant of share rights over ordinary shares affecting remuneration of directors
and other key management personnel in this financial year or future reporting years are as follows:
Number
of rights
granted
Grant
date
Vesting
date and
exercisable
date
Expiry
date
Exercise
price
1,200,000
27/09/2022
30/06/2023
30/06/2026
1,200,000
27/09/2022
30/06/2024
30/06/2027
1,200,000
27/09/2022
30/06/2025
30/06/2028
600,000
27/09/2022
30/06/2023
30/06/2026
600,000
27/09/2022
30/06/2024
30/06/2027
600,000
27/09/2022
30/06/2025
30/06/2028
Name
John Grant
John Grant
John Grant
Paul MacRae
Paul MacRae
Paul MacRae
Euh (David) Hwang
600,000
27/09/2022
30/06/2023
30/06/2026
Euh (David) Hwang
600,000
27/09/2022
30/06/2024
30/06/2027
Euh (David) Hwang
600,000
27/09/2022
30/06/2025
30/06/2028
Fair value
per right
at grant
date
$0.021
$0.025
$0.031
$0.021
$0.025
$0.031
$0.021
$0.025
$0.031
$0.000
$0.000
$0.000
$0.000
$0.000
$0.000
$0.000
$0.000
$0.000
Danny Maher
11,000,000
27/09/2022
30/06/2024
30/06/2027
$0.000
$0.025
Ray Kiley
Ray Kiley
Ray Kiley
600,000
27/09/2022
30/06/2023
30/06/2026
600,000
27/09/2022
30/06/2024
30/06/2027
600,000
27/09/2022
30/06/2025
30/06/2028
Iain Bartram
Iain Bartram
2,575,739
1/12/2020
30/06/2023
1/12/2027
9,500,000
27/09/2022
30/06/2024
30/06/2027
$0.000
$0.000
$0.000
$0.000
$0.000
$0.021
$0.025
$0.031
$0.096
$0.025
Simon Ryan
3,000,000
27/09/2022
30/06/2024
30/06/2027
$0.000
$0.025
Dino Davanzo
3,000,000
01/10/2022
30/09/2024
30/06/2027
$0.000
$0.026
All service rights issued in FY 23 and FY22 only had a time served criteria and did not have any performance
based criteria.
Share rights granted carry no dividend or voting rights.
The number of share rights over ordinary shares granted to and vested in directors and other key management
personnel as part of compensation during the year ended 30 June 2023 are set out below:
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
1 8
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Name
John Grant
Paul MacRae
Euh (David) Hwang
Ray Kiley
Danny Maher
Simon Ryan
Iain Bartram
Dino Davanzo
Craig Nelson
Number of
rights granted
during the
year 2023
Number of
rights granted
during the
year 2022
Number of
rights vested
during the
year 2023
Number of
rights vested
during the
year 2022
3,600,000
1,800,000
1,800,000
1,800,000
11,000,000
3,000,000
9,500,000
3,000,000
1,003,345
484,950
-
438,730
-
522,461
9,277,165
-
-
4,292,506
1,200,000
600,000
600,000
600,000
-
-
2,575,739
-
-
1,003,345
484,950
-
438,730
-
1,475,231
-
-
4,292,506
Values of share rights over ordinary shares granted, vested and lapsed for directors and other key
management personnel as part of compensation during the year ended 30 June 2023 are set out below:
Value of rights
granted during
the year
Value of rights
vested during
the year
Value of rights
lapsed/ forfeited
during the year
Remuneration
consisting of rights
for the year
$
$
$
%
94,200
46,200
46,200
46,200
275,000
75,000
237,500
78,000
25,200
12,600
12,600
12,600
-
-
-
-
-
-
-
-
246,498
(473,079)
-
-
28.0%
29.0%
34.0%
29.0%
22.0%
9.0%
25.0%
11.0%
Name
John Grant
Paul MacRae
Euh (David) Hwang
Ray Kiley
Danny Maher
Simon Ryan
Iain Bartram
Dino Davanzo
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
1 9
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at the
start of the year
Received
as part of
remuneration
Purchased
during the
year
Other
Balance at the
end of the year
Ordinary shares
John Grant
Paul MacRae
Ray Kiley
3,995,400
3,682,084
1,044,762
Danny Maher
252,155,741
Simon Ryan
Iain Bartram
Craig Nelson*
4,392,140
508,065
19,523,897
285,302,089
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,995,400
3,682,084
1,044,762
252,155,741
4,392,140
508,065
(19,523,897)
-
(19,523,897)
265,778,192
* Craig Nelson’s last date of employment was 23 September 2022 and hence was no longer a KMP from that date.
Option holding
The number of options over ordinary shares in the company held during the financial year by each director and
other members of key management personnel of the consolidated entity, including their personally related
parties, is set out below:
Balance at the
start of the year
Granted
Lapsed
Other
Balance at the
end of the year
Options over
ordinary shares
John Grant
4,200,000
4,200,000
-
-
-
-
-
-
4,200,000
4,200,000
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
2 0
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Share rights holding
The number of share rights over ordinary shares in the company held during the financial year by each director
and other members of key management personnel of the consolidated entity, including their personally
related parties, is set out below:
Balance at the
start of the year
Granted
Expired/
forfeited/other
Balance at the end
of the year
Share rights over
ordinary shares
John Grant
Paul MacRae
Euh (David) Hwang
Ray Kiley
Danny Maher
Simon Ryan
Iain Bartram
Dino Davanzo
Craig Nelson*
7,769,983
2,525,690
-
438,730
3,600,000
1,800,000
1,800,000
1,800,000
-
11,000,000
4,433,802
11,852,904
-
4,292,506
3,000,000
9,500,000
3,000,000
-
-
-
-
-
-
(9,277,165)
-
-
(4,292,506)
11,369,983
4,325,690
1,800,000
2,238,730
11,000,000
7,433,802
12,075,739
3,000,000
-
31,313,615
35,500,000
(13,569,671)
53,243,944
* Craig Nelson’s last date of employment was 23 September 2022 and hence was no longer a KMP from that date.
Vested and
exercisable
Vested and
unexercisable
Other**
Balance at the end
of the year
Share rights
holding over
ordinary shares
(30 June 2023)
John Grant
Paul MacRae
Euh (David) Hwang
Ray Kiley
Simon Ryan
Iain Bartram
Craig Nelson*
Total vested
share rights over
ordinary shares
8,969,983
600,000
600,000
1,038,730
4,433,802
2,575,739
4,292,506
-
2,525,690
-
-
-
-
-
-
-
-
-
-
-
(4,292,506)
8,969,983
3,125,690
600,000
1,038,730
4,433,802
2,575,739
-
22,510,760
2,525,690
(4,292,506)
20,743,944
* Craig Nelson’s last date of employment was 23 September 2022 and hence was no longer a KMP from that date
Loans to key management personnel and their related parties
There were no loans to key management personnel and their related parties as at 30 June 2023.
This concludes the remuneration report, which has been audited.
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
2 1
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Shares under option
Indemnity and insurance of auditor
There were 21,482,667 unissued ordinary shares of
FirstWave Cloud Technology Limited under option
outstanding at the date of this report. The options
are exercisable at a weighted average exercise price
of $0.42 per option.
No person entitled to exercise the options had or
has any right by virtue of the option to participate in
any share issue of the company or of any other body
corporate.
Shares under share rights
There were 82,816,590 unissued ordinary shares of
FirstWave Cloud Technology Limited under share
rights outstanding at the date of this report. This
includes 55,800,000 SARs that have an exercise
price of $0.05. The remaining 27,016,590 share
rights have no exercise price.
Shares issued on the exercise of options
There were no ordinary shares of FirstWave Cloud
Technology Limited issued on the exercise of
options during the year ended 30 June 2023 and up
to the date of this report.
Shares issued on the exercise of share
rights
492,962 ordinary shares of FirstWave Cloud
Technology Limited were issued on the exercise of
share rights during the year ended 30 June 2023
and up to the date of this report. Share rights were
exercised at an exercise price of $nil.
Indemnity and insurance of officers
The company has indemnified the directors and
executives of the company for costs incurred, in their
capacity as a director or executive, for which they
may be held personally liable, except where there is
a lack of good faith.
During the financial year, the company paid a
premium in respect of a contract to insure the
directors and executives of the company against a
liability to the extent permitted by the Corporations
Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the
amount of the premium.
The company has not, during or since the end of the
financial year, indemnified or agreed to indemnify
the auditor of the company or any related entity
against a liability incurred by the auditor.
During the financial year, the company has not paid
a premium in respect of a contract to insure the
auditor of the company or any related entity.
Proceedings on behalf of the company
No person has applied to the Court under section
237 of the Corporations Act 2001 for leave to
bring proceedings on behalf of the company, or to
intervene in any proceedings to which the company
is a party for the purpose of taking responsibility
on behalf of the company for all or part of those
proceedings.
Non-audit services
Details of the amounts paid or payable to the
auditor for non-audit services provided during the
financial year by the auditor are outlined in note 26
to the financial statements.
The directors are satisfied that the provision of
non-audit services during the financial year, by the
auditor (or by another person or firm on the auditor’s
behalf), is compatible with the general standard
of independence for auditors imposed by the
Corporations Act 2001.
The directors are of the opinion that the services as
disclosed in note 26 to the financial statements do
not compromise the external auditor’s independence
requirements of the Corporations Act 2001 for the
following reasons:
— all non-audit services have been reviewed and
approved to ensure that they do not impact the
integrity and objectivity of the auditor; and
— none of the services undermine the general
principles relating to auditor independence
as set out in APES 110 Code of Ethics
for Professional Accountants (including
Independence Standards) issued by the
Accounting Professional and Ethical Standards
Board, including reviewing or auditing the
auditor’s own work, acting in a management or
decision-making capacity for the company, acting
as advocate for the company or jointly sharing
economic risks and rewards.
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
2 2
C
H
A
I
R
’
S
L
E
T
T
E
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C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Officers of the company who are former partners of PKF Brisbane Audit
There are no officers of the company who are former partners of PKF Brisbane Audit.
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 immediately after this directors’ report.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
On behalf of the directors
John Grant
Chair
30 August 2023
Ray Kiley
Director
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Auditor’s independence declaration
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2
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Y
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF FIRSTWAVE CLOUD TECHNOLOGY LIMITED I declare that, to the best of my knowledge and belief, during the year ended 30 June 2023, there have been no contraventions of: (a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) any applicable code of professional conduct in relation to the audit. This declaration is in respect of FirstWave Cloud Technology Limited and the entities it controlled during the year. PKF BRISBANE AUDIT SHAUN LINDEMANN PARTNER BRISBANE 30 AUGUST 2023
FINANCIAL
REPORT
A description of the nature of the consolidated
entity’s operations and its principal activities are
included in the directors’ report, which is not part of
the financial statements.
The financial statements were authorised for issue,
in accordance with a resolution of directors, on
30 August 2023. The directors have the power to
amend and reissue the financial statements.
General information
The financial statements cover Firstwave Cloud
Technology Limited (referred to as the ‘company’
or ‘parent’) as a consolidated entity consisting
of Firstwave Cloud Technology Limited and the
entities it controlled at the end of, or during, the
year (referred to as the ‘consolidated entity’). The
financial statements are presented in Australian
dollars, which is Firstwave Cloud Technology
Limited’s functional and presentation currency.
FirstWave Cloud Technology Limited is a listed
public company limited by shares, incorporated
and domiciled in Australia. Its registered office and
principal place of business is:
Level 14, 132 Arthur Street
North Sydney, NSW 2060
Australia
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L
A
A
U
U
N
N
N
N
A
A
3
3
2
2
0
0
2
2
–
–
Y
Y
G
G
O
O
L
L
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N
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F
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A
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I
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N
C
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P
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Y
Statement of profit or loss and other
comprehensive income
For the year ended 30 June 2023
Revenue
Revenue from contracts with customers
Cost of sales
Gross profit
Other income
Interest income calculated using the effective interest method
Expenses
Sales and marketing
Product and development
Operations and support
Corporate and administration
Transaction costs
Impairment of assets
Finance costs
Total expenses
Loss before income tax expense
Income tax expense
Consolidated
2023
$
2022
$
12,492,797
9,351,497
(2,857,863)
(3,164,155)
9,634,934
6,187,342
2,518,465
1,391,018
136,901
13,495
(4,594,096)
(5,074,454)
(5,268,699)
(4,179,811)
(1,485,475)
(1,856,924)
(6,670,909)
(7,701,978)
(99,113)
(2,173,410)
(7,591,178)
-
(11,167)
(60,772)
(25,720,637)
(21,047,349)
(13,430,337)
(13,455,494)
(17,948)
-
Note
4
6
5
13
6
7
Loss after income tax expense for the year attributable to the
owners of FirstWave Cloud Technology Limited
(13,448,285)
(13,455,494)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
19,400
19,400
99,954
99,954
Total comprehensive income for the year attributable to the
owners of FirstWave Cloud Technology Limited
(13,428,885)
(13,355,540)
Basic earnings per share
Diluted earnings per share
34
34
Cents
Cents
(0.81)
(0.81)
(1.14)
(1.14)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
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G
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Y
Statement of financial position
As at 30 June 2023
Assets
Current assets
Cash and cash equivalents
Term deposits
Trade and other receivables
Contract assets
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangibles
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Contract liabilities
Employee benefits
Lease liabilities
Deferred research and development income
Total current liabilities
Non-current liabilities
Contract liabilities
Employee benefits
Provisions
Lease liabilities
Deferred research and development income
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
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O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
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D
U
O
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A
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Consolidated
2023
$
2022
$
Note
8
9
10
11
12
13
14
15
16
18
19
15
16
17
18
19
21
22
5,607,419
10,408,589
133,776
133,776
3,190,429
3,083,004
142,440
742,640
168,417
639,081
9,816,704
14,432,867
109,992
208,603
167,484
308,730
53,194,363
61,830,141
53,512,958
62,306,355
63,329,662
76,739,222
2,862,039
3,917,913
3,214,285
3,060,533
1,392,125
1,410,549
118,569
880,057
107,145
945,979
8,467,075
9,442,119
730,679
163,960
26,406
141,857
153,782
108,860
26,406
260,426
1,369,579
1,590,156
2,432,481
2,139,630
10,899,556
11,581,749
52,430,106
65,157,473
128,474,750
128,426,284
5,911,076
5,736,129
(81,955,720)
(69,004,940)
52,430,106
65,157,473
The above statement of financial position should be read in conjunction with the accompanying notes.
2 7
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A
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A
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Statement of changes in equity
For the year ended 30 June 2023
Consolidated
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total
equity
$
Balance at 1 July 2021
63,760,506
7,611,200
(56,501,362)
14,870,344
Loss after income tax expense for the year
Other comprehensive income
for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their
capacity as owners:
-
-
-
-
(13,455,494)
(13,455,494)
99,954
-
99,954
99,954
(13,455,494)
(13,355,540)
Contributions of equity, net of transaction
costs (note 21)
62,036,737
Share-based payments (note 35)
Transfer to retained earnings
Share issue on exercise of options and
share rights (note 21)
-
860,004
(961,916)
-
-
951,916
62,036,737
860,004
(10,000)
2,629,041
(1,873,113)
-
755,928
Balance at 30 June 2022
128,426,284
5,736,129
(69,004,940)
65,157,473
Consolidated
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total
equity
$
Balance at 1 July 2022
128,426,284
5,736,129
(69,004,940)
65,157,473
-
(13,448,285)
(13,448,285)
19,400
-
19,400
19,400
(13,448,285)
(13,428,885)
Loss after income tax expense for the year
Other comprehensive income
for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their
capacity as owners:
Share-based payment expense (note 35)
Share issue on exercise of share rights
(note 21)
704,813
48,466
(51,761)
-
-
704,813
(3,295)
-
Transfer to retained earnings
-
(497,505)
497,505
Balance at 30 June 2023
128,474,750
5,911,076
(81,955,720)
52,430,106
The above statement of changes in equity should be read in conjunction with the accompanying notes
2 8
-
-
-
-
-
-
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O
P
E
R
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A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
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A
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D
I
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’
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F
I
N
A
N
C
I
A
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P
O
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T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
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P
O
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A
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I
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Y
Statement of cash flows
For the year ended 30 June 2023
Consolidated
Note
2023
$
2022
$
Cash flows from operating activities
Receipts from customers (inclusive of GST)
13,257,939
11,156,706
Payments to suppliers and employees (inclusive of GST)
(16,553,154)
(17,912,327)
Transaction cost payments (inclusive of GST)
Interest received
Other income
Interest and other finance costs paid
Income taxes paid
(40,756)
(2,717,781)
95,684
17,700
1,484,806
1,661,314
-
-
(183)
(209,000)
Net cash used in operating activities
33
(1,755,481)
(8,003,571)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Opening cash balance of the acquired entity
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from exercise of options
Share issue transaction costs
Settlement of Opmantek Ltd borrowings
Borrowings to Opmantek Ltd
Repayment of lease liabilities
(5,386)
(121,000)
(2,909,358)
(3,084,626)
-
958,938
(2,914,744)
(2,246,688)
-
-
13,957,893
761,163
(2,127)
(1,051,445)
-
-
(2,282,136)
(500,000)
33
(128,818)
(188,493)
Net cash from/(used in) financing activities
(130,945)
10,696,982
Net increase/(decrease) in cash and cash equivalents
(4,801,170)
446,723
Cash and cash equivalents at the beginning of the financial year
10,408,589
9,961,866
Cash and cash equivalents at the end of the financial year
8
5,607,419
10,408,589
Net cash used in operating activities
Transaction cost payments (inclusive of GST)
Net cash used in operating activities before transaction costs
(inclusive of GST)
(1,755,481)
(8,003,571)
40,756
2,717,781
(1,714,725)
(5,285,790)
The above statement of cash flows should be read in conjunction with the accompanying notes
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A
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2
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2
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Y
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Notes to the financial statements
30 June 2023
Note 1. Significant accounting
policies
The principal accounting policies adopted in the
preparation of the financial statements are set
out below. These policies have been consistently
applied to all the years presented, unless otherwise
stated.
New or amended Accounting Standards
and Interpretations adopted
The consolidated entity has adopted all of the
new or amended Accounting Standards and
Interpretations issued by the Australian Accounting
Standards Board (‘AASB’) that are mandatory for
the current reporting period. The adoption of
these Accounting Standards and Interpretations
did not have any significant impact on the financial
performance or position of the consolidated entity.
Any new or amended Accounting Standards or
Interpretations that are not yet mandatory have not
been early adopted.
Going concern
During the year ended 30 June 2023, the
consolidated entity incurred a net loss after tax of
$13,448,285 (2022: loss of $13,455,494 and net cash
outflows used in operating activities of $1,755,481
(2022: operating cash outflow of $8,003,571). The
directors have prepared the financial statements on
the going concern basis, which assumes continuity
of normal business activities and the realisation of
assets and the settlement of liabilities in the ordinary
course of business.
Based on its current commitments, the consolidated
entity has sufficient funds to meet its debts as and
when they fall due. Accordingly, the directors have
determined that the use of the going concern
basis of accounting is appropriate in preparing
the financial statements. The assessment of going
concern is based on cash flow projections. The
preparation of these projections incorporates the
use of several assumptions, judgements and other
considerations (‘inputs’). Having regard to the range
of possible outcomes utilising different inputs, the
directors have concluded that none of the potential
impacts to future cash flow outcomes give rise to
material uncertainty which may cast significant doubt
on the consolidated entity’s ability to continue as a
going concern.
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’).
Historical cost convention
The financial statements have been prepared under
the historical cost convention.
Critical accounting estimates
The preparation of the financial statements requires
the use of certain critical accounting estimates. It
also requires management to exercise its judgement
in the process of applying the consolidated entity’s
accounting policies. The areas involving a higher
degree of judgement or complexity, or areas where
assumptions and estimates are significant to the
financial statements, are disclosed in note 2.
Parent entity information
In accordance with the Corporations Act 2001,
these financial statements present the results of the
consolidated entity only. Supplementary information
about the parent entity is disclosed in note 32.
Principles of consolidation
The consolidated financial statements incorporate
the assets and liabilities of all subsidiaries of
FirstWave Cloud Technology Limited (‘company’ or
‘parent entity’) as at 30 June 2023 and the results of
all subsidiaries for the year then ended. FirstWave
Cloud Technology Limited and its subsidiaries
together are referred to in these financial statements
as the ‘consolidated entity’.
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Y
G
O
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A
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Foreign operations
The assets and liabilities of foreign operations
are translated into Australian dollars using the
exchange rates at the reporting date. The revenues
and expenses of foreign operations are translated
into Australian dollars using the average exchange
rates, which approximate the rates at the dates of
the transactions, for the period. All resulting foreign
exchange differences are recognised in other
comprehensive income through the foreign currency
reserve in equity.
The foreign currency reserve is recognised in profit
or loss when the foreign operation or net investment
is disposed of.
Revenue recognition
The consolidated entity recognises revenue as
follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects
the consideration to which the consolidated entity is
expected to be entitled in exchange for transferring
goods or services to a customer. For each contract
with a customer, the consolidated entity: identifies
the contract with a customer; identifies the
performance obligations in the contract; determines
the transaction price which takes into account
estimates of variable consideration and the time
value of money; allocates the transaction price to
the separate performance obligations on the basis of
the relative stand-alone selling price of each distinct
good or service to be delivered; and recognises
revenue when or as each performance obligation is
satisfied in a manner that depicts the transfer to the
customer of the goods or services promised.
Variable consideration within the transaction
price, if any, reflects concessions provided to
the customer such as discounts, rebates and
refunds, any potential bonuses receivable from
the customer and any other contingent events.
Such estimates are determined using either the
‘expected value’ or ‘most likely amount’ method.
The measurement of variable consideration is
subject to a constraining principle whereby revenue
will only be recognised to the extent that it is
highly probable that a significant reversal in the
amount of cumulative revenue recognised will
not occur. The measurement constraint continues
until the uncertainty associated with the variable
consideration is subsequently resolved. Amounts
received that are subject to the constraining
principle are recognised as a refund liability.
Subsidiaries are all those entities over which the
consolidated entity has control. The consolidated
entity controls an entity when the consolidated
entity is exposed to, or has rights to, variable returns
from its involvement with the entity and has the
ability to affect those returns through its power to
direct the activities of the entity. Subsidiaries are
fully consolidated from the date on which control is
transferred to the consolidated entity. They are de-
consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised
gains on transactions between entities in the
consolidated entity are eliminated. Unrealised losses
are also eliminated unless the transaction provides
evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with
the policies adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using
the acquisition method of accounting. A change in
ownership interest, without the loss of control, is
accounted for as an equity transaction, where the
difference between the consideration transferred
and the book value of the share of the non-
controlling interest acquired is recognised directly in
equity attributable to the parent.
Where the consolidated entity loses control over
a subsidiary, it derecognises the assets including
goodwill, liabilities and non-controlling interest
in the subsidiary together with any cumulative
translation differences recognised in equity. The
consolidated entity recognises the fair value of the
consideration received and the fair value of any
investment retained together with any gain or loss in
profit or loss.
Operating segments
Operating segments are presented using the
‘management approach’, where the information
presented is on the same basis as the internal
reports provided to the Chief Operating Decision
Makers (‘CODM’). The CODM is responsible for the
allocation of resources to operating segments and
assessing their performance.
Foreign currency translation
The financial statements are presented in Australian
dollars, which is FirstWave Cloud Technology
Limited’s functional and presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into
the entity’s functional currency using the exchange
rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from
the settlement of such transactions and from the
translation at financial year-end exchange rates
of monetary assets and liabilities denominated in
foreign currencies are recognised in profit or loss.
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Disaggregation of revenue
Income tax
Recurring revenue relates to the provisioning of
licensing, support, and professional services revenue
provided over the contracted service period and
where revenue is recognised over a period of time.
Non-recurring revenue relates to professional
services revenue that is ad hoc in nature and where
revenue is recognised at a point in time.
Licensing and support revenue
(recurring revenue)
Recognition of licensing and support revenue
commences upon provisioning of the contracted
service. Provisioning entails the setting up of the
customer on the entity’s infrastructure and the
rendering of prescribed professional services to the
customer to enable the provision of the contracted
service. As licensing is subscription based, license
revenue and the related support service revenue
is recognised over the term of the contract,
commencing on the date of service activation.
Interest
Interest income is recognised as interest accrues
using the effective interest method. This is a
method of calculating the amortised cost of a
financial asset and allocating the interest income
over the relevant period using the effective
interest rate, which is the rate that exactly
discounts estimated future cash receipts through
the expected life of the financial asset to the net
carrying amount of the financial asset.
Government grants
Government grants are recognised at fair value
where there is a reasonable certainty that the grant
will be received upon meeting all grant terms
and conditions. Grants that are meant to fund
expenditure on research and development are
recognised over the periods when these costs are
written off to profit or loss. Grants related to assets
are carried forward as deferred income at fair value
and are credited to other income over the expected
useful life of the asset on a straight line basis.
Prepayments
Prepayments are largely made up of back to back
cost of licenses procured from upstream security
vendors/channel partners. These prepayments are
charged to profit and loss over a term of 12 months,
co-terming with related license revenue recognised
per revenue recognition policy stated above.
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The income tax expense or benefit for the period
is the tax payable on that period’s taxable income
based on the applicable income tax rate for each
jurisdiction, adjusted by the changes in deferred
tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment
recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised
for temporary differences at the tax rates expected
to be applied when the assets are recovered or
liabilities are settled, based on those tax rates that
are enacted or substantively enacted, except for:
— when the deferred income tax asset or liability
arises from the initial recognition of goodwill or
an asset or liability in a transaction that is not a
business combination and that, at the time of the
transaction, affects neither the accounting nor
taxable profits; or
— when the taxable temporary difference is
associated with interests in subsidiaries 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 at
each reporting date. Deferred tax assets recognised
are reduced to the extent that it is no longer
probable that future taxable profits will be available
for the carrying amount to be recovered. Previously
unrecognised deferred tax assets are recognised to
the extent that it is probable that there are future
taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only
where there is a legally enforceable right to offset
current tax assets against current tax liabilities and
deferred tax assets against deferred tax liabilities;
and they relate to the same taxable authority on
either the same taxable entity or different taxable
entities which intend to settle simultaneously.
FirstWave Cloud Technology Limited (the ‘head
entity’) and its wholly-owned Australian subsidiaries
have formed an income tax consolidated group
under the tax consolidation regime. The head
entity and each subsidiary in the tax consolidated
group continue to account for their own current
and deferred tax amounts. The tax consolidated
group has applied the ‘separate taxpayer within
group’ approach in determining the appropriate
amount of taxes to allocate to members of the tax
consolidated group.
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In addition to its own current and deferred tax
amounts, the head entity also recognises the current
tax liabilities (or assets) and the deferred tax assets
arising from unused tax losses and unused tax
credits assumed from each subsidiary in the tax
consolidated group.
Assets or liabilities arising under tax funding
agreements with the tax consolidated entities are
recognised as amounts receivable from or payable
to other entities in the tax consolidated group.
The tax funding arrangement ensures that the
intercompany charge equals the current tax liability
or benefit of each tax consolidated group member,
resulting in neither a contribution by the head
entity to the subsidiaries nor a distribution by the
subsidiaries to the head entity.
Current and non-current classification
Assets and liabilities are presented in the statement
of financial position based on current and non-
current classification.
An asset is classified as current when: it is either
expected to be realised or intended to be sold
or consumed in the consolidated entity’s normal
operating cycle; it is held primarily for the purpose
of trading; it is expected to be realised within 12
months after the reporting period; or the asset is
cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least 12
months after the reporting period. All other assets
are classified as non-current.
A liability is classified as current when: it is either
expected to be settled in the consolidated entity’s
normal operating cycle; it is held primarily for the
purpose of trading; it is due to be settled within 12
months after the reporting period; or there is no
unconditional right to defer the settlement of the
liability for at least 12 months after the reporting
period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always
classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other
short-term, highly liquid investments with original
maturities of three months or less that are readily
convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value
and subsequently measured at amortised cost using
the effective interest method, less any allowance
for expected credit losses. Trade receivables are
generally due for settlement within 30 days.
The consolidated entity has applied the simplified
approach to measuring expected credit losses, which
uses a lifetime expected loss allowance. To measure
the expected credit losses, trade receivables have
been grouped based on days overdue.
Other receivables are recognised at amortised cost,
less any allowance for expected credit losses.
Contract assets
Contract assets are recognised when the
consolidated entity has transferred goods or
services to the customer but where the consolidated
entity is yet to establish an unconditional right
to consideration. Contract assets are treated as
financial assets for impairment purposes.
Other financial assets
Other financial assets are initially measured at fair
value. Transaction costs are included as part of the
initial measurement, except for financial assets at
fair value through profit or loss. Such assets are
subsequently measured at either amortised cost
or fair value depending on their classification.
Classification is determined based on both the
business model within which such assets are held
and the contractual cash flow characteristics of the
financial asset unless, an accounting mismatch is
being avoided.
Financial assets are derecognised when the
rights to receive cash flows have expired or have
been transferred and the consolidated entity has
transferred substantially all the risks and rewards of
ownership. When there is no reasonable expectation
of recovering part or all of a financial asset, its
carrying value is written off.
Financial assets at amortised cost
A financial asset is measured at amortised cost only
if both of the following conditions are met: (i) it is
held within a business model whose objective is
to hold assets in order to collect contractual cash
flows; and (ii) the contractual terms of the financial
asset represent contractual cash flows that are solely
payments of principal and interest.
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Property, plant and equipment
Intangible assets
Intangible assets acquired are initially recognised
at cost. Finite life intangible assets are subsequently
measured at cost less amortisation and any
impairment. The gains or losses recognised in profit
or loss arising from the derecognition of intangible
assets are measured as the difference between net
disposal proceeds and the carrying amount of the
intangible asset. The method and useful lives of
finite life intangible assets are reviewed annually.
Changes in the expected pattern of consumption
or useful life are accounted for prospectively by
changing the amortisation method or period.
Goodwill
Goodwill arises on the acquisition of a business.
Goodwill is not amortised. Instead, goodwill is
tested annually for impairment, or more frequently
if events or changes in circumstances indicate that
it might be impaired, and is carried at cost less
accumulated impairment losses. Impairment losses
on goodwill are taken to profit or loss and are not
subsequently reversed.
Capitalised development costs
Expenditure on research activities is recognised
as an expense in the period in which it is incurred.
Expenditure relating to an internally-generated
intangible asset arising from development is
capitalised when: it is probable that the project
will be a success considering its commercial and
technical feasibility; the consolidated entity is able
to use or sell the asset; the consolidated entity
has sufficient resources and intent to complete
the internal development; and its costs can be
measured reliably.
The amount initially recognised for internally-
generated intangible assets is the sum of the
expenditure incurred from the date when the
intangible asset first meets the recognition criteria
listed above. Where no internally-generated
intangible asset can be recognised, development
expenditure is recognised in profit or loss in the
period in which it is incurred. Subsequent to initial
recognition, internally-generated intangible assets are
reported at cost less accumulated amortisation and
accumulated impairment losses on the same basis as
intangible assets that are acquired separately.
Capitalised development costs are amortised on a
straight-line basis over the period of their expected
benefit, being their finite useful lives of 5 years.
Plant and equipment is stated at historical cost less
accumulated depreciation and impairment. Historical
cost includes expenditure that is directly attributable
to the acquisition of the items.
Depreciation is calculated on a straight line basis to
write off the net cost of each item of property, plant
and equipment over their expected useful lives as
follows:
Leasehold improvements
Computer equipment
Computer platform
Website
3 years
3-5 years
2-3 years
5 years
The residual values, useful lives and depreciation
methods are reviewed, and adjusted if appropriate,
at each reporting date.
Leasehold improvements are depreciated over the
unexpired period of the lease or the estimated
useful life of the assets, whichever is shorter.
An item of property, plant and equipment is
derecognised upon disposal or when there is no
future economic benefit to the consolidated entity.
Gains and losses between the carrying amount and
the disposal proceeds are taken to profit or loss.
Right-of-use assets
A right-of-use asset is recognised at the
commencement date of a lease. The right-of-use
asset is measured at cost, which comprises the
initial amount of the lease liability, adjusted for, as
applicable, any lease payments made at or before
the commencement date net of any lease incentives
received, any initial direct costs incurred, and,
except where included in the cost of inventories,
an estimate of costs expected to be incurred for
dismantling and removing the underlying asset, and
restoring the site or asset.
Right-of-use assets are depreciated on a straight-
line basis over the unexpired period of the lease or
the estimated useful life of the asset, whichever is
the shorter. Where the consolidated entity expects
to obtain ownership of the leased asset at the
end of the lease term, the depreciation is over its
estimated useful life. Right-of use assets are subject
to impairment or adjusted for any remeasurement of
lease liabilities.
The consolidated entity has elected not to
recognise a right-of-use asset and corresponding
lease liability for short-term leases with terms of 12
months or less and leases of low-value assets. Lease
payments on these assets are expensed to profit or
loss as incurred.
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Brand name
Contract liabilities
Brand name acquired in a business combination is
not amortised but 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. Brand names are considered to be indefinite
life assets because there is no foreseeable limit to
the cash flows generated by them.
Customer list
Customer list acquired in a business combination are
amortised on a straight-line basis over the period of
their expected benefit, being their finite life of 5 years.
Patents
Significant costs associated with patents are
deferred and amortised on a straight-line basis over
the period of their expected benefit, being their
finite useful lives of 5 years.
Information systems
Significant costs associated with information systems
are deferred and amortised on a straight-line basis
over the period of their expected benefit, being
their finite life of 5 years.
Impairment of non-financial assets
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.
Trade and other payables
Trade and other payables represent liabilities for
goods and services provided to the consolidated
entity prior to the end of the financial year and which
are unpaid. Due to their short-term nature, they are
measured at amortised cost and are not discounted.
The amounts are unsecured and are usually paid
within 30 days of recognition.
Contract liabilities represent the consolidated
entity’s obligation to transfer goods or services to
a customer and are recognised when a customer
pays consideration, or when the consolidated entity
recognises a receivable to reflect its unconditional
right to consideration (whichever is earlier) before
the consolidated entity has transferred the goods or
services to the customer.
Lease liabilities
A lease liability is recognised at the commencement
date of a lease. The lease liability is initially
recognised at the present value of the lease
payments to be made over the term of the lease,
discounted using the interest rate implicit in the
lease or, if that rate cannot be readily determined,
the consolidated entity’s incremental borrowing
rate. Lease payments comprise of fixed payments
less any lease incentives receivable, variable lease
payments that depend on an index or a rate,
amounts expected to be paid under residual value
guarantees, exercise price of a purchase option
when the exercise of the option is reasonably certain
to occur, and any anticipated termination penalties.
Lease liabilities are measured at amortised cost
using the effective interest method. The carrying
amounts are remeasured if there is a change in
the following: future lease payments arising from
a change in an index or a rate used; residual
guarantee; lease term; certainty of a purchase
option and termination penalties. When a lease
liability is remeasured, an adjustment is made to the
corresponding right-of use asset, or to profit or loss
if the carrying amount of the right-of-use asset is
fully written down.
Finance costs
Finance costs are expensed in the period in which
they are incurred.
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Provisions
Provisions are recognised when the consolidated
entity has a present (legal or constructive) obligation
as a result of a past event, it is probable the
consolidated entity will be required to settle the
obligation, and a reliable estimate can be made
of the amount of the obligation. The amount
recognised as a provision is the best estimate of
the consideration required to settle the present
obligation at the reporting date, taking into
account the risks and uncertainties surrounding the
obligation. If the time value of money is material,
provisions are discounted using a current pre-tax
rate specific to the liability. The increase in the
provision resulting from the passage of time is
recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-
monetary benefits, annual leave and long service
leave expected to be settled wholly within 12
months of the reporting date are measured at the
amounts expected to be paid when the liabilities
are settled.
Other long-term employee benefits
The liability for annual leave and long service leave
not expected to be settled within 12 months of the
reporting date 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. 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 corporate bonds with
terms to maturity and currency that match, as closely
as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution
superannuation plans are expensed in the period in
which they are incurred.
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Share-based payments
Equity-settled share-based compensation benefits
are provided to employees.
Equity-settled transactions are awards of shares, or
options over shares, that are provided to employees
in exchange for the render-ing of services.
The cost of equity-settled transactions is measured
at fair value on grant date. Fair value is determined
using either the Binomial, Black-Scholes or Monte
Carlo option pricing model that takes into account
the exercise price, the term of the option, the
impact of dilution, the share price at grant date and
expected price volatility of the underlying share, the
expected dividend yield and the risk free interest
rate for the term of the option, together with non-
vesting conditions that do not determine whether
the consolidated enti-ty receives the services that
entitle the employees to receive payment.
The cost of equity-settled transactions is recognised
as an expense with a corresponding increase in
equity over the vesting period. The cumulative
charge to profit or loss is calculated based on the
grant date fair value of the award, the best estimate
of the num-ber of awards that are likely to vest
and the expired portion of the vesting period. The
amount recognised in profit or loss for the period is
the cumulative amount calculated at each reporting
date less amounts already recognised in previous
periods.
Market conditions are taken into consideration
in determining fair value. Therefore, any awards
subject to market conditions are considered to vest
irrespective of whether or not that market condition
has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum
an expense is recognised as if the modification
has not been made. An addi-tional expense is
recognised, over the remaining vesting period, for
any modification that increases the total fair value of
the share-based compensation benefit as at the date
of modification.
If the non-vesting condition is within the control of
the consolidated entity or employee, the failure to
satisfy the condition is treated as a cancellation.
If the condition is not within the control of the
consolidated entity or employee and is not satisfied
during the vest-ing period, any remaining expense
for the award is recognised over the remaining
vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated
as if it has vested on the date of cancellation, and
any remaining expense is rec-ognised immediately.
If a new replacement award is substituted for the
cancelled award, the cancelled and new award is
treated as if they were a modification.
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E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
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A
T
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D
I
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C
T
O
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Y
Fair value measurement
Diluted earnings per share
When an asset or liability, financial or non-financial,
is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that
would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market
participants at the measurement date; and assumes
that the transaction will take place either: in the
principal market; or in the absence of a principal
market, in the most advantageous market.
Fair value is measured using the assumptions that
market participants would use when pricing the
asset or liability, assuming they act in their economic
best interests. For non-financial assets, the fair
value measurement is based on its highest and best
use. Valuation techniques that are appropriate in
the circumstances and for which sufficient data are
available to measure fair value, are used, maximising
the use of relevant observable inputs and minimising
the use of unobservable inputs.
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.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing
the profit attributable to the owners of FirstWave
Cloud Technology Limited, excluding any costs
of servicing equity other than ordinary shares, by
the weighted average number of ordinary shares
outstanding during the financial year, adjusted for
bonus elements in ordinary shares issued during the
financial year.
Diluted earnings per share 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 additional ordinary shares that
would have been outstanding assuming conversion
of all 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.
New Accounting Standards and
Interpretations not yet mandatory
or early adopted
Australian Accounting Standards and Interpretations
that have recently been issued or amended but are
not yet mandatory, have not been early adopted
by the consolidated entity for the annual reporting
period ended 30 June 2023. The adoption of these
Accounting Standards and Interpretations is not
expected to have any significant impact on the
consolidated entity’s financial statements.
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
3 7
C
H
A
I
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’
S
L
E
T
T
E
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C
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O
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S
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E
T
T
E
R
D
I
R
E
C
T
O
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S
’
R
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P
O
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T
F
I
N
A
N
C
I
A
L
R
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P
O
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S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
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M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Note 2. Critical accounting
judgements, estimates and
assumptions
The preparation of the financial statements requires
management to make judgements, estimates and
assumptions that affect the reported amounts in
the financial statements. Management continually
evaluates its judgements and estimates in relation
to assets, liabilities, contingent liabilities, revenue
and expenses. Management bases its judgements,
estimates and assumptions on historical experience
and on various other factors, including expectations
of future events, management believes to be
reasonable under the circumstances. The resulting
accounting judgements and estimates will seldom
equal the related actual results. The judgements,
estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying
amounts of assets and liabilities (refer to the
respective notes) within the next financial year are
discussed below.
Share-based payment transactions
The consolidated entity measures the cost of equity-
settled transactions with employees by reference to
the fair value of the equity instruments at the date at
which they are granted. The fair value is determined
by using either the Binomial or Black-Scholes model
taking into account the terms and conditions upon
which the instruments were granted. The accounting
estimates and assumptions relating to equity-settled
share-based payments would have no impact on the
carrying amounts of assets and liabilities within the
next annual reporting period but may impact profit
or loss and equity. Refer to note 35 for information
regarding key assumptions.
Allowance for expected credit losses
The allowance for expected credit losses assessment
requires a degree of estimation and judgement. It is
based on the lifetime expected credit loss, grouped
based on days overdue, and makes assumptions
to allocate an overall expected credit loss rate for
each group. These assumptions include recent sales
experience, historical collection rates and forward-
looking information that is available. The allowance
for expected credit losses, as disclosed in note 9, is
calculated based on the information available at the
time of preparation. The actual credit losses in future
years may be higher or lower.
Capitalised development costs
Distinguishing the research and development phases
of a new customised product and determining
whether the recognition requirements for the
capitalisation of development costs are met requires
judgement. After capitalisation, management
monitors whether the recognition requirements
continue to be met and whether there are any
indicators that capitalised costs may be impaired.
Estimation of useful lives of assets
The consolidated entity 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 the 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
As outlined in Note 13, management has identified
two cash generating units (CGU). The recorded
value of goodwill and other intangible assets
have been allocated to each CGU. The allocation
of other intangible assets to each CGU requires
management judgement. Impairment testing has
been performed for each CGU using the value in
use method, based on the assumptions outlined in
Note 13, which also require the use of significant
estimates and judgements.
Income tax
The consolidated entity 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 consolidated
entity recognises liabilities for anticipated tax audit
issues based on the consolidated entity’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.
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
3 8
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
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P
O
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T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Note 3. Operating segments
Identification of reportable operating segments
The consolidated entity’s operating segments are
based on the internal reports that are reviewed
and used by the Chief Executive Officer (being
the Chief Operating Decision Makers (‘CODM’))
in assessing performance and in determining the
allocation of resources.
The consolidated entity only has one reportable
segment being the development and sale of internet
security software. For information on the reportable
segment refer to the statement of profit or loss and
other income (for segment revenues and profit/loss)
and statement of financial position (for total segment
assets and liabilities) and notes to the financial
statements. Refer to note 4 for geographical
information. Whilst two cash-generating units
have been identified for the purpose of internal
impairment assessments at balance date, this level
of information has not been compiled and provided
internally to the CODM during the year.
Major customers
During the year ended 30 June 2023, there was
one major external customer (2022: one customer)
where revenue exceeded 10% of the consolidated
revenue. Total revenue from the customer for the
year ended 30 June 2023 amounted to $6,455,424
(2022: $6,234,304).
Lease term
The lease term is a significant component in
the measurement of both the right-of-use asset
and lease liability. Judgement is exercised
in determining whether there is reasonable
certainty that an option to extend the lease or
purchase the underlying asset will be exercised,
or an option to terminate the lease will not be
exercised, when ascertaining the periods to be
included in the lease term. In determining the
lease term, all facts and circumstances that create
an economical incentive to exercise an extension
option, or not to exercise a termination option,
are considered at the lease commencement date.
Factors considered may include the importance of
the asset to the consolidated entity’s operations;
comparison of terms and conditions to prevailing
market rates; incurrence of significant penalties;
existence of significant leasehold improvements;
and the costs and disruption to replace the asset.
The consolidated entity reassesses whether it
is reasonably certain to exercise an extension
option, or not exercise a termination option, if
there is a significant event or significant change in
circumstances.
Business combinations
As discussed in note 1, business combinations
are initially accounted for on a provisional basis,
the amounts disclosed for the years ended 30
June 2023 and 30 June 2022 are final. The fair
value of assets acquired, liabilities and contingent
liabilities assumed are initially estimated by the
consolidated entity taking into consideration all
available information at the reporting date. Fair
value adjustments on the finalisation of the business
combination accounting is retrospective, where
applicable, to the period the combination occurred
and may have an impact on the assets and liabilities,
depreciation and amortisation reported.
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
3 9
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
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C
T
O
R
S
’
R
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P
O
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T
F
I
N
A
N
C
I
A
L
R
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P
O
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T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Note 4. Revenue from contracts with customers
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Major service lines
CyberCision
Network monitoring
Geographical regions
Australia
North America*
LATAM**
ROW***
Timing of revenue recognition
Recurring revenue (over a period of time)
Non-recurring revenue (at a point in time)
Consolidated
2023
$
2022
$
7,175,804
5,316,993
7,352,290
1,999,207
12,492,797
9,351,497
7,486,923
2,772,199
1,653,222
580,453
6,781,065
1,147,516
907,101
515,815
12,492,797
9,351,497
11,169,980
1,322,817
9,131,206
220,291
12,492,797
9,351,497
* North America represents revenue from customers in United States of America and Canada.
** Latin America (‘LATAM’) represents revenue from customers in Mexico, Central America and South America.
*** Rest of the world (‘ROW’) represents the revenue from customers in the rest of the world.
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
4 0
C
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A
I
R
’
S
L
E
T
T
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I
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’
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P
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F
I
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A
N
C
I
A
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P
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S
H
A
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H
O
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D
E
R
I
N
F
O
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M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Note 5. Other income
Research and development (‘R&D’) grant income*
Settlement of liability for no consideration**
Other income***
Other income
Consolidated
2023
$
2022
$
897,714
1,596,018
1,358,122
-
24,733
32,896
2,518,465
1,391,018
* There are no unfulfilled conditions or other contingencies attached to receipt of R&D grant income.
** The amount in the current year relates to the writeback of accruals for products that are now end of life and reflects the successful
negotiation in terminating multiple contracts for services that the business no longer requires.
*** Includes $7,500 (2022: $nil) export success grant from Queensland Government for monitoring business, $13,000 (2022: $nil) Singapore
lease security deposit refund and $nil (2022: $26,260) Singapore Government job support grant.
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
4 1
C
H
A
I
R
’
S
L
E
T
T
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R
C
E
O
’
S
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E
T
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R
D
I
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T
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S
’
R
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P
O
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T
F
I
N
A
N
C
I
A
L
R
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P
O
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T
S
H
A
R
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H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Note 6. Expenses
Loss before income tax includes the following specific expenses:
Cost of sales
Cost of licenses
Depreciation
Leasehold improvements
Computer equipment
Website
Computer platform
Right-of-use assets
Total depreciation
Amortisation
Capitalised development costs
Customer list
Patents
Total amortisation
Consolidated
2023
$
2022
$
2,857,863
3,164,155
33,998
15,402
2,457
623
46,546
43,395
2,280
410
100,127
202,750
152,607
295,381
3,917,595
3,279,236
41,250
23,208
6,875
27,410
3,982,053
3,313,521
Total depreciation and amortisation
4,134,660
3,608,902
Impairment
Capitalised development costs
Information systems
Total impairment
Finance costs
7,591,178
-
7,591,178
-
90,000
90,000
Interest and finance charges paid/payable on lease liabilities
11,167
60,772
Net foreign exchange variance
Net foreign exchange variance
Employee benefit expenses
Employee salaries and other benefits*
Defined contribution superannuation expense
Share-based payments expenses
(11,578)
38,178
10,561,645
11,420,218
745,510
704,813
774,676
860,004
Total employee benefit expenses
12,011,968
13,054,898
* Includes a salary sacrifice amount of $nil (2022: $538,539). Share rights have been granted for cash forgone.
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
4 2
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Note 7. Income tax
Consolidated
2023
$
2022
$
Numerical reconciliation of income tax expense
and tax at the statutory rate
Loss before income tax expense
(13,430,337)
(13,455,494)
Tax at the statutory tax rate of 25% (2022: 26%)
(3,357,584)
(3,363,874)
Tax effect amounts which are not deductible/(taxable)
in calculating taxable income:
Amortisation of intangibles
Entertainment expenses
Impairment of assets
Non-deductible research and development incentive expenditure
Development costs
Deferred income
Tax losses not recognised (including reversal of previously recognised
tax losses)
Current year temporary differences not recognised
Under provision from prior period
Income tax expense
Tax losses not recognised
Unused tax losses for which no deferred tax asset
has been recognised
980,266
2,251
1,897,794
491,109
(727,180)
(230,347)
749,666
603
-
669,570
(857,314)
(339,530)
(943,691)
(3,140,879)
650,498
293,193
17,948
17,948
2,658,303
482,576
-
-
Consolidated
2023
$
2022
$
48,253,453
50,098,496
Potential tax benefit at statutory tax rates
12,063,363
12,524,624
The above potential tax benefit for tax losses has not been recognised in the statement of financial position.
These tax losses can only be utilised in the future if the continuity of ownership test is passed, or failing that,
the same business test is passed.
Note 8. Cash and cash equivalents
Cash at bank
Consolidated
2023
$
2022
$
5,607,419
10,408,589
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
4 3
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
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S
’
R
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P
O
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T
F
I
N
A
N
C
I
A
L
R
E
P
O
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T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Note 9. Trade and other receivables
Trade receivables
Less: Allowance for expected credit losses
Consolidated
2023
$
2,496,008
(160,109)
2,335,899
2022
$
1,691,107
(260,123)
1,430,984
Research and development tax incentive receivable
854,530
1,397,219
Other receivables
GST receivable
-
-
34,685
220,116
3,190,429
3,083,004
Allowance for expected credit losses
The consolidated entity has recognised a loss of $33,084 (2022: $667,906) in profit or loss in respect of
impairment of receivables for the year ended 30 June 2023.
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Consolidated
Not overdue
0 to 3 months overdue
3 to 6 months overdue
6 to 12 months overdue
Expected credit
loss rate
2023
%
2022
%
Carrying
amount
Allowance for
expected credit losses
2023
$
2022
$
2023
$
2022
$
3.00%
5.90%
15.00%
47.66%
-
2,311,416
1,172,563
69,342
9.20%
91,809
227,960
12.37%
36.78%
5,427
5,396
25,034
46,670
5,421
814
2,572
-
20,982
3,098
17,163
Special provision
100.00%
100.00%
81,960
218,880
81,960
218,880
2,496,008
1,691,107
160,109
260,123
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Closing balance
Consolidated
2023
$
2022
$
260,123
33,084
(133,098)
210,224
667,906
(618,007)
160,109
260,123
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
4 4
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
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C
T
O
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S
’
R
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P
O
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T
F
I
N
A
N
C
I
A
L
R
E
P
O
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T
S
H
A
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E
H
O
L
D
E
R
I
N
F
O
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M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Note 10. Other assets
Current assets
Prepayments
Security deposits
Note 11. Property, plant and equipment
Leasehold improvements – at cost
Less: Accumulated depreciation
Computer equipment – at cost
Less: Accumulated depreciation
Computer platform – at cost
Less: Accumulated depreciation
Website – at cost
Less: Accumulated depreciation
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
4 5
Consolidated
2023
$
2022
$
709,459
33,181
605,900
33,181
742,640
639,081
Consolidated
2023
$
2022
$
685,863
(608,200)
77,663
574,827
(552,131)
22,696
245,475
(245,261)
214
23,843
(14,424)
9,419
685,863
(574,202)
111,661
565,443
(536,729)
28,714
259,871
(244,638)
15,233
12,286
(410)
11,876
109,992
167,484
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial
year are set out below:
Consolidated
Balance at 1 July 2021
Additions
Additions through business
combinations
Disposals
Depreciation expense
Balance at 30 June 2022
Additions
Disposals
Leasehold
improvements
$
Computer
equipment
$
Computer
platform
$
Website
$
Total
$
68,807
87,533
20,806
(18,939)
(46,546)
111,661
-
-
54,282
19,855
-
(2,028)
(43,395)
28,714
9,384
3,117
14,396
-
12,286
-
-
-
-
(2,280)
(410)
126,206
134,070
20,806
(20,967)
(92,631)
15,233
11,876
167,484
-
-
(14,396)
-
-
(2,457)
9,384
(14,396)
(52,480)
9,419
109,992
Depreciation expense
(33,998)
(15,402)
Balance at 30 June 2023
77,663
22,696
(623)
214
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
4 6
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Note 12. Right-of-use assets
Non-current assets
Right-of-use assets – office premises
Less: Accumulated depreciation
Consolidated
2023
$
2022
$
417,195
(208,592)
1,022,455
(713,725)
208,603
308,730
The consolidated entity has leased office premises under operating leases expiring in two to four years, with in
certain instances options to extend. The leases have various escalation clauses. On renewal, the terms of the
leases are renegotiated.
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year
are set out below:
Consolidated
Balance at 1 July 2021
Disposals
Depreciation expense
Balance at 30 June 2022
Depreciation expense
Balance at 30 June 2023
For other AASB 16 lease-related disclosures refer to the following:
— note 6 for details of interest on lease liabilities and other lease expenses;
— note 18 for details of lease liabilities at the beginning and end of the reporting period;
— note 24 for the maturity analysis of lease liabilities; and
— consolidated statement of cash flows for repayment of lease liabilities.
Office
premises
$
622,149
(110,669)
(202,750)
308,730
(100,127)
208,603
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
4 7
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Note 13. Intangibles
Goodwill – at cost
Capitalised development costs – at cost
Less: Accumulated amortisation
Less: Impairment
Brand name – at cost
Customer list – at cost
Less: Accumulated amortisation
Patents – at cost
Less: Accumulated amortisation
Information systems – at cost
Less: Accumulated impairment
Consolidated
2023
$
2022
$
49,493,774
49,493,774
29,157,582
26,248,860
(19,009,367)
(15,091,772)
(7,591,178)
-
2,557,037
11,157,088
971,000
971,000
165,000
(48,125)
116,875
241,536
(185,859)
55,677
90,000
(90,000)
-
165,000
(6,875)
158,125
212,805
(162,651)
50,154
90,000
(90,000)
-
53,194,363
61,830,141
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
4 8
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year
are set out below:
Consolidated
Balance at
1 July 2021
Additions
Additions
through
business
combinations
Impairment
expense
Amortisation
expense
Balance at
30 June 2022
Additions
Impairment
expense
Amortisation
expense
Balance at
30 June 2023
Goodwill
$
Capitalised
development
$
Brand
name
$
Customer
list
$
Patents
$
Information
systems
$
Total
$
-
-
9,346,067
3,429,257
-
-
-
-
67,238
10,326
90,000
9,503,305
-
3,439,583
49,493,774
1,661,000
971,000
165,000
-
-
-
(3,279,236)
-
-
(6,875)
(27,410)
-
-
-
52,290,774
(90,000)
(90,000)
49,493,774
11,157,088
971,000
158,125
-
-
-
2,908,722
(7,591,178)
(3,917,595)
-
-
-
-
-
-
50,154
28,731
-
(41,250)
(23,208)
-
-
-
-
-
-
(3,313,521)
61,830,141
2,937,453
(7,591,178)
(3,982,053)
53,194,363
49,493,774
2,557,037
971,000
116,875
55,677
Impairment tests for goodwill and all other intangibles
The consolidated entity tests whether goodwill and other intangible assets have incurred any impairment in
accordance with the consolidated entity’s accounting policies.
The recoverable amounts of assets and the Cash Generating Unit (‘CGU)’ were previously determined using a
fair value less costs to sell using a market-based approach. During the period, the directors reassessed the use
of fair value using the market-based approach and deemed that a value-in-use method is more appropriate.
a) Cash Generating Units (‘CGUs’)
For the purpose of impairment testing, intangibles have been allocated to two CGUs (CyberCision and
Network Monitoring). A summary of the carrying value of goodwill and other intangible assets as at 30 June
2023 is detailed below:
Goodwill
Other Intangibles
Information
systems
$
Total
$
-
49,493,774
1,723,494
1,977,095
1,723,494
51,470,869
4 9
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
b) Impairment testing and key assumptions
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash inflows which are largely independent of the cash inflows from the other assets or
groups of assets (CGUs).
The directors have assessed the fair value having regard to a value in use approach and based on the
recoverable amount calculation with the assumptions outlined below, have determined an impairment charge
of $7,591,178 in relation to the CyberCision CGU. No impairment was noted in relation to the Network
Monitoring CGU. The recoverable value of the two CGUs has been measured at $53,282,878. The impairment
has been recognised as a result of lower than anticipated sales of the CyberCision platform and a focus
on Network Monitoring due to the significant opportunities globally that exist in that CGU. This has led to
a rebalancing of the investment in development and several redundancies in the CyberCision team. The
Directors do not believe that the existing clients of the CyberCision platform will be affected by the changes,
and the company continues to see opportunities for the product.
The practice of the consolidated entity is not to provide business forecasts as they require a range of
assumptions with multiple variables that it believes are too difficult to make and ultimately can be as
misleading as they might be informative. Consequently, the following significant judgements and key
assumptions should only be read in the context of forecasts so far as they relate to the value in use
calculations:
Forecast period
Discount rate (pre-tax)
Terminal growth rate
Revenue Growth rate
CyberCision
Network Monitoring
5 years
16%
3%
5 years
16%
3%
Organic growth rate per annum
over a 5 year period of 5-10%
Organic growth rate per annum
over a 5 year period of 20-30%
Operating costs / overheads Operating costs to grow in line
Cash flow forecast
with inflation and other than
COGS and some increased
support costs, resources not to
grow as a result of revenue growth.
Cash flow calculations to use
cash flow projections based on
the financial forecast approved
by management covering a 5
year period.
Operating costs to grow in line
with inflation and other than
some increased support costs,
resources not to grow as a result
of revenue growth.
Cash flow calculations to use
cash flow projections based on
the financial forecast approved
by management covering a 5
year period.
Sensitivity to changes in assumptions
For the Network Monitoring CGU, revenue would need to decrease by more than 9% in the first year before
goodwill would need to be impaired, with all other assumptions remaining constant. The discount rate would
be required to increase by 1.4% before goodwill would need to be impaired, with all other assumptions
remaining constant. Management believes that other reasonable changes in the key assumptions on which
the recoverable amount of the monitoring division’s goodwill is based would not cause the CGU’s carrying
amount to exceed its recoverable amount. If there are any negative changes in the key assumptions on which
the recoverable amount of goodwill is based, this will result in a future impairment charge for the monitoring
division’s goodwill.
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
5 0
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Note 14. Trade and other payables
Current liabilities
Trade payables
Accrued expenses
GST payable
Refer to note 24 for further information on financial instruments.
Note 15. Contract liabilities
Current liabilities
Contract liabilities
Non-current liabilities
Contract liabilities
Reconciliation
Consolidated
2023
$
2022
$
1,194,598
1,590,500
76,941
1,124,190
2,793,723
-
2,862,039
3,917,913
Consolidated
2023
$
2022
$
3,214,285
3,060,533
730,679
153,782
3,944,964
3,214,315
The contract liabilities relate to sales of term-based contracts that have been prepaid and hence the entity is
obligated to provide the services agreed under the contract. Reconciliation of the contract liabilities (current
and non-current) during the current financial year are set out below:
Opening balance
Payments received in advance
Additions through business combination
Transfer to revenue – included in the opening balance
Transfer to revenue – other balances
Consolidated
2023
$
3,214,315
7,286,857
-
(2,528,092)
(4,028,116)
2022
$
1,023,050
959,040
2,631,918
(901,819)
(497,874)
Closing balance
3,944,964
3,214,315
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
5 1
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Unsatisfied performance obligations
The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied
at the end of the reporting period was $3,944,964 as at 30 June 2023 ($3,214,315 as at 30 June 2022) and is
expected to be recognised as revenue in future periods as follows:
Within 12 months
12 to 24 months
Note 16. Employee benefits
Current liabilities
Annual leave
Long service leave
Non-current liabilities
Long service leave
Note 17. Provisions
Non-current liabilities
Lease make-good
Lease make-good
Consolidated
2023
$
2022
$
3,214,285
730,679
3,060,533
153,782
3,944,964
3,214,315
Consolidated
2023
$
2022
$
1,038,067
354,058
1,064,686
345,863
1,392,125
1,410,549
163,960
108,860
1,556,085
1,519,409
Consolidated
2023
$
2022
$
26,406
26,406
The provision represents the present value of the estimated costs to make good the premises leased by the
consolidated entity at the end of the respective lease terms.
5 2
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
Note 18. Lease liabilities
Current liabilities
Lease liability
Non-current liabilities
Lease liability
Consolidated
2023
$
2022
$
118,569
107,145
141,857
260,426
260,426
367,571
Refer to note 24 for maturity analysis of lease liabilities.
Note 19. Deferred research and development income
Consolidated
2023
$
2022
$
Current liabilities
Deferred research and development income
880,057
945,979
Non-current liabilities
Deferred research and development income
1,369,579
1,590,156
2,249,636
2,536,135
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
5 3
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Note 20. Borrowings
National Australia Bank (‘NAB’) lease facility
The consolidated entity has an asset leasing facility for $300,000 with NAB. The facility is available on a
revolving basis with repayment terms ranging from 1 to 3 years from the draw-down date.
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
NAB lease facility
Corporate credit card facility
Used at the reporting date
NAB lease facility
Corporate credit card facility
Unused at the reporting date
NAB lease facility
Corporate credit card facility
Consolidated
2023
$
2022
$
300,000
70,000
370,000
300,000
70,000
370,000
-
-
-
-
-
-
300,000
70,000
370,000
300,000
70,000
370,000
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
5 4
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Note 21. Issued capital
Consolidated
2032
Shares
2022
Shares
2023
$
2022
$
Ordinary shares – fully paid
1,662,846,883
1,662,353,921
128,474,750
128,426,284
Movements in ordinary share capital
Details
Balance
Date
Shares
$
1 July 2021
747,390,339
63,760,506
Issue of shares on exercise of options
16 July 2021
Issue of shares on exercise of rights
19 July 2021
Issue of shares on exercise of rights
2 August 2021
Issue of shares on exercise of rights
2 August 2021
Issue of shares on exercise of options
2 August 2021
Issue of shares on exercise of options
19 August 2021
Issue of shares on exercise of rights
6 September 2021
Issue of shares on exercise of rights
6 September 2021
Issue of shares on exercise of rights
6 September 2021
418,751
960,000
4,178,060
27,588
6,155,118
8,714,504
1,130,432
55,176
367,340
Issue of shares from placement
7 December 2021
40,000,000
Issue of shares on exercise of rights
7 December 2021
508,065
Issue of shares from entitlement offer
21 December 2021
99,398,468
Issue of shares on exercise of rights
24 December 2021
Issue of shares on exercise of rights
24 December 2021
Issue of shares on exercise of rights
24 December 2021
Issue of shares on exercise of rights
14 April 2022
Issue of shares from placement
20 January 2022
Issue of shares on exercise of rights
14 April 2022
Issue of shares on exercise of rights
14 April 2022
111,358
55,679
59,556
1,374,481
60,000,000
134,903
48,279
$0.110
$0.110
$0.110
$0.140
$0.110
$0.110
$0.110
$0.140
$0.070
$0.070
$0.120
$0.070
$0.110
$0.120
$0.130
$0.110
$0.070
$0.070
$0.140
46,482
100,800
438,696
3,807
683,218
967,310
118,695
7,614
24,612
2,800,000
60,460
6,957,893
11,693
6,626
7,498
144,321
4,200,000
9,039
6,662
Issue of shares – business combination
17 January 2022
691,265,824
$0.068
49,079,874
Share issue transaction costs, net of tax
-
$0.000
(1,009,522)
Balance
30 June 2022
1,662,353,921
128,426,284
Issue of shares on exercise of rights
13 December 2022
Issue of shares on conversion of rights
13 December 2022
426,667
66,295
$0.110
$0.110
Share issue transaction costs, net of tax
44,800
6,961
(3,295)
Balance
30 June 2023
1,662,846,883
128,474,750
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
5 5
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Ordinary shares
Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to
shareholders should the company be wound up, in proportions that consider both the number of shares held
and the extent to which those shares are paid up. The fully paid ordinary shares have no par value and the
company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a
poll each share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The consolidated entity’s objectives in managing its capital are to safeguard its ability to continue as a going
concern while balancing its ability to provide returns for shareholders and benefits for other stakeholders, and
to maintain an optimum capital structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt
is calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
The consolidated entity will raise capital to support its growth strategy and to fund value adding projects that
it deems necessary to maintain and enhance shareholder value. Any funds raised will be utilized in adherence
with the governance principles underlying the consolidated entity’s capital management policy under the
authority of the board.
The capital risk management policy remains unchanged from the 30 June 2022 Annual Report.
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
5 6
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Note 22. Reserves
Foreign currency reserve
Share-based payments reserve
Foreign currency reserve
Consolidated
2023
$
2022
$
117,189
5,793,887
97,789
5,638,340
5,911,076
5,736,129
The reserve is used to recognise exchange differences arising from the translation of the financial statements
of foreign operations to Australian dollars.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of
their remuneration, and other parties as part of their compensation for services.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2021
Foreign currency translation
Share-based payment expense
Transfer to issued capital
Transfer to retained earnings
Balance at 30 June 2022
Foreign currency translation
Share-based payment expense
Transfer to issued capital
Transfer to retained earnings
Foreign
currency
reserve
$
Share-based
payments
$
Total
$
(2,165)
99,954
-
-
-
97,789
19,400
-
-
-
7,613,365
7,611,200
-
860,004
99,954
860,004
(1,873,113)
(1,873,113)
(961,916)
(961,916)
5,638,340
5,736,129
-
704,813
(51,761)
(497,505)
19,400
704,813
(51,761)
(497,505)
Balance at 30 June 2023
117,189
5,793,887
5,911,076
Note 23. Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
5 7
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Note 24. Financial instruments
Financial risk management objectives
The consolidated entity’s activities expose it to a variety of financial, market, credit and liquidity risks. The
consolidated entity’s overall risk management program focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The
consolidated entity uses different methods to measure different types of risk to which it is exposed. These
methods include sensitivity analysis in the case of interest rate and foreign exchange risks and ageing analysis
for credit risk.
Risk management is carried out by senior finance executives (‘finance’) under policies approved by the
Board of Directors (‘the Board’). These policies include identification and analysis of the risk exposure of the
consolidated entity and appropriate procedures, controls and risk limits. Finance identifies, evaluates and
hedges financial risks within the consolidated entity’s operating units. Finance reports to the Board through
the Managing Director on a monthly basis.
Market risk
Foreign currency risk
The consolidated entity is not exposed to any significant foreign currency risk as its offshore revenues and
expenses act as a natural arbitrage.
Price risk
The consolidated entity is not exposed to any significant price risk noting however that the pricing of its
products are subject to competitive pressure.
Interest rate risk
The consolidated entity’s main interest rate risk arises from cash at bank. Bank balance at variable rates expose
the consolidated entity to interest rate risk.
An official increase/decrease in interest rates of 50 (2022: 50) basis points would have a favourable/adverse
effect on the loss before tax of $29,196 (2022: $52,043) per annum. The percentage change is based on the
expected volatility of interest rates using market data and analysts’ forecasts.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the consolidated entity. The consolidated entity has a strict code of credit, including obtaining agency
credit information, confirming references and setting appropriate credit limits. The consolidated entity obtains
guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting
date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets,
as disclosed in the statement of financial position and notes to the financial statements. The consolidated
entity does not hold any collateral.
The consolidated entity has adopted a lifetime expected loss allowance in estimating expected credit losses
to trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These
provisions are considered representative across all customers of the consolidated entity based on recent sales
experience, historical collection rates and forward-looking information that is available.
The consolidated entity has a credit risk exposure with one major customer, which as at 30 June 2023 owed
the consolidated entity $1,245,883 (50% of trade receivables) (2022: $544,256 (32% of trade receivables)).
This balance was within its terms of trade and no impairment was made as at 30 June 2023 and 30 June 2022.
There are no guarantees against this receivable, but management closely monitors the receivable balance on a
monthly basis and is in regular contact with this customer to mitigate risk.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of
this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure
to make contractual payments for a period greater than 1 year.
T
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O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
5 8
C
H
A
I
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S
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E
T
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E
R
C
E
O
’
S
L
E
T
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R
D
I
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C
T
O
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S
’
R
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P
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T
F
I
N
A
N
C
I
A
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R
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P
O
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T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Liquidity risk
Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly
cash and cash equivalents) and available borrowing/capital raising facilities to be able to pay debts as and
when they become due and payable.
The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing
facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of
financial assets and liabilities.
Financing arrangements
Unused borrowing facilities at the reporting date:
NAB lease facility
Corporate credit card facility
Consolidated
2023
$
2022
$
300,000
70,000
370,000
300,000
70,000
370,000
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
5 9
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Remaining contractual maturities
The following tables detail the consolidated entity’s remaining contractual maturity for its financial instrument
liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based
on the earliest date on which the financial liabilities are required to be paid. The tables include both interest
and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ
from their carrying amount in the statement of financial position.
Weighted
average
interest
rate
%
1 year or
less
$
Between
1 and 2
years
$
Between
2 and 5
years
$
Over 5
years
$
Remaining
contractual
maturities
$
Consolidated – 2023
Non-derivatives
Non-interest bearing
Trade payables
Interest-bearing
– fixed rate
Lease liability
Consolidated – 2022
Non-derivatives
Non-interest bearing
Trade payables
Interest-bearing
– fixed rate
Lease liability
-
1,194,598
-
-
Total non-derivatives
1,313,167
3.50%
118,569
130,703
130,703
11,155
11,155
Weighted
average
interest
rate
%
1 year or
less
$
Between
1 and 2
years
$
Between
2 and 5
years
$
Over 5
years
$
-
1,124,190
-
-
-
-
-
-
-
-
1,194,598
260,427
1,455,025
Remaining
contractual
maturities
$
1,124,190
367,570
1,491,760
Total non-derivatives
1,231,335
3.50%
107,145
118,568
118,568
141,857
141,857
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually
disclosed above.
6 0
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
Note 25. Fair value measurement
The carrying amounts of trade and other receivables and trade and other payable approximate their fair values
due to their short term nature. The fair value of financial liabilities is estimated by discounting the remaining
contractual maturities at the current market interest rate that is available for similar financial liabilities.
Note 26. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by PKF Brisbane Audit,
the auditor of the company:
Consolidated
2023
$
2022
$
Audit services – PKF Brisbane Audit (2022: Grant Thornton)
Audit or review of the financial statements
121,500
227,601
Other services – PKF Brisbane (2022: Grant Thornton)
Taxation services
12,000
40,000
133,500
267,601
Note 27. Contingent liabilities
The consolidated entity has given bank guarantees as at 30 June 2023 of $133,776 (2022: $133,776) to various
landlords.
Note 28. Commitments
The consolidated entity had no commitments as at 30 June 2023 and 30 June 2022.
Note 29. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the
consolidated entity is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
6 1
Consolidated
2023
$
2022
$
1,740,128
145,275
16,945
59,617
454,500
1,406,490
105,790
15,285
149,357
702,905
2,416,465
2,379,827
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
Note 30. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries
in accordance with the accounting policy described in note 1:
Name
FirstWave Technology Pty Ltd
FirstWave Global Pty Ltd
Principal place of business /
Country of incorporation
Australia
Australia
FirstWave Cloud Technology Inc.
The United States of America
FirstWave Cloud Technology (Singapore) Pte Ltd
Singapore
FirstWave Share Rights Pty Ltd
Opmantek Ltd
Opmantek Software Pty Ltd
Australia
Australia
Australia
Ownership interest
2023
%
2022
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Note 31. Related party transactions
Parent entity
FirstWave Cloud Technology Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 30.
Key management personnel
Disclosures relating to key management personnel are set out in note 29.
Transactions with related parties
There were no transactions with related parties during the current and previous financial year.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous
reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
T
R
O
P
E
R
L
A
U
N
N
A
3
2
0
2
–
Y
G
O
L
O
N
H
C
E
T
D
U
O
L
C
E
V
A
W
T
S
R
I
F
6 2
C
H
A
I
R
’
S
L
E
T
T
E
R
C
E
O
’
S
L
E
T
T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
R
E
C
T
O
R
Y
Note 32. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
Parent
2023
$
2022
$
(6,728,566)
(46,861,042)
(6,728,566)
(46,861,042)
Parent
2023
$
2022
$
206,907
126,949
58,623,124
65,300,008
(9,796)
(9,796)
142,535
142,535
128,474,750
128,426,284
5,793,887
5,638,340
(75,635,717)
(68,907,151)
58,632,920
65,157,473
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2023 and
30 June 2022.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2023 and 30 June 2022.
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2023
and 30 June 2022.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed
in note 1, except for the following:
— Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
— Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt
may be an indicator of an impairment of the investment.
6 3
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E
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E
O
’
S
L
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T
E
R
D
I
R
E
C
T
O
R
S
’
R
E
P
O
R
T
F
I
N
A
N
C
I
A
L
R
E
P
O
R
T
S
H
A
R
E
H
O
L
D
E
R
I
N
F
O
R
M
A
T
I
O
N
C
O
R
P
O
R
A
T
E
D
I
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O
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N
A
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Note 33. Cash flow information
Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax expense for the year
(13,448,285)
(13,455,494)
Consolidated
2023
$
2022
$
Adjustments for:
Depreciation and amortisation
Impairment expense
Share-based payments – employees
Other non-cash adjustments
Change in operating assets and liabilities:
Increase in trade and other receivables
Decrease in contract assets
Decrease/(increase) in prepayments
Increase in other operating assets
Decrease in trade and other payables
Increase in contract liabilities
Increase in employee benefits
Decrease in other operating liabilities
4,134,660
7,591,178
704,813
22,208
(107,424)
25,977
(103,559)
3,608,902
90,000
860,004
8,645
(239,052)
384,280
500,620
-
(1,408,509)
(1,055,875)
730,649
36,676
(286,499)
(341,075)
2,191,265
97,425
(300,582)
Net cash used in operating activities
(1,755,481)
(8,003,571)
Non-cash investing and financing activities
Shares issued in relation to business combinations
Shares issued for non-cash consideration
Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2021
Net cash used in financing activities
Other changes
Balance at 30 June 2022
Net cash used in financing activities
Other changes
Balance at 30 June 2023
6 4
Consolidated
2023
$
2022
$
-
49,079,874
51,761
2,637,532
51,761
51,717,406
Lease
liability
$
632,988
(188,493)
(76,924)
367,571
(128,818)
21,672
260,425
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Note 34. Earnings per share
Loss after income tax attributable to the owners
of FirstWave Cloud Technology Limited
Weighted average number of ordinary shares used
in calculating basic earnings per share
Weighted average number of ordinary shares used
in calculating diluted earnings per share
Basic earnings per share
Diluted earnings per share
Consolidated
2023
$
2022
$
(13,448,285)
(13,455,494)
Number
Number
1,662,621,336
1,181,688,234
1,662,621,336
1,181,688,234
Cents
Cents
(0.81)
(0.81)
(1.14)
(1.14)
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Options and rights have been excluded in the weighted average number of shares used to calculate diluted
earnings per share as they were anti-dilutive.
Note 35. Share-based payments
The consolidated entity has a share option plan and a share rights plan to incentivise certain employees and
key management personnel (‘KMP’). Shareholders approved the Rights Plan at an Extraordinary General Meeting
held on 29 July 2020. The Board has the discretion to invite employees to apply for share rights, which have
been designed to deliver long term variable remuneration opportunities, which has a service based vesting
condition, that assist in aligning the interests of the employees, with shareholders of the company.
During the financial year no options and 55,800,000 share rights were granted (2022: no options and
16,585,111 share rights). The share-based payment expense for the year was $704,813 (2022: $860,004), out
of which $nil (2022: $538,539) was offset by the employees agreeing to salary sacrifice in lieu of service rights
and hence saving the consolidated entity cash costs.
Movements in share awards during the year
The following table illustrates the number of awards and weighted average exercise prices (‘WAEP’) of, and
movements in, share awards during the current and previous year:
Number
30 June 2023
Number
30 June 2022
WAEP
30 June 2023
WAEP
30 June 2022
Movement in share options
including share rights
Balance at the beginning of the year
59,552,717
76,426,895
Share rights granted during the year
55,800,000
16,585,111
Forfeited during the year
Exercised during the year
Expired during the year
(9,277,165)
-
(492,962)
(24,299,290)
(2,933,333)
(9,159,999)
$0.000
$0.000
$0.000
$0.000
$0.000
$0.190
$0.000
$0.000
$0.031
$0.000
Balance at the end of the year
102,649,257
59,552,717
19,832,667 options and 30,016,590 share rights were vested and exercisable as at 30 June 2023 (2022:
21,116,000 options and 24,933,813 share rights).
6 5
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The weighted average share price of the company during the financial year was $0.06 (2022: $0.07).
The weighted average remaining contractual life of options and share rights outstanding at the end of the
financial year was 5.06 years (2022: 6.17 years).
Share rights
During the year 30 June 2022, 1,088,415 restricted rights were issued to key personnel in lieu of cash bonuses
with nil exercise price and expiry 30 June 2027 and 9,277,165 share appreciation rights (SARs) were issued to
Iain Bartram in three tranches 2,796,610, 3,113,208 and 3,367,347 at exercise prices of $0.18, $0.27 and $0.36
respectively vesting over 3 years from 1 July 2021 to 30 June 2024 and expiring 30 June 2027.
During the year 30 June 2022, there were also 6,219,531 share rights granted in lieu of salary and fees.
484,950 were granted to Paul MacRae and 1,003,345 to John Grant in lieu of directors fees expiring 30 June
2035, and 4,292,506 to Craig Nelson in lieu of salary and commission with nil exercise price and expiring 30
June 2027. 438,730 were granted to Ray Kiley in lieu of Director’s fees and were approved by shareholders
during the 24 November 2022 Annual General Meeting.
During the year 30 June 2023, 35,800,000 SARs were granted in lieu of cash bonuses with a $nil exercise
price, vesting over two years from 1 July 2022 to 30 June 2024 and expiring 30 June 2027.
During the year 30 June 2023, there were also 20,000,000 SARs granted in lieu of director fees as follows:
(i) 11,000,000 SARs were granted to Danny Maher vesting over two years from 1 July 2022 to 30 June 2024
and expiring 30 June 2027;
(ii) 3,600,000 SARs were granted to John Grant in three tranches of 1,200,000 vesting over a three year period
from 1 July 2022 to 30 June 2023, 1 July 2023 to 30 June 2024 and 1 July 2024 to 30 June 2025 with
respective expiry dates of 30 June 2026, 30 June 2027 and 30 June 2028;
(iii) 1,800,000 SARs were granted to Paul MacRae in three tranches of 600,000 vesting over a three year period
from 1 July 2022 to 30 June 2023, 1 July 2023 to 30 June 2024 and 1 July 2024 to 30 June 2025 with
respective expiry dates of 30 June 2026, 30 June 2027 and 30 June 2028;
(iv) 1,800,000 SARs were granted to Ray Kiley in three tranches of 600,000 vesting over a three year period
from over a three year period from 1 July 2022 to 30 June 2023, 1 July 2023 to 30 June 2024 and 1 July
2024 to 30 June 2025 with respective expiry dates of 30 June 2026, 30 June 2027 and 30 June 2028
(v) 1,800,000 SARs were granted to Euh (David) Hwang in three tranches of 600,000 vesting over a three year
period from over a three year period from 1 July 2022 to 30 June 2023, 1 July 2023 to 30 June 2024 and 1
July 2024 to 30 June 2025 with respective expiry dates of 30 June 2026, 30 June 2027 and 30 June 2028.
All share rights issued are only subject to service conditions for vesting.
For the share rights granted during the current financial year, the valuation model inputs used to determine
their fair value at the grant date are as follows:
Grant date
Expiry date
27/09/2022
30/06/2026
27/09/2022
30/06/2027
27/09/2022
30/06/2027
27/09/2022
30/06/2028
01/10/2022
30/06/2027
Share
price at
grant
date
$0.040
$0.040
$0.040
$0.040
$0.040
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest
rate
Fair value
at grant
date
%
63.38%
73.76%
75.14%
88.10%
75.14%
$0.05
$0.05
$0.05
$0.05
$0.05
%
3.50%
3.50%
3.50%
3.50%
3.50%
-
-
-
-
-
$0.021
$0.025
$0.026
$0.031
$0.026
Note 36. Events after the reporting period
No matter or circumstance has arisen since 30 June 2023 that has significantly affected, or may significantly
affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of
affairs in future financial years.
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Directors’ declaration
30 June 2023
In the directors’ opinion:
— the attached financial statements and notes comply with the Corporations Act 2001, the Accounting
Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
— the attached financial statements and notes comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board as described in note 1 to the financial statements;
— the attached financial statements and notes give a true and fair view of the consolidated entity’s financial
position as at 30 June 2023 and of its performance for the financial year ended on that date; and
— there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations
Act 2001.
On behalf of the directors
John Grant
Chair
30 August 2023
Sydney
Ray Kiley
Director
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Independent auditor’s report to the members
of Firstwave Cloud Technology Limited
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF FIRSTWAVE CLOUD TECHNOLOGY LIMITED
Report on the Financial Report
Opinion
We have audited the accompanying financial report of FirstWave Cloud Technology Limited (the company),
which comprises the consolidated statement of financial position as at 30 June 2023, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary
of significant accounting policies and other explanatory information, and the directors’ declaration of the
company and the consolidated entity comprising the company and the entities it controlled at the year’s end
or from time to time during the financial year.
In our opinion the financial report of FirstWave Cloud Technology Limited is in accordance with the
Corporations Act 2001, including:
a)
Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2023
and of its performance for the year ended on that date; and
b)
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We are independent of the consolidated entity 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.
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. For each matter below, our description of how our audit addressed the matter is
provided in that context.
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1. Carrying value and impairment of goodwill and other intangible assets
Why significant
How our audit addressed the key audit matter
As at 30 June 2023 the Group has recognised goodwill
of $49.49m and other intangible assets of $3.70m as
disclosed in Note 13.
An annual impairment assessment is required under
AASB 136 Impairment of Assets. This assessment is
conducted on the relevant assets at the level of the
lowest identifiable cash generating units (CGU), which
for the Group represents the operating business which
it controls.
The directors prepared a discounted cashflow model to
perform impairment assessments for each CGU. The
key assumptions within this model included, but was
not limited to:
Our work included, but was not limited to, the following
procedures:
Assessing the appropriateness of the Group’s
designation of CGU’s based on the nature and
operation of the Group’s businesses;
Assessing management’s process of compiling and
preparing the cash flow forecasts, including the
review and board approval of the source forecast
information and key assumptions;
In conjunction with valuation specialists we evaluated
the key assumptions used in management’s
recoverable amount analysis, including:
Revenue growth rate;
Discount rate.
Terminal growth rate; and
An impairment charge of $7.59m was recognised as at
30 June 2023.
Significant judgements are required in the impairment
assessment by management about the anticipated
future results of the CGU’s, and the wider economies in
which they operate. There was a high degree of
estimation, complexity and uncertainty in developing
key assumptions for the cash flow models.
o
o
assessing the basis for management’s forecast
revenue, cash flows and terminal value growth
rate assumptions, including comparison to
market and industry information, and
consideration of historical growth trends and
support for future forecast growth and cost
savings;
evaluating the discount rate used by
management for reasonableness, and
undertaking sensitivity analysis on the
impairment model using varied discount rates,
growth projections within reasonable
foreseeable ranges and comparing these to the
carrying value of the net assets of each CGU.
Assessing the independence, experience and
qualifications of the valuation specialist engaged by
the Group to assist with and review the impairment
analysis.
Assessing the appropriateness of the disclosures in
Notes 2 and 13.
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2. Capitalisation of product development costs
Why significant
How our audit addressed the key audit matter
As at 30 June 2023 the carrying value of capitalised
product development costs
(net of accumulated
amortization, and a current year impairment charge of
$7.59m) was $2.56m (30 June 2022: $11.16m) as
outlined in Note 13.
During the year, the group capitalised $2.91m of costs
relating to product development. These intangible
assets are being amortised over their finite life of five
years.
AASB 138 Intangible Assets sets out the specific
requirements to be met to capitalise development
costs. Intangible assets should be amortised over their
useful lives in accordance with AASB 138.
The capitalisation of product development costs is a
key audit matter due to the material nature of costs
capitalised, and the subjectivity and management
judgement applied in assessing whether costs meet the
development phase criteria described in AASB 138.
Our work included, but was not limited to, the following
procedures:
Assessing the group’s accounting policy in respect of
product development costs for compliance with
AASB 138;
Evaluating management’s assessment of each
project for compliance with the recognition criteria set
out in AASB 138, including discussing project plans
with management to obtain an understanding of the
nature and feasibility of key projects;
Testing a sample of costs capitalised by tracing to
underlying support, including timesheets,
employment contracts, payroll reports, and invoices
from external suppliers and assessing whether the
expenditure was attributable to the development of
the assets;
Assessing the reasonableness of the useful lives
attributed to capitalised development costs and
whether amortisation expense was recorded based
upon the assigned useful lives; and
Reviewing the disclosures in Notes 2 and 13 to the
financial statements relating to intangible assets.
Other Information
The Directors are responsible for the other information. The other information comprises the information
included in the consolidated entity’s Annual Report, 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.
Other Matter
The financial report of FirstWave Cloud Technology Limited for the year ended 30 June 2022 was audited
by another auditor who expressed an unmodified opinion on that report on 30 August 2022.
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Directors’ Responsibilities 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 consolidated entity’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 consolidated entity 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 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 aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the consolidated entity’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors.
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the consolidated entity’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the consolidated entity to cease to
continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the consolidated entity to express an opinion on the group financial report. We are
responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
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We communicate with the Directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
From the matters communicated with the Directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2023. 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.
Opinion
In our opinion, the Remuneration Report of FirstWave Cloud Technology Limited for the year ended 30 June
2023 complies with section 300A of the Corporations Act 2001.
PKF BRISBANE AUDIT
SHAUN LINDEMANN
PARTNER
BRISBANE
30 AUGUST 2023
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Shareholder information
30 June 2023
The shareholder information set out below is applicable as at 11 October 2023.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Ordinary shares
Number
of holders
% of total
shares issued
102
21
43
776
865
1,807
149
0.00%
0.00%
0.02%
1.96%
98.02%
100%
0.02
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Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
SUPER FLI PTY LTD
CITICORP NOMINEES PTY LIMITED
ERIC HAROLD GREENWOOD
DANIEL PATRICK MAHER
SAISEI NETWORKS INC
INU SANGYO PTY LTD
NEW INSIGHTS AUSTRALIA PTY LTD
INDIGENOUS CAPITAL LIMITED
TIMOTHY FRANKLIN
MR SCOTT LIDGETT & MRS KATHERINE LIDGETT
MR DAVID ROTHWELL
MR GREGORY VYTAS MAREN & MRS GERALDINE MARGARET
MACLEAN MAREN
ROGER ALLEN AND MAGGIE GRAY PTY LIMITED
RPA PROPERTIES PTY LTD
BRUXNER PACIFIC PTY LTD
G & L PRIOR PTY LTD
KEEVA SPEYER
PATAGORANG SUPERANNUATION PTY LTD
EREMITE PTY LTD
Ordinary shares
Number
held
% of total
shares issued
217,282,773
201,233,570
12.76%
11.81%
52,216,570
51,566,002
50,922,171
40,571,428
28,789,750
24,459,594
20,069,990
19,523,897
17,470,147
16,892,501
16,316,718
13,789,796
13,394,875
12,994,576
12,000,000
11,400,741
10,714,286
10,419,440
3.07%
3.03%
2.99%
2.38%
1.69%
1.44%
1.18%
1.15%
1.03%
0.99%
0.96%
0.81%
0.79%
0.76%
0.70%
0.67%
0.63%
0.61%
842,028,825
49.43%
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Unquoted equity securities
Options over ordinary shares
Share rights over ordinary shares
Substantial holders
DANIEL MAHER
HSBC Custody Nominees (Australia) Limited
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
Number on issue
19,832,667
81,240,851
Ordinary shares
Number
held
% of total
shares issued
252,155,741
217,282,773
14.80%
12.76%
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.
There are no other classes of equity securities.
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Corporate directory
30 June 2023
Directors
John Grant – Non-Executive Chair
Paul MacRae – Non-Executive Director
Euh (David) Hwang – Non-Executive Director
Danny Maher – Managing Director
Ray Kiley – Non-Executive Director
Company secretary
Iain Bartram
Registered office
Share register
Auditor
Level 14, 132 Arthur Street
North Sydney, NSW 2060
Australia
Tel: +61 (02) 9409 7000
Automic Registry Services
Level 5, 126 Philip Street
Sydney NSW 2000
Australia
Tel: 1300 288 664
PKF Brisbane Audit
Level 6, 10 eagle Street
Brisbane, QLD 4000
Stock exchange listing
FirstWave Cloud Technology Limited shares are listed on the Australian
Securities Exchange (ASX code: FCT)
Website
www.firstwave.com
Corporate Governance
Statement
The directors and management are committed to conducting the
business of FirstWave Cloud Technology Limited in an ethical manner
and in accordance with the highest standards of corporate governance.
FirstWave Cloud Technology Limited has adopted and has substantially
complied with the ASX Corporate Governance Principles and
Recommendations (Fourth Edition) (‘Recommendations’) to the extent
appropriate to the size and nature of its operations.
The consolidated entity’s Corporate Governance Statement, which sets
out the corporate governance practices that were in operation during
the financial year and identifies and explains any Recommendations that
have not been followed and ASX Appendix 4G are released to the ASX on
the same day the Annual Report is released. The Corporate Governance
Statement and Corporate Governance Compliance Manual can be found
on the company’s website at www.firstwavecloud.com/shareholder-centre.
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7 9
Head Office
Level 14, 132 Arthur Street,
North Sydney NSW 2060
+61 2 9409 7000
www.firstwave.com
Firstwave Cloud Technology Limited
ABN 35 144 733 595