2024
For the Year Ended 30 June 2024
Firstwave Cloud Technology Limited
ABN 35 144 733 595
Annual
Report
www.firstwave.com
Directors’ report
Contents
Chair’s letter
3
CEO’s letter
5
Directors’ report
7
Auditor’s independence
declaration
25
Financial report
26
Directors’ declaration
65
Independent auditor’s report
66
Shareholder information
71
Corporate directory
73
2
Annual Report 2024
Chair’s letter
Chair’s letter
2024 was a year in which we drove further synergies
while maintaining our focus on converting a strong
pipeline of sales opportunities to revenue.
The focus on synergies lowered operating costs for
the year, excluding non-cash impairments, by $3.80
million and reduced normalized cash burn, excluding
non-recurring revenues, from $592k per month at the
end of FY23 to $283k per month at the end of FY24,
This is in line with our objective to reach cashflow
breakeven in FY25. However, achieving this objective
is dependent on growth in revenue, in particular
annualized recurring revenue (ARR), and this proved
once again to be elusive in FY24. Even given the
narrowing of our sales focus to the key geographic
markets of Australia, the US and LATAM and on our
most profitable products in network management
(NMIS) and cybersecurity (CyberCision) email, we
failed to convert sufficient of our pipeline (in particular
the larger opportunities) to revenue, and opening
cash of $5.61 million reduced to $1.68 million by
June 30.
We indicated to shareholders in our Q4 FY24 update
that, without additional sales, we had sufficient
cash to operate at the June 30 level of expense
and investment through until March 2025. We also
indicated to shareholders in this update that our
pipeline of opportunities was greater than the annual
revenue of the company, so it goes without saying
that we do not expect to have no additional sales.
However, given our history of revenue growth, it is an
appropriate scenario to contemplate.
Key announcements
»
In September 2023, the acquisition of Saisei
Networks Inc. (Saisei) in a 100% equity
transaction. Founded in Silicon Valley, Saisei
is a leading provider of software for real-time
network visibility, analytics and control and has
patented technology developed by some of the
best networking experts in the industry that
allows network managers to effectively manage
their end users’ experience without incremental
capital expenditure. Built as a carrier-grade
solution, Saisei provides telecommunications
and enterprise (private network) customers
with advanced tools in network management
automation – precisely the space targeted by
FirstWave;
»
In November 2023, the retirement of
directors, Paul MacRae and David Hwang.
I acknowledged Paul for his invaluable and
consistent contribution since the company listed
in 2016, and David for his expert and concise
contribution, particularly during the acquisition of
Opmantek. I also indicated to shareholders that
we were a vastly different business to the one we
were 18 months prior and would then begin the
process of identifying new Directors that can help
us achieve our international growth aspirations;
»
In December 2023, under a newly expanded
relationship, FirstWave’s largest customer in
Latin America, Telmex, had become a reseller
of FirstWave’s industry-leading Network
Management Information System (NMIS)
platform by bundling the software with its
network sales and delivered its first contract with
a government client. It was indicated that the
contract will deliver approximately A$1 million in
revenue for FirstWave over the next three years
with a minimum of A$400k in FY24 and A$300k
in each of the following two financial years;
»
In February 2024, FirstWave entered into an
agreement to issue convertible notes with a
face value of $2.5 million and a conversion price
of 3.6 cents to Danish asset management and
specialist small cap financier Formue Nord A/S
(Formue Nord). Formue Nord is the leading
provider of customised financing solutions for
listed companies in the micro, small and mid-cap
sectors in the Nordics;
3
Chair’s letter
»
In April 2024, the extension of FirstWave’s
Professional Services Agreement (PSA) with
Telstra for a further 15 months;
»
Also in April 2024, the appointment of US
domiciled, Daniel Friel, as a Non-Executive
Director. Mr. Friel founded Bank of America’s
Strategic Alliances and Investments group
charged with identifying innovative technologies
and enabling business unit adoption. As
President of Banc of America Technology
Investments, Inc. and Banc of America
Ecommerce Holdings, Inc. Mr. Friel managed
the investment in more than 40 technology
companies in the security, authentication, and
payments sectors and replaced the retiring Non-
Executive Director, Mr Ray Kiley;
»
In June, an update on shifts in strategic focus
at Telstra and their impact on FirstWave. These
shifts which related to a sharpening of sales
focus under the PSA and removing or closing
less profitable lines of business were seen as
complementary to FirstWave’s core strategies
of expanding its international footprint in North
America and Latin America, and domestically
securing extensions to current customer
contracts under the Telstra PSA and launching
the sovereign ISM compliant email platform; and
»
Also in June, a contract extension and uplift from
FirstWave’s largest customer under the PSA with
Telstra, is expected to increase that customer’s
revenues to FirstWave by 20% in FY25.
Outlook
In my report to shareholders last year, I stated that
the challenge for the management team under Danny
Maher was to realise the promise for revenue growth
at higher margins and lower costs from our pipeline
of opportunity. Unfortunately, even given no lack of
effort on the part of the whole FirstWave team, as in
FY23, we were unable to meet this challenge. The
pipeline continues to be driven by NMIS, and there
is no doubt we are advancing the opportunities we
have, but progress remains slow. The fact is that we
have little influence over purchasing cycles for the
major companies we are dealing with and the ‘sales
pressure’ we can apply is done very softly.
But, even given this, we can identify revenue
opportunities in FY25 that will support reaching our
goal of cashflow breakeven, but note, as I did last
year, 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
4
Annual Report 2024
CEO’s letter
CEO’s letter
2024 was a year of significant restructuring and, as
a result, also a year of significant financial progress.
We made an acquisition of the Saisei business
which is now generating new sales and new revenue
streams, and we continue to work to close out some
very significant opportunities that are in the pipeline.
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 2024 financial year.
Our key goal has been to make the company cash
flow positive – ideally in FY25 and I was thrilled to
deliver a cashflow positive first quarter for FY25.
The company has continued to make significant
positive change, and it is fair to say that it is a
completely different company to what it was 2-3
years ago and continues to improve.
After several restructures I now have directly
reporting to me:
-
Sales
-
Marketing
-
Customer Support/Success
-
Product Development
-
Finance and Corporate
There is a reasonable load on me as CEO, however I
am well supported by key people assisting me to stay
across all of these areas in a hands-on way.
Financial Results
I was pleased with the further reduction in the
company’s operating losses, which reduced by 47%
(excluding non-cash impairments) from $5.86 million
to $3.08 million and put us on track to our goal of
being cashflow positive this financial year (FY25).
To achieve a cashflow positive result for FY25 will
require a modest level of sales and no significant
churn and we are on track to deliver on this goal
after successfully delivering Q1 FY25 in a cashflow
positive manner.
We would have liked to have seen greater growth in
our ARR during FY24, however several sales have
been made which have covered some churn during
the year and without those sales we would have seen
ARR decrease. Some of the churn was unwanted
and other parts of the churn were proactive decisions
by the management team to lower our costs and
effectively exit unprofitable business.
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 this financial year
(FY25) and we are on track to achieve that goal if we
deliver on our targets.
We are managing our cash prudently while investing
in growth, with a strong pipeline of new revenue
opportunities.
Our focus continues to be the conversion of the
pipeline to deliver customers 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 which is taking us a touch longer
than expected, however we are close to “moving the
needle” now. I believe we have the people and the
pipeline to do it.
5
CEO’s letter
We have diversified revenues - both geographically
and from a product perspective - which de-risks the
business and we have the opportunity to greatly
exceed our sales targets based on the pipeline in
front of us.
As a software provider in the cybersecurity and
network management sectors, FirstWave is part of
an exciting and growing space. We have exceptional
customers and an excellent pipeline created off
the back of industry-leading products. Our cash
usage is decreasing, and the business continues to
strengthen.
I am a happy, optimistic MD and shareholder, and I
look forward to some great results in FY25.
Kind regards
Danny Maher
Managing Director and Chief Executive Officer
6
Annual Report 2024
Directors’ report
Directors’ report
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 2024.
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
-
Daniel Friel - Non-Executive Director (appointed
on 23 April 2024)
-
Ray Kiley - Non-Executive Director (retired on
23 April 2024)
-
Paul MacRae - Non-Executive Director (retired
on 23 November 2023)
-
Euh (David) Hwang - Non-Executive Director
(retired on 23 November 2023)
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.
Review of operations
The loss for the consolidated entity after providing for
income tax amounted to $23,040,028 (30 June 2023:
$13,448,285).
The loss for the year of $23,040,028 (30 June 2023:
$13,448,285) was after an impairment of intangible
assets of $19,955,063 (30 June 2023: $7,591,178).
The loss excluding the impairment was $3,084,965
(30 June 2023: $5,857,107 loss). There is a 47.3%
improvement of $2,772,143 in the loss excluding the
impairment expense.
The improvement against the prior financial year loss
is attributed to the improved focus on the entity’s
most profitable products in its most productive
geographies and disciplined cost rationalisation.
On 19 September 2023, FirstWave acquired 100% of
the assets of network automation software company
Saisei Networks Inc. (www.saisei.com). FirstWave
issued 40,571,428 new shares to Saisei as payment
for the assets of the business. The transaction
included $200,000 in cash receivables.
Saisei’s software is a carrier-grade solution and
provides network managers in telecommunications
and enterprise (private network) customers with the
ability to dynamically apply network controls based
on pre-configured rule sets together with machine
learning. This delivers a highly-automated solution
that increases network capability while reducing
operational expenditure.
30 June 2024
7
Directors’ report
The transaction was undertaken for benefits to
FirstWave, including:
»
Expanding the company’s IP through the
acquisition of Saisei’s IP and patents;
»
Improving and expanding the functionality of the
company’s NMIS network management offering;
»
Bringing over 50 new clients and adding
approximately $AUD1 million to FirstWave’s
annual revenue, 75% of which is derived from
USA, Canada and Latin America;
»
Offsetting transaction costs and increasing
the company’s cash reserves in total by
approximately $200,000;
»
Delivering 6 new software engineers focussed
exclusively on enhancing the company’s IP; and
»
Expanding the company’s technical
management.
John Harper, Saisei CTO, joined FirstWave to
support a successful merger of intellectual property
and solutions post-acquisition, and the business
moving forward.
With increasing opportunity for its network monitoring
platform, the Company undertook a detailed review
of its investment priorities during the period. This
resulted in:
»
Repurposing its investment to where
the Company sees its short to mid-term
opportunities;
»
Making 11 positions redundant; and
»
Delivering annual savings of approximately $1.5
million without significant impact on its existing
customers.
Across the year the company also made several
management restructures in line with both short
term and long term strategic objectives and cost
optimisation. The major elements were:
»
Iain Bartram was appointed to the position of
Chief Operating Officer for an interim period,
adding responsibility for customer support and
software development to his existing role as
Chief Financial Officer and Company Secretary;
Mr Bartram has now returned to his role of CFO
subsequent to other restructures being finalised;
»
Focusing the company´s CEO, Danny Maher, as
much as possible, on sales and marketing, and
the company’s strategic goals;
»
The Company’s Chief Revenue Officer (CRO),
Dino Davanzo, departed the business post
the financial year end with the CEO picking
up the global responsibility for sales with each
territory manager reporting directly to him, along
with marketing, customer support, product
development and finance and;
»
After leading FirstWave’s software development
activities since the Company’s formation,
the company’s Chief Technology Officer
(CTO), Simon Ryan, departed the business in
December 2023 with Deepthi Bhushan taking up
responsibility for product development reporting
directly to the CEO.
Following the organisational restructures, the added
focus to converting the Company’s strong pipeline to
revenue saw several transactions close and several
other opportunities move closer to completion.
Significant amongst those that closed in the period
were:
»
Extension of the Company’s NMIS agreement
with the US Space Agency, NASA.
»
Extension of the Company’s NMIS agreement
with Mexico’s largest telecommunications group,
Telmex.
8
Annual Report 2024
Directors’ report
»
Securing the first sale of our technology as part
of our reseller engagement with Telmex. Telmex
has utilised a range of FirstWave products since
2011. Under the newly expanded relationship,
Telmex has become a reseller of FirstWave’s
industry-leading Network Management
Information System (NMIS) platform by bundling
the software with its network sales. This first
successful sale was to a Mexican government
client and the contract will deliver approximately
A$1 million in revenue to FirstWave over the
next three years with a minimum of A$400,000
in cash this financial year. The Company has
since completed the implementation at the
client and expects that over time, having proven
the success of this sale and the use of NMIS
as a point of differentiation when bundled with
Telmex’s network offerings, more opportunities
will follow.
Other key aspects of the company’s performance in
the year included:
»
Release v5.0 of the Company’s Open AudIT
software – FirstWave’s most popular commerical
open-source product and most recently awarded
‘world’s best agent-less Discovery Tools for IT
Asset Management’ by Comparitech. The V5.0
release is the most significant update to Open-
AudIT in over three years. Open-AudIT is one
of the world’s leading IT audit platforms, with
over 130,000 organisations using the software
to scan their network intelligently and store the
configurations of the discovered devices. The
upgrade will allow FirstWave to add new features
much faster and further cement Open-AudIT’s
position as the number one tool in the market.
»
Supporting the continued investment in sales,
the company raised additional finance through a
convertible note that provided $2.375 million net
of fees on very favourable terms:
-
Conversion price of 3.6 cents and interest
repayments of ~$25k/month commencing in
March 2024
-
Repayment due August 2025 (no early
payment penalties)
-
Establishes relationship with high-quality
capital partner Formue Nord A/S.
Renegotiation of the Telstra Product & Services
Agreement (PSA) to:
-
Extend it by 15-months (until July 2025)
-
Underpin several strategic initiatives
-
Provide a mix of variable and fixed income
streams.
»
Extending and uplifting revenue by ~20% the
Company’s largest end customer contract for
CyberCision under the Telstra PSA to an ISM
compliant platform as the forerunner to the new
all-of-government platform with Telstra.
»
Formal confirmation by Telstra of the end of
service date as 30 June 2024 for GPA firewall
security and 30 September 2024 for CSX2 cloud
infrastructure platform. This is anticipated to
impact FY25 from Q1 as follows:
-
GPA - $770K reduction in ARR resulting in
$440K reduction in Annualised Recurring
Gross Profit (ARGP)
-
CSX2 - $1.2m reduction in ARR and no
reduction in ARGP as CSX2 revenue is a
recharge of platform costs i.e. zero margin.
»
With delays in converting the pipeline of sales
opportunities, several executives travelled for
extended periods to USA and LATAM to assess
and accelerate sales processes.
»
New US based Director Daniel Friel joined the
FirstWave Board.
9
Directors’ report
Financial review
Profit or loss performance
FirstWave’s revenue for the year was $11,277,401
(2023: $12,492,797), which represents a decrease of
9.7% over the prior comparative period (‘PCP’). The
reduction in revenue and gross profit relates primarily
to matters already disclosed to the market which
include some significant non-recurring revenues in
the prior comparative period, and churn of a number
of contracts with Telstra.
Statement of financial position
Cash and cash equivalents decreased by $3,929,402
which was largely due to net cash outflows of
$2,784,499 relating to further investment into
FirstWave’s technology platform, and $3,466,714
to support operating activities. Net cash used
in operating activities was higher than PCP by
$1,711,233 (97%). This increase in operating cash
outflow is primarily due to once-off revenues in FY23
for NMIS9 upgrades and end of life product revenues
at Telstra not repeated in FY24 totalling $1,458,896,
and redundancy costs of $696,060 in FY24 when
there were none in FY23. Cash receipts from
customers were $11,644,871 (2023: $13,257,939).
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 to the degree
the company’s financial resources is able, 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
continues 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
Management 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.
10
Annual Report 2024
Directors’ report
A significant failure in the operation of any of the
company’s products and the subsequent impact
on our customers’ business operations
Management has directed substantial effort and
investment into ensuring the operational success
and efficiency of all its products and services. This
risk is managed by maintaining a highly experienced
and forward-looking development team to ensure the
operational success and efficiency for our current
and future products. 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 that have the
relevant expertise in network monitoring and internet
security software. The executive considers that it
has managed this risk as well as it is able and the
company 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
On 19 September 2023, the company acquired
100% of the assets of Saisei Networks Inc. (‘Saisei’).
FirstWave issued 40,571,428 new shares to
Saisei as payment for the assets of the business.
Saisei is an innovative and established provider of
patented network automation technology in North
America. It was acquired to expand and improve the
consolidated entity’s intellectual property (‘IP’) and
patents and accelerate growth of the consolidated
entity in its key target market of North American
telecommunications providers. The effective date of
the transaction was 1 September 2023.
On 22 February 2024, the company entered into a
loan agreement with Formue Nord Fund and issued
convertible notes for an amount of $2,500,000.
There were no other 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 2024 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
as well as further cost reductions in the current
period, the consolidated entity is focused on growing
revenues faster without significant increase in costs,
and to reaching cash flow neutrality.
Environmental regulation
The consolidated entity is not subject to any
significant environmental regulation under Australian
Commonwealth or State law.
11
Directors’ report
Information on current directors
Other current directorships’ quoted below 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 below are directorships held in the last 3 years for listed entities
only and excludes directorships of all other types of entities, unless otherwise stated.
John Grant
Non-Executive Director and Chair
John has a degree in Engineering with Honours
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
Member of the Remuneration and Nomination Committee and member of the
Audit, Risk and Compliance Committee
3,995,400 ordinary shares directly held
1,400,000 options over ordinary shares
11,769,983 service rights, of which 4,000,000 service rights had been
approved by the Board and are subject to shareholder approval at the 2024
AGM, and 3,600,000 share appreciation rights.
None
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Special responsibilities:
Interests in shares:
Interests in options:
Interests in rights:
Former directorships
(last 3 years):
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Special responsibilities:
Interests in shares:
Interests in options:
Interests in rights:
Former directorships
(last 3 years):
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
Member of the Audit, Risk and Compliance Committee and member of the
Remuneration and Nomination Committee
50,922,171 ordinary shares directly held
201,233 570 ordinary shares indirectly held
None
11,900,000 share appreciation rights and 900,000 service rights which had
been approved by the directors are subject to shareholder approval at the
2024 AGM
None
12
Annual Report 2024
Directors’ report
Daniel Friel
Non-Executive Director (appointed on 23 April 2024)
Daniel has a BS, Economics and ABD, Economic
Daniel, with over 25 years in the financial sector, founded Bank of America’s
Strategic Alliances and Investments group to identify and adopt innovative
technologies. As President of Banc of America Technology Investments and
Ecommerce Holdings, he oversaw investments in over 40 tech companies,
including notable exits like Signio (acquired by VeriSign), Shopping.com (now
owned by eBay), and Archipelago (merged with NYSE). Previously, he was
SVP and Director of Financial and Economic Analysis at Bank of America
and taught economics at North Carolina State University. Daniel has also
advised several technology firms, including DxEcosystems, 6fusion, and Virtual
StrongBox.
None
None
None
None
4,053,233 share appreciation rights which had been approved by the
directors are subject to shareholder approval at the 2024 AGM
None
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Special responsibilities:
Interests in shares:
Interests in options:
Interests in rights:
Former directorships
(last 3 years):
Company secretary
Meetings of directors
Iain Bartram studied at Cambridge University and holds 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 where he qualified as Chartered Accountant. 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.
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 2024, and the number of meetings attended by each director were:
John Grant
Danny Maher
Daniel Friel*
Ray Kiley**
Paul MacRae***
Euh (David) Hwang****
19
18
1
14
6
7
19
19
5
19
19
19
3
2
-
1
2
-
3
3
3
3
3
3
4
-
-
4
-
2
4
4
4
4
4
4
Full Board
Attended
Attended
Attended
Hold
Hold
Hold
Remuneration and
Nomination Committee
Audit, Risk and
Compliance Committee
* Appointed on 23 April 2024 and was unable to attend the board meetings for six weeks post joining in April
due to a medical procedure.
** Retired on 23 April 2024
*** Retired on 23 November 2023
**** Retired on 23 November 2023.
13
Directors’ report
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 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 FY2024. 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.
14
Annual Report 2024
Directors’ report
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 2024.
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
Annual General Meeting (‘AGM’)
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
(redundant on 15 December 2023)
»
Iain Bartram - Chief Financial Officer
»
Dino Davanzo - Chief Revenue Officer
To assist the entity with managing cash reserves,
Ray Kiley and John Grant agreed to receive Service
Rights in lieu of cash payments for their Directors’
fees for the calendar year 2024. In this regard, on
the 17 April 2024 John Grant was issued 4,000,000
Service Rights vesting 31 December 2024 and an
expiry of 16 April 2031. Ray Kiley resigned from the
board on 23 April 2024 and hence his unpaid fees for
calendar year 2024 only relate to his service from 1
Jan 2024 to 23 April 2024. Therefore Ray’s service
rights issued on 17 April 2024 vested immediately
on 23 April 2024 and has an expiry date of 16 April
2031. The granting of these share rights is subject to
shareholder approval at the upcoming AGM. As at
the date of this report, there is no reason to believe
that these share rights would not be approved.
For achievement against targets in H1 FY24,
directors approved 900,000 Service Rights to be
issued to Danny Maher on 26 April 2024 with no
further vesting conditions and an expiry date of 30
June 2031. The granting of these share rights is
subject to shareholder approval at the upcoming
AGM. As at the date of this report, there is no reason
to believe that these share rights would not be
approved.
Daniel Friel joined the board on 23 April 2024. It has
been agreed that Daniel will receive USD $2,000
per month in cash and an annual allocation of Share
Appreciation Rights (SARs) with an approximate
value of AUD $60,000. In this regard, directors
approved 4,053,233 share appreciation rights
(‘SARs’) with an exercise price of $0.025 to Daniel
Friel on 23 April 2024 which will vest on 22 April
2025 and expire 22 April 2029. The granting of these
share rights is subject to shareholder approval at the
upcoming AGM. As at the date of this report, there
is no reason to believe that these share rights would
not be approved.
There were no other share rights issued to KMP’s
during the year and hence the above resulted in
4,053,233 Share Appreciation Rights and 5,423,989
Service Rights, totalling 9,477,222 share-rights being
granted to KMPs during the year ended 30 June
2024. The granting of these securities is subject to
shareholder approval at the upcoming AGM.
15
Directors’ report
Details of the remuneration of KMP of the consolidated entity are set out in the following tables:
Short-term benefits
Post-
employment
benefits
Cash
salary
and fees
2024
$
$
$
$
$
$
$
$
60,000
-
-
9,900
-
-
77,400
147,300
24,167
-
-
2,658
-
-
6,300
33,125
20,000
-
-
2,200
-
-
6,300
28,500
29,000
-
-
11,201
-
-
25,506
65,707
12,227
-
-
-
-
-
11,333
23,560
324,000
45,000
48,971
27,399
11,574
-
155,500
612,444
162,936
-
77,388
13,699
97,384
81,921
17,158
450,486
330,000
-
-
27,399
4,547
-
118,750
480,696
260,000
43,188
22,127
27,399
1,289
-
39,000
393,003
1,222,330
88,188
148,486
121,855
114,794
81,921
457,247 2,234,821
Cash
bonus
Annual
leave
Super-
annuation
Long
service
leave
Equity -
Settled
options/
rights
Total
Long-
term
benefits
Termina-
tion
benefits
Share-
based
payments
Non-Executive Directors:
Executive Director:
Other Key Management Personnel:
Simon Ryan(5)
Iain Bartram
Dino Davanzo*
John Grant
Paul MacRae(1)
Euh (David) Hwang(2)
Ray Kiley(3)
Daniel Friel(4)
Danny Maher
(1) Represents remuneration from 1 July 2023 to the last date of employment of 23 November 2023.
(2) Represents remuneration from 1 July 2023 to the last date of employment of 23 November 2023.
(3) Represents remuneration from 1 July 2023 to the last date of employment of 23 April 2024.
(4) Represents remuneration from the date of appointment of 23 April 2023 to 30 June 2024.
(5) Represents remuneration from 1 July 2023 to the last date of employment of 15 December 2023.
16
Annual Report 2024
Directors’ report
Short-term benefits
Post-
employment
benefits
Cash
salary
and fees
2024
$
$
$
$
$
$
$
$
120,000
-
-
12,600
-
-
52,600
185,200
58,000
-
-
6,090
-
-
26,300
90,390
48,000
-
-
4,200
-
-
26,300
78,500
58,000
-
-
6,090
-
-
26,300
90,390
360,000
90,000
7,615
25,292
6,725
-
137,500
627,132
355,000
-
1,365
25,292
6,836
-
37,500
425,993
330,000
-
3,173
25,292
3,186
-
118,750
480,401
172,349
28,976
12,986
17,095
198
-
29,250
260,854
33,075
26,408
35,181
23,324
-
59,617
-
177,605
1,534,424
145,384
60,320
145,275
16,945
59,617
454,500 2,416,465
Cash
bonus
Annual
leave
Super-
annuation
Long
service
leave
Equity -
Settled
options/
rights
Total
Long-
term
benefits
Termina-
tion
benefits
Share-
based
payments
Non-Executive Directors:
Executive Director:
Other Key Management Personnel:
Simon Ryan
Iain Bartram
Dino Davanzo*
Craig Nelson**
John Grant
Paul MacRae
Euh (David) Hwang
Ray Kiley
Danny Maher
* 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.
John Grant
Paul MacRae
Euh (David) Hwang
Ray Kiley
Daniel Friel
Danny Maher
Simon Ryan
Iain Bartram
Dino Davanzo
Craig Nelson
Non-Executive Directors:
Executive Director
Other Key Management Personnel:
47%
81%
78%
61%
52%
67%
96%
75%
79%
-
72%
71%
66%
71%
-
64%
91%
75%
78%
85%
-
-
-
-
7%
-
-
11%
-
-
-
-
-
14%
-
-
11%
15%
53%
19%
22%
39%
48%
26%
4%
25%
10%
-
9%
25%
11%
-
28%
29%
34%
29%
-
22%
Fixed remuneration
2024
2024
2024
2023
2023
2023
STI
LTI
The proportion of remuneration linked to performance and the fixed proportion are as follows:
17
Directors’ report
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 2024
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:
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:
No options granted, exercised or lapsed during the year 30 June 2024.
Number
of options
granted
Number of options
granted during the
year 2024
Value of options
granted during the
year
$
Name
Name
Name
Grant
date
Vesting
date and
exercisable
date
Number of options
granted during the
year 2023
Value of options
exercised during the
year
$
Expiry
date
Exercise
price
Fair value
per share
right at
grant date
Number of options
vested during the
year 2023
Remuneration
consisting of
options for the year
$
Number of options
vested during the
year 2024
Value of options
lapsed during the
year
$
John Grant
John Grant
John Grant
1,400,000
-
-
20/11/2019
-
-
01/07/2022
-
2,800,000
30/06/2025
1,400,000
-
$0.547
$0.093
18
Annual Report 2024
Directors’ report
John Grant
John Grant
John Grant
Paul MacRae
Euh (David) Hwang
Ray Kiley
Ray Kiley
Danny Maher
Danny Maher
Iain Bartram
Daniel Friel
Simon Ryan*
Dino Davanzo
1,200,000
1,200,000
4,000,000
300,000
300,000
475,000
523,989
11,000,000
900,000
9,500,000
4,053,233
3,000,000
3,000,000
27/09/2022
27/09/2022
17/04/2024**
27/09/2022
27/09/2022
27/09/2022
17/04/2024**
27/09/2022
26/04/2024**
27/09/2022
23/04/2024**
27/09/2022
01/10/2022
30/06/2024
30/06/2025
30/06/2024
30/06/2024
30/06/2024
30/06/2024
23/04/2024
30/06/2024
30/06/2024
30/06/2024
22/04/2025
30/06/2024
30/09/2024
30/06/2027
30/06/2028
16/04/2031
30/06/2027
30/06/2027
30/06/2027
16/04/2031
30/06/2027
16/04/2031
30/06/2027
22/04/2029
30/06/2027
30/06/2027
$0.000
$0.000
$0.000
$0.050
$0.050
$0.050
$0.000
$0.050
$0.000
$0.050
$0.250
$0.050
$0.050
$0.025
$0.031
$0.025
$0.025
$0.025
$0.025
$0.031
$0.025
$0.020
$0.025
$0.025
$0.025
$0.026
Number
of rights
granted
Grant
date
Name
Vesting
date and
exercisable
date
Fair value
per right at
grant date
Exercise
price
Expiry
date
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:
* Simon Ryan’s last date of employment was 15 December 2023 and hence was no longer a KMP from that
date. 813,698 SARs was forfeited in FY24 on a pro-rata basis.
All service rights issued in FY22, FY23 and FY24 only had a time served criteria and did not have any
criteria.
Share rights granted carry no dividend or voting rights.
** These share rights had been approved by the directors in April 2024 and are subject to shareholder
approval at the 2024 AGM.
19
Directors’ report
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 2024 are set out below:
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 2024 are set out below:
Number of rights
granted during the
year 2024
Value of rights
granted during
the year
Name
Name
Number of rights
granted during the
year 2023
Value of rights
vested during
the year
Number of rights
vested during the
year 2023
Remuneration
consisting of rights
for the year
Number of rights
vested during the
year 2024
Value of rights
lapsed/ forfeited
during the year
John Grant
Paul MacRae
Euh (David) Hwang
Ray Kiley
Daniel Friel
Danny Maher
Simon Ryan
Iain Bartram
Dino Davanzo
John Grant
Paul MacRae
Euh (David) Hwang
Ray Kiley
Daniel Friel
Danny Maher
Simon Ryan
Iain Bartram
Dino Davanzo
4,000,000
-
-
523,989
4,053,233
900,000
-
-
-
$
100,000
-
-
13,100
60,000
18,000
-
-
-
3,600,000
1,800,000
1,800,000
1,800,000
-
11,000,000
3,000,000
9,500,000
3,000,000
$
30,000
7,500
7,500
24,975
-
293,000
54,658
237,500
-
1,200,000
300,000
300,000
998,989
-
11,900,000
2,186,302
9,500,000
-
$
-
(26,100)
(26,100)
(21,725)
-
-
(20,342)
(150,798)
-
1,200,000
600,000
600,000
600,000
-
-
-
2,575,739
-
$
53.0%
19.0%
22.0%
39.0%
48.0%
26.0%
4.0%
25.0%
10.0%
20
Annual Report 2024
Directors’ report
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:
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:
* Paul MacRae’s last date of employment was 23 November 2023 and hence was no longer a KMP from that date.
** Ray Kiley’s last date of employment was 23 April 2024 and hence was no longer a KMP from that date.
*** Simon Ryan’s last date of employment was 15 December 2023 and hence was no longer a KMP from that date.
Balance at the
start of the
year
Balance at the
start of the
year
Name
Name
Received
as part of
remuneration
Granted
Balance at
the end of the
year
Balance at
the end of the
year
Purchased
during the
year
Lapsed
Other
Other
John Grant
Paul MacRae*
Ray Kiley**
Daniel Friel
Danny Maher
Simon Ryan***
Iain Bartram
John Grant
Ordinary shares
Options over ordinary shares
3,995,400
3,682,084
1,044,762
-
252,155,741
4,392,140
508,065
265,778,192
4,200,000
4,200,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,800,000)
(2,800,000)
-
(3,682,084)
(1,044,762)
-
-
(4,392,140)
-
(9,118,986)
-
-
3,995,400
-
-
-
252,155,741
-
508,065
256,659,206
1,400,000
1,400,000
21
Directors’ report
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:
*Paul MacRae’s last date of employment was 23 November 2023 and hence he was no longer a KMP from that date.
**Euh (David) Hwang’s last date of employment was 23 November 2023 and hence he was no longer a KMP from that date.
***Ray Kiley’s last date of employment was 23 April 2024 and hence he was no longer a KMP from that date.
****Simon Ryan’s last date of employment was 15 December 2023 and hence he was no longer a KMP from that date.
Share rights over ordinary shares
Balance at the
start of the year
Name
Granted
Balance at the
end of the year
Expired/
forfeited/other
John Grant
Paul MacRae*
Euh (David) Hwang**
Ray Kiley***
Daniel Friel
Danny Maher
Simon Ryan****
Iain Bartram
Dino Davanzo
11,369,983
4,325,690
1,800,000
2,238,730
-
11,000,000
7,433,802
12,075,739
3,000,000
53,243,944
4,000,000
-
-
523,989
4,053,233
900,000
-
-
-
9,477,222
-
(4,325,690)
(1,800,000)
(2,762,719)
-
-
(7,433,802)
(1,575,739)
-
(17,897,950)
15,369,983
-
-
-
4,053,233
11,900,000
-
10,500,000
3,000,000
44,823,216
Share rights holding over ordinary shares (30 June 2024)
Vested and
exercisable
Name
Vested and
unexercisable
Balance at the
end of the year
Other
John Grant
Paul MacRae*
Euh (David) Hwang**
Ray Kiley***
Danny Maher
Simon Ryan****
Iain Bartram
Total vested
share rights over
ordinary shares
10,169,983
3,425,690
900,000
1,598,989
11,900,000
6,620,104
10,500,000
45,114,766
-
-
-
-
-
-
-
-
-
(3,425,690)
(900,000)
(1,598,989)
-
(6,620,104)
-
(12,544,783)
10,169,983
-
-
-
11,900,000
-
10,500,000
32,569,983
Loans to key management personnel and their related parties
There was no loans to key management personnel and their related parties as at 30 June 2024.
22
Annual Report 2024
Directors’ report
This concludes the remuneration report,
which has been audited.
Shares under option
There were 17,782,667 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 78,394,011 unissued ordinary shares of
FirstWave Cloud Technology Limited under share
rights outstanding at the date of this report. This
includes 50,076,989 SARs that have an exercise
price of $0.05 and 4,053,233 SARs that have an
exercise price of $0.025. These SARs are subject
to shareholder approval at the 2024 AGM The
remaining 24,263,789 share rights have no exercise
price and 5,423,989 of these share rights are subject
to shareholder approval at the 2024 AGM.
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 2024 and up to the
date of this report.
Shares issued on the exercise of
share rights
6,601,051 ordinary shares of FirstWave Cloud
Technology Limited were issued on the exercise of
share rights during the year ended 30 June 2024
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.
Indemnity and insurance of auditor
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.
23
Directors’ report
Non-audit services
Details of the amounts paid or payable for non-audit services provided during the financial year by the auditor
are outlined in note 22 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 22 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.
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
29 August 2024
Sydney
Danny Maher
Director
24
Annual Report 2024
Auditor’s independence declaration
Auditor’s independence
declaration
AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF FIRSTWAVE CLOUD TECHNOLOGY LIMITED
PKF Brisbane Audit
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2024,
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
29 AUGUST 2024
PKF Brisbane Pty Ltd is a member of PKF Global, the network of member firms of PKF International Limited, each of which is
a separately owned legal entity and does not accept any responsibility or liability for the actions or inactions of any individual
member or correspondent firm(s). Liability limited by a scheme approved under Professional Standards Legislation.
25
Financial report
Financial
report
General information
Contents
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
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 29 August
2024. The directors have the power to amend and reissue the financial statements.
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Consolidated entity disclosure statement
Directors' declaration
Independent auditor's report to the members of FirstWave Cloud Technology Limited
Corporate directory
27
28
29
30
31
64
65
66
73
26
Annual Report 2024
Financial report
Statement of profit or loss and other
comprehensive income
For the year ended 30 June 2024
Revenue
Expenses
Name
Consolidated
Revenue from contracts with customers
Cost of sales
Gross profit
Other income
Interest income calculated using the effective interest method
Sales and marketing
Product and development
Operations and support
Corporate and administration
Transaction costs
Impairment of accept
Finance costs
Total expenses
Loss before income tax expense
Income tax expense
Foreign currency translation
Other comprehensive income for the year, net of tax
Basic loss per Share
Dluted loss per share
11,277,401
(2,479,003)
8,798,398
2,383,009
69,030
(891)
(891)
(23,040,919)
(1.35)
(1.35)
(4,580,017)
(2,471,255)
(977,917)
(5,894,859)
(236,627)
(19,955,063)
(170,986)
(34,286,724)
(23,036,287)
(3,741)
(23,040,028)
(4,594,096)
(5,268,699)
(1,485,475)
(6,670,909)
(99,113)
(7,591,178)
(11,167)
(25,720,637)
(13,430,337)
(17,948)
(13,448,285)
4
6
5
11
6
7
31
31
12,492,797
(2,857,863)
9,634,934
2,518,465
136,901
19,400
19,400
(13,428,885)
(0.81)
(0.81)
Note
2024
$
Cents
2023
$
Cents
Loss after income tax expense for the year attributable
to the owners of FirstWave Cloud Technology Limited
Total comprehensive income for the year attributable to
the owners of FirstWave Cloud Technology Limited
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
27
Financial report
Statement of financial position
As at 30 June 2024
Current assets
Non-current assets
Liabilities
Current liabilities
Non-current liabilities
Equity
Assets
Consolidated
Cash and cash equivalents
Term deposits
Trade and other receivables
Contract assets
Other assets
Total current assets
Property, plant and equipment
Right-of-use assets
Intangibles
Other assets
Total non-current assets
Total assets
130,165
108,476
36,833,842
33.226
37,105,709
41,869,232
109,992
208,603
53,194,363
-
53,512,958
63,329,662
Trade and other payables
Contract liabilities
Employee benefits
Lease liabilities
Deferred research and development income
Total current liabilities
1,737,780
1,948,484
921,147
130,702
793,353
5,531,466
2,862,039
3,214,285
1,392,125
118,569
880,057
8,467,075
Contract liabilities
Borrowings
Employee benefits
Provisions
Lease liabilities
Deferred research and development income
Deferred tax
Total non-current liabilities
Total liabilities
Net assets
401,293
2,235,724
194,662
26,406
11,155
1,211,900
44,000
4,125,140
9,656,606
32,212,626
730,679
-
163,960
26,406
141,857
1,369,579
-
2,432,481
10,899,556
52,430,106
Issued capital
Reserves
Accumulated losses
Total equity
131,001,770
5,783,561
(104,572,705)
32,212,626
128,474,750
5,911,076
(81,955,720)
52,430,106
1,678,017
133,776
2,200,055
255,230
496,445
4,763,523
8
9
10
11
10
12
13
14
15
13
16
14
15
17
18
5,607,419
133,776
3,190,429
142,440
742,640
9,816,704
Note
2024
$
2023
$
The above statement of financial position should be read in conjunction with the accompanying notes
28
Annual Report 2024
Financial report
Statement of changes in equity
For the year ended 30 June 2024
Consolidated
Consolidated
Issued
capital
$
Issued
capital
$
Reserves
$
Reserves
$
Accumulated
losses
$
Accumulated
losses
$
Total
equity
$
Total
equity
$
Balance at 1 July 2022
Balance at 1 July 2023
Loss after income tax expense for the year
Loss after income tax expense for the year
Total comprehensive income for the year
Total comprehensive income for the year
Share-based payments (note 32)
Contributions of equity, net of transaction
costs (note 17)
Share-based payment expense (note 32)
Balance at 30 June 2024
Share issue on exercise of share rights
(note 17)
Lapsed and forfeited share-based
payment expense
Balance at 30 June 2023
Lapsed and forfeited share-based payment
expense
Convertible note option
Share issue on exercise of share rights
(note 17)
Transactions with owners in their capacity as owners:
Transactions with owners in their capacity as owners:
Other comprehensive income
for the year, net of tax
128,426,284
-
-
-
128,474,750
-
48,466
-
5,736,129
-
19,400
704,813
5,911,076
(497,505)
(51,761)
19,400
(69,004,940)
(13,448,285)
(13,448,285)
-
(81,955,720)
497,505
-
-
65,157,473
(13,448,285)
(13,428,885)
704,813
52,430,106
-
(3,295)
19,400
Other comprehensive income
for the year, net of tax
128,474,750
-
-
1,997,000
-
131,001,770
530,020
-
-
-
5,911,076
-
(891)
-
645,576
5,783,562
(541,928)
(423,042)
192,771
(891)
(81,955,720)
(23,040,028)
(23,040,028)
-
-
(104,572,706)
-
423,042
-
-
52,430,106
(23,040,028)
(23,040,919)
1,997,000
645,576
32,212,626
(11,908)
-
192,771
(891)
The above statement of changes in equity should be read in conjunction with the accompanying notes
29
Financial report
Statement of cash flows
For the year ended 30 June 2024
The above statement of cash flows should be read in conjunction with the accompanying notes
Consolidated
Note
2024
$
2023
$
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Transaction cost payments (inclusive of GST)
Interest received
Other income
Net cash used in operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Receipts from the acquisition of Saisei
Net cash used in investing activities
Cash flows from financing activities
Share issue transaction costs
Proceeds from borrowings
Repayment of borrowings
Transaction costs related to loans and borrowings
Repayment of lease liabilities
Net cash from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
Net cash used in operating activities
Transaction cost payments (inclusive of GST)
Net cash used in operating activities before transaction costs
(inclusive of GST)
11,644,871
(16,054,329)
(127,834)
65,423
1,005,155
(3,466,714)
(77,919)
(2,784,499)
200,000
(2,662,418)
(11,908)
2,500,000
(32,557)
(125,000)
(130,805)
2,199,730
(3,929,402)
5,607,419
1,678,017
(3,466,714)
127,834
(3,338,880)
13,257,939
(16,553,154)
(40,756)
95,684
1,484,806
(1,755,481)
(5,386)
(2,909,358)
-
(2,914,744)
(2,127)
-
-
-
(128,818)
(130,945)
(4,801,170)
10,408,589
5,607,419
(1,755,481)
40,756
(1,714,725)
30
29
30
8
30
Annual Report 2024
Financial report
Notes to the financial statements
30 June 2024
Note 1. Material accounting
policies
The accounting policies that are material to the
consolidated entity are set out below. The accounting
policies adopted are consistent with those of the
previous financial year, 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.
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 2024, the
consolidated entity incurred an operating loss of
$3,084,965 which together with an impairment
of assets of $19,955,063 resulted in a net loss
after tax of $23,040,028 ( 2023 : operating loss
of $5,857,107 which together with an impairment
of assets of $7,591,178 resulted in a net loss
after tax of $13,448,285) and net cash outflows
used in operating activities of $3,466,714 (2023:
$1,755,481). This increase in operating cash outflow
is primarily due to once-off revenues in FY23 for
NMIS9 upgrades and end of life product revenues
at Telstra not repeated in FY24 totalling $1,458,896,
and redundancy costs of $696,060 in FY24 when
there were none in FY23. As at 30 June 2024, the
Group has recorded a net current asset deficiency of
$767,943 (2023: surplus $1,349,629).
In considering whether the consolidated entity can
remain as a going concern moving forward, the
directors note the following:
»
The consolidated entity has reported operational
improvement and reducing “normalised” cash
usage in quarterly activity reports over the last 2
years and is continuing to focus on minimising its
cash usage;
»
The consolidated entity needs approximately
$1,000,000 in net new sales in FY25 (i.e. sales
in excess of churn beyond that already disclosed
and accounted for from Telstra discontinuing
GPA and closing its CSX2 platform) to cover
operating costs. The Directors believe there is
a high likelihood that sales growth will exceed
this conservative scenario and extend the cash
runway into the FY26 financial year;
»
The convertible note, unless renegotiated
or converted earlier by the lender, is due for
repayment on 22nd August 2025. If it were to be
repaid rather than renegotiated or converted, an
additional approximately $2,500,000 in net new
sales or other revenues would be required within
the next 12 months from the date of signing this
report (within the ‘relevant period’);
»
The consolidated entity has the ability to make
further reductions to outlays if necessary;
»
The consolidated entity has the ability to
sell business assets to acquirers who are
appropriately resourced to monetise the value in
these assets and hence value them accordingly;
and
»
The consolidated entity has the ability and option
to raise funds through the capital markets, noting
that the likely price per share upon raising, and
hence the quantum of funds required to be raised
is unknown at this time.
In light of these considerations, the directors have
prepared the financial statements of the consolidated
entity 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.
31
Financial report
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 28.
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 2024 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’.
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.
32
Annual Report 2024
Financial report
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.
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.
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.
Income tax
The income tax expense or benefit for the period
is the tax payable on that period’s taxable income
based on the applicable income tax rate for each
jurisdiction, adjusted by 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.
33
Financial report
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.
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.
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.
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.
34
Annual Report 2024
Financial report
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 internallygenerated
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, internallygenerated 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.
Brand name
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.
Borrowings
Loans and borrowings are initially recognised at
the fair value of the consideration received, net of
transaction costs. They are subsequently measured
at amortised cost using the effective interest method.
The component of the convertible notes that exhibits
characteristics of a liability is recognised as a
liability in the statement of financial position, net of
transaction costs.
On the issue of the convertible notes the fair value
of the liability component is determined using a
market rate for an equivalent nonconvertible bond
and this amount is carried as a non-current liability
on the amortised cost basis until extinguished on
conversion or redemption. The increase in the
liability due to the passage of time is recognised as
a finance cost. The remainder of the proceeds are
allocated to the conversion option that is recognised
and included in shareholders’ equity as a convertible
note reserve, net of transaction costs. The carrying
amount of the conversion option is not remeasured in
the subsequent years. The corresponding interest on
convertible notes is expensed to profit or loss.
35
Financial report
Finance costs
Finance costs are expensed in the period in which
they are incurred.
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.
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 rendering of services.
The cost of equity-settled transactions is measured
at fair value on grant date. Fair value is determined
using either the Binomial, BlackScholes 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 entity 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 number 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 additional 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
vesting 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 recognised 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.
36
Annual Report 2024
Financial report
Business combinations
The acquisition method of accounting is used to
account for business combinations regardless of
whether equity instruments or other assets are
acquired.
The consideration transferred is the sum of the
acquisition-date fair values of the assets transferred,
equity instruments issued or liabilities incurred by
the acquirer to former owners of the acquiree and
the amount of any non-controlling interest in the
acquiree. For each business combination, the non-
controlling interest in the acquiree is measured at
either fair value or at the proportionate share of the
acquiree’s identifiable net assets. All acquisition
costs are expensed as incurred to profit or loss.
On the acquisition of a business, the consolidated
entity assesses the financial assets acquired and
liabilities assumed for appropriate classification
and designation in accordance with the contractual
terms, economic conditions, the consolidated entity’s
operating or accounting policies and other pertinent
conditions in existence at the acquisition-date.
Where the business combination is achieved in
stages, the consolidated entity remeasures its
previously held equity interest in the acquiree at
the acquisition-date fair value and the difference
between the fair value and the previous carrying
amount is recognised in profit or loss.
Contingent consideration to be transferred by the
acquirer is recognised at the acquisition-date fair
value. Subsequent changes in the fair value of the
contingent consideration classified as an asset or
liability is recognised in profit or loss. Contingent
consideration classified as equity is not remeasured
and its subsequent settlement is accounted for within
equity.
The difference between the acquisition-date fair
value of assets acquired, liabilities assumed and any
non-controlling interest in the acquiree and the fair
value of the consideration transferred and the fair
value of any pre-existing investment in the acquiree
is recognised as goodwill. If the consideration
transferred and the pre-existing fair value is less
than the fair value of the identifiable net assets
acquired, being a bargain purchase to the acquirer,
the difference is recognised as a gain directly in
profit or loss by the acquirer on the acquisition-date,
but only after a reassessment of the identification
and measurement of the net assets acquired, the
non-controlling interest in the acquiree, if any,
the consideration transferred and the acquirer’s
previously held equity interest in the acquirer.
Business combinations are initially accounted for
on a provisional basis. The acquirer retrospectively
adjusts the provisional amounts recognised and
also recognises additional assets or liabilities during
the measurement period, based on new information
obtained about the facts and circumstances that
existed at the acquisition-date. The measurement
period ends on either the earlier of (i) 12 months from
the date of the acquisition or (ii) when the acquirer
receives all the information possible to determine fair
value.
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.
37
Financial report
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 32 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
Management has allocated goodwill to an individual
cash generating unit (CGU) and other intangible
assets (e.g. capitalized software development
costs) have been allocated to each CGU identified.
Impairment testing has been performed for each
CGU (not at the group level) using the value in use
method.
38
Annual Report 2024
Financial report
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.
Business combinations
As discussed in note 1, business combinations
are initially accounted for on a provisional basis,
the amounts disclosed for the year ended 30 June
2024 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.
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 Managing Director (being the Chief
Operating Decision Maker (‘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 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 cashgenerating 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 2024, there was
one major external customer (2023: one customer)
where revenue exceeded 10% of the consolidated
revenue. Total revenue from the customer for the
year ended 30 June 2024 amounted to $4,898,156
(2023: $6,455,424).
39
Financial report
Note 4. Revenue from contracts with customers
Note 5. Other income
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
* There are no unfulfilled conditions or other contingencies attached to receipt of R&D grant income
* 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.
*** During the previous financial period there were a number of LATAM customers who upgraded to NMIS 9 by purchasing new
perpetuity licences that caused the non-recurring revenue to be significantly higher than in the current period. The recurring revenue in
LATAM in the current year was $1,321,596 (2023: $1,060,363) a 24.6% increase of $261,233.
Consolidated
Consolidated
2024
$
2024
$
2023
$
2023
$
Major service lines
CyberCision
Network monitoring
Research and development (‘R&D’) grant income*
Settlement of liability for no consideration
Other income
Other income
Geographical regions
Australia
USA and Canada
LATAM*
ROW**
Timing of revenue recognition
Recurring revenue (over a period of time)
Non-recurring revenue (at a point in time)***
5,548,163
5,729,238
11,277,401
1,771,513
606,103
5,393
2,383,009
5,862,973
3,272,930
1,433,580
707,918
11,277,401
10,620,211
657,190
11,277,401
7,175,804
5,316,993
12,492,797
897,714
1,596,018
24,733
2,518,465
7,486,923
2,772,199
1,653,222
580,453
12,492,797
11,169,980
1,322,817
12,492,797
40
Annual Report 2024
Financial report
Note 6. Expenses
Consolidated
2024
$
2023
$
Loss before income tax includes the following specific expenses:
Cost of sales
Cost of licenses
Depreciation
Total depreciation
Amortisation
Capitalised development costs
Customer list
Patents
Total amortisation
Total depreciation and amortisation
Impairment
Capitalised development costs
Goodwill
Total impairment
Finance costs
Interest and finance charges paid/payable on lease liabilities
Interest and finance charge on convertible note
Finance costs expensed
Net foreign exchange variance
Net foreign exchange variance
Employee benefit expenses
Employee salaries and other benefits`
Defined contribution superannuation expense
Share-based payments expenses
Total employee benefit expenses
2,479,003
169,619
1,109,514
62,330
25,923
1,197,767
1,367,386
-
19,955,063
19,955,063
7,235
163,751
170,986
42,217
10,032,709
752,157
568,569
11,353,435
2,857,863
152,607
3,917,595
41,250
23,208
3,982,053
4,134,660
7,591,178
-
7,591,178
11,167
-
11,167
(11,578)
10,561,645
745,510
704,813
12,011,968
* Includes a salary sacrifice amount of $77,007 (2023: $nil). Share rights have been granted for cash forgone.
41
Financial report
Note 7. Income tax
Consolidated
Consolidated
2024
$
2024
$
2023
$
2023
$
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense
Tax at the statutory tax rate of 25%
Tax effect amounts which are not deductible/(taxable) in calculating
taxable income:
Amortisation of intangibles
Entertainment expenses
Expense incurred in deriving non-accessible non-exempt income
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
Potential tax benefit at statutory tax rates
(23,036,287)
(5,759,072)
283,882
439
73,855
4,988,766
662,601
(669,358)
(442,878)
(861,765)
725,083
136,682
3,741
3,741
50,603,888
12,650,972
(13,430,337)
(3,357,584)
980,266
2,251
-
1,897,794
491,109
(727,180)
(230,347)
(943,691)
650,498
293,193
17,948
17,948
48,253,453
12,063,363
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.
42
Annual Report 2024
Financial report
Consolidated
Allowance for
expected credit losses
Carrying amount
Expected credit
loss rate
2024
$
2024
%
2024
%
2024
%
2023
$
2023
%
2023
%
2023
%
Trade receivables
Less: Allowance for expected credit losses
Research and development tax incentive receivable
Other receivables
Not overdue
0 to 3 months overdue
3 to 6 months overdue
6 to 12 months overdue
Special provision
887,951
(77,370)
810,581
1,375,909
13,565
2,200,055
22,494
1,172
-
24
53,680
77,370
749,827
39,055
-
47
99,022
887,951
3.00%
2.95%
-
50.00%
54.21%%
2,496,008
(160,109)
2,335,899
854,530
-
3,190,429
69,342
5,421
814
2,572
81,960
160,109
2,311,416
91,809
5,427
5,396
81,960
2,496,008
3.00%
5.90%
15.00%
47.66%
100.00%
Note 9. Trade and other receivables
Allowance for expected credit losses
The consolidated entity has recognised a loss of $6,971 (2023: $33,084) in profit or loss in respect of impair-
ment of receivables for the year ended 30 June 2024.
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Note 8. Cash and cash equivalents
Consolidated
2024
$
2023
$
Cash at bank
1,678,017
5,607,419
43
Financial report
Consolidated
2024
$
2023
$
Goodwill - at cost
Less: Impairment
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
50,495,774
(19,955,063)
30,540,711
32,750,014
(20,118,881)
(7,591,178)
5,039,955
971,000
341,000
(110,455)
230,545
263,413
(211,782)
51,631
36,833,842
49,493,774
-
49,493,774
29,157,582
(19,009,367)
(7,591,178)
2,557,037
971,000
165,000
(48,125)
116,875
241,536
(185,859)
55,677
53,194,363
Consolidated
2024
$
2023
$
Current assets
Prepayments
Security deposits
Non-current assets
Prepayments
489,245
7,200
496,445
33,226
529,671
709,459
33,181
742,640
-
742,640
Note 11. Intangibles
Note 10. Other assets
Consolidated
2024
$
2023
$
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Closing balance
160,109
(21,633)
(61,106)
77,370
260,123
33,084
(133,098)
160,109
Movements in the allowance for expected credit losses are as follows:
44
Annual Report 2024
Financial report
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year
are set out below:
Capitalised
development
$
Goodwill
$
Brand
name
$
Customer
list
$
Patents
$
Consolidated
Total
$
Balance at 1 July 2022
Impairment expense
Amortisation expense
Balance at 30 June
2023
Additions through
business combinations
(note 29)
Impairment expense
Amortisation expense
Balance at 30 June
2024
Additions
Additions
49,493,774
-
-
49,493,774
1,002,000
(19,955,063)
-
30,540,711
-
-
11,157,088
(7,591,178)
(3,917,595)
2,557,037
915,000
-
(1,109,514)
5,039,955
2,908,722
2,677,432
971,000
-
-
971,000
-
-
-
971,000
-
-
158,125
-
(41,250)
116,875
176,000
-
(62,330)
230,545
-
-
50,154
-
(23,208)
55,677
-
-
(25,923)
51,631
28,731
21,877
61,830,141
(7,591,178)
(3,982,053)
53,194,363
2,093,000
(19,955,063)
(1,197,767)
36,833,842
2,937,453
2,699,309
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
2024 is detailed below :
CyberCision
$
Network Monitoring
$
Goodwill
Other Intangibles
-
2,430,272
2,430,272
30,540,711
3,862,859
34,403,570
45
Financial report
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 $19,955,063 in relation to the Network Monitoring CGU. No impairment was noted in relation to
the CyberCision CGU. The recoverable value of the two CGUs has been measured at $34,525,770. The
impairment has been recognised as a result of lower than anticipated sales of the Network Monitoring
products.
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:
Sensitivity to changes in assumptions
For the CyberCision CGU the discount rate would have to increase by 1.0% before the intangible asset would
need to be impaired, with all other assumptions remaining constant.
If there are any negative changes in the key assumptions on which the recoverable amount of goodwill is
based, this would result in a further impairment charge for the Monitoring CGU’s goodwill.
CyberCision
Network Monitoring
Forecast period
Discount rate (pre-tax)
Terminal growth rate
Revenue Growth rate
5 years
16%
3%
FY25 forecast to have lower
revenue than current financial year
due to the removal of zero margin
recharge between Telstra and
the company and the end of life
of Telstra’s GPA Firewall product.
After this initial reduction an organic
growth rate of 5% per annum has
been applied over the next 4 years.
5 years
16%
3%
Organic growth rate per annum
over a 5 year period of 5-18%
Cash flow forecast
Cash flow calculations to use
cash flow projections based on
the financial forecast approved by
management covering a 5 year
period.
Cash flow calculations to use
cash flow projections based on
the financial forecast approved by
management covering a 5 year
period.
Operating costs /
overheads
Operating costs 30-40% down
in FY25 and FY26 compared to
current financial year and then to
grow in line with inflation and other
than COGS and some increased
support costs, resources not to grow
as a result of revenue growth.
Operating costs 20-25% down
in FY25 and FY26 compared to
current financial year and then
to grow in line with inflation and
other than some increased support
costs, resources not to grow as a
result of revenue growth
46
Annual Report 2024
Financial report
Consolidated
Consolidated
Consolidated
2024
$
2024
$
2024
$
2023
$
2023
$
2023
$
Current liabilities
Trade payables
Accrued expenses
GST payable
Current liabilities
Contract liabilities
Non-current liabilities
Contract liabilities
Opening balance
Payments received in advance
Additions through business combination
Transfer to revenue – included in the opening balance
Transfer to revenue – other balances
Closing balance
836,972
816,728
84,080
1,737,780
1,948,484
401,293
2,349,777
3,944,964
4,144,858
200,000
(3,089,358)
(2,850,687)
2,349,777
1,194,598
1,590,500
76,941
2,862,039
3,214,285
730,679
3,944,964
3,214,315
7,286,857
-
(2,528,092)
(4,028,116)
3,944,964
Note 12. Trade and other payables
Note 13. Contract liabilities
Refer to note 20 for further information on financial instruments.
Reconciliation
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:
47
Financial report
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 $2,349,777 as at 30 June 2024 ($3,944,964 as at 30 June 2023) and is
expected to be recognised as revenue in future periods as follows:
Consolidated
2024
$
2023
$
Within 12 months
12 to 24 months
1,948,484
401,293
2,349,777
3,214,285
730,679
3,944,964
Consolidated
2024
$
2023
$
Current liabilities
Annual leave
Long service leave
Non-current liabilities
Long service leave
712,981
208,166
921,147
194,662
1,115,809
1,038,067
354,058
1,392,125
163,960
1,556,085
Note 14. Employee benefits
Consolidated
2024
$
2023
$
Current liabilities
Deferred research and development income
Non-current liabilities
Deferred research and development income
793,353
1,211,900
2,005,253
880,057
1,369,579
2,249,636
Note 15. Deferred research and development income
48
Annual Report 2024
Financial report
Note 16. Borrowings
Convertible notes payable
On 22 February 2024, the company entered into a loan agreement with Formue Nord Fund and issued
convertible notes for an amount of AU$2,500,000. The conversion price is fixed at $0.036 which is a 28.6%
premium to the 21 February 2024 closing share price of $0.028 at the time of signing the loan agreement.
The convertible notes will have a maturity date of 18 months from the issue date unless previously redeemed
or converted into shares. There is an establishment fee of 5% payable to Formue Nord Fund. The interest
rate margin will be 8% per annum over the +3 month BBSW from the last day of the previous quarter(currently
4.55%). The interest is payable quarterly in arrears on each interest payment date. Each convertible
note entitles the noteholder to one share (subject to any adjustment for bonus shares, rights issues and
capital reconstructions), or the cash equivalent (at the election of the company). Any convertible note not
converted by the maturity date must be redeemed by the company at the issue price on the maturity date.
The company has the option to redeem the convertible notes at any time prior to the maturity date without
penalty. The convertible notes are unsecured debt obligation of the company and ranks equally with other
ordinary unsecured creditors of the company in relation to repayment of principal and interest.
Refer to note 20 for further information on financial instruments.
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.
Consolidated
2024
$
2023
$
Non-current liabilities
Convertible notes payable
2,235,724
-
49
Financial report
Consolidated
2024
$
2023
$
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
300,000
70,000
370,000
-
-
-
300,000
70,000
370,000
300,000
70,000
370,000
-
-
-
300,000
70,000
370,000
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Note 17. Issued capital
Consolidated
2024
$
2023
Shares
2024
Shares
2023
$
Ordinary shares – fully paid
131,001,770
1,710,019,362
128,474,750
1,662,846,883
Date
Details
Shares
Share price
$
Balance
Issue of shares on exercise of rights
Issue of shares on conversion of rights
Share issue transaction costs, net of tax
Balance
Issue of shares on business combination
Issue of shares on conversion of rights
Issue of shares on conversion of rights
Issue of shares on conversion of rights
Issue of shares on conversion of rights
Issue of shares on conversion of rights
Issue of shares on conversion of rights
Share issue transaction costs, net of tax
Balance
1 July 2022
13 December 2022
13 December 2022
30 June 2023
21 September 2023
18 October 2023
18 October 2023
18 October 2023
18 October 2023
18 October 2023
06 May 2024
30 June 2024
1,662,353,921
426,667
66,295
1,662,846,883
40,571,428
286,123
4,292,506
1,386,664
128,058
68,970
438,730
1,710,019,362
128,426,284
44,800
6,961
(3,295)
128,474,750
1,997,000
19,456
326,230
145,600
15,239
9,518
25,885
(11,908)
131,001,770
-
$0.110
$0.110
$0.050
$0.070
$0.080
$0.110
$0.120
$0.140
$0.060
Movements in ordinary share capital
50
Annual Report 2024
Financial report
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 2023 Annual Report.
51
Financial report
Foreign currency reserve
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.
Convertible note equity reserve
This reserve is used to recognise the equity portion of the convertible notes issued.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
There were no dividends paid, recommended or declared during the current or previous financial year
Consolidated
2024
$
2023
$
Foreign currency reserve
Share-based payments reserve
Convertible note equity reserve
116,298
5,474,492
192,771
5,783,561
117,189
5,793,887
-
5,911,076
Consolidated
Foreign currency
reserve
$
Share-based
payments
$
Convertible
note equity
$
Total
$
Balance at 1 July 2022
Foreign currency translation
Share-based payment expense
Transfer to issued capital
Transfer to retained earnings
Balance at 30 June 2023
Foreign currency translation
Convertible note option
Share-based payment expense
Transfer to issued capital
Transfer to retained earnings
Balance at 30 June 2024
97,789
19,400
-
-
-
117,189
(891)
-
-
-
-
116,298
5,638,340
-
704,813
(51,761)
(497,505)
5,793,887
-
-
645,575
(541,928)
(423,042)
5,474,492
-
-
-
-
-
-
-
192,771
-
-
-
192,771
5,736,129
19,400
704,813
(51,761)
(497,505)
5,911,076
(891)
192,771
645,575
(541,928)
(423,042)
5,783,561
Note 18. Reserves
Note 19. Dividends
52
Annual Report 2024
Financial report
Note 20. 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
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
(2023: 50) basis points would have a favourable/
adverse effect on the loss before tax of $15,425
(2023: $29,196) 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 2024
owed the consolidated entity $430,975 (49% of
trade receivables) (2023: $1,245,883 (50% of trade
receivables)). This balance was within its terms of
trade and no impairment was made as at 30 June
2024 and 30 June 2023. 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.
53
Financial report
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:
Consolidated
2024
$
2023
$
NAB lease facility
Corporate credit card facility
300,000
70,000
370,000
300,000
70,000
370,000
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
$
Consolidated – 2024
Remaining
contractual
maturities
$
Non-derivatives
Non-interest bearing
Trade payables
Interest-bearing
– fixed rate
Convertible notes payable
Lease liability
Total non-derivatives
-
-
3.50%
836,972
-
130,702
967,674
-
2,500,000
11,155
2,511,155
-
-
-
-
-
-
-
-
836,972
2,500,000
141,857
3,478,829
54
Annual Report 2024
Financial report
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually
disclosed above.
Weighted
average
interest rate
%
1 year or
less
$
Between
1 and 2
years
$
Between
2 and 5
years
$
Over 5
years
$
Consolidated – 2022
Remaining
contractual
maturities
$
Non-derivatives
Non-interest bearing
Trade payables
Interest-bearing
– fixed rate
Lease liability
Total non-derivatives
-
3.50%
1,194,598
118,569
1,313,167
-
130,703
130,703
-
11,155
11,155
-
-
-
1,194,598
260,427
1,455,025
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 21. Fair value measurement
During the financial year the following fees were paid or payable for services provided by PKF Brisbane Audit,
the auditor of the company:
Note 22. Remuneration of auditors
Consolidated
2024
$
2023
$
Audit services – PKF Brisbane Audit
Audit or review of the financial statements
Other services – PKF Brisbane
Taxation services
122,300
12,800
135,100
121,500
12,000
133,500
The consolidated entity has given bank guarantees as at 30 June 2024 of $133,776 (2023: $133,776) to
various landlords.
Note 23. Contingent liabilities
55
Financial report
The consolidated financial statements incorporate the assets, liabilities and results of the following
subsidiaries in accordance with the accounting policy described in note 1:
The consolidated entity had no commitments as at 30 June 2024 and 30 June 2023.
Compensation
The aggregate compensation made to directors and other members of key management personnel of the
consolidated entity is set out below:
Note 26. Interests in subsidiaries
Note 24. Commitments
Note 25. Key management personnel disclosures
Ownership interest
Consolidated
2024
%
Principal place of business /
Country of incorporation
2024
$
2023
%
2023
$
FirstWave Technology Pty Ltd
FirstWave Global Pty Ltd
FirstWave Cloud Technology Inc.
FirstWave Cloud Technology (Singapore) Pte Ltd
FirstWave Share Rights Pty Ltd
Opmantek Ltd
Opmantek Software Pty Ltd
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
100%
100%
100%
100%
100%
100%
100%
Australia
Australia
The United States of America
Singapore
Australia
Australia
Australia
1,459,004
121,855
114,794
81,921
457,247
2,234,821
100%
100%
100%
100%
100%
100%
100%
1,740,128
145,275
16,945
59,617
454,500
2,416,465
56
Annual Report 2024
Financial report
Parent entity
FirstWave Cloud Technology Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 26
Key management personnel
Disclosures relating to key management personnel are set out in note 25.
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.
Note 27. Related party transactions
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Note 28. Parent entity information
Parent
2024
$
2023
$
Loss after income tax
Total comprehensive income
(28,787,272)
(28,787,272)
(6,728,566)
(6,728,566)
57
Financial report
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 2024 and 30
June 2023.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2024 and 30 June 2023.
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2024 and 30
June 2023
Material accounting policy information
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.
Statement of financial position
Parent
2024
$
2023
$
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share-based payments reserve
Convertible note equity reserve
Accumulated losses
Total equity
-
34,525,769
-
2,279,724
131,001,770
5,474,492
192,771
(104,422,988)
32,246,045
206,907
58,623,124
(9,796)
(9,796)
128,474,750
5,793,887
-
(75,635,717)
58,632,920
58
Annual Report 2024
Financial report
On 19 September 2023, the company acquired 100% of the net assets of Saisei Networks Inc. (‘Saisei’).
FirstWave issued 40,571,428 new shares to Saisei for the net assets of the business for a total consideration
of $1,997,000. The effective date of the transaction is 1 September 2023. Saisei is an innovative and
established provider of patented network automation technology in North America. It was acquired to expand
the consolidated entity’s intellectual property (‘IP’) and accelerate growth of the consolidated entity in its key
target market of North American telecommunications providers. The transaction has been accounted for as a
business combination. The acquired business contributed revenues of $778,116 from 1 September 2023 to 30
June 2024. If the acquisition occurred on 1 July 2023, the full year contributions would have been revenues
of $934,251. The values identified in relation to the acquisition of the assets of Saisei are final as at 30 June
2024. The profit or loss before tax of the acquired business from the date of acquisition and for the year are
not disclosed. The contribution of the acquired business to the results of the consolidated entity cannot be
quantified due to shared costs of the combined businesses after the business combination.
Note 29. Business combinations
Details of the acquisition are as follows:
Fair value
$
Other receivables
Accrued revenue
Capitalised development cost
Customer list
Contract liabilities
Deferred tax liability
Employee benefits
Net assets acquired
Goodwill*
Acquisition-date fair value of the total consideration transferred
Representing:
FirstWave Cloud Technology Limited shares issued to vendor
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: shares issued by company as part of consideration
Net cash used
200,000
20,000
915,000
176,000
(200,000)
(44,000)
(72,000)
995,000
1,002,000
1,997,000
1,997,000
1,997,000
(1,997,000)
-
* The goodwill is attributable to the expected synergies of the combined business.
59
Financial report
Reconciliation of loss after income tax to net cash used in operating activities
Non-cash investing and financing activities
Changes in liabilities arising from financing activities
Note 30. Cash flow information
Consolidated
2024
$
2023
$
Loss after income tax expense for the year
Adjustments for.
Depreciation and amortisation
Impairment expense
Share-based payments — employees
Other non-cash adjustments
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
(Increase)/decrease in contract assets
Decrease/(increase) in prepayments
Decrease in other operating assets
Decrease in trade and other payables
(Decrease)/Increase in contract liabilities
(Decrease)/Increase in employee benefits
Decrease in other operating liabilities
Net cash used in operating activities
(23,040,028)
1,367,386
19,955,063
568,569
(37,375)
990,374
(112,790)
220,213
25,981
(1,124,262)
(1,595,187)
(440,276)
(244,382)
(3,466,714)
(13,448,285)
4,134,660
7,591,178
704,813
22,208
(107,424)
25,977
(103,559)
-
(1,055,875)
730,649
36,676
(286,499)
(1,755,481)
Consolidated
2024
$
2023
$
Shares issued in relation to business combinations
Shares issued for non-cash consideration
1,997,000
541,928
2,538,928
-
51,761
51,761
Lease liability
$
Consolidated
Balance at 1 July 2022
Net cash used in financing activities
Other changes
Balance at 30 June 2023
Net cash used in financing activities
Other changes
Balance at 30 June 2024
367,571
(128,818)
21,672
260,425
(130,805)
12,237
141,857
60
Annual Report 2024
Financial report
Note 31. Earnings per share
Note 32. Share-based payments
Consolidated
2024
$
Number
Cents
2023
$
Number
Cents
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
(23,040,028)
1,707,794,498
1,707,794,498
(1.35)
(1.35)
(13,448,285)
1,662,621,336
1,662,621,336
(0.81)
(0.81)
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.
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 9,477,222 share rights were granted (2023: no options and
55,800,000 share rights). The sharebased payment expense for the year was 645,575 (2023: $704,813), out
of which $77,007 (2023: $nil) was offset by the directors agreeing to salary sacrifice in lieu of service rights
and hence saving the consolidated entity cash costs.
During the financial year, $60,000 SARs (2023: $1,405,250) and $131,100 service rights (2023: $nil) were
granted. The granting of these share rights is subject to shareholder approval at the upcoming AGM. As at
the date of this report, there is no reason to believe that these share rights would not be approved.
61
Financial report
17,782,667 options and 64,890,778 share rights were vested and exercisable as at 30 June 2024 (2023:
19,832,667 options and 30,016,590 share rights).
The weighted average share price of the company during the financial year was $0.024 (2023: $0.056).
The weighted average remaining contractual life of options and share rights outstanding at the end of the
financial year was 4.33 years (2023: 5.06 years).
Balance at the beginning of the year
Share rights granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Balance at the end of the year
102,649,257
9,477,222
(5,723,010)
(6,601,051)
(3,625,740)
96,176,678
59,552,717
55,800,000
(9,277,165)
(492,962)
(2,933,333)
102,649,257
Number
30 June 2024
Number
30 June 2023
Consolidated
Movement in share options including share rights
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:
Share rights
During the year 30 June 2024, 4,053,233 share appreciation rights (SARs) were granted with an exercise
price of $0.025, vesting over 1 year from 23 April 2024 to 22 April 2025 and expiring 22 Apr 2029. These
rights were granted to Daniel Friel who joined the board on 23 April 2024. It has been agreed that Daniel
will receive US$2,000 per month in cash and an annual allocation of Share Appreciation Rights with an
approximate value of AU$60,000. In this regard, Daniel Friel was granted 4,053,233 SARs with an exercise
price of $0.025 on 23 April 2024 that vest on 22 April 2025 and expire 22 April 2029. The granting of these
securities is subject to shareholder approval at the upcoming AGM.
62
Annual Report 2024
Financial report
During the year 30 June 2024, there were also 5,423,989 Service Rights were granted with a $nil exercise
price as follows:
(i) 4,000,000 Service Rights were granted to John Grant on17 April 2024 vesting 31 December 2024 and an
expiry date of 16 April 2031 in lieu of cash payments for the Director fees. The granting of these securities is
subject to shareholder approval at the upcoming AGM;
(ii) 523,989 Service Rights were granted to Ray Kiley on17 April 2024 vesting 23 April 2024 and an expiry
date of 16 April 2031 in lieu of cash payments for the Director fees. Ray Kiley resigned from the board on 23
April 2024 and hence his unpaid fees for calendar year 2024 only relate to his service from 1 January 2024 to
23 April 2024. Therefore Ray’s service rights issued on 17 April 2024 were issued with a vesting date 23 April
2024 and an expiry date of 16 April 2031. The granting of these securities is subject to shareholder approval
at the upcoming AGM; and
(iii) 900,000 Service Rights were granted to Danny Maher for achievement against targets in H1 FY24 on
26 April 2024 with no further vesting conditions and an expiry date of 30 June 2031. The granting of these
securities is subject to shareholder approval at the upcoming AGM.
There were no other share rights granted to KMP’s during the year and hence the above resulted in
4,053,233 SARS and 5,423,989 Service Rights, totalling 9,477,222 share-rights being granted to KMPs
during the year ended 30 June 2024. The granting of these securities is subject to shareholder approval at
the upcoming AGM.
All share rights granted are only subject to service conditions for vesting.
Note 33. Events after the reporting period
No matter or circumstance has arisen since 30 June 2024 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.
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
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest
rate
Fair value
at grant
date
Number
of grants
Share
price at
grant date
%
%
17/04/2024
17/04/2024
23/04/2024
26/04/2024
16/04/2031
16/04/2031
22/04/2029
30/06/2031
$0.026
$0.026
$0.025
$0.020
$0.000
$0.000
$0.025
$0.000
52.40%
73.49%
67.34%
106.46%
3.92%
3.92%
3.92%
3.92%
$0.025
$0.025
$0.015
$0.020
523,989
4,000,000
4,053,233
900,000
-
-
-
-
63
Financial report
Consolidated entity disclosure statement
As at 30 June 2024
Entity name
Entity name
Type of entity
Type of entity
% of share
capital
held
% of share
capital
held
Country of
incorporation
Country of
incorporation
Australian
resident
or foreign
resident
Australian
resident
or foreign
resident
Expiry date
Expiry date
FirstWave Cloud
Technology Limited
FirstWave Technology
Pty Ltd
FirstWave Global Pty Ltd
Opmantek Ltd
Opmantek Software Pty Ltd
FirstWave Cloud Technol-
ogy (Singapore) Pte Ltd
FirstWave Share Rights
Pty Ltd
FirstWave Cloud Technol-
ogy Inc.
Body
Corporate
Body
Corporate
Body
Corporate
Trustee of a
Trust
Body
Corporate
Body
Corporate
Body
Corporate
Body
Corporate
n/a
100
100
100
100
100
100
100
Australia
Australia
Singapore
Australia
The United
States of America
Australia
Australia
Australia
Australian
Australian
Dual(1)
Australian
Dual(1)
Australian
Australian
Australian
n/a
n/a
Singapore /
Australia
n/a
The United States of
America / Australia
n/a
n/a
n/a
Parent entity
Parent entity
(1) As of 30 June 2024, based on the interpretations required for the purpose of the making a consolidated entity disclosure statement
in accordance with Section 295(3A) of the Corporations Act, these subsidiaries had Australia as an additional tax residency to their
country of incorporation.
Basis of preparation
This consolidated entity disclosure statement
(CEDS) has been prepared in accordance with the
Corporations Act 2001 and includes information for
each entity that was part of the consolidated entity
as at the end of the financial year in accordance with
AASB 10 Consolidated Financial Statements.
Determination of tax residency
Section 295 (3A) (vi) of the Corporations Act 2001
defines tax residency as having the meaning in the
Income Tax Assessment Act 1997. The determination
of tax residency involves judgement as there are
different interpretations that could be adopted, and
which could give rise to a different conclusion on
residency.
In determining tax residency, the consolidated entity
has applied the following interpretations:
»
Australian tax residency: The consolidated
entity has applied current legislation and judicial
precedent, including having regard to the Tax
Commissioner’s public guidance in Tax Ruling
TR 2018/5.
»
Foreign tax residency: The consolidated entity
has applied current legislation and judicial
precedent in the determination of foreign tax
residency.
64
Annual Report 2024
Directors’ declaration
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 correct view of the consolidated entity’s
financial position as at 30 June 2024 and of its performance for the financial year ended on that date;
»
there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable; and
»
the information disclosed in the attached consolidated entity disclosure statement is true and correct.
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
Directors’ declaration
30 June 2024
John Grant
Chair
29 August 2024
Sydney
Danny Maher
Director
65
Independent auditor’s report
Independent auditor’s report
PKF Brisbane Audit
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) and its subsidiaries (the Group), which
comprises the consolidated statement of financial
position as at 30 June 2024, 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, and notes to the
consolidated financial statements, including material
accounting policy information, the consolidated
entity disclosure statement and the directors’
declaration.
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 Group’s financial
position as at 30 June 2024 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 Group in accordance
with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements
of the Accounting Professional & 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.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial
statements, which indicates that the group incurred
a net loss of $23,040,028 and net cash outflows
from operating activities of $3,466,714 during the
year ended 30 June 2024. As stated in Note 1, these
events or conditions, along with other matters as set
forth in Note 1, indicated that a material uncertainty
exists that may cast doubt on the Group’s ability
to continue as a going concern. Our opinion is not
modified in respect of this matter.
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.
PKF Brisbane Pty Ltd is a member of PKF Global, the network of member firms of PKF International Limited, each of which is a
separately owned legal entity and does not accept any responsibility or liability for the actions or inactions of any individual member or
correspondent firm(s). Liability limited by a scheme approved under Professional Standards Legislation.
66
Annual Report 2024
Independent auditor’s report
1. Carrying value and impairment of goodwill and other intangible assets
How our audit addressed the key audit matter
How our audit addressed the key audit matter
As at 30 June 2024 the Group has recognised
goodwill of $30.54m and other intangible assets of
$6.29m as disclosed in Note 11.
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:
•
Revenue growth rate;
•
Terminal growth rate; and
•
Discount rate.
An impairment charge of $19.95m was recognised
as at 30 June 2024.
Significant judgements are required in the
impairment assessment by management about
the anticipated future results of the CGUs, 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.
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:
-
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 appropriateness of the
disclosures in Notes 1 and 11.
67
Independent auditor’s report
2. Capitalisation of product development costs
How our audit addressed the key audit matter
Why significant
As at 30 June 2024 the carrying value of
capitalised product development costs (net of
accumulated amortization) was $5.04m (30 June
2023: $2.56m, including $7.59m impairment) as
outlined in Note 11.
During the year, the group capitalised $2.68m
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 1 and 11 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 Group’s annual report for the year ended 30 June 2024, 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 accordingly 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.
68
Annual Report 2024
Independent auditor’s report
Responsibilities of the Directors for the Financial
Report
The directors of the Company are responsible for
the preparation of:
a.
a) the financial report (other than the
consolidated entity disclosure statement) that
gives a true and fair view in accordance with
Australian Accounting Standards and the
Corporations Act 2001; and
b.
b) the consolidated entity disclosure statement
that is true and correct in accordance with
the Corporations Act 2001, and for such
internal control as the directors determine is
necessary to enable the preparation of:
i.
the financial report (other than the
consolidated entity disclosure statement) that
gives a true and fair view and is free from
material misstatement, whether due to fraud
or error; and
ii.
the consolidated entity disclosure statement
that is true and correct and is free of
misstatement, whether due to fraud or error.
In preparing the financial report, the directors
are responsible for assessing the ability of the
Group to continue as a going concern, disclosing,
as applicable, matters related to going concern
and using the going concern basis of accounting
unless the directors either intend to liquidate the
Group or to cease operations, or has 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.
69
Independent auditor’s report
•
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.
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 2024. 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 2024 complies with section 300A of
the Corporations Act 2001.
PKF BRISBANE AUDIT
SHAUN LINDEMANN
PARTNER
BRISBANE
29 AUGUST 2024
70
Annual Report 2024
Shareholder information
Shareholder information
30 June 2024
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Equity security holders
Ranges
Holders
Number of
Ordinary Shares
% Issued Share
Capital
above 0 up to and including 1,000
above 1,000 up to and including 5,000
above 5,000 up to and including 10,000
above 10,000 up to and including 100,000
above 100,000
Totals
Holding less than a marketable parcel
104
19
45
712
781
1,661
330
5,965
63,052
376,803
30,113,634
1,679,459,908
1,710,019,362
0.00%
0.00%
0.02%
1.76%
98.21%
100.00%
0.16%
The shareholder information set out below is applicable as at 15 October 2024.
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Holder Name
Number held
% of total
shares issued
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
SUPER FLI PTY LTD
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
BNP PARIBAS NOMINEES PTY LTD
ROGER ALLEN AND MAGGIE GRAY PTY LIMITED
BRUXNER PACIFIC PTY LTD
ROBINA GROUP HOLDINGS PTY LTD
G & L PRIOR PTY LTD
OLDROYD INVESTMENTS PTY LTD
OLD DILKARA PTY LTD
KEEVA SPEYER
PATAGORANG SUPERANNUATION PTY LTD
EREMITE PTY LTD
WILLROTH PTY LTD
Totals
259,170,629
201,233,570
51,566,002
50,922,171
40,571,428
28,789,750
24,459,594
20,069,990
19,523,897
17,470,147
16,860,093
13,789,796
13,639,576
13,394,875
12,500,000
12,000,000
12,000,000
11,400,741
10,714,286
10,390,511
10,000,000
850,467,056
15.16%
11.77%
3.02%
2.98%
2.37%
1.68%
1.43%
1.17%
1.14%
1.02%
0.99%
0.81%
0.80%
0.78%
0.73%
0.70%
0.70%
0.67%
0.63%
0.61%
0.58%
49.73%
71
Shareholder information
Number on issue
% of total shares
issued
Number held
Options over ordinary shares
Share rights over ordinary shares
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
DANIEL MAHER
10,516,669
67,616,740
15.16%
14.75%
259,170,629
252,155,741
Unquoted equity securities
Ordinary Shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a
poll each share shall have one vote.
There are no other classes of equity securities.
Substantial holders
Voting rights
The voting rights attached to ordinary shares are set out below:
72
Annual Report 2024
Corporate directory
Corporate directory
30 June 2024
Directors
Registered office
Share register
Auditor
Stock exchange
listing
Website
Corporate Governance
Statement
Company secretary
John Grant - Non-Executive Chair
Danny Maher - Managing Director
Daniel Friel - Non-Executive Director
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 2, 66 Eagle Street
Brisbane, QLD 4000
FirstWave Cloud Technology Limited shares are listed on the Australian
Securities Exchange (ASX code: FCT)
http://www.firstwave.com
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:
https://www.firstwavecloud.com/shareholder-centre
Iain Bartram
73
Notes
74
Annual Report 2024
Notes
75
Contact Us
Head Office
Level 14, 132 Arthur Street,
North Sydney NSW 2060
P : +61 2 9409 7000
W: www.firstwave.com
Firstwave Cloud Technology Limited
ABN 35 144 733 595