Over the Wire
ANNUAL
REPORT
2020
Over the Wire Holdings Limited ACN 151 872 730
Over the Wire
ANNUAL REPORT
2020
Over the Wire Holdings Limited
ACN 151 872 730
Share Register
Auditor
Solicitors
GENERAL
This Annual Report is dated 1 October 2020.
Currency
Monetary amounts shown in this Annual Report are expressed in Australian dollars unless
otherwise stated.
Photographs and diagrams
Photographs used in this report without descriptions are only for illustration. Diagrams used in
this report may not be drawn to scale. The assets depicted in photographs in this report are not
assets of the Company unless otherwise stated.
3
ANNUAL REPORT 2020 TABLE OF
CONTENTS
Chairman's Letter
Business Overview
General Information
Corporate Directory
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Corporate Governance Statement
Financial Statements
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Contact Details
5
6
11
12
13
22
28
30
40
45
91
93
100
4
ANNUAL REPORT 2020 CHAIRMAN'S
LETTER
On behalf of the Board of
Over the Wire Holdings Limited,
it is with great pleasure that we
present to you the annual report
for the 2020 financial year.
Highlights of the year
• Revenue increased by 10% to $87.6m
• Recuring revenue growth of 14%
• EBITDA of $17.4m
• Achieved customer retention of 98.5%
We would attribute the year’s results to effectively
managing our cashflows and supporting our customers
through the COVID-19 restrictions. Our overall growth of
10% is especially pleasing during these challenging market
conditions.
The integration of the businesses that we have acquired
have progressed well with the Access Digital and Comlinx
businesses now fully integrated.
We would like to thank all of our staff for achieving another
great result for our company. Throughout the COVID-19
restrictions our team has shown commendable focus and
resilience. We would also like to thank our clients for their
continued support, and we maintain our commitment to
you of being the telecommunications provider that does
focus on providing exceptional service.
Finally, we thank all shareholders for your continued and
loyal support. We look forward to another successful and
rewarding year ahead.
John Puttick
Chairman
5
ANNUAL REPORT 2020
BUSINESS
OVERVIEW
Our purpose is to simplify technology to empower business.
Simplify
We love the
challenge of turning
our complex environment
into solutions for our customers.
We are the trusted advisors that
make sense, remove barriers,
and reduce confusion. We make
it our business to understand our
customers and their problems. We
take tech problems out of the way
so our customers can get on
with what they do best.
Technology
Every day we are creating the future. We
are known for our expertise in using all
kinds of technology to empower our
customers. Our proactive focus on tech
solutions informs our approach; agile
and adaptable, product-agnostic
and customer-focused.
To Simplify
Technology
To Empower
Business
Empower
Our customers' success
is our success. We grow when they
grow. We partner with our customers
to achieve their goals. We provide
transparency and knowledge to tailer
solutions that ensure their ongoing
competitive advantage.
Business
We're here for business. We love to
work with those who have an appetite
for doing things better. We are passionate
about partnering in our customers' journey.
We aim to do this through:
• Our products - reliable, flexible and good value
• Our people – knowledgeable, passionate and helpful
• Our performance - superior service and highly
recommended
Providing a broad and integrated offering of products
and services provides our customers with a complete
solution from one supplier dedicated to customer
service.
Our suite of services to businesses include:
• Data Networks and Internet
• Voice
• Hosting (Cloud and Data Centre Colocation) and
• Managed Services and Security
6
ANNUAL REPORT 2020 CUSTOMER SERVICE
Our vision is to be the technology solution provider
passionately promoted by our customers.
Our dedication to customer service remains uncompromising and we have a culture which consistently
delivers high levels of customer service and retention. Over the Wire provided various levels of support
to a number of COVID-19 impacted customers and partners in 2020. This is verified by our high levels
of customer retention, shown in the graph below as year on year customer revenue retained.
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Customer Retention
98.6%
97.1%
98.2%
97.3%
96.0%
98.5%
2015 2016 2017 2018 2019 2020
7
ANNUAL REPORT 2020
SIGNIFICANT GROWTH AND
STRONG FINANCIAL PERFORMANCE
Total revenue from ordinary activities for the year was $87.6m (2019: $79.6m), representing an increase of 10% on the
corresponding year. The result demonstrates demand from customers across all four product lines. The Group has also
maintained a strong financial position, increasing net assets to $68.9m, up from $65m in 2019.
The group continues to show strong growth in recurring revenue. The below table shows recurring revenue growth figures
from 2019 to 2020:
Product
Data
Voice
Hosting
Security & Managed Services
Recuring Revenue growth
Recurring Revenue growth
2019 to 2020
(Organic)
2019 to 2020
(Statutory)
1%
18%
7%
90%
2%
19%
12%
133%
Overall, recurring revenue grew to $74.7m, up from $65.7m in 2019, representing an increase of 14% on the corresponding
year. Of this increase, 10% was a result of organic growth.
The group has delivered consistent growth in total revenue accross all product lines, as represented by the graphs below.
(A$m)
Data
(A$m)
Voice
40
30
20
10
20
15
10
5
2016
2017
2018
2019 2020
2016
2017
2018
2019 2020
(A$m)
Security & Managed Services
(A$m)
Hosting
25
20
15
10
5
12
10
8
6
4
2
2016
2017
2018
2019 2020
2016
2017
2018
2019 2020
8
ANNUAL REPORT 2020 SUCCESSFUL ACQUISITIONS
Acquisition of Fonebox & Zintel
On 31 August 2020, Over the Wire acquired 100% of the shares in J2 Australia Cloud Connect Pty Ltd and 100% of the share
capital in Zintel Communications Limited.
Fonebox and Zintel are leading providers of 13, 1300 and 1800 inbound telecommunication services.
The strategic rationale for acquiring Fonebox and Zintel was:
The acquisition complements the consolidated entity’s existing outbound telephony solutions;
Fonebox and Zintel have been leaders in inbound telecommunications in Australia and New Zealand for 10+ years;
Fonebox and Zintel have a quality team that will integrate well with the consolidated entity;
Large and active customer base in the SME and corporate market;
The acquisition is expected to offer attractive EBITDA and EPS accretion to the consolidated entity immediately; and
Potential for addressable near-term synergies and margin expansion.
Over the Wire has a track record of acquiring and then integrating acquisitions,
with timely realisation of synergies and cost savings.
IPO to
2016
2017
2018
2019
2020
Integrated
Integrated
Integrated
Investing in our
capability & systems
Acquired
31 Aug 2020
9
ANNUAL REPORT 2020
POSITIVE OUTLOOK
Our commitment to being able to provide a complete telecommunications, cloud and IT Services offering to businesses, that
is supported by a team that is dedicated to a positive customer experience, gives us confidence that our growth will continue
in FY21.
We remain focussed on achieving our vision and continuously improving the financial performance of the business and the
returns for our shareholders.
GROW
IMPROVE
FOCUS
ENGAGE
EVOLVE
To identify, understand, and
realise our opportunities
to grow
For our systems to reduce
friction, enhance customer
experience, and support our
growth
For our customers to value
our technical expertise
and strength of our
relationships
For our people to embody
our purpose and values,
and make a positive
contribution to their and
our success
To offer seamless solutions
to our customers and
partners
Organic revenue
growth >15%
targeted
Take advantage
of industry
tailwinds in
SD-WAN, Cyber
Security and
Hosted Voice
Living our
values
Continuously focus on how we
are improving the experience
for our customers, resulting in
retention and growth
Purpose led
leadership
Selective future
acquisitions
Operational
efficiencies
Build on our
performance
culture
Attract, develop
and retain great
talent
Further enhance
our systems
and processes
for optimal
customer and team
experience
Realisation of
synergies from
acquisitions
10
ANNUAL REPORT 2020
GENERAL
INFORMATION
The annual report covers Over the Wire Holdings Limited
as a consolidated entity consisting of Over the Wire
Holdings Limited and the entities it controls.
Over the Wire Holdings Limited is a listed public company
limited by shares, incorporated and domiciled in Australia.
Its registered office and principal place of business are:
The report is presented in Australian dollars, which is Over
the Wire Holdings Limited’s functional and presentational
currency.
Registered Office & Principal Place of Business
Level 24, 100 Creek Street
Brisbane QLD 4000
A description of the nature of the Group’s operations and
its principal activities are included in the directors’ report.
The financial statements were authorised for issue, in
accordance with a resolution of directors on 20 August
2020. The directors have the power to amend and/or
reissue the financial report.
11
ANNUAL REPORT 2020
CORPORATE
DIRECTORY
DIRECTORS
JOHN PUTTICK DUNIV QUT, FACS, ACA
Chair
MICHAEL OMEROS MAICD, BE(ELECTRONICS), BINFOTECH
Managing Director
Group Chief Executive Officer
BRENT PADDON BINFOTECH, GRADDIPBUSADMIN
Executive Director (Non-Executive Director from 1 July 2020)
SUSAN FORRESTER AM BA, LLB (HONS), EMBA, FAICD
Non-Executive Director
CATHY ASTON BEC, MCOMM, GAICD, FFIN
Non-Executive Director (appointed 1 July 2020)
SECRETARY
MIKE STABB FCA, MAICD, BBUS(ACCY,BUSLAW), RTA
Chief Financial Officer (ceased CFO role 9 March 2020)
(ceased Company Secretary role 26 June 2020)
SIMONE DEJUN LLM, GRAD DIP LEGAL PRACTICE, LLB,
BBUS(ADVERTISING)
Group General Counsel
(appointed to Company Secretary role 1 April 2020)
KEY MANAGEMENT
SCOTT SMITH
Chief Executive Officer (appointed 9 March 2020)
BEN CORNISH
Chief Technology Officer
GARY PITTORINO
Chief Operating Officer
BEN MELVILLE
Chief Financial Officer (appointed 9 March 2020)
Registered Office and Principal Place of Business
Level 24, 100 Creek Street
Brisbane QLD 4000
Share Register
Link Market Services
10 Eagle St
Brisbane QLD 4000
Auditor
PKF Brisbane Audit
Level 6, 10 Eagle Street
Brisbane QLD 4000
Solicitors
McCullough Robertson Lawyers
Level 11, Central Plaza Two
66 Eagle Street
Brisbane QLD 4000
Bankers
Westpac
260 Queen Street
Brisbane QLD 4000
National Australia Bank
259 Queen Street
Brisbane QLD 4000
Stock Exchange Listings
Over the Wire Holdings Limited (OTW) shares are listed on
the Australian Securities Exchange (ASX)
Website Address
www.overthewire.com.au
12
ANNUAL REPORT 2020
1.0DIRECTORS’
REPORT
13
ANNUAL REPORT 2020 DIRECTORS’
REPORT
Your directors present their report on the consolidated
entity consisting of Over the Wire Holdings Limited (“the
Company”) and the entities it controlled (“the Group”) for
the year ended 30 June 2020.
DIRECTORS AND
COMPANY SECRETARY
The name of the directors who held office during or since
the end of the year.
JOHN PUTTICK
Non-Executive Chairman
(appointed 1 December 2015)
MICHAEL OMEROS
Managing Director and Group Chief Executive Officer
(appointed 1 July 2011)
BRENT PADDON
Executive Director
(appointed 1 July 2011)
SUSAN FORRESTER AM
Non-Executive Director
(appointed 1 December 2015)
CATHY ASTON
Non-Executive Director
(appointed 1 July 2020)
MIKE STABB
Company Secretary
(appointed 9 July 2012)
(ceased Company Secretary role 26 June 2020)
SIMONE DEJUN
Company Secretary
(appointed 1 April 2020)
DIRECTORS REPORT
PRINCIPAL ACTIVITIES
The Group is a profitable, high-growth provider of
telecommunications, cloud and IT solutions.
It has a national network with Points of Presence (POPs)
in all major Australian capital cities and Auckland, New
Zealand.
During the year, the principal continuing activities of the
Group consisted of offering an integrated product suite of
the following services to businesses in Australia and New
Zealand:
• Data Networks and Internet
• Voice
• Hosting and
• Security & Managed Services
There has been no significant change to the principal
activities of the Group during the year.
REVIEW OF OPERATIONS
Total revenue from ordinary activities for the year was
$87,611K (2019: $79,589K), representing an increase of
10% on the corresponding year. The result demonstrates
demand from customers across all four product lines
including:
• Data Networks and Internet revenue of $37,531K
(2019: $36,959K), representing an increase of 2% on the
corresponding year;
• Voice revenue of $19,597K (2019: $16,417K),
representing an increase of 19% on the corresponding
year;
• Hosting revenue of $10,134K (2019: $9,075K),
representing an increase of 12% on the corresponding
year;
• Security & Managed Services revenue of $20,349K
(2019: $17,138K), representing an increase of 19% on
the corresponding year.
The Group continued to build upon its geographic
expansion strategy.
The below table shows revenue-growth figures from 2019
to 2020:
Geographic Area
Queensland
New South Wales
Victoria
South Australia
Revenue Growth
2019 to 2020
(Statutory)
7%
8%
8%
31%
14
ANNUAL REPORT 2020
DIRECTORS REPORT - CONTINUED
FINANCIAL POSITION
The financial position of the Group remains strong with net
assets increasing by $3,925K to $68,945K from $65,020K.
This increase includes the recognition of $8,515K of lease
liabilities and right of use assets during the year.
EARNINGS BEFORE INTEREST,
TAX, DEPRECIATION AND
AMORTISATION (EBITDA)
EBITDA refers to earnings before interest, tax, depreciation
and amortisation, and is an important metric to the Group
because it shows the strong gross profit and expenditure
management delivered by the Group and correlates well
with operating cash flow. Set out below is a reconciliation of
Profit before Income Tax Expense and EBITDA.
Consolidated
2020
$ ,000
2019
$ ,000
Profit before Income Tax Expense
7,214
12,805
Depreciation & Amortisation
9,756
7,956
Finance Costs
EBITDA
426
579
17,396
21,340
EBITDA was $17,396K (2019: $21,340K), representing a
decrease of 18% on the corresponding year. Net Profit after
Income Tax Expense (NPAT) was $5,033K (2019: $10,162K),
representing a decrease of 50% on the corresponding year.
The reduction in EBITDA and NPAT was predominately
due to the recognition of $4,058K of other income in 2019
relating to the release of the stretch target earnout payable
on the acquisition of Comlinx, as well as a reduction in Non-
recurring sales resulting from the impact of COVID-19.
As at 30 June 2020, the Group had $10,435K in cash or cash
equivalents. Net cash flow from Operating Activities (before
Interest and Tax) for the 2020 year was $15,705K ($17,150K
in 2019) demonstrating continued strong cash conversion.
The Group’s continued sound management of overhead
expenses in the underlying business, maintaining net debtor
days metrics, recognising cost synergies in the acquired
entities, and when combined with revenue growth of 10%,
has generated the positive Cash from Operating Activities
outlined in the Consolidated Statement of Cash flows.
DIVIDENDS PAID AND
PROPOSED
A final dividend for 30 June 2019 of 2.00 cents per share fully
franked was paid in October 2019.
An interim dividend of 1.50 cents per share fully franked, for
the six months ended 31 December 2019, was paid in April
2020.
15
Subsequent to year-end, on 20 August 2020, the Group
declared a fully franked final dividend of 2.25 cents per
share, for the year ended 30 June 2020. The dates of the
dividend are as follows:
Ex Date
Record Date
DRP Election Close Date
Payment Date
14 September 2020
15 September 2020
16 September 2020
15 October 2020
As this final dividend was declared subsequent to year-
end, no provision has been made in the accounts for the
dividend.
BUSINESS STRATEGIES AND
PROSPECTS FOR FUTURE
FINANCIAL YEARS
The primary objective of the Group is to continue adding
value for shareholders through a combination of organic
growth, and strategic acquisitions.
The Group operates four product lines: Data Networks,
Voice, Security & Managed Services and Hosting. Each
product line is capable of being delivered stand-alone or
bundled with one or more other product lines to deliver a
complete solution.
The Group will continue its business development and
marketing initiatives, and leverage its investment in the
four product lines to grow organically, both through the
acquisition of new customers and selling additional products
and services to existing customers and partner channel.
The Group will continue to look to grow through identifying
and acquiring suitable businesses that deliver a strategic fit,
readily achievable synergies and add shareholder value.
SIGNIFICANT CHANGES IN
STATE OF AFFAIRS
CORONAVIRUS (COVID-19) PANDEMIC
The Group actively managed the impact of COVID-19 on its
team and business through H2 of 2020, and continues to
monitor the impact going forward. Our key focus throughout
lockdowns was and continues to remain the health and
safety of our team and maintaining a high level of service
and reliability for our customers, to support them through
these unprecedented times.
Overall financial impact on business
Recurring Revenue
Due to social distancing restrictions, the current pandemic
generated greater demand for voice and collaboration
technologies, which saw strong demand for our voice
offering, resulting in higher volumes in the second half of the
financial year.
ANNUAL REPORT 2020
The increase in voice volumes partially offset delayed
delivery of some data services that had resulted from
customer site access restrictions during the initial
lockdown period. While voice volume is expected to reduce
as social distancing restrictions ease, the reduction is not
anticipated to be close to the initial increase as businesses
and our customers continue to embrace remote working
through use of our voice and collaboration offerings.
Non-recurring Revenue
With customers looking to manage working capital during
Government lockdowns, there was a reduction in the
number of non-recurring opportunities with customers.
Working Capital
During the lockdown period between March and June
2020, given the degree of uncertainty COVID-19 created,
the Group took a number of measures to ensure sufficient
working capital was available to continue operations.
Measures included:
• Discussions with the Group’s financial institutions
around deferred payment terms for borrowings. While
this was discussed and able to be put in place, the
Group did not take up any deferred terms.
• Deferral of non-essential capital expenditure.
Approximately $900K of capital expenditure planned for
2020 was deferred until 2021.
• Reduction in full time staff hours by 10% between 1
April 2020 and 30 June 2020.
Expected Credit Losses
Our exposure to customers in industries hardest hit by the
current pandemic (retail, hospitality and travel) is limited
and those most affected represent a small portion of our
recurring base.
To support our customers during this period, we provided
extended terms to a number of businesses that had
been impacted and were not able to operate or were at a
reduced capacity over lockdown periods.
The Group increased its monitoring of debt recovery
as there is an increased probability of customers
delaying payment or being unable to pay in the current
environment. As a result, we have increased our allowance
of expected credit losses as at 30 June 2020.
Business Continuity
The Group has implemented a COVIDSafe plan based on
the Australian Governments 3-Step framework and each
State's roadmap to a COVIDSafe Australia.
EVENTS SINCE THE END OF THE FINANCIAL YEAR
Dividend Declared
On 20 August 2020, the Company declared a fully franked
final dividend of 2.25 cents per share, for the year ended
30 June 2020. The dates of the dividend are as follows:
Ex Date
Record Date
DRP Election Close Date
Payment Date
14 September 2020
15 September 2020
16 September 2020
15 October 2020
DIRECTORS REPORT - CONTINUED
As this final dividend was declared subsequent to year-
end, no provision has been made in the accounts for the
dividend.
Acquisitions
On 11 August 2020, the Group signed a share purchase
agreement to acquire 100% of the share capital in J2
Australia Cloud Connect Pty Ltd and 100% of the share
capital in Zintel Communications Limited.
The acquisition is due to settle on 31 August 2020, for
consideration of $36,000K plus an adjustment for working
capital.
The acquisition of both of the above businesses will
strengthen the Group’s inbound call capability, while also
providing significant opportunities when combined with
our existing outbound and hosted telephony platforms.
Details regarding the assets and liabilities acquired is
not available at the date of this report as the transfer of
ownership of the business will be on 31 August 2020.
No other matters or circumstances have arisen since the
end of the financial period which significantly affected or
may significantly affect the operations of the Group, the
results of those operations, or the state of affairs of the
Group in future financial periods.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF
OPERATIONS
The Group will continue its focus on growing organically
through geographic expansion, cross-selling of
complementary products and new or enhanced product
and service initiatives within its existing product lines.
The impact of the Coronavirus (COVID-19) pandemic
is ongoing and while there has been an impact to the
Group up to 30 June 2020, it is not practicable to estimate
the potential impact, positive or negative, after the
reporting date. The situation is continuing to develop and
is dependent on measures imposed by the Australian
Government and other countries, such as maintaining
social distancing requirements, customer site access,
quarantine, travel restrictions and any economic stimulus
that may be provided.
Acquisitions will continue to be targeted where they
provide synergies, complement the current offering and
add shareholder value.
ENVIRONMENTAL REGULATION
The Group's operations are not currently subject to
significant environmental regulation under the law of the
Commonwealth or of a State or Territory.
16
ANNUAL REPORT 2020
OUR VISION IS TO BE THE
TECHNOLOGY SOLUTION
PROVIDER PASSIONATELY
PROMOTED BY OUR
CUSTOMERS.
17
ANNUAL REPORT 2020 INFORMATION
ON DIRECTORS
& COMPANY
SECRETARY
The following information is
current as at the date of
this report.
JOHN PUTTICK
DUNIV QUT, FACS, ACA
Non-Executive Chairman
John was appointed as Chairman of
the company in December 2015. He
was the founder and chairman of
GBST Holdings Limited.
John holds an Honorary Doctorate
from The Queensland University
of Technology and a Chartered
Accounting qualification from
Auckland University of Technology.
John has over forty years of
experience in building commercial
systems with information
technology, over thirty of which
were in developing financial
services solutions at GBST Holdings
Limited.
Other Current Directorships
None
Former Directorships in last 3 years
None
Special Responsibilities
• Chair of the Board
• Chair of remuneration and
nominations committee (ceased
Chair role 29 July 2020)
• Member of audit and risk
committee (appointed as Chair 29
July 2020)
Direct and indirect interest in shares
and options
Ordinary Shares
Over the Wire Holdings 171,889
MICHAEL OMEROS
MAICD, BE(ELECTRONICS)(HONS), BINFOTECH
Managing Director
Chief Executive Officer
Michael is a co-founder and the
Managing Director of the company.
He has over twenty years
of experience in the
telecommunications and IT services
sectors, and graduated from
QUT in 1994 with a Bachelor of
Engineering – Electronics (First Class
Honours) and Bachelor of IT (with
Distinction).
Prior to Over the Wire, Michael held
a Senior Management role at GBST,
worked for Zurich Insurance in the
UK and founded Celentia which has
now been absorbed by Over the
Wire.
Other Current Directorships
None
Former Directorships in last 3 years
None
Special Responsibilities
• Member of audit and risk
committee (ceased 29 July 2020)
Direct and indirect interest in shares
and options
Ordinary Shares
Over the Wire Holdings 13,025,297
18
ANNUAL REPORT 2020
BRENT PADDON
BINFOTECH, GRADDIPBUSADMIN
Executive Director
SUSAN FORRESTER AM
BA, LLB (HONS), EMBA, FAICD
CATHY ASTON
BEC. MCOMM, GAICD, FFIN
Non-Executive Director
Non-Executive Director
(Non-Executive Director from 1 July 2020)
Brent is a co-founder and Director of the
company.
He has over twenty years of experience
in telecommunications and IT services
sectors and graduated from QUT in 1996
with a bachelor of IT. He also completed
a Graduate Diploma in Business
Administration from QUT in 2008.
Brent held a senior management
role at Web Central, worked for Pipe
Networks and founded Brisbane Internet
Technology, which was sold to Asia
Online.
Other Current Directorships
None
Former Directorships in last 3 years
None
Special Responsibilities
• Member of remuneration and
nominations committee
• Member of audit and risk committee
(appointed 29 July 2020)
Direct and indirect interest in shares and
options
Ordinary Shares
Over the Wire Holdings 11,500,000
19
Susan was appointed as Non-Executive
Director in December 2015.
She is an accomplished company director,
with significant experience as non-
executive director across a range of listed
and unlisted company boards, spanning
the professional services, health and
technology sectors. In particular, she has
chaired, or being a member of various
audit, risk management and remuneration
committees.
With a Bachelor of Laws (Honours)
and a Bachelor of Arts (Japanese) from
the University of Queensland, Susan
completed an executive Masters of
Business Administration (EMBA) from
the Melbourne Business School. She is
also a Fellow of the Australian Institute of
Company Directors (FAICD).
Other Current Directorships
Non-Executive Director of G8 Education
Limited (ASX:GEM) (appointed November
2011)
Non-Executive Director of Viva Leisure
Limited (ASX:VVA) (appointed 18 October
2018)
Non-Executive Director of National
Veterinary Care Ltd (ASX:NVL) (appointed
February 2015, resigned 7 April 2020)
Former Directorships in last 3 years
Non-Executive Director of Xenith IP Group
Limited (ASX:XIP) (appointed October
2015)
Special Responsibilities
• Chair of audit and risk committee
(ceased Chair role 29 July 2020)
• Member of remuneration and
nominations committee (appointed as
Chair 29 July 2020)
Direct and indirect interest in shares and
options
Ordinary Shares
Over the Wire Holdings: 185,000
Cathy was appointed as an independent
director of Over The Wire effective 1 July
2020.
She is an experienced Chair and non-
executive director of telecommunications,
digital and financial services businesses
in Australia and greater Asia. Senior
executive experience includes CEO/
Managing Director, Mobitel Pvt Ltd (Sri
Lanka) and Finance Director for Telstra
International (Hong Kong).
Cathy holds a Bachelor of Economics
from Macquarie University and a Master
of Commerce from the University of
NSW. She is a graduate of the Australian
Institute of Company Directors and a
Fellow of the Financial Services Institute of
Australia.
Other Current Directorships
Non-Executive Director, IMB Ltd
(appointed September 2016), Chair of Risk
Committee
Non-Executive Director, Macquarie
Investment Management Limited
(appointed December 2017)
Advisor, Avanseus Holdings Pty Ltd,
(Singapore) (appointed October 2015)
Former Directorships in last 3 years
Non-Executive Director, Southern Phone
Ltd, Chair of Governance, Risk and
Remuneration Committee (appointed
November 2015)
Non-Executive Director, Financial Services
Institute of Australasia (appointed 2015),
Chair of Audit and Risk Committee
Special Responsibilities
• Member of audit and risk committee
(appointed 29 July 2020)
• Member of remuneration and
nominations committee (appointed 29
July 2020)
Direct and indirect interest in shares and
options
None
ANNUAL REPORT 2020
MIKE STABB
FCA, MAICD, BBUS(ACCY,BUSLAW), RTA
SIMONE DEJUN
LLM, GRAD DIP LEGAL PRACTICE, LLB, BBUS(ADVERTISING)
Company Secretary
(ceased Company Secretary position 26
June 2020)
Company Secretary
General Counsel
Chief Financial Officer
(ceased CFO position 9 March 2020)
Mike was appointed Company Secretary
in July 2012.
He is a Fellow of the Institute of
Chartered Accountants with over twenty
years of experience, and graduated with
Distinction from QUT in 1995 with a
Bachelor of Business (Accy & BusLaw).
Mike worked for Deutsche Bank in
London and on Wall Street, and held CFO
and senior finance roles in the property,
radio communications and banking
industries in Australia.
Simone was appointed Company
Secretary 1 April 2020.
She completed a Master of Laws,
Bachelor of Laws, Bachelor of Business
(Advertising) at QUT, and a Graduate
Diploma of Legal Practice at the College
of Law.
Simone is Over the Wire's General
Counsel with 8 years post-admission
experience. Simone was previously
General Counsel at Superloop and
has also worked as a lawyer for PIPE
Networks. She has volunteered as
Company Secretary at not-for-profit
Australian Pet Welfare Foundation.
Other Current Directorships
None
Other Current Directorships
None
Former Directorships in last 3 years
None
Former Directorships in last 3 years
None
Special Responsibilities
• Company Secretary (ceased 26 June
Special Responsibilities
• Company Secretary
2020)
• Chief Financial Officer (ceased 9 March
2020)
Direct and indirect interest in shares and
options
Ordinary Shares
Over the Wire Holdings: 378,980
Direct and indirect interest in shares and
options
Ordinary Shares
Over the Wire Holdings: 416
20
ANNUAL REPORT 2020 DIRECTORS REPORT - CONTINUED
MEETINGS OF DIRECTORS
The number of meetings of the Company’s board of directors and of each board committee held during the year ended 30
June 2020, and the numbers attended by each director were:
Full Meetings of directors
Meetings of committees
Held
Attended
Held
Attended
Held
Attended
Audit
Nominations & Remuneration*
John Puttick
Michael Omeros
Brent Paddon
Susan Forrester
Cathy Aston
7
7
7
7
NA
7
7
6
7
NA
4
4
NA
4
NA
4
4
NA
4
NA
4
NA
4
4
NA
4
NA
4
4
NA
*
Effective from 24 June 2020, the Remuneration & Nominations Committee has been renamed to the People & Culture Committee.
INSURANCE OF OFFICERS AND INDEMNITIES
During the financial year, Over the Wire Holdings Limited maintained policies to insure the directors and secretaries of the
Company and its Australian-based controlled entities, and the executives and general managers of each of the divisions of
the Group. The terms of the insurance contracts prohibit disclosure of the premiums payable and other terms of the policies.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought
against the officers in their capacity as officers of entities in the Group, and any other payments arising from liabilities
incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct
involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to
gain advantage for themselves or someone else or to cause detriment to the Company. It is not possible to apportion the
premium between amounts relating to the insurance against legal costs and those relating to other liabilities.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of
the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on
behalf of the Company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of
the Company with leave of the Court under section 237 of the Corporations Act 2001.
NON-AUDIT SERVICES
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the Company and/or the Group are important.
Details of the amounts paid or payable to the auditor (PKF Brisbane Audit) for audit and non-audit services provided during
the year are set out below.
The board of directors has considered the position and, in accordance with advice received from the audit committee, is
satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as
set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following
reasons:
• All non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and
objectivity of the auditor.
• None of the services undermines the general principles relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants.
21
ANNUAL REPORT 2020
During the year the following fees were paid or payable for
non-audit services provided by the auditor of the parent
entity, its related practices and non-related audit firms:
(A) KEY MANAGEMENT PERSONNEL (KMP) COVERED IN
THIS REPORT
REMUNERATION REPORT
Consolidated
2020
$ ,000
2019
$ ,000
19
19
19
22
22
22
Taxation Services
Tax Compliance Services
Total Remuneration for Taxation
Services
Total Remuneration for Non-Audit
Services
AUDITOR’S INDEPENDENCE
DECLARATION
A copy of the auditor’s independence declaration as
required under section 307C of the Corporations Act 2001 is
set out on page 22.
ROUNDING OF AMOUNTS
The Group is of a kind referred to in ASIC Corporations
(Rounding in Financial / Directors’ Reports) Instrument
2016/191, issued by the Australian Securities and
Investments Commission, relating to the ‘rounding off’
of amounts in the directors’ report and financial report.
Amounts in the directors’ report and financial report
have been rounded off to the nearest thousand dollars in
accordance with that Legislative Instrument.
REMUNERATION REPORT
The directors present the Over the Wire Holdings
Limited 2020 remuneration report, outlining key aspects
of our remuneration policy and framework as well as
remuneration awarded this year. It has also been audited
as required by section 308(3C) of the Corporations Act
(2001).
The Report is structured as follows:
(A) Key management personnel (KMP) covered in this
report
(B) Remuneration policy and link to performance
(C) Elements of remuneration
(D) Remuneration expenses for executive KMP
(E) Non-executive director arrangements
(F) Other statutory information
(G) Options and Performance Rights
John Puttick
Non-Executive Chairman
(appointed 1 December 2015)
Michael Omeros
Managing Director and Group Chief Executive Officer
(appointed 1 July 2011)
Brent Paddon
Executive Director
(appointed 1 July 2011)
(Non-Executive Director from 1 July 2020)
Susan Forrester
Non-Executive Director
(appointed 1 December 2015)
Other key management personnel:
Scott Smith
Chief Executive Officer
(appointed 9 March 2020)
Mike Stabb
Company Secretary and Chief Financial Officer
(ceased CFO position 9 March 2020)
(ceased Company Secretary role 26 June 2020)
Ben Cornish
Chief Technology Officer
Gary Pittorino
Chief Operating Officer
Ben Melville
Chief Financial Officer
(appointed 9 March 2020)
From 1 July 2020 Brent Paddon and Cathy Aston were
appointed as Non-executive Directors of the Group.
There have been no further changes in KMP since the end
of the reporting period other than those disclosed above.
(B) REMUNERATION POLICY AND LINK TO
PERFORMANCE
During 2020 the remuneration committee was made
up of two independent non-executive directors and
one executive director. The committee will review and
determine our remuneration policy and structure annually
to ensure it remains aligned to business needs, and
meets our remuneration principles. As the Group now
has a dedicated General Manager of Human Resources,
our remuneration policy is now being developed and
finalised through input by the remuneration committee
and recommendations provided by externally engaged
consultants.
22
ANNUAL REPORT 2020 Short-term Incentives – Operational Bonuses
In 2020, elements of KMP remuneration were dependent
on the satisfaction of operational performance conditions.
Short term incentive cash bonuses paid in relation to 2019:
• $68,986 for Michael Omeros linked to the achievement
of operational KPIs.
• $26,795 for Brent Paddon linked to the achievement of
operational KPIs.
• $52,615 for Mike Stabb linked to the achievement of
operational KPIs.
• $50,390 for Ben Cornish linked to the achievement of
operational KPIs.
Long-term Incentives
On 29 May 2020, the Group issued 115,387 performance
rights to key management personnel and select senior
staff as part of a Long Term Incentive (LTI) scheme under
an Employee Share Plan as a means of rewarding and
incentivising key employees.
Further details of the performance rights, including details
of rights issued during the financial year, are set out in
note 31.
The Long term incentive (LTI) scheme contains features
that meets contemporary generally accepted market
standards, and that:
• Encourage the long term retention of selected key
executives and aligns the interests of the key executives
with shareholders;
• Reward service and performance by these executives;
• Meet contemporary governance and executive
remuneration standards; and
• Satisfy all executive employment contract obligations
and meet all regulatory requirements.
Details of performance measures used in relation to
performance rights issued to KMP can be located at note
31 of the accompanying financial statements.
REMUNERATION REPORT - CONTINUED
Executive KMP Remuneration Policy Statement
Consistent with contemporary Corporate Governance
standards, The Group's remuneration policy will aim to
set employee and executive remuneration that is fair,
competitive and appropriate for the markets in which it
operates and is mindful of internal relativities. Over the
Wire Holdings will aim to ensure that the mix and balance
of remuneration is appropriate to reward fairly, attract,
motivate and retain senior executives and other key
employees.
Specific objectives of this policy will include the
following:
• Provide a fair and competitive (internal and external)
fixed annual remuneration for all positions under
transparent policies and review procedures;
• Link executive KMP rewards to shareholder value
accretion by providing appropriate equity (or
equivalent) incentives to selected senior executives and
employees linked to long-term Company performance
and core values;
• Provide competitive total rewards to attract and retain
appropriately skilled employees and executives;
• Have a meaningful portion of remuneration ‘at risk’,
dependent upon meeting pre-determined performance
benchmarks, both short (annual), medium (deferred STI)
and long term (+ 3 years); and
• Establish appropriate, demanding performance hurdles
for any executive short or long term equity incentive
remuneration.
This broad remuneration policy will be delivered by Over
the Wire Holdings under a Total Targeted Remuneration
(TTR) or Total Annual Remuneration (TAR) framework.
Appropriate remuneration policy settings will be achieved
by consistently applying a clear remuneration strategy
directed at supporting the Board approved business
strategy with appropriate and flexible processes, policies
and procedures established by the Board from time to
time.
(C) ELEMENTS OF REMUNERATION
Fixed Annual Remuneration
Executives may receive their fixed remuneration as
cash, superannuation and fringe benefits such as mobile
phones, car allowances and in house fringe benefits.
During 2020 there were no fixed remuneration increases
given to executive KMP.
During 2020, two new members of the KMP were
promoted from within the Group. Their fixed
remuneration is as follows:
• Scott Smith:
Base Salary $250,000
• Ben Melville:
Base Salary $180,000
23
ANNUAL REPORT 2020 REMUNERATION REPORT - CONTINUED
(D) REMUNERATION EXPENSES FOR EXECUTIVE KMP
The following table shows details of the remuneration expense recognised for the Group’s executive key management personnel
for the current and previous financial year measured in accordance with the requirements of the accounting standards.
Remuneration paid to directors and executives is valued at the cost to the Group.
(I) Key Management Personnel Remuneration
Name
Year
Fixed remuneration
Variable
remuneration
Total
Perfor-
mance
Based
Cash
Salary*
Non-
monetary
Benefits*
Annual
Leave*
Long
service
Leave
**
Post-
employ-
ment
Benefits
***
Cash
Bonus*
Share
Based
Payments
****
$
$
$
$
$
$
$
$
Executive Directors
Michael
Omeros
2020
255,691
45,768
22,500
4,875
24,392
61,390
2019
263,170
45,768
23,077
Brent Paddon1
2020
244,213
3,990
18,750
2019
244,327
5,244
18,794
5,000
4,063
4,072
20,531
99,237
21,090
24,556
20,531
39,695
-
-
-
-
414,617
456,783
316,662
332,663
Other Management Personnel
5,929
1,295
6,438
15,348
1,928
106,236
Scott Smith2
Mike Stabb3
Ben Cornish
Gary Pittorino
Ben Melville2
Total
Executive
Directors &
Other KMPs
Total NED
Remuneration
(see section (e)
below)
Total KMP
remuneration
Expensed
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
75,308
-
152,626
224,938
-
-
-
-
-
11,282
16,923
196,523
22,430
16,500
207,520
17,724
16,923
215,109
174,608
55,114
-
-
-
-
-
16,500
13,397
4,269
-
-
2,444
3,667
3,575
3,667
3,575
2,903
925
-
-
-
-
-
15,212
32,230
54,234
268,029
24,531
59,634
70,151
399,844
21,723
42,973
65,771
369,496
20,531
53,364
70,151
389,880
20,804
42,973
25,009
323,970
15,399
-
2,784
209,091
5,234
7,674
1,371
74,587
-
-
-
-
2020
1,194,585
72,188
95,731
20,742
114,894
227,144
148,314
1,873,598
2019
1,114,563
68,736
89,114
19,309
101,523
251,930
143,086
1,788,261
2020
2019
190,125
145,000
-
-
-
-
-
-
-
-
-
-
-
-
190,125
145,000
2020
1,384,710
72,188
95,731
20,742
114,894
227,144
148,314
2,063,723
2019
1,259,563
68,736
89,114
19,309
101,523
251,930
143,086
1,933,261
%
15
22
8
12
16
-
32
32
29
32
21
1
12
-
20
22
-
-
18
20
1
2
3
*
**
***
Appointed as Non-executive Director from 1 July 2020
Appointed 9 March 2020
Ceased role as Chief Financial Officer on 9 March 2020
Short-term benefits as per Corporations Regulation 2M.3.03(1) Item 6
Along with other full time staff, all KMP accepted a 10% reduction in hours over the period 1 April 2020 to 30 June 2020 to support working capital of the Group
through the COVID-19 imposed lockdowns
Other long-term benefits as per Corporations Regulation 2M.3.03(1) Item 8
Post-employment benefits are provided through contributions to a superannuation fund. The amounts disclosed as remuneration represent the amount
contributed by the employer at the statutory rate 9.5%, plus any salary sacrificed amounts if applicable, measured in accordance with AASB 119 Employee Benefits.
**** Shares issued under an employee share scheme established by the Group on 30 November 2015 (re-approved 29 November 2018), as well as Performance Rights
issued as set out at Note 31.
24
ANNUAL REPORT 2020
REMUNERATION REPORT - CONTINUED
(II) Rights Granted As Remuneration - Long Term Incentive Plan
Name
KMP
Scott Smith1
Mike Stabb2
Ben Cornish
Gary Pittorino
Ben Melville1
Year
Granted
Balance
at Start of
year
Granted
during
year
Rights to deferred shares
Vested
Forfeited
Balance at
end of year
(unvested)
Maximum
value to
vest*
2020
2020
2019
2018
2020
2019
2018
2020
2019
2020
No.
-
-
13,333
29,920
No.
8,362
20,067
-
-
-
20,067
13,333
29,920
-
-
-
20,067
10,400
-
-
3,345
No.
%
No.
%
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,362
20,067
13,333
29,920
20,067
13,333
29,920
20,067
10,400
3,345
$
23,136
55,222
34,866
8,608
55,222
34,866
8,608
55,222
27,196
9,255
1
2
*
Appointed 9 March 2020
Ceased role as Chief Financial Officer on 9 March 2020
The maximum value of the deferred shares yet to vest has been determined as the amount of the grant date fair value of the rights that is yet to be expensed.
The minimum value of deferred shares yet to vest is nil, as the shares will be forfeited if the vesting conditions are not met.
Details of the performance rights granted as remuneration to those KMP in the above table are included in Note 31 to the
financial statements.
(III) Performance Based Remuneration Granted and Forfeited During the Year
Cash bonuses are dependent on meeting defined performance measures. The amount of the bonus is determined having
regard to the satisfaction of performance measures and weightings as described above in section (B) 'Remuneration Policy
and Link to Performance'. The maximum bonus values are established at the start of each financial year and amounts
payable are determined in the final month of the financial year by the Remuneration and Nomination Committee.
The proportion of the cash bonus paid/payable or forfeited is as follows:
30 June 2020
Total STI Cash bonus
Total
Opportunity
$
100,000
40,000
25,000
52,500
70,000
70,000
12,500
Awarded
%
Forfeited
%
61%
61%
61%
61%
61%
61%
61%
39%
39%
39%
39%
39%
39%
39%
Executive Directors:
Michael Omeros
Brent Paddon1
Other Management Personnel:
Scott Smith
Mike Stabb
Ben Cornish
Gary Pittorino
Ben Melville
1
Appointed as Non-executive Director from 1 July 2020
25
ANNUAL REPORT 2020
REMUNERATION REPORT - CONTINUED
(E) NON-EXECUTIVE DIRECTOR ARRANGEMENTS
Board fees are $117,000 ($75,000 in 2019) for John Puttick and $73,125 ($50,000 in 2019) for Susan Forrester. Board fees
include a 10% reduction for the period 1 April 2020 to 30 June 2020. In addition, they are paid $10,000 for chairing their
respective committees. There are no performance-based payments or retirement allowances. From 1 July 2020, base fees
for Chair of the Board will increase from $120,000 to $150,000 and base fees for Non-Executive Directors from $75,000 to
$80,000.
From 1 July 2020, Brent Paddon and Cathy Aston have been appointed as Non-executive Directors.
The table below represent the amounts paid for the periods in which their services were provided.
Base fees
Chair
Other Non-executive Directors
Total
Consolidated
2020
$
120,000
75,000
195,000
2019
$
85,000
60,000
145,000
All non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The
letter summarises the board policies and terms, including remuneration, relevant to the office of director.
(F) OTHER STATUTORY INFORMATION
Shareholdings
The numbers of shares in the Company held (directly, indirectly or beneficially) during the financial year by KMP, including
their related parties, are set out below:
Balance at
1/07/2019
Sold on
Market
Share
Purchase
Plan
Employee
Share
Scheme
Vested
Performance
Rights
Bought on
Market
Balance at
30/06/2020
Directors
Michael Omeros
13,623,245
(650,000)
Brent Paddon1
12,150,000
(650,000)
John Puttick
78,778
Susan Forrester
161,738
-
-
Total Directors
26,013,761
(1,300,000)
Other Key Management Personnel (OKMP)
Scott Smith2
Mike Stabb3
Ben Cornish
Gary Pittorino
Ben Melville2
358,032
333,134
124,103
204
-
Total OKMP
815,473
-
-
-
-
-
-
Group Total
26,829,234
(1,300,000)
1
2
3
Appointed as Non-executive Director from 1 July 2020
Appointed 9 March 2020
Ceased role as Chief Financial Officer on 9 March 2020
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
212
212
212
212
212
1,060
1,060
-
-
-
-
-
-
-
-
-
-
-
-
52,052
13,025,297
-
11,500,000
93,111
23,262
171,889
185,000
168,425
24,882,186
9,226
45,634
1,706
5
2
367,470
378,980
126,021
421
214
56,573
873,106
224,998
25,755,292
26
ANNUAL REPORT 2020
REMUNERATION REPORT - CONTINUED
(G) OPTIONS AND PERFORMANCE RIGHTS
(i) Options
At the date of this report, there were no unissued shares of Over the Wire Holdings Limited under option. (2019: Nil)
(ii) Performance Rights
At the date of this report, there were 278,852 performance Rights over Over the Wire Holdings Limited shares. (2019:
163,465)
End of Remuneration Report
This report, incorporating the Remuneration Report is signed in accordance with a resolution of Directors.
Michael Omeros
Managing Director
Brisbane
20 August 2020
John Puttick
Chair Person
Brisbane
20 August 2020
27
ANNUAL REPORT 2020
2.0
AUDITOR’S
INDEPENDENCE
DECLARATION
28
ANNUAL REPORT 2020 AUDITOR'S INDEPENDENCE DECLARATION
AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF OVER THE WIRE HOLDINGS LIMITED
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2020, 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 Over the Wire Holdings Limited and the entities it controlled during the
year.
PKF BRISBANE AUDIT
CAMERON BRADLEY
PARTNER
BRISBANE
20 AUGUST 2020
29
ANNUAL REPORT 2020
3.0
CORPORATE
GOVERNANCE
STATEMENT
30
ANNUAL REPORT 2020 CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE STATEMENT
Compliance with ASX Corporate Governance Principles and Recommendations
Over the Wire Holdings Limited and the board are committed to achieving and demonstrating the highest standards
of corporate governance. Over the Wire Holdings Limited has reviewed its corporate governance practices against the
Corporate Governance Principles and Recommendations (3rd edition) published by the ASX Corporate Governance Council.
The 2020 corporate governance statement is dated as at 20 August 2020 and reflects the corporate governance practices
in place during the 2020 financial year to 20 August 2020. The 2020 corporate governance statement was approved by the
board on 1 October 2020.
A description of the group’s current corporate governance practices is set out in the group’s corporate governance statement
which can be viewed at www.overthewire.com.au/investors/corporate-governance.
Over the Wire’s corporate governance charter has been drafted in light of these Guidelines and the table below summarises
the company’s compliance, in accordance with ASX Listing Rule 4.10.3.
Principles and Recommendations
Compliance
Principle 1 – Lay solid foundations for management and oversight
1.1 Establish the functions expressly
reserved to the Board and those delegated
to management, and disclose those
functions.
1.2 Undertake appropriate checks before
appointing a person as a director, and
provide shareholders with all material
information relevant to a decision on
whether or not to elect or re-elect a
director.
1.3 Have a written agreement with each
director and senior executive setting out
the terms of their appointment.
Comply
Complies
Complies
The Board is responsible for the overall corporate
governance of the company.
The Board has adopted a Board charter that formalises
its roles and responsibilities and defines the matters
that are reserved for the Board and specific matters
that are delegated to management.
The company will conduct police checks, solvency and
banned director searches in relation to all appointed
and future nominated directors.
The company will publish Director profiles on the
company’s website outlining biographical details, other
directorships held, commencement date of office and
level of independence.
The company has written agreements with each director
and senior executive. On appointment of directors and
senior executives the company will issue necessary
written agreements outlining the terms of their
appointment.
Complies
1.4 The company secretary should be
accountable directly to the Board on all
matters to do with the proper functioning
of the Board.
This is consistent with the Charter and corporate
structure of the company. The company secretary has
a direct relationship with the Board in relation to these
matters.
Complies
Partially Complies
1.5 Establish a diversity policy and
disclose the policy or a summary of that
policy.
The policy should include requirements
for the Board to establish measurable
objectives for achieving gender diversity
and for the Board to assess annually both
the objectives and progress in achieving
them, for reporting against in each
reporting period.
The Board has adopted a diversity policy that outlines
objectives to ensure that the company has as diverse a
workforce as practicable.
The Board determined that given the company’s size
and structure, it is not appropriate or
possible to mandate a fixed number of women at any
given level within the organisation, so no measurable
objectives are included.
As a measurement of gender diversity, the proportion
of women working within Over the Wire as at 20 August
2020 is as follows:
•
•
•
Women on the Board – 40%
Women in Senior Executive positions – 14%
Women in the organisation – 19%
31
ANNUAL REPORT 2020 CORPORATE GOVERNANCE STATEMENT - CONTINUED
1.6 Have a process for periodically
evaluating the performance of the Board,
its committees and individual directors,
and disclose that process and, at the end
of each reporting period, whether such
performance evaluation was undertaken
in that period.
The company conducts the process for evaluating the
performance of the Board, its committee and individual
directors as outlined in the Board Charter. Performance
evaluation was conducted in this period.
Complies
1.7 Have a process for periodically
evaluating the performance of the
company’s senior executives, and
disclose that process and, at the end
of each reporting period, whether such
performance evaluation was
undertaken in that period.
A summary of the processes for performance evaluation
of key executives, directors and the
Board is available on the company’s website. The Chief
Executive Officer (CEO) reviews the
performance of the senior executives. The Board
reviews the CEO’s performance. These reviews were
conducted in this period.
Complies
Principles and Recommendations
Compliance
Principle 2 – Structure the Board to add value
Comply
Complies
A combined Nominations and Remuneration
Committee has been established with its own
charter and consists of:
•
• Susan Forrester; and
• Brent Paddon.
John Puttick (committee chair);
2.1 The company should have a
nomination committee, which has at least
three members, a majority of independent
directors and is chaired by an independent
director.
The functions and operations of the
nomination committee should be
disclosed.
2.2 Have and disclose a board skills
matrix, setting out what the board is
looking to achieve in its membership.
2.3 Disclose the names of the directors
that the Board considers to be
independent directors, and an explanation
of why the Board is of that opinion if a
factor that impacts on independence
applies to a director, and disclose the
length of service of each director.
The company has established charter rules as a
guide for Board deliberations. Together, the Directors
have a broad range of experience, expertise, skills,
qualifications and contacts relevant to the company
and its business.
The Board considers John Puttick (appointed in
December 2015) to be an independent director.
The Board also considers Susan Forrester (appointed
in December 2015) to be an independent director.
Partially
Complies
Complies
The Board notes the following directors are deemed
not independent for the purposes of the Guidelines:
• Michael Omeros (appointed in July 2011) – Michael
is a founding shareholder of Over the Wire and is
an executive director of the company.
• Brent Paddon (appointed in July 2011) – Brent is
also a founding shareholder of Over the Wire and is
an executive director of the company.
32
ANNUAL REPORT 2020
CORPORATE GOVERNANCE STATEMENT - CONTINUED
2.4 A majority of the Board should be
independent directors.
For the 2020 Financial Year the the Board comprised
four Directors, of which two were independent non-
executive Directors. On 1 July 2020, Catherine Aston
was appointed to the Board as a non-executive
Director, and Brent Paddon transitioned from
Executive Director to non-executive Director.
Complies from 1 July
2020
During the 2020
Financial Year, the
Board was equally
weighted between
independent and
executive Directors.
The size of the
company had not
previously justified
the cost of appointing
additional independent
Directors at this stage.
The chairman, John Puttick, is a non-executive and
independent director.
Complies
This is consistent with the Board Charter.
Complies
2.5 The chair of the Board should be an
independent director and should not be
the CEO.
2.6 There should be a program for
inducting new directors and providing
appropriate professional development
opportunities for directors to develop
and maintain the skills and knowledge
needed to perform their role as a director
effectively.
Principles and Recommendations
Compliance
Principle 3 – Act ethically and responsibly
3.1 Have a code of conduct for the Board,
senior executives and employees, and
disclose that code or a summary of that
code.
The company has adopted a code of conduct, which
sets out a framework to enable Directors to achieve
the highest possible standards in the discharge of
their duties and to give a clear understanding of best
practise in Corporate Governance.
Comply
Complies
Principles and Recommendations
Compliance
Comply
Principle 4 – Safeguard integrity in corporate reporting
4.1 The company should have an audit
committee, which consists of only
non-executive directors, a majority of
independent directors, is chaired by
an independent chairman who is not
chairman of the Board, and has at least
three members. The functions and
operations of the audit committee should
be disclosed.
Complies from 29 July
2020
The Board has established an Audit and Risk Committee
which operates under an audit and risk committee
charter.
During the 2020 Financial Year, the Audit and Risk
Committee members were:
• Susan Forrester (committee chair)
•
John Puttick; and
• Michael Omeros.
John Puttick (committee chair)
At 29 July, the Audit and Risk Committee members are:
•
• Susan Forrester
• Brent Paddon; and
• Cathy Aston.
The committee includes two independent directors and
is chaired by an independent director.
33
ANNUAL REPORT 2020
CORPORATE GOVERNANCE STATEMENT - CONTINUED
This is consistent with the approach to be adopted by
the Audit and Risk Committee and the Board.
Complies
4.2 The Board should, before approving
financial statements for a financial period,
receive a declaration from the CEO and
CFO that, in their opinion, the financial
records have been properly maintained
and that the financial statements comply
with the appropriate accounting standards
and give a true and fair view of the
financial position and performance of the
company, formed on the basis of a sound
system of risk management and internal
controls, operating effectively.
4.3 The company’s auditor should attend
the AGM and be available to answer
questions from security holders relevant
to the audit.
Over the Wire’s auditors will be requested to attend the
AGM and shareholders will be entitled to ask questions
in accordance with the Corporations Act and these
guidelines.
Complies
Principles and Recommendations
Compliance
Principle 5 – Make timely and balanced disclosures
5.1 Have a written policy for complying
with continuous disclosure obligations
under the Listing Rules, and disclose that
policy or a summary of it.
The company has a written continuous disclosure policy
which is designed to ensure that all material matters
are appropriately disclosed in a balanced and timely
manner and in accordance with the requirements of the
ASX Listing Rules.
Comply
Complies
Principles and Recommendations
Compliance
Comply
Principle 6 – Respect the rights of security holders
6.1 Provide information about the company
and its governance to investors via its
website.
6.2 Design and implement an investor
relations program to facilitate effective
two-way communication with investors.
6.3 Disclose the policies and processes
in place to facilitate and encourage
participation at meetings of security
holders.
The Board Charter and other applicable policies
are available on the company’s website.
Complies
The company has adopted a shareholder
communications policy. The company will use
its website, half year and annual reports, market
announcements and media disclosures to
communicate with its shareholders, as well as
encourage participation at general meetings.
The company intends to facilitate effective
participation in the AGM, as well as the ability
to submit written questions ahead of the AGM.
The company intends to adopt appropriate
technologies to facilitate the effective
communication and conduct of general meetings.
Complies
The company has not
disclosed a formal policy or
process, but it has engaged
a recognised and reputable
share registry service
provider to further these
objectives.
6.4 Give security holders the option to
receive communications from, and send
communications to, the company and its
share registry electronically.
The company has instructed its share registry to
facilitate this option for shareholders.
Complies
34
ANNUAL REPORT 2020 CORPORATE GOVERNANCE STATEMENT - CONTINUED
Principles and Recommendations
Compliance
Comply
Principle 7 – Recognise and manage risk
7.1 The Board should have a risk committee
which is structured so that it consists of
a majority of independent directors, is
chaired by an independent director, and
has at least three members.
The functions and operations of the risk
committee should be disclosed.
7.2 The Board or a committee of the
Board should review the entity’s risk
management framework with management
at least annually to satisfy itself that it
continues to be sound, and disclose, in
relation to each reporting period, whether
such a review has taken place.
7.3 Disclose if the company has an
internal audit function, how the function
is structured and what role it performs,
or if it does not have an internal audit
function, that fact and the processes the
company employs for evaluating and
continually improving the effectiveness of
its risk management and internal control
processes.
7.4 Disclose whether the company has
any material exposure to economic,
environmental and social sustainability
risks and, if so, how it manages those
risks.
The company has a combined Audit and Risk
Committee. See 4.1 above.
Partially Complies
The charter establishes the role of the
committee. Risk review was conducted in this
period.
Complies
Due to the company’s limited number
of employees and relative nature and
scale of its operations, the costs of an
independent internal audit function would be
disproportionate. The company has an external
auditor and the Audit and Risk Committee will
monitor and evaluate material or systemic
issues.
Does not comply due to
the nature and scale of
operations, however the
Board believes it and the
Audit and Risk Committee
have adequate oversight of
the existing operations.
The Board does not believe that the company
has any such material risks.
Complies
Principles and Recommendations
Compliance
Comply
The company has a combined Nominations
and Remuneration Committee. See 2.1 above.
Partially Complies
Principle 8 – Remunerate fairly and responsibly
8.1 The Board should have a remuneration
committee which is structured so that it consists
of a majority of independent directors, is chaired
by an independent director, and has at least three
members. The functions and operations of the
remuneration committee should be
disclosed.
8.2 The policies and practices regarding the
remuneration of non-executive directors, and the
remuneration of executive directors and other
senior executives, should be separately disclosed.
The Nominations and Remuneration
Committee charter is available on the
company’s website.
Complies
Complies
8.3 If the company has an equity-based
remuneration scheme, it should have a policy
on whether participants are permitted to enter
into transactions (whether through the use of
derivatives or otherwise) which limit the economic
risk of participating in the scheme, and disclose
that policy or a summary of it.
The company operates an exempt share plan
and has approved a performance rights plan
for the potential issue of rights in the future.
In accordance with the company’s Securities
Trading Policy participants are not permitted
to enter into transactions which limit economic
risk without written clearance.
35
ANNUAL REPORT 2020 RESPONSIBILITY OF THE BOARD
The Board is responsible for the company’s proper
corporate governance. To carry out this obligation, the
Board must act:
• Honestly, conscientiously and fairly;
•
•
In accordance with the law;
In the interests of the Shareholders (with a view to
building sustainable value for them); and
In the interests of employees and other stakeholders.
•
The Board’s broad function is to:
CORPORATE GOVERNANCE STATEMENT - CONTINUED
COMPOSITION OF BOARD
The Board is comprised of four directors. Half of
the Board are non-executive directors independent
from management. The Chairman of the Board is an
independent non-executive director.
BOARD CHARTER AND POLICY
The Board has adopted a charter which formally recognises
its responsibilities, functions, power and authority and
composition. This charter sets out other things which are
important for effective corporate governance including:
• Represent, serve and protect the interests of
shareholders;
• Develop, implement, oversee, and review the strategies
and performance of the company;
• A detailed definition of ‘independence’;
• A framework for the identification of candidates for
appointment to the Board and their selection (including
undertaking appropriate background checks);
• Optimise company performance and build sustainable
• A framework for individual performance review and
shareholder value within an effective corporate
governance framework of internal controls and risk
management;
• Ensure shareholders and stakeholders are regularly
and effectively informed of developments affecting the
company, as well as the ongoing performance of the
company; and
• Ensure that no decision or action is taken that has the
effect of prioritising their personal interests over the
company’s interests.
Power and authority in certain areas is specifically reserved
to the Board – consistent with its function described above.
These areas include:
• Providing leadership and setting the strategic objectives
of the company;
• Composition of the Board itself including the
appointment and removal of the Chairman or deputy
chairman (if applicable);
• Oversight of the company including its control and
accountability system;
• Appointment and removal of senior management
(including the CEO or equivalent) and the company
Secretary;
• Reviewing, ratifying and monitoring the risk
management framework and setting the risk appetite
within which the Board expects management to operate;
• Approving and formulating company strategy and policy;
• Approving and monitoring operating budgets and major
capital expenditure;
• Overseeing the integrity of the company’s accounting
and corporate reporting systems, including the external
audit;
• Overseeing corporate strategy and performance
objectives developed by management;
• Overseeing the company’s compliance with its
continuous disclosure obligations;
• Approving the company’s remuneration framework;
• Monitoring the overall corporate governance of the
company (including its strategic direction and goals for
management, and the achievement of these goals); and
• Oversight of the Board’s various committees.
evaluation;
• Proper training to be made available to Directors both at
the time of their appointment and on an on-going basis;
• Basic procedures for meetings of the Board and its
committees including frequency, agenda, minutes
and private discussion of management issues among
nonexecutive Directors;
• Ethical standards and values (in a detailed code of ethics
and values);
• Dealings in securities (in a detailed code for securities
transactions designed to ensure fair and transparent
trading by Directors and senior management and their
associates); and
• Communications with Shareholders and the market.
The purpose of the charter is to ‘institutionalise’ good
corporate governance and to build a culture of best
practice both in Over the Wire’s internal practices and its
dealings with others.
This information is available on the company’s website at
https://overthewire.com.au/investors/
AUDIT AND RISK COMMITTEE
The purpose of this committee is to advise on the
establishment and maintenance of a framework of
internal control and appropriate ethical standards for the
management of the company. Its current members are:
John Puttick (committee chair);
•
• Susan Forrester;
• Brent Paddon; and
• Cathy Aston.
The committee performs functions relevant to risk
management and internal and external reporting
and reports to the Board following each meeting. The
committee’s responsibilities include:
• Setting Board and committee structures to facilitate a
•
proper review function by the Board;
Internal control framework including management
information systems;
• Corporate risk assessment (including economic,
36
ANNUAL REPORT 2020
CORPORATE GOVERNANCE STATEMENT - CONTINUED
environmental and social sustainability risks) and
compliance with internal controls;
• Management processes supporting external reporting
practices;
• Review of financial statements and other financial
information distributed externally;
• Review of the effectiveness of the audit function;
• Review of management corporate reporting
processes supporting external reporting, including the
appropriateness of the accounting judgements;
• Review of the performance and independence of the
external auditors;
• Review of the external audit function to ensure prompt
remedial action by management, where appropriate, in
relation to any deficiency in or breakdown of controls;
and
• Reviewing any proposal for the external auditor to
provide non-audit services and whether it might
compromise the independence of the external auditor.
Meetings will be held at least four times each financial
year. A broad agenda is laid down for each regular meeting
according to an annual cycle. The committee invites the
external auditors to attend each of its meetings.
The Audit and Risk Committee information is available
on the company’s website at https://overthewire.com.au/
investors/
NOMINATIONS AND REMUNERATION COMMITTEE
The purpose of this committee is to assist the Board and
report to it on remuneration and related policies and
practices (including remuneration of senior management
and non-executive Directors). Its current members are:
John Puttick;
• Susan Forrester (committee chair);
•
• Brent Paddon; and
• Cathy Aston
The committee’s functions include:
• Recommendations to the Board about the company’s
remuneration policies and procedures;
• Oversight of the performance of senior management
and non-executive Directors;
• Recommendations to the Board about remuneration of
senior management and non-executive Directors; and
• Reviewing the company’s reporting and disclosure
practices in relation to the remuneration of Directors
and senior executives.
Meetings will be held at least four times each financial year
and more often as required.
The Nominations and Remuneration Committee
information is available on the company’s website at
https://overthewire.com.au/investors/
37
POLICIES
Securities Trading Policy
A securities trading policy (Trading Policy) has been
adopted by the Board to provide guidance to Directors,
identified employees including senior management,
and other employees of Over the Wire, where they are
contemplating dealing in the company’s securities or the
securities of entities with whom Over the Wire may have
dealings. The Trading Policy is designed to ensure that any
trading in the company’s securities is in accordance with
the law and minimises the possibility of misperceptions
arising in relation to Directors’ and employees’ dealings in
the company’s securities or securities of other entities.
The Trading Policy is directed at dealing in the company’s
securities by the Directors and employees, dealings
through entities or trusts controlled by a relevant person,
or in which they have an interest, and encouraging family
or friends to so deal. It also extends to addressing dealings
in the securities of other entities that may be transacting
with or be counterparties of Over the Wire.
Any non-compliance with the Trading Policy will be
regarded as an act of serious misconduct. The Trading
Policy is available on the company’s website at https://
overthewire.com.au/investors/
Diversity Policy
Over the Wire is committed to complying with the diversity
recommendations published by ASX and promoting
diversity among employees, Directors and senior
management, and has adopted a policy in relation to
diversity (Diversity Policy).
Over the Wire defines diversity to include, but not be
limited to, gender, age, disability, ethnicity, marital or family
status, religious or cultural background, sexual orientation
and gender identity.
The Diversity Policy adopted by the Board outlines Over the
Wire’s commitment to fostering a corporate culture that
embraces diversity and provides a process for the Board
to determine measurable objectives and procedures to
implement and report against to achieve its diversity goals.
The company’s Nominations and Remuneration Committee
is responsible for implementing the Diversity Policy, setting
the company’s measurable objectives and benchmarks
for achieving diversity and reporting to the Board on
compliance with the Diversity Policy.
As part of its role, the company’s Nominations and
Remuneration Committee is responsible for formulating
and implementing a company remuneration policy.
Under the Diversity Policy, a facet of this role will include
reporting to the Board annually on the proportion of men
and women in Over the Wire’s workforce and their relative
levels of remuneration.
The Board will assess and report annually to Shareholders
on progress towards achieving its diversity goals. The
Diversity Policy is available on the company’s website at
https://overthewire.com.au/investors/
ANNUAL REPORT 2020
CORPORATE GOVERNANCE STATEMENT - CONTINUED
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 31 August 2020.
Over The Wire Holdings Limited
Issued capital ordinary shares: 51,650,558 as at 31 August 2020.
Substantial Shareholders
Substantial shareholders in the company are set out below:
Michael Omeros (Including Related Entities and Indirect Holdings)
Brent Paddon (Including Related Entities and Indirect Holdings)
National Nominees Limited
Total Substantial Shareholders
Ordinary Shares
Number
Held
% of Total Shares
Issued
13,025,297
11,500,000
10,197,267
34,722,564
25.22%
22.27%
19.74%
67.23%
Number Of Holders Of Each Class Of Equity Securities And Distribution Schedule Of The Number Of Holders
The number of holders of each class, and distribution schedule of the number of holders of equity securities, is set below:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and Over
Total
Unmarketable Parcels
VOTING RIGHTS
Ordinary Shares
Number
Held
334,434
2.067,673
2,104,833
5,899,141
41,244,476
51,650,558
-
Number
of Holders
753
805
279
245
22
2,104
-
The voting rights attached to each class of equity securities are set out below:
ORDINARY SHARES
On a show of hands every member present at a meeting in person, or by proxy, shall have one vote, and upon a poll each
share shall have one vote.
38
ANNUAL REPORT 2020
CORPORATE GOVERNANCE STATEMENT - CONTINUED
THE NUMBER AND CLASS OF RESTRICTED SECURITIES SUBJECT TO VOLUNTARY ESCROW THAT ARE ON ISSUE
Voluntary Escrow
The number and class of securities subject to Voluntary Escrow are set out below:
Ordinary Shares
Number
Held
% of Total Shares
Issued
Date that Voluntary Escrow Period Ends:
50% of shares issued on acquisition of Comlinx (Escrow release date - 30 June
2021)
Total Substantial Shareholders
347,828
347,828
0.67%
0.67%
25.22%
22.27%
19.74%
2.64%
2.22%
1.31%
1.10%
1.07%
0.68%
0.67%
0.65%
0.51%
0.36%
0.26%
0.23%
0.22%
0.22%
0.21%
0.21%
0.20%
Ordinary Shares
13,025,297
11,500,000
10,197,267
1,362,882
1,144,742
677,622
567,392
551,061
351,870
347,827
337,139
262,086
185,000
135,507
120,000
112,939
112,139
108,000
107,471
104,278
41,310,519
79.98%
The 20 Largest Holders of Each Class of Quoted Equity Securities
Michael Nictarios Omeros (Including Related Entities And Indirect Holdings)
Brent Evans Paddon (Including Related Entities And Indirect Holdings)
National Nominees Limited
Jay Heddon Binks
J P Morgan Nominees Australia Pty Limited
CS Third Nominees Pty Limited
Christopher Peter Marciano
Bnp Paribas Noms Pty Ltd
Scott Anthony Smith
Wayne Albert Shaw
Birkdale Holdings (QLD) Pty Ltd
Carter Haywood Pty Ltd
Ms Susan Margaret Forrester & Mr Bruce Forrester
Bnp Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd Drp
Mr Benjamin James Cornish
Mr David Noel Groth & Mrs Kathryn Renae Taylor-Groth
BM Jag Pty Ltd
Mr John Francis Puttick
Carter Haywood Pty Ltd
Netwealth Investments Limited
Total
39
ANNUAL REPORT 2020
4.0
FINANCIAL
STATEMENTS
40
ANNUAL REPORT 2020 FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For Year Ended 30 June 2020
Consolidated
Revenue from Contracts with Customers
Other Income
Expenses
Data Centre & Colocation Expense
Calls & Communications Expense
Other Cost of Goods Sold
Employee Benefits Expense
Depreciation & Amortisation Expense
Finance Costs
Other Expenses
Profit Before Income Tax Expense
Income Tax Expense
Profit After Income Tax Expense for the Year Attributable to members
Other Comprehensive Income
Other Comprehensive Income for the Year, Net of Tax
Total Comprehensive Income for the Year Attributable to members
Basic Earnings per Share
Diluted Earnings per Share
Note
2020
$ ,000
87,611
50
(3,516)
(27,157)
(15,343)
(20,711)
(9,756)
(426)
(3,538)
7,214
(2,181)
5,033
-
-
5,033
9.749
9.716
4
5
6
6
6
6
6
6
6
7
8
8
2019
(restated)1
$ ,000
79,589
4,123
(3,501)
(24,846)
(13,032)
(18,511)
(7,956)
(579)
(2,482)
12,805
(2,643)
10,162
-
-
10,162
Cents
20.713
20.647
1.
Reclassified and measured amounts due to introduction of AASB 16 - see note 3 for details.
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
41
ANNUAL REPORT 2020 FINANCIAL STATEMENTS - CONTINUED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As At 30 June 2020
Consolidated
Note
2020
$ ,000
2019
(restated)1
$ ,000
1 July 2018
(restated)1
$ ,000
Assets
Current Assets
Cash & Cash Equivalents
Trade & Other Receivables
Inventories
Other Current Assets
Total Current Assets
Non-Current Assets
Other Non-Current Assets
Property, Plant & Equipment
Intangibles
Total Non-Current Assets
Total Assets
Liabilities
Current Liabilities
Trade & Other Payables
Borrowings
Lease Liability
Current Tax Liability
Employee Benefits
Unearned Income
Deferred Consideration
Total Current Liabilities
Non-Current Liabilities
Borrowings
Lease Liability
Employee Benefits
Unearned Income
Deferred Tax
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued Capital
Reserves
Retained Profits
Total Equity
9
10
11
12
12
13
14
15
16
17
18
19
20
16
17
19
20
21
22
31
23
10,435
9,328
292
2,658
22,713
198
16,778
70,354
87,330
10,325
8,920
217
2,253
21,715
204
10,397
74,844
85,445
110,043
107,160
9,310
3,925
1,426
987
1,954
2,567
-
10,732
3,924
1,149
1,046
1,872
2,384
1,392
7,013
4,357
263
857
12,490
46
6,365
36,649
43,060
55,550
6,283
3,924
1,014
977
1,293
1,015
1,968
20,169
22,499
16,474
1,600
9,523
115
342
9,349
20,929
41,098
68,945
44,321
416
24,208
68,945
5,626
2,504
239
256
11,016
19,641
42,140
65,020
43,884
155
20,981
65,020
9,128
650
186
-
4,381
14,345
30,819
24,731
12,246
361
12,124
24,731
42
1.
Reclassified and measured amounts due to introduction of AASB 16 - see note 3 for details.
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2020 FINANCIAL STATEMENTS - CONTINUED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For Year Ended 30 June 2020
Share Based
Payment
Reserve
Retained
Profits
(restated)1
Consolidated
Balance at 1 July 2018
Profit after Income Tax for the Year
Other Comprehensive Income
Total Comprehensive Income for the Year
Transactions with Owners, in their Capacity
as Owners:
Dividends Paid
Performance Rights Issued
Movements as a result of existing
Performance Rights
Employee Share Plan
Shares Issued Net of Capital Raising Costs
Tax Effect of Capitalised Costs
Balance at 30 June 2019 (restated)1
Note
24
22
22
Consolidated
Note
Balance at 1 July 2019 (restated)1
Profit after Income Tax for the Year
Other Comprehensive Income
Total Comprehensive Income for the Year
Transactions with Owners, in their Capacity
as Owners:
Dividends Paid
Dividend Reinvestment Plan
Performance Rights Issued
Movements as a result of existing
Performance Rights
Employee Share Plan
Tax Effect of Capitalised Costs
Balance at 30 June 2020
24
22
22
Issued
Capital
$ ,000
12,246
-
-
-
-
-
327
135
31,235
(59)
43,884
$ ,000
361
-
-
-
-
11
(147)
(70)
-
-
155
Issued
Capital
$ ,000
43,884
Share Based
Payment
Reserve
$ ,000
155
-
-
-
-
45
-
-
153
239
44,321
-
-
-
-
-
13
248
-
-
416
Total
Equity
$ ,000
24,731
10,162
-
10,162
$ ,000
12,124
10,162
-
10,162
(1,305)
(1,305)
-
-
-
-
-
20,981
Retained
Profits
$ ,000
20,981
5,033
-
5,033
11
180
65
31,235
(59)
65,020
Total
Equity
$ ,000
65,020
5,033
-
5,033
(1,806)
(1,806)
-
-
-
-
-
45
13
248
153
239
24,208
68,945
1.
Reclassified and measured amounts due to introduction of AASB 16 - see note 3 for details.
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
43
ANNUAL REPORT 2020 FINANCIAL STATEMENTS - CONTINUED
CONSOLIDATED STATEMENT OF CASH FLOWS
For Year Ended 30 June 2020
Consolidated
Note
2020
Cash Flows from Operating Activities
Receipts from Customers
Payments to Suppliers & Employees
Interest Received
Interest Paid & Other Finance Costs Paid
Income Taxes Paid
Net Cash From / (Used In) Operating Activities
29(a)
Cash Flows from Investing Activities
Payments for Business Combinations (net of cash acquired)
Payments for Property, Plant & Equipment
Payments for Intangible Assets
Proceeds from Sale of Property, Plant & Equipment
Net Cash From / (Used In) Investing Activities
Cash Flows from Financing Activities
Proceeds from Issue of Shares (net of transaction costs)
Proceeds from Borrowings
Repayment of Borrowings
Repayment of Lease Liabilities
Dividends Paid
Net Cash From / (Used In) Financing Activities
Net Increase (Decrease) in Cash & Cash Equivalents
Cash & Cash Equivalents at the Beginning of the Year
Cash & Cash Equivalents at the End of the Year
Non-Cash Financing Activities
Shares Issued as Consideration for Business Acquisitions
Assets acquired through Finance Leases
Dividend Reinvestment plan
1.
Reclassified and measured amounts due to introduction of AASB 16 - see note 3 for details.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
2019
(restated)1
$ ,000
83,224
(66,074)
17,150
35
(579)
(4,092)
12,514
(24,821)
(2,602)
(896)
12
$ ,000
96,396
(80,691)
15,705
29
(426)
(3,669)
11,639
(1,427)
(4,404)
(864)
-
(6,695)
(28,307)
29(b)
9
-
2,170
(4,025)
(1,219)
(1,760)
(4,834)
110
10,325
10,435
-
-
45
25,441
-
(3,502)
(1,529)
(1,305)
19,105
3,312
7,013
10,325
5,810
1,353
-
44
ANNUAL REPORT 2020 5.0NOTES TO THE
FINANCIAL
STATEMENTS
45
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For Year Ended 30 June 2020
These consolidated financial statements and notes
represent those of Over the Wire Holdings Limited (the
“Company”) and its controlled entities (the “Group”).
The separate financial statements of the parent entity Over
the Wire Holdings Limited have not been presented within
the financial report as permitted by the Corporations Act
2001.
The financial statements were authorised for issue on 20
August 2020 by the directors of the Company.
NOTE 1: SIGNIFICANT
ACCOUNTING POLICIES
BASIS OF PREPARATION
These general purpose financial statements have been
prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’) and the Corporations
Act 2001, as appropriate for for-profit oriented entities.
These financial statements also comply with International
Financial Reporting Standards as issued by the
International Accounting Standards Board (‘IASB’).
Except for cash flow information, the financial statements
have been prepared on an accrual basis and are based
on historical costs, modified, where applicable, by the
measurement at fair value of selected non-current assets,
financial assets and financial liabilities.
A. NEW ACCOUNTING STANDARDS ADOPTED IN THE
CURRENT FINANCIAL PERIOD
The Group has considered the implications of new or
amended Accounting Standards which have become
applicable for the current financial reporting period and
the Group had to change its accounting policies as a result
of adopting the following standards:
• AASB 16: Leases.
The impact of the adoption of these standards and the
respective accounting policies are disclosed in Note 3.
B. NEW ACCOUNTING STANDARDS FOR APPLICATION
IN FUTURE PERIODS
Accounting Standards issued by the AASB that are
not yet mandatorily applicable to the Group, together
with an assessment of the potential impact of such
pronouncements on the Group when adopted in future
periods, are discussed below:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Revised Conceptual Framework for Financial Reporting
(applicable to annual reporting periods beginning on or
after 1 January 2020).
The revised Conceptual Framework contains new
definition and recognition criteria as well as new guidance
on measurement that affects several Accounting
Standards. Where the Group has relied on the existing
framework in determining its accounting policies for
transactions, events or conditions that are not otherwise
dealt with under the Australian Accounting Standards, the
Group may need to review such policies under the revised
framework. At this time, the application of the Conceptual
Framework is not expected to have a material impact on
the Group's financial statements.
AASB 17: Insurance Contracts (applicable to annual
reporting periods beginning on or after 1 January 2021).
When effective, this Standard will replace the current
accounting requirements applicable to Insurance Contracts
in AASB 4: Insurance Contracts and. The overall objective of
AASB 17 is to provide an accounting model for insurance
contracts that is more useful and consistent for insurers.
In contrast to the requirements in AASB 4 which are
largely based on grandfathering previous local accounting
policies. This standard is not applicable to the Group.
Amendments to AASB 3: Definition of a Business
(applicable to annual reporting periods beginning on or
after 1 January 2020).
The definition of a business has been amended to help
entities determine whether an acquired set of activities
and assets is a business or not. They clarify the minimum
requirements for a business, remove the assessment of
whether market participants are capable of replacing any
missing elements, add guidance to help entities assess
whether an acquired process is substantive, narrow the
definitions of a business and of outputs, and introduce an
optional fair value concentration test.
Since the amendments apply prospectively to transactions
or other events that occur on or after the date of first
application, the Group will not be affected by these
amendments on the date of transition.
Amendments to AASB 101 and 108: Definition of Material
(applicable to annual reporting periods beginning on or
after 1 January 2020).
The purpose of the amendments is to align the definition
of ‘material’ across the standards and to clarify certain
aspects of the definition. The new definition states that,
’Information is material if omitting, misstating or obscuring
it could reasonably be expected to influence decisions that
the primary users of general purpose financial statements
make on the basis of those financial statements, which
provide financial information about a specific reporting
entity.’
The amendments to the definition of material is not
expected to have a significant impact on the Group’s
consolidated financial statements.
46
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
C. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements incorporate the
assets and liabilities of all subsidiaries of the Group
(‘Company’ or ‘Parent Entity’) as at 30 June 2020 and the
results of all subsidiaries for the year then ended. The
Group and its subsidiaries together are referred to in these
financial statements as ‘the Group’.
Subsidiaries are all those entities over which the Group
has the power to govern the financial and operating
policies, generally accompanying a shareholding of more
than one half of the voting rights. The effects of potential
exercisable voting rights are considered when assessing
whether control exists. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group.
They are de-consolidated from the date that control
ceases.
Inter-company transactions, balances and unrealised
gains on transactions between entities in the Group are
eliminated. Unrealised losses are also eliminated unless
the transaction provides evidence of the impairment of the
asset transferred. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with
the policies adopted by the Group.
The acquisition of subsidiaries is accounted for using the
acquisition method of accounting. Refer to the ‘Business
Combinations’ accounting policy for further details. A
change in ownership interest, without the loss of control,
is accounted for as an equity transaction, where the
difference between the consideration transferred and the
book value of the share of the non-controlling interest
acquired is recognised directly in equity attributable to the
parent.
Where the Group loses control over a subsidiary, it de-
recognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any
cumulative translation differences recognised in equity.
The Group recognises the fair value of the consideration
received and the fair value of any investment retained
together with any gain or loss in profit or loss.
D. 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 acquirer’s identifiable net
assets. All acquisition costs are expensed as incurred to
profit or loss.
47
On the acquisition of a business, the Group assesses
the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance
with the contractual terms, economic conditions, the
Group’s operating or accounting policies and other
pertinent conditions in existence at the acquisition-date.
Contingent consideration to be transferred by the acquirer
is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of contingent consideration
classified as an asset or liability is recognised in profit or
loss.
The difference between the acquisition-date fair value
of assets acquired, liabilities assumed and any non-
controlling interest in the acquiree and the fair value of
the consideration transferred and the fair value of any
pre-existing investment in the acquiree is recognised
as goodwill. If the consideration transferred and the
pre-existing fair value is less than the fair value of
the identifiable net assets acquired, being a bargain
purchase to the acquirer, the difference is recognised
as a gain directly in profit or loss by the acquirer on the
acquisition-date, but only after a reassessment of the
identification and measurement of the net assets acquired,
the non-controlling interest in the acquiree, if any, the
consideration transferred and the acquirer’s previously
held equity interest in the acquiree.
The acquisition date fair value of the consideration
transferred for a business combination plus the acquisition
date fair value of any previously held equity interest forms
the cost of the investment.
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.
E. FOREIGN CURRENCY TRANSLATION
The financial statements are presented in Australian
dollars, which is the Group’s functional and presentation
currency.
Foreign Currency Transactions
Foreign currency transactions are translated into
Australian dollars 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.
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
F. REVENUE RECOGNITION
Revenue is recognised when it is probable that the
economic benefit will flow to the Group and the revenue
can be reliably measured. Revenue is measured at the fair
value of the consideration received or receivable.
Sale of Goods
Customers obtain control of products when the goods are
delivered to their premises, unless otherwise stated in the
contract. Revenue is recognised at this point in time. Any
deposits taken as part of a contract with a customer are
recorded as a contract liability and are only recognised
as revenue once the relevant performance obligation is
met, in this case being the delivery of goods. Invoices are
usually payable within 14 to 30 days.
For contracts that permit the customer to return an item,
revenue is recognised to the extent that it is probable
that a significant reversal in the amount of cumulative
revenue recognised will not occur. Therefore, the amount
of revenue recognised is adjusted for expected returns,
which are estimated based on the historical data for
specific types of goods. No provision for returns is
provided for by the Group given the historical low levels of
returns.
All goods sold come with a manufacturer's warranty. As
such, no provision for warranties is provided for by the
Group.
Rendering of Services
Services to be provided to customers are described in each
contract and revenue is recognised on the following basis:
Recurring services:
Recurring services (monthly services for data networks,
data centre, colocation and cloud and managed services)
are recognised as revenue on a monthly basis as services
are provided over the term of the contract.
Non-recurring services:
For non-recurring services, where no breakdown of
individual service performance obligations are outlined
in a contract, services are taken to be provided to the
customer at the conclusion of the contract, at which point
revenue for these services will be recognised, otherwise
revenue is recognised as each performance obligation is
met based on either:
• The price allocated to each performance obligation
under the contract; or
• Where no price has been allocated to individual
performance obligations, the total revenue per the
contract, allocated based on the weighted sales price
for each performance obligation had they been sold
individually.
Where there is a difference in timing between payment
milestones and completion of performance obligations the
following will be recognised:
• A contract liability is recognised where a payment
milestone is invoiced prior to the satisfaction of
performance obligations.
• A contract asset is recognised where a performance
obligation is met, however under the relevant contract
the amount is not yet able to be invoiced.
Interest
Interest revenue is recognised as interest accrues using
the effective interest method. This is the method of
calculating the amortised cost of a financial asset and
allocating the interest income over the relevant period
using the effective interest rate, which is the rate that
exactly discounts estimated future cash receipts through
the expected life of the financial asset to the net carrying
amount of the financial asset.
Other Revenue
Other revenue is recognised when it is received or when
the right to receive payment is established.
INCOME TAX
G.
The income tax expense or benefit for the period is
the tax payable on that period’s taxable income based
on the applicable income tax rate for each jurisdiction,
adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences, unused tax losses
and the adjustment recognised for prior periods, where
applicable.
Deferred tax assets and liabilities are recognised for
temporary differences at the tax rates expected to apply
when the assets are recovered or liabilities are settled,
based on those tax rates that are enacted or substantively
enacted, except for:
• When the deferred income tax asset or liability arises
from the initial recognition of goodwill or an asset
or liability in a transaction that is not a business
combination and that, at the time of the transaction,
affects neither the accounting nor taxable profits; or
• When the taxable temporary difference is associated
with interests in subsidiaries, associates or joint
ventures, and the timing of the reversal can be
controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
The carrying amount of recognised and un-recognised
deferred tax assets are reviewed each reporting date.
Deferred tax assets recognised are reduced to the extent
that it is no longer probable that future taxable profits
will be available for the carrying amount to be recovered.
Previously un-recognised deferred tax assets are
recognised to the extent that it is probable that there are
future taxable profits available to recover the asset.
48
ANNUAL REPORT 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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.
Tax Consolidation
The Company and its wholly owned Australian subsidiaries
have formed a tax consolidated group with effect from 1
November 2015. The head entity within the group is Over
the Wire Holdings Limited.
The members of the tax-consolidated group are
identified in Note 31. Tax expense/income, deferred tax
liabilities and deferred tax assets arising from temporary
differences of the members of the tax-consolidated group
are recognised in the separate financial statements of
the members of the tax-consolidated group using the
"separate taxpayer within group" approach by reference to
the carrying amounts in the separate financial statements
of each entity and the tax values applying under tax
consolidation.
Current tax liabilities and assets and deferred tax assets
arising from unused tax losses and relevant tax credits of
the members of the tax-consolidated group are recognised
by Over the Wire Holdings Limited (as head entity in the
tax-consolidated group). Due to the existence of a tax
funding arrangement between the entities in the tax-
consolidated group, amounts are recognised as payable to
or receivable by Over the Wire Holdings Limited and each
member of the group in relation to the tax contribution
amounts paid or payable between the parent entity and
the other members of the tax-consolidated group in
accordance with the arrangement.
H. CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand, deposits
held at call with financial institutions, other short-term,
highly liquid investments with original maturities of three
months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant
risk of changes in value. For the statement of cash
flows presentation purposes, cash and cash equivalents
also includes bank overdrafts, which are shown within
borrowings of current liabilities on the statement of
financial position.
TRADE AND OTHER RECEIVABLES
I.
Trade receivables are initially recognised at fair value
and subsequently measured at amortised cost using the
effective interest method, less any loss allowance. Trade
receivables are generally due for settlement within 14 to
30 days.
Details about the Group’s impairment policies and the
calculation of the loss allowance are provided in note 25.
Other receivables are recognised at amortised cost, less
any loss allowance.
49
INVENTORIES
J.
Finished goods are stated at the lower of cost or net
realisable value, on a first-in-first-out basis. Costs of
purchased inventory are determined after deducting
rebates and discounts received or receivable.
Stock in transit is stated at the lower of cost and net
realisable value. Cost comprises purchase and delivery
costs, net of rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the
sale.
K. CONTRACT ASSETS AND COSTS
Accrued revenue (contract assets) relate to contracts
where the Group has recognised an asset for work
performed and which the Group has a right to payment
when performance obligations are completed. A contract
asset is recognised for work previously performed. When
invoicing takes place, any amount that has previously been
classified as a contract asset will be reclassified to trade
receivables. Contract assets are generally converted to
sales invoices / trade receivable within 1-3 months of being
recognised.
Details about the Group’s impairment policies and the
calculation of the loss allowance are provided in note 25.
Contract costs (prepayments) represent external or
staff costs incurred as part of satisfying a contract to
a customer. Where the cost relates to a performance
obligation that is satisfied at a point in time, it will be
recognised in profit and loss on the date the performance
obligation is met. Where the related performance
obligation is satisfied over time, the cost will be amortised
over the corresponding period.
L. CONTRACT LIABILITIES
The Group recognises two types of contract liabilities being
accrued expenses and unearned income.
The Group recognises unearned income where it
has received or is unconditionally entitled to receive
consideration before there is a transfer of goods or
services to a customer. Unearned income represents
the Group’s obligation to transfer goods or services to a
customer for which it has received consideration.
Accrued expenses are recognised when the Group has
received a benefit from an employee or external source
and has not yet been invoiced for the goods or services
provided. The liability recognised is equal to the Group's
estimate of the cost to be incurred for the goods or
services received, but not yet invoiced.
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
M. PROPERTY, PLANT AND EQUIPMENT
Plant and equipment is stated at historical cost less
accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the
acquisition of the items.
Depreciation is calculated on both a straight-line and
diminishing value basis, depending on the asset. The
depreciation method chosen is based on what is deemed
the most reliable to write off the net cost of each item of
property, plant and equipment over their expected useful
lives.
The depreciation rates used for each class of depreciable
assets are:
Computer,
Network &
IT Plant &
Equipment
Furniture and
Fixtures
Motor Vehicles
Straight Line
Diminishing Value
13 - 33%
15 – 67%
2½ - 33%
20 – 40%
15%
N/A
The residual values, useful lives and depreciation methods
are reviewed, and adjusted if appropriate, at each
reporting date.
Leasehold improvements and plant and equipment under
lease are depreciated over the unexpired period of the
lease or the estimated useful life of the assets, whichever
is shorter.
An item of property, plant and equipment is de-recognised
upon disposal or when there is no future economic benefit
to the Group. Gains and losses between the carrying
amount and the disposal proceeds are taken to profit or
loss.
N. LEASES
At the commencement of a contract, the Group assesses
whether a contract is, or contains, a lease. A contract is,
or contains, a lease if the contract conveys the right to
control the use of an identified asset for a period of time in
exchange for consideration. To assess whether a contract
conveys the right to control the use of an identified asset,
the Group assesses whether:
• The contract involves the use of an identified asset
which may be specified explicitly or implicitly. The asset
should be physically distinct or represent substantially
all of the capacity of a physically distinct asset. If the
lessor has a substantive substitution right, then the
asset is not identified;
• The Group has the right to obtain substantially all of the
economic benefits from the use of the asset throughout
the period of use; and
• The Group has the right to operate the asset throughout
the period of use, without the supplier having the right
to change those operating instructions.
For leases that contain components, the Group allocates
the consideration in the lease to each component based
on their relative stand-alone prices.
A number of leases for office and data centre premises
include options to extend the period of the lease. These
options are included in the calculation of the lease liability
and right of use asset where the Group is reasonably
certain that the option will be exercised.
Lease liabilities
Lease liabilities are measured at the present value of lease
payments, net of cash lease incentives that are not paid
at the balance date. Lease payments are apportioned
between principal repayments of the liability and finance
charges using the Group’s incremental borrowing rate,
calculated at the commencement of the lease. Lease
payments for office and data centre premises exclude
service fees such as outgoings, electricity or cleaning costs.
Right of Use Assets
Leased assets are capitalised at the commencement date
of the lease and comprise of the following:
initial lease liability amount
•
• add: initial direct costs incurred when entering into the
lease
less: lease incentives received
•
• add: estimate of any make good or restoration costs per
the lease agreement.
Right of use assets are depreciated on a straight-line basis
over the useful life to the Group, commencing from the
time the asset is ready for use.
O.
INTANGIBLE ASSETS
Brand Value
Brands are acquired in a business combination. Some
brands are not amortised, given the Board has assessed
them to have indefinite useful lives due to the strength
of the brand in the market and the intention to continue
using the brand indefinitely into the future. These are
tested annually for impairment, or more frequently if
events or changes in circumstances indicate that they
might be impaired. Some brands are amortised where the
Board has identified the Brand as likely to be transitioned
to an Over the Wire Brand in the future.
Right-to-Use Assets
Right-to-Use assets are acquired in a business
combination, whereby a right to access a specified
asset is conveyed, for a period of time, in exchange for
consideration. Right-to-Use assets are amortised on
a straight-line basis over the period of their expected
benefit, generally being the expected finite life of the
underlying lease which grants the access, including the
period of any options where the option is considered likely
to be exercised. Right-to-Use assets are carried at cost less
any accumulated amortisation and impairment losses.
50
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Goodwill
Goodwill arises on the acquisition of a business
combination. Goodwill is calculated as the excess sum of:
• the consideration transferred;
• any non-controlling interest; and
• the acquisition date fair value of any previously held
equity interest; over the acquisition date fair value of
net identifiable assets acquired.
Goodwill is not amortised. Instead, goodwill is tested
annually for impairment, or more frequently if events
or changes in circumstances indicate that it might
be impaired, and is carried at cost less accumulated
impairment losses. Impairment losses on goodwill are
taken to profit or loss and are not subsequently reversed.
Goodwill is allocated to the Group's cash-generating units
or groups of cash-generating units, representing the
lowest level at which goodwill is monitored.
Customer Contracts
Customer contracts and relationships acquired in a
business combination are amortised on a straight-line
basis over the period of their expected benefit, being
their expected finite life of approximately 10 years,
based upon the Group’s historical levels of customer
retention. Customer contracts are carried at cost less any
accumulated amortisation and impairment losses.
Internally Generated Computer Software
Costs that are clearly associated with an identifiable and
unique product, which will be controlled by the Group and
have a profitable benefit exceeding the cost beyond one
year, are recognised as intangible assets. The following
criteria are required to be met before the related expenses
can be capitalised as an intangible asset:
• The technical feasibility of completing the intangible
asset so that it will be available for use or sale.
• The intention to complete the intangible asset and use
or sell it.
• The Group’s ability to use or sell the intangible asset.
• How the intangible asset will generate probable future
economic benefits. Among other things, the Group can
demonstrate the existence of a market for the output of
the intangible asset or the intangible asset itself or, if it
is to be used internally, the usefulness of the intangible
asset.
• The availability of adequate technical, financial and
•
other resources to complete the development and to
use or sell the intangible asset, and
Its ability to measure reliably the expenditure
attributable to the intangible asset during its
development.
Computer software development costs recognised as
assets are amortised over their useful lives, not exceeding
a period of five years.
51
IMPAIRMENT OF NON-FINANCIAL ASSETS
P.
Goodwill and other intangible assets that have an
indefinite useful life are not subject to amortisation and
are tested annually for impairment, or more frequently
if events or changes in circumstances indicate that
they might be impaired. Other non-financial assets are
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its
recoverable amount.
Recoverable amount is the higher of an asset’s fair value
less costs of disposal and value-in-use. The value-in-use
is the present value of the estimated future cash flows
relating to the asset using a pre-tax discount rate specific
to the asset or cash-generating unit to which the asset
belongs. Assets that do not have independent cash flows
are grouped together to form a cash-generating unit.
Q. TRADE AND OTHER PAYABLES
These amounts represent liabilities for goods and services
provided to the Group prior to the end of the financial year
and which are unpaid. Due to their short-term nature they
are measured at amortised cost and are not discounted.
The amounts are unsecured and are usually paid within 30
days of recognition.
R. 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.
Where there is an unconditional right to defer settlement
of the liability for at least 12 months after the reporting
date, the loans or borrowings are classified as non-current.
S. FINANCE COSTS
Finance costs attributable to qualifying assets are
capitalised as part of the asset. All other finance costs
are expensed in the period in which they are incurred,
including:
•
•
Interest on short-term and long-term borrowings
Interest on finance leases
T.
FINANCIAL INSTRUMENTS
Initial Recognition and Measurement
Financial assets and financial liabilities are recognised
when the entity becomes a party to the contractual
provisions to the instrument. For financial assets, this is
equivalent to the date that the Company commits itself
to either purchase or sale of the asset (i e trade date
accounting is adopted).
ANNUAL REPORT 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Financial instruments (except for trade receivables) are
initially measured at fair value plus transactions costs
except where the instrument is classified as ‘at fair value
through profit or loss' in which case the transaction costs
are expensed to profit or loss immediately.
Trade receivables are initially measured at the transaction
price if the trade receivables do not contain a significant
financing component.
benefits associated with the asset. Financial liabilities are
de-recognised where the related obligations are either
discharged, cancelled or expire.
The difference between the carrying value of the financial
liability extinguished or transferred to another party and
the fair value of consideration paid, including the transfer
of non-cash assets or liabilities assumed, is recognised in
profit or loss.
Classification and Subsequent Measurement
• Financial Liabilities
Financial liabilities are subsequently measured at
amortised cost or fair value through profit or loss.
All financial liabilities are subsequently measured at
amortised cost using the effective interest method
except for:
• contingent consideration of an acquirer in a
business combination to which AASB 3: Business
Combinations applies
• held for trading financial liabilities; or
• financial liabilities initially designated as at fair value
through profit or loss.
Financial liabilities cannot be reclassified.
• Financial Assets
Financial assets are subsequently measured at
amortised cost, fair value through profit or loss or
fair value through other comprehensive income.
Measurement is on the basis of contractual cash flow
characteristics of the financial asset and the business
model for managing the financial assets.
Credit-impaired Financial assets
At each reporting date the Group assesses whether the
financial assets carried at amortised cost are credit-
impaired. A financial assets is credit impaired when one
or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have
occurred.
U. PROVISIONS
Provisions are recognised when the Group has a present
(legal or constructive) obligation as a result of a past
event, it is probable the Group will be required to settle
the obligation, and a reliable estimate can be made of
the amount of the obligation. The amount recognised
as a provision is the best estimate of the consideration
required to settle the present obligation at the reporting
date, taking into account the risks and uncertainties
surrounding the obligation. If the time value of money is
material, provisions are discounted using a current pre-tax
rate specific to the liability. The increase in the provision
resulting from the passage of time is recognised as a
finance cost.
Financial assets that meet the following conditions are
subsequently measured at amortised cost:
V. EMPLOYEE BENEFITS
• The financial asset is managed solely to collect
contractual cash flows; and
• the contractual terms within the financial asset
give rise to cash flows that are solely payments
of principal and interest on the principal amount
outstanding on specified dates.
Financial assets that meet the following conditions are
subsequently measured at fair value through other
comprehensive income:
• the contractual terms within the financial asset
give rise to cash flows that are solely payments
of principal and interest on the principal amount
outstanding on specified dates; and
• the business model for managing the financial assets
comprises both contractual cash flows collection and
the selling of the financial asset.
All other financial assets are measured at fair value
through profit or loss.
De-recognition
Financial assets are de-recognised where the contractual
rights to receipt of cash flows expires or the asset is
transferred to another party whereby the entity no longer
has any significant continuing involvement in the risks and
Wages and Salaries and Annual Leave
Liabilities for wages and salaries, including non-monetary
benefits, and annual leave expected to be settled within
12 months of the reporting date are recognised in current
liabilities in respect of employees’ services up to the
reporting date and are measured at the amounts expected
to be paid when the liabilities are settled. Based on past
experience, the Group does not expect the full amount of
annual leave classified as current to be settled within the
next 12 months.
Long Service Leave
The liability for long service leave is recognised in current
and non-current liabilities, depending on the unconditional
right to defer settlement of the liability for at least 12
months after the reporting date. The liability is measured
as the present value of expected future payments to be
made in respect of services provided by employees up
to the reporting date. Consideration is given to expected
future wage and salary levels, experience of employee
departures and periods of service. Based on past
experience, the Group does not expect the full amount of
long service leave classified as current to be settled within
the next 12 months.
Expected future payments are discounted using market
yields at the reporting date on Australian corporate bonds
52
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(the Milliman G100 Australian Corporate bonds discount
rate at the end of June) with terms to maturity and
currency that match, as closely as possible, the estimated
future cash outflows.
Equity-settled compensation
The Group operates an employee share and performance
rights plan. Share-based payments to employees are
measured at the fair value of the instruments issued and
amortised over the vesting periods. As performance rights
do not contain any market based targets, the fair value
of the rights is determined using probability weighted
pricing model. The number of rights expected to vest is
reviewed and adjusted at the end of each reporting period
such that the amount recognised for services received as
consideration for the equity instruments granted is based
on the number of equity instruments that eventually vest.
Until vested, the expenses recognised are accumulated in
the share based payment reserve.
ISSUED CAPITAL
W.
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
X. SHARE BASED PAYMENT RESERVE
This reserve is used to record expenses in relation to
share based payments during the vesting period of the
underlying equity instruments.
Y. DIVIDENDS
Dividends are recognised when declared during the
financial year and no longer at the discretion of the
Company.
Z. EARNINGS PER SHARE
Basic Earnings Per Share
Basic earnings per share is calculated by dividing the profit
attributable to the owners of the Group, by the weighted
average number of ordinary shares outstanding during the
financial year.
Diluted Earnings Per Share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into
account the after income tax effect of interest and other
financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares
assumed to have been issued for no consideration in
relation to dilutive potential ordinary shares.
AA. 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.
53
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.
AB. ROUNDING OF AMOUNTS
The Company is of a kind referred to in ASIC Corporations
(Rounding in Financial / Directors’ Reports) Instrument
2016/191, issued by the Australian Securities and
Investments Commission, relating to ‘rounding-off’.
Amounts in this report have been rounded off in
accordance with that Legislative Instrument to the nearest
thousand dollars, or in certain cases, the nearest dollar.
AC. COMPARATIVE FIGURES
When required by Accounting Standards, comparative
figures have been adjusted to conform to changes in
presentation for the current financial year.
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 other various 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 within the next financial year are
discussed below.
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
CORONAVIRUS (COVID-19) PANDEMIC
Judgement has been exercised in considering the impacts
that the Coronavirus (COVID-19) pandemic has had, or
may have, on the Group based on known information.
This consideration extends to the nature of the products
and services offered, customers, supply chain, staffing and
geographic regions in which the Group operates. Specific
notes address the current impact upon the financial
statements and uncertainties with respect to events or
conditions which may impact the consolidated entity
unfavourably as at the reporting date or subsequently as a
result of the Coronavirus (COVID-19) pandemic.
IMPAIRMENT OF RECEIVABLES
The loss allowances for financial assets are based on
assumptions about risk of default and expected loss rates.
The Group uses judgement in making these assumptions
and selecting the inputs to the impairment calculation,
based on the Group’s past history, existing market
conditions as well as forward looking estimates at the end
of each reporting period. Details of the key assumptions
and inputs used are disclosed in Note 25.
TIMING OF SATISFACTION OF SALES PERFORMANCE
OBLIGATIONS
For performance obligations that are satisfied over time,
the output method is used to determine the satisfaction
of performance obligations, and therefore revenue
recognised. This method is used due to the fact that
services are provided evenly over the relevant contract
period.
For performance obligations that are satisfied at a point in
time, revenue is deemed to be earned where the customer
has taken delivery of the goods or service, the risks and
rewards are transferred to the customer, and where there
is a valid sales contract.
TRANSACTION PRICE AND AMOUNTS ALLOCATED TO
PERFORMANCE OBLIGATIONS
With the exception of larger contracts entered into by
Comlinx, other contracts entered into by the Group include
the transaction price for each performance obligation
contained within each contract. For Comlinx contracts,
where the transaction price of a contract is not split out
against individual performance obligations, the transaction
price is allocated in proportion to stand-alone selling prices
that would have been charged for each performance
obligation. Stand-alone selling prices are based on the
current sales prices of the Group excluding any customer
or volume discounts. Since acquisition, Comlinx are
adopting contract pricing policies consistent with the rest
of the Group.
ESTIMATION OF USEFUL LIVES OF ASSETS
The Group determines the estimated useful lives and
related depreciation and amortisation charges for its
property, plant and equipment and finite life intangible
assets. The useful lives could change significantly as
a result of technical innovations or some other event.
The depreciation and amortisation charge will increase
where the useful lives are less than previously estimated.
Technically obsolete or non-strategic assets that have been
abandoned or sold will be written off or written down.
GOODWILL AND OTHER INDEFINITE LIFE INTANGIBLE
ASSETS
The Group tests annually, or more frequently if events or
changes in circumstances indicate impairment, whether
goodwill and other indefinite life intangible assets
have suffered any impairment, in accordance with the
accounting policy stated in note 1.
IMPAIRMENT OF NON-FINANCIAL ASSETS OTHER THAN
GOODWILL AND OTHER INDEFINITE LIFE INTANGIBLE
ASSETS
The Group assesses impairment of non-financial assets
other than goodwill and other indefinite life intangible
assets at each reporting date by evaluating conditions
specific to the Group and to the particular asset that
may lead to impairment. If an impairment trigger exists,
the recoverable amount of the asset is determined. This
involves fair value less costs of disposal or value-in-use
calculations, which incorporate a number of key estimates
and assumptions.
INCOME TAX
The Group is subject to income taxes in the jurisdictions
in which it operates. Significant judgement is required
in determining the provision for income tax. There are
many transactions and calculations undertaken during
the ordinary course of business for which the ultimate
tax determination is uncertain. The Group recognises
liabilities based on the Group’s current understanding of
the tax law. Where the final tax outcome of these matters
is different from the carrying amounts, such differences
will impact the current and deferred tax provisions in the
period in which such determination is made.
RECOVERY OF DEFERRED TAX ASSETS
Deferred tax assets are recognised for deductible
temporary differences only if the Group considers it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
54
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
LEASE TERM
Each office and data centre premises lease is assessed
to determine whether any available options to extend
the lease are likely to be exercised. This has resulted in
a mix of cases in the assumed extension of premises
leases, dependant on location and future business and
operational goals of the Group.
LEASE DISCOUNT RATES
The discount rate used to calculate the present value of
lease liabilities is the incremental borrowing rate of the
Group. The incremental borrowing rate is the estimated
rate of interest that the Group would have to pay to
borrow over a similar term, and with a similar security, the
funds necessary to obtain an asset of a similar value to the
right of use asset in a similar economic environment.
MAKE GOOD OR RESTORATION COSTS
Where office and data centre premises leases include a
make good or restoration clause, an estimate of these
costs is included in the value of the right to use asset
where a reasonable estimate can be calculated. In the case
where a reasonable estimate cannot be made, no cost is
recognised until such time as amounts can be reasonably
determined.
VALUATION OF DEFERRED CONSIDERATION PAYABLE
As the value of deferred consideration payable for
business combinations is dependent upon vendors
achieving revenue targets in future years, management
is required to make judgements that affect the reported
amounts in the financial statements. Management has
used their best judgement in determining the fair value of
the reported liabilities, including estimating the likelihood
of achieving the revenue targets and in turn the likelihood
of having to make the future payments.
LONG SERVICE LEAVE PROVISION
As discussed in note 1, the liability for long service leave
is recognised and measured at the present value of the
estimated future cash flows to be made in respect of
all employees at the reporting date. In determining the
present values of the liability, estimates of attrition rates
and pay increases through promotion and inflation have
been taken into account.
CREDIT RISK OF TRADE RECEIVABLES
As the Group provides a loss allowance against specific
trade receivables that have been identified as a higher
credit risk, remaining balances are deemed to be lower
risk, even if over 30 days past due. This assumption is
based on historical trends of low levels of trade receivable
write-offs along with consistent aging of trade receivable
balances of the Group across current and prior periods.
Assumptions underpinning the Group's expected credit
loss model are outlined in Note 25.
NOTE 3: CHANGES IN ACCOUNTING POLICIES
This note describes the nature and effect of the adoption of AASB 16: Leases on the group’s financial statements and also
discloses the new accounting policies that have been applied from 1 July 2019, where they are different to those applied in
prior periods.
AASB 16 Leases was implemented by the Group on 1 July 2019 and replaced the current requirements in AASB 117 Leases.
This standard was applied retrospectively by the Group, restating comparative information as if the standard has always
applied.
Under AASB 16, a contract is a lease or contains a lease if the contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration. Under AASB 117, a lease was either a finance lease (on balance
sheet) or an operating lease (off balance sheet). AASB 16 removes the distinction of operating and finance leases and
requires lessees to recognise a lease liability reflecting future lease payments and a ‘right-of-use asset’ for the majority of
lease contracts, with some minor exemptions available, of which the Group has applied the exemption regarding leases for
low value assets.
The lease liabilities are measured at the present value of the remaining lease payments, discounted using the Group's
incremental borrowing rate at the commencement date of each lease. The right-of-use asset comprises the initial lease
liability amount, plus initial direct costs incurred when entering into the lease, plus make good costs, less any lease incentives
received. The right of use asset is depreciated over the term of the lease.
Under AASB 16, the consolidated statement of comprehensive income no longer includes operating lease expenditure for
contracted leases, but is impacted by the recognition of additional interest and depreciation expense.
For existing finance leases previously accounted for under AASB 117, the carrying amount of the right-of-use asset and lease
liability at the date of initial application shall be the carrying amount of the lease asset and lease liability immediately before
the date measured applying AASB 117.
55
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The impact on lease arrangements on adoption impacted the consolidated statement of financial position as follows:
• Recognition of right of use assets
• Recognition of additional current and non-current lease liabilities
• De-recognition of prepayments for operating leases
• Decrease in opening retained earnings
The impact on the consolidated statement of comprehensive income was:
• Decrease of operating lease rent expense
•
•
Increase in depreciation expense
Increase in finance costs (interest expense)
The impact on the consolidated statement of cash flows was:
• Decrease in payments to suppliers and employees
•
•
Increase in finance costs
Increase in payments for lease liabilities
The Group has not applied any of the practical expedients included in AASB 16 as it is not applicable.
(i)
Group Policy
At the commencement of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses
whether:
• The contract involves the use of an identified asset which may be specified explicitly or implicitly. The asset should
be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the lessor has a
substantive substitution right, then the asset is not identified;
• The Group has the right to obtain substantially all of the economic benefits from the use of the asset throughout the
period of use; and
• The Group has the right to operate the asset throughout the period of use, without the supplier having the right to
change those operating instructions.
For leases that contain components, the Group allocates the consideration in the lease to each component based on their
relative stand-alone prices.
A number of leases for office and data centre premises include options to extend the period of the lease. These options are
included in the calculation of the lease liability and right of use asset where the Group is reasonably certain that the option
will be exercised.
The Group does not apply AASB 16 to intangible assets as allowed under the standard.
(ii)
Lease Liabilities
Lease liabilities are measured at the present value of lease payments, net of cash lease incentives that are not paid at the
balance date. Lease payments are apportioned between principal repayments of the liability and finance charges using the
Group’s incremental borrowing rate, calculated at the commencement of the lease. Lease payments for office and data
centre premises exclude service fees such as outgoings, electricity or cleaning costs.
(iii)
Lease Assets
Leased assets are capitalised at the commencement date of the lease and comprise of the following:
•
initial lease liability amount
• add: initial direct costs incurred when entering into the lease
•
less: lease incentives received
• add: estimate of any make good or restoration costs per the lease agreement.
Right of use assets are depreciated on a straight-line basis over the useful life to the Group, commencing from the time the
asset is ready for use.
56
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(iv)
Key Judgements
Lease discount rates
The discount rate used to calculate the present value of the lease liability is the incremental borrowing rate of the Group.
The incremental borrowing rate is the estimated rate of interest that the Group would have to pay to borrow over a similar
term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right of use asset in a similar
economic environment.
Lease term
Each office and data centre premises lease is assessed to determine whether any available options to extend the lease
are likely to be exercised. This has resulted in a mix of cases in the assumed extension of premises leases, dependant on
location and future business and operational goals of the Group.
Make good or restoration costs
Where office and data centre premises leases include a make good or restoration clause, an estimate of these costs is
included in the value of the right to use asset where a reasonable estimate can be calculated. In the case where a reasonable
estimate cannot be made, no cost is recognised until such time as amounts can be reasonably determined.
(v)
Quantitative Impact of Initial Application of AASB 16
The tables below provide details of the impact on comparative balances upon adoption of AASB 16 due to the consolidated
Group applying the full retrospective approach:
Consolidated
2019
Original
$ ,000
AASB 16
Adjustment
$ ,000
2019
Restated
$ ,000
(3,954)
(6,818)
(476)
(3,310)
12,765
(2,628)
10,137
453
(1,138)
(103)
828
40
(15)
25
Consolidated
AASB 16
Adjustment
Cents
0.052
0.052
2019
Original
Cents
20.661
20.596
(3,501)
(7,956)
(579)
(2,482)
12,805
(2,643)
10,162
2019
Restated
Cents
20.713
20.647
Consolidated statement of Comprehensive Income
Extract
Expenses
Data Centre & Co-Location Expense
Depreciation & Amortisation Expense
Finance Costs
Other Expenses
Profit before Income Tax
Income Tax
Income Tax Expense
Profit after Income Tax
Basic Earnings Per Share
Diluted Earnings Per Share
57
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Consolidated statement of Financial Position
Extract
Assets
Current Assets
Other Current Assets
Total Current Assets
Non Current Assets
Property, Plant and Equipment
Total Non Current Assets
Total Assets
Current Liabilities
Borrowings
Lease Liability
Total Current Liabilities
Non Current Liabilities
Borrowings
Lease Liability
Deferred Tax
Total Non Current Liabilities
Total Liabilities
Net Assets
Equity
Retained Profits
Total Equity
Consolidated statement of Cash Flows
Extract
Cash Flows from Operating Activities
Payments to Suppliers & Employees
Interest Paid
Net Cash From / (Used In) Operating Activities
Cash Flows from Financing Activities
Repayment of Borrowings
Repayment of Lease Liability
Net Cash From / (Used In) Financing Activities
Consolidated
2019
Original
$ ,000
AASB 16
Adjustment
$ ,000
2019
Restated
$ ,000
2,304
21,766
8,043
83,091
104,857
4,252
-
21,678
6,512
-
11,041
18,048
39,726
65,131
21,092
65,131
(51)
(51)
2,354
2,354
2,303
(328)
1,149
821
(886)
2,504
(25)
1,593
2,414
(111)
(111)
(111)
2,253
21,715
10,397
85,445
107,160
3,924
1,149
22,499
5,626
2,504
11,016
19,641
42,140
65,020
20,981
65,020
Consolidated
2019
Original
$ ,000
AASB 16
Adjustment
$ ,000
2019
Restated
$ ,000
(67,355)
(476)
11,336
(3,853)
-
20,283
1,281
(103)
1,178
351
(1,529)
(1,178)
(66,074)
(579)
12,514
(3,502)
(1,529)
19,105
58
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 4: OPERATING SEGMENTS & PRODUCT LINES
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Chief
Operating Decision Makers (‘CODM’) in assessing performance and determining the allocation of resources. The CODM
considers that the business has one reportable segment, being IT and Telecommunications. Therefore, all segment assets
and liabilities, and the segment result, relate to one business segment and consequently no detailed segment analysis has
been prepared.
Product Lines 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 product lines and assessing their performance. This is also the basis on which the board receive internal
management results.
A. DESCRIPTION OF PRODUCT LINES
The Group is a profitable, high growth provider of telecommunications, cloud and IT solutions. It has a national network
presence with Points of Presence (POPs) in all major Australian capital cities and Auckland, New Zealand. The Group utilises
more than 20 wholesale infrastructure providers to deliver services into these POPs for delivery of a complete data and voice
solution to meet each customer’s specific requirements. The Chief Operating Decision Makers (‘CODM’) consider the business
from both a product and a geographic perspective and have identified four reportable Product Lines.
Data Networks and Internet
The Group typically enters into an initial three year contract with a customer for the establishment, provision and
maintenance of its WAN. Customers include small to large businesses with single to multiple sites.
The Data Networks Product Line includes the provision of internet products and services. Access to affordable, high speed
and reliable connectivity is a prerequisite for consuming cloud based applications and services, facilitating transactions, and
utilising IP-based communications. The Group provides high bandwidth, dependable, business grade Internet connectivity
to enable Internet services, video conferencing, Software as a Service applications and online collaboration for businesses of
any size.
The Group supplies Internet connections matching the most appropriate technology to location and/or price requirements
of its customers.
Voice
The Group predominately provides Session Initiation Protocol (SIP) based Internet voice solutions that offer high quality, high
availability, voice calls at a lower cost to traditional telephony.
Over the Wire’s voice platform supports a range of client usage scenarios, from Private Branch exchanges (PBX) to call centre
diallers, for both inbound and outbound calling.
Hosting
The Group provides a range of private cloud-based services to its customers consisting of:
Infrastructure as a Service (IaaS):
Forming the base of a fully outsourced infrastructure solution. The Group offers its customers a range of IaaS platforms with
cloud-based server, storage and network services.
Hosted PBX:
The Group provides a business-grade hosted telephony solution, eliminating the need for high capital expenditure and costly
upgrade cycles to gain access to new features.
Data Centre Colocation:
Data Centre colocation allows customers to house their equipment, such as servers and network equipment, in the Group’s
secure, highly stable and monitored data centres reducing the risk of downtime and saving on environmental infrastructure
costs (such as power and air-conditioning).
Security & Managed Services
Managed Services:
The Group offers a range of Managed Services from basic maintenance through to complete outsourced IT support and
administration. This division also includes one-off project work where requested by the customer.
59
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Equipment:
The Group provides high quality equipment solutions, allowing customers to maximise their network performance and
reliability.
Security:
The Group provides a range of customised security options including unified threat management, remote and mobile user
connectivity management, content filtering, managed firewall and individualised reporting.
B. PRODUCT LINE INFORMATION PROVIDED TO THE CHIEF OPERATING DECISION MAKERS (‘CODM’).
The breakdown of revenue has been shown below geographically and by Product Line, split between revenue derived from
the transfer of goods and services over time and at a point in time.
Contract Revenue by Product Line
Data Networks and Internet
Voice
Hosting
Security & Managed Services
Total Contract Revenue by Product Line
Contract Revenue by Geographic Area
Australasia
Total Contract Revenue by Geographic Area
Consolidated
2020
$ ,000
37,531
19,597
10,134
20,349
87,611
87,611
87,611
2019
$ ,000
36,959
16,417
9,075
17,138
79,589
79,589
79,589
Revenue is derived from the transfer of goods and services over time and at a point in time in the following product lines:
30 June 2020
Timing of Revenue Recognition
Contract Revenue by Product Line
Data Networks and Internet
Voice
Hosting
Security & Managed Services
Total Contract Revenue by Product Line
30 June 2019
Contract Revenue by Product Line
Data Networks and Internet
Voice
Hosting
Security & Managed Services
Total Contract Revenue by Product Line
At a point in
time
$ ,000
565
683
11
13,780
15,039
285
338
7
14.988
15,618
Over time
$ ,000
36,966
18,914
10,123
6,569
72,572
36,674
16,079
9,068
2,150
63,971
Consolidated
2020
$ ,000
2019
$ ,000
37,531
19,597
10,134
20,349
87,611
36,959
16,417
23,028
3,185
79,589
60
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 5: OTHER INCOME
Other Income
Interest Income
Provision for change in expected deferred consideration payable
Other Sundry Income
Total Other Income
NOTE 6: EXPENSES
Profit before income tax includes the following expenses:
Data Centre & Colocation Expense
Data Centre & Colocation - Cost of Sales
Data Centre & Colocation - Other Expenses
Total Data Centre & Colocation Expense
Calls & Communications Expense
Calls & Communications - Cost of Sales
Calls & Communications - Other Expenses
Total Calls & Communications Expense
Other Cost of Goods Sold
Hardware, Software & Maintenance
Other Cost of Goods Sold
Total Other Cost of Goods Sold
Employee Benefits
Salaries and Wages
Superannuation
Annual and Long Service Leave
Share-based Payments Expense
Other Employee Expenses
Total Employee Benefits
61
Consolidated
2020
$ ,000
2019
$ ,000
29
(35)
56
50
35
4,058
30
4,123
Consolidated
2020
$ ,000
2019
(restated)1
$ ,000
1,185
2,331
3,516
27,085
72
27,157
12,532
2,811
15,343
16,801
1,524
(42)
459
1,969
20,711
1,005
2,496
3,501
24,708
138
24,846
10,895
2,137
13,032
14,765
1,334
344
277
1,791
18,511
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 6: EXPENSES (CONTINUED)
Depreciation
Computer, Network & IT Plant & Equipment
Furniture & Fittings
Motor Vehicles
Right of Use Assets
Total Depreciation
Amortisation
Amortisation of Internally Generated Software
Amortisation of other Intangibles
Amortisation of Borrowing Costs
Total Amortisation
Total Depreciation & Amortisation
Finance Costs
Interest and Finance Charges Paid/Payable on Borrowings
Interest and Finance Charges Paid/Payable on Lease Liabilities
Total Finance Costs
Other Expenses
Legal, Accounting & Business Acquisition Costs
Premises
Licenses & Subscriptions
Travel & Marketing
Loss allowance & impairment of financial assets
General Expenses
Total Other Expenses
Total Expenses
Consolidated
2020
$ ,000
2019
(restated)1
$ ,000
2,760
113
3
1,501
4,377
552
4,802
25
5,379
9,756
226
200
426
481
523
879
493
550
632
2,330
56
1
1,365
3,755
287
3,896
18
4,201
7,956
441
138
579
534
233
665
657
42
351
3,538
80,447
2,482
70,907
1.
Reclassified and measured amounts due to introduction of AASB 16 - see note 3 for details.
Expenses increased largely due to the full year impact of Comlinx and Access Digital, both of which had 8 months of results
in the comparative period.
62
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 7: INCOME TAX EXPENSE
Income Tax Expense
Current Tax
Deferred Tax – origination and reversal of temporary differences
Deferred Tax – adjustment recognised for prior periods
Adjustment recognised for prior periods
Aggregate Income Tax Expense
Deferred tax included in income tax expense comprises:
(Increase) / Decrease in Deferred Tax Assets
Increase / (Decrease) in Deferred Tax Liabilities
Deferred Tax – origination and reversal of temporary differences
Numerical Reconciliation of Income Tax Expense and Tax at Statutory Rate
Profit before income tax expense
Tax at the statutory rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable
income:
Entertainment
Amortisation of Intangibles
Accounting & Legal & Business Acquisition Costs
IPO Costs
Provision for change in deferred consideration
Other Sundry Items
Adjustment recognised for prior periods
Movement in Timing Differences
Difference in tax balances acquired on business combinations
Income Tax Expense
The applicable weighted average effective tax rates are as follows:
Consolidated
2020
$ ,000
2019
(restated)1
$ ,000
3,531
(1,408)
(8)
66
2,181
(1,722)
314
(1,408)
7,214
2,164
27
-
-
-
10
(86)
(49)
66
-
-
2,181
30%
4,095
(1,449)
-
(3)
2,643
(161)
(1,288)
(1,449)
12,805
3,842
24
-
34
(59)
(1,218)
26
(1,193)
(3)
-
(3)
2,643
21%
1.
Reclassified and measured amounts due to introduction of AASB 16 - see note 3 for details.
The applicable weighted average effective tax rate is low in 2019 due to the reduction in the Provision for Deferred
Consideration taken to profit and loss, which is not subject to tax.
63
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 8: EARNINGS PER SHARE
Reconciliation of Earnings to Profit or Loss
Earnings Used to Calculate Basic Earnings Per Share
Earnings Used to Calculate Diluted Earnings Per Share
Weighted Average Number of Ordinary Shares
Weighted Average Number of Ordinary Shares Outstanding During the Year Used
in Calculating Basic Earnings Per Share
Adjustments for calculation of diluted earnings per share:
Weighted Average Number of Performance Rights Outstanding During the Year
Used in Calculating Dilutive Earnings Per Share
Weighted Average Number of Ordinary Shares Outstanding During the Year Used
in Calculating Dilutive Earnings Per Share
Basic Earnings Per Share (Cents Per Share)
Diluted Earnings Per Share (Cents Per Share)
Consolidated
2020
$,000
5,033
5,033
,000
51,626
2019
(restated)1
$,000
10,162
10,162
,000
49,062
174
157
51,800
49,219
Cents
9.749
9.716
Cents
20.713
20.647
1.
Reclassified and measured amounts due to introduction of AASB 16 - see note 3 for details.
Earnings per share decreased predominately due the recognition of $4,058K of other income in the prior year relating to
a reduction in consideration payable for the acquisition of Comlinx, as well as lower than expected non-recurring revenue,
stemming from the impact of COVID-19.
NOTE 9: CASH & CASH EQUIVALENTS
Cash & Cash Equivalents (Current)
Cash on Hand
Cash at Bank
Total Cash & Cash Equivalents
Consolidated
2020
$ ,000
1
10,434
10,435
2019
$ ,000
1
10,324
10,325
Reconciliation to Cash and Cash Equivalents at the End of the Financial Year
The above figures are reconciled to cash and cash equivalents at the end of the
financial year as shown in the statement of cash flows as follows:
Balance as Above
Balance as per Statement of Cash Flows
10,435
10,435
10,325
10,325
64
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 10: TRADE & OTHER RECEIVABLES
The following table details the Group’s trade and other receivables exposed to credit risk with aging analysis and impairment
provided for thereon. Amounts are considered ‘past due’ when the debt has not been settled with the terms and conditions
agreed between the Group and the customer or counter-party to the transaction. Receivables that are past due are assessed
for impairment by ascertaining the debtors and are provided for where there are specific circumstances indicating that the
debt may not be fully repaid to the Group.
Trade & Other Receivables (Current)
Trade Receivables
Loss allowance
Term Deposits
Deposits Paid
Other Receivables
Total Trade & Other Receivables
Impairment of Receivables
The Group has applied the lifetime expected loss model for calculating the
loss allowance on trade receivables. The accounting policies in relation to
the calculation of expected credit losses is outlined in Note 2. Assumptions
underpinning the expected credit loss model and other information on credit risk
is outlined in Note 25.
Loss allowance at 30 June
The aging of the impaired receivables provided for above are as follows:
Gross Trade Receivables
Less expected credit loss for specific balances
Expected credit loss - Based on weighted expected loss rate on remaining
balances at 2.35% for 30 June 2020 (2019: 1.09%)
Additional Overlay for COVID-19 - Based on weighted expected loss rate on
customers most at risk in impacted industries
Refer to Note 25 for further information.
Consolidated
2020
$ ,000
2019
$ ,000
7,952
(384)
7,568
257
183
1,320
9,328
7,952
(122)
7,830
(184)
(78)
6,030
(191)
5,839
822
140
2,119
8,920
6,030
(127)
5,903
(64)
-
Total Loss Allowance
(384)
(191)
Movements in Loss Allowance of Receivables is as Follows:
Opening Balance
Amounts restated through opening retained earnings
Additional Provision Recognised
Receivables Written off During the Year as Uncollectable
Unused amount reversed
Closing Balance
191
-
530
(337)
-
384
303
-
156
(268)
-
191
Trade and Other Receivables increased largely due to deferred payment terms offered to customers who were impacted by
COVID-19.
65
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 11: INVENTORIES
Inventories (Current)
Finished Goods – at Net Realisable Value
Total Inventories
NOTE 12: OTHER ASSETS
Other Assets (Current)
Prepayments - Maintenance Contracts
Prepayments - Other contracts
Prepayments - Other
Total Other Assets (Current)
Other Assets (Non-current)
Borrowing Costs
Prepayments - Maintenance Contracts
Total Other Assets (Non-current)
Total Other Assets
Amortisation of prepaid maintenance contracts recognised as a cost of providing
services during the period
1.
Reclassified and measured amounts due to introduction of AASB 16 - see note 3 for details.
Consolidated
2020
$ ,000
2019
$ ,000
292
292
217
217
Consolidated
2020
$ ,000
2019
(restated)1
$ ,000
800
1,333
525
2,658
10
188
198
2,856
2,259
1,056
779
418
2,253
32
172
204
2,457
2,498
Other assets increased due to the renegotiation of key supplier contracts which resulted in a change to the billing cycle. This
should be read in conjunction with the corresponding Unearned Income - Maintenance Contracts, at Note 20.
66
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 13: PLANT & EQUIPMENT
Computer, Network & IT Plant & Equipment (Non-Current)
Computer, Network & IT Plant & Equipment – at cost
Less: Accumulated Depreciation
Furniture & Fixtures (Non-Current)
Furniture & Fixtures – at cost
Less: Accumulated Depreciation
Motor Vehicles (Non-Current)
Motor Vehicles – at cost
Less: Accumulated Depreciation
Right of Use (Non-Current)
Right of Use Assets – at cost
Less: Accumulated Depreciation
Total Plant & Equipment at written Down Value
Consolidated
2020
$ ,000
2019
(restated)1
$ ,000
21,049
(14,563)
6,486
480
(415)
65
95
(89)
6
12,233
(2,012)
10,221
16,778
18,607
(11,856)
6,751
591
(428)
163
95
(86)
9
6,392
(2,918)
3,474
10,397
Reconciliations
Reconciliations of the written down value at the beginning and end of the current and previous financial year are set out
below:
Computer,
Network,
IT Plant &
Equipment
(restated)1
$,000
4,727
1,143
2,602
566
46
(3)
(2,330)
6,751
Furniture
& Fixtures
Motor
Vehicles
Right of Use
Assets
(restated)1
$,000
$,000
$,000
179
46
1
-
-
(7)
(56)
163
4
-
-
-
6
-
(1)
9
1,455
887
2,552
-
(52)
-
(1,368)
3,474
Total
$,000
6,365
2,076
5,155
566
-
(10)
(3,755)
10,397
Balance at 1 July 2018
Additions Through Business
Combinations
Additions
Transfers from inventory
Transfer between classes
Disposals*
Depreciation Expense
Balance at 30 June 2019
67
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 13: PLANT & EQUIPMENT (CONTINUED)
Furniture
& Fixtures
Motor
Vehicles
Right of Use
Assets
Computer,
Network,
IT Plant &
Equipment
$,000
6,751
-
2,496
-
-
(2,761)
6,486
Balance at 1 July 2019
Additions Through Business
Combinations
Additions
Transfers from inventory
Disposals
Depreciation Expense
Balance at 30 June 2020
$,000
163
-
15
-
-
(113)
65
$,000
9
-
-
-
-
(3)
6
1.
*
Reclassified and measured amounts due to introduction of AASB 16 - see note 3 for details.
During the 2018/2019 year $1,177K of assets with a written down value of nil were scrapped during the year.
NOTE 14: INTANGIBLES
Intangibles (Non-Current)
Goodwill – at Cost
Brand Value
Less: Accumulated Amortisation
Location and Right-to-Use
Less: Accumulated Amortisation
Customer Lists
Less: Accumulated Amortisation
Internally Generated Software
Less: Accumulated Amortisation
Total
$,000
10,397
-
$,000
3,474
-
8,247
10,758
-
-
(1,500)
10,221
-
-
(4,377)
16,778
Consolidated
2020
$ ,000
29,032
29,032
5,510
(681)
4,829
1,817
(874)
943
43,950
(10,152)
33,798
2,731
(979)
1,752
2019
$ ,000
29,032
29,032
5,510
(439)
5,071
1,817
(709)
1,108
43,950
(5,757)
38,193
1,867
(427)
1,440
Total Intangibles
70,354
74,844
68
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 14: INTANGIBLES (CONTINUED)
Reconciliations
Reconciliations of the written down value at the beginning and end of the current and previous financial year are set out
below:
Balance at 1 July 2018
Additions - Business Combinations
Additions
Disposals
Amortisation Expense
Balance at 30 June 2019
Additions - Business Combinations
Additions
Disposals
Amortisation Expense
Balance at 30 June 2020
Internally
Generated
Software
$,000
831
-
896
-
(287)
1,440
-
864
-
(552)
1,752
Goodwill
$,000
16,300
12,732
-
-
-
29,032
-
-
-
-
29,032
Brand
Value
$,000
3,246
2,050
-
-
(225)
5,071
-
-
-
(242)
4,829
Location &
Right
to Use
$,000
1,274
-
-
-
(166)
1,108
-
-
-
(165)
943
Customer
List
$,000
14,998
26,700
-
-
(3,505)
38,193
-
-
-
Total
$,000
36,649
41,482
896
-
(4,183)
74,844
-
-
-
(4,395)
33,798
(5,354)
70,354
69
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 14: INTANGIBLES (CONTINUED)
Finite Life Intangible Assets
Outlined below are the carrying amounts and remaining amortisation periods of the individual intangible assets that are material
to the Group’s financial statements at 30 June 2020.
Remaining
Amortisation Period
Carrying
Amount
Location & Right to Use - Sanity
Right to Use - WebCentral
Location & Right to Use
Customer List - Faktortel
Customer List - Sanity
Customer List - Telarus
Customer List - SpiderBox
Customer List - VPN Solutions
Customer List - Access Digital
Customer List - Comlinx
Customer List
Brand - Sanity
Brand - Telarus
Brand - VPN Solutions
Brand - Access Digital
Brand
Internally Generated Computer Software - 2017
Internally Generated Computer Software - 2018
Internally Generated Computer Software - 2019
Internally Generated Computer Software - 2020
Internally Generated Computer Software
Years
7
< 1
5
5
7
5
7
8
8
2
2
2
3
2
3
4
5
922
21
943
1,017
817
2,963
152
6,600
11,583
10,666
33,798
100
146
117
167
530
39
222
627
864
1,752
Impairment Disclosures
Both goodwill and a select number of brand values are allocated to a cash generating unit, which is based on the Group’s
reporting segment. As per Note 4, the Group has one reportable segment, being IT and Telecommunications.
Brand Value has been recorded in relation to the acquisition of Faktortel & Comlinx, and these costs are not amortised, given
the Board has assessed them to have indefinite useful lives due to the strength of the brand in the market, and the intention of
the Board to continue to trade under this brand indefinitely. Instead, these Brands are tested annually for impairment, or more
frequently if events or changes in circumstances indicate that they might be impaired. Other acquired Brand values are being
amortised, where the Board has assessed that the Brands will eventually be replaced in the market by the Over the Wire brand
after an appropriate period of co-branding.
70
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 14: INTANGIBLES (CONTINUED)
Impairment Testing of Goodwill
All Goodwill is allocated to the Group’s one cash generating unit (CGU) being IT & Telecommunications.
The recoverable amount of the cash-generating unit is determined based on value-in-use calculations. These calculations use
the present value of cash flow projections over a 5 year period, with growth rates based on historical growth rates achieved
in the past and budgets approved by management. A terminal value based on the EBITDA exit multiple method was used in
the calculation.
Key assumptions used for value-in-use calculations:
CGU – IT & Telecommunications:
EBITDA & Net Cash flow from Operations (growth rate)
Discount Rate
2020
2019
13%
10%
18%
10%
As the Group runs a business structure that is light on capital expenditure requirements and utilises back-to-back purchasing
arrangements aligned with the contractual terms of customers contracts, revenue, cost of goods sold and overhead have not
been assessed in isolation, but instead EBITDA has been used for future cash flow projections, based on the entity’s historical
accuracy on forecasting EBITDA growth and its ability to manage expenses in line with revenue growth.
The Discount rate has been based upon an estimate of the entity’s weighted average cost of capital, and is similar to that
used in the valuation of other intangible assets such as customer lists.
Impairment Charge for Goodwill
As a result of the impairment testing and evaluation, the Group has determined that the carrying value of Goodwill does not
exceed their value-in-use, and no impairment charge is required.
Impact of possible changes in key assumptions
If the growth rate for EBITDA and Net Cash flow from Operations was reduced by 50% to 6%, there would still be no
impairment charge required.
If the discount rate, based on an estimate of the entity’s weighted average cost of capital was increased by 50% to 15%, there
would still be no impairment charge required.
NOTE 15: TRADE & OTHER PAYABLES
Trade & Other Payables (Current)
Trade Payables
GST Payable
Accrued Expenses
Other Payables
Total Trade & Other Payables (Current)
Consolidated
2020
$ ,000
4,981
1,010
2,624
695
9,310
2019
$ ,000
7,396
761
1,930
645
10,732
Trade and Other Payables decreased mainly due to the renegotiation of key supplier contracts which resulted in a change to
the billing cycle.
71
ANNUAL REPORT 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 16: BORROWINGS
Borrowings (Current)
Term Loan
Total Borrowings (Current)
Borrowings (Non-Current)
Term Loan
Total Borrowings (Non-Current)
Consolidated
2020
$ ,000
3,925
3,925
1,600
1,600
2019
(restated)1
$ ,000
3,924
3,924
5,626
5,626
Total Borrowings
5,525
9,550
1.
Reclassified and measured amounts due to introduction of AASB 16 - see note 3 for details.
Term Loan
This facility is secured by an interlocking guarantee and indemnity given by all entities in the Group supported by a first
registered general security agreement over all present and subsequently-acquired property over each of the entities in the
consolidated group. The nominal interest rate for the loan is 2.26% on top of the bank bill swap rate, with a maturity date of
31 July 2021.
Loan Covenants
Under the terms of the Group’s major borrowing facility, the Group is required to comply with the following financial
covenants:
• Debt Service Coverage Ratio must at all times exceed 1.75 times
• Financial debt / EBITDA Ratio must at all times be less than 2.25x
As at and during the financial year ended 30 June 2020, the Group had complied with these covenants.
Facilities Available
The Group has access to the following facilities, with the balance of the facilities as at 30 June 2020 being as follows:
Facility
Term Loan
Credit Card Facilities
Bank Guarantee Facilities
Limit
$,000
10,390
400
1,000
Used
$,000
5,525
64
869
72
ANNUAL REPORT 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 17: LEASE LIABILITIES
The Consolidated group leases office premises, data centre premises and IT Equipment across QLD, NSW, VIC & SA.
(a) Lease Liabilities
Current
Lease Liability - Premises
Lease Liability - IT Equipment
Lease Liability - Current
Non-Current
Lease Liability - Premises
Lease Liability - IT Equipment
Lease Liability - Non-Current
Total Lease Liability
Consolidated
2020
$ ,000
2019
(restated)1
$ ,000
1,119
307
1,426
8,941
582
9,523
10,949
821
328
1,149
1,618
886
2,504
3,653
(b) Associated Right of Use Assets
The written down value of Right of Use assets that relate to the above lease liabilities are as follows. They are also included in
the line Item "Property, Plant & Equipment" in the Consolidated Statement of Financial Position (Refer Note 13).
Right of Use Assets
Properties/ Premises
IT Equipment
Total Written Down Value (Note 13)
Consolidated
2020
$ ,000
9,125
1,096
10,221
2019
(restated)1
$ ,000
2,355
1,119
3,474
(c) Amounts recognised in the Consolidated Statement of Comprehensive Income
The Consolidated Statement of Comprehensive Income includes the following amounts relating to leases:
Right of Use Assets
Depreciation charge on properties/ premises (included in depreciation and
amortisation)
Depreciation charge on IT equipment (included in depreciation and amortisation)
Interest expense on properties/ premises (included in finance costs)
Interest expense on IT Equipment (included in finance costs)
(d) Cash outflows
Total cash outflows for leases for the year ended 30 June 2020 was $1,419K (2019: $1,640K)
73
Consolidated
2020
$ ,000
2019
(restated)1
$ ,000
1,235
1,138
265
174
26
230
103
35
1,700
1,506
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 17: LEASE LIABILITIES (CONTINUED)
(e) Other Information
Expense relating to low value leased assets
The expense relating to leases of low-value assets for which no lease liability or right of use asset has been recognised was
$29K for the year ended 30 June 2020 (2019: $35K).
Leases not yet commenced to which the consolidated group is committed
As at the date of this report, the Consolidated group has signed a new lease agreement for office premises with total cash
outflows of approximately $1,534K over the next 6 years which assumes all available options will be taken up. The start date
of the new lease is September 2020.
Extension and termination options
Extension and termination options are included in a number of property and equipment leases across the Group. These
terms are used to maximise operational flexibility in terms of managing contracts. The majority of extension and termination
options held are exercisable only by the Group and not by the respective lessor. Most extension options in property leases
have not been included in the lease liability, because the Group could replace the assets without significant cost or business
disruption. No estimate of potential future cash outflows on available options outside of those recognised in the lease
liability have been calculated on the basis that the majority of options, if taken up will trigger a rent review which could
significantly alter the outflows for these additional periods.
1.
Reclassified and measured amounts due to introduction of AASB 16 - see note 3 for details.
NOTE 18: CURRENT TAX LIABILITY
Current Tax Liability
Provision For Income Tax Payable
Total Current Tax Liability
NOTE 19: EMPLOYEE BENEFITS
Employee Benefits (Current)
Provision for Long Service Leave
Provision for Annual Leave
Other Employee Benefits Payable
Total Employee Benefits Payable (Current)
Employee Benefits (Non-Current)
Provision for Long Service Leave
Total Employee Benefits Payable (Non-Current)
Consolidated
2020
$ ,000
987
987
2019
$ ,000
1,046
1,046
Consolidated
2020
$ ,000
2019
$ ,000
820
1,134
-
1,954
115
115
570
1,302
-
1,872
239
239
Total Employee Benefits
2,069
2,111
74
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 19: EMPLOYEE BENEFITS (CONTINUED)
Movement in Provisions
Provision for Long Service Leave
Balance at 1 July
Additional Provisions
Additions Through Business Combinations
Amounts Used
Balance at 30 June
Provision for Annual Leave
Balance at 1 July
Additional Provisions
Additions Through Business Combinations
Amounts Used
Balance at 30 June
Consolidated
2020
$ ,000
2019
$ ,000
809
149
-
(23)
935
1,302
1,039
-
(1,209)
1,134
527
209
94
(21)
809
952
1,053
193
(896)
1,302
Amounts Not Expected to be Settled Within the Next 12 Months:
The current provision for long service leave includes all unconditional entitlements where employees have completed the
required period of service and also where employees are entitled to pro-rata payments in certain circumstances. Based on
past experience the Group does not expect all employees to take the full amount of accrued long service leave or require
payment within the next 12 months.
NOTE 20: UNEARNED INCOME
Unearned Income (Current)
Customer prepayments and deposits
Setup fees
Unearned income - maintenance contracts
Total Unearned Income (Current)
Unearned income (Non-current)
Unearned income - maintenance contracts
Total Unearned Income (Non-Current)
Total Unearned Income
Revenue recognised in the reporting period that was included in unearned income
at the beginning of the period
Consolidated
2020
$ ,000
2019
$ ,000
1,688
19
860
2,567
342
342
2,909
2,384
1,031
15
1,338
2,384
256
256
2,640
1,015
Unearned income increased predominately due to a significant customer deposit made in June 2020 for the provision of
professional services. This should be read in conjunction with the corresponding prepaid maintenance contracts, at Note 12.
75
ANNUAL REPORT 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 21: DEFERRED TAX
Deferred Tax Consist Of:
Deferred Tax Assets (a)
Deferred Tax Liabilities (b)
Net Deferred Tax Asset / (Liability)
a) Deferred Tax Assets:
The Balance Comprises Temporary Differences Attributable to:
Accrued Expenses
Provision for Doubtful Debts
Employee Benefits
Claimable IPO Costs
Leases
Other
Deferred Tax Asset
Movement in Deferred Tax
Assets
Balance at 1 July 2018
(Charged) / Credited to Profit
or Loss
(Charged) / Credited through
Equity
Additions Through Business
Combinations
(Over) / Under Provision of
Prior Year
Balance at 30 June 2019
(Charged) / Credited to Profit
or Loss
(Charged) / Credited through
Equity
Additions Through Business
Combinations
(Over) / Under Provision of
Prior Year
Accrued
Expenses
$,000
144
83
Prov. for
Doubtful
Debts
$,000
91
(55)
-
34
-
261
32
-
-
-
-
21
-
57
58
-
-
-
Balance at 30 June 2020
293
115
Consolidated
2020
$ ,000
2019
(restated)1
$ ,000
3,728
(13,077)
(9,349)
1,746
(12,762)
(11,016)
293
115
731
201
2,388
-
3,728
261
57
633
63
732
-
1,746
Employee
Benefits
Claimable
IPO Costs
Lease
Liability
Other
Total
$,000
$,000
$,000
$,000
444
110
-
79
-
633
(24)
-
-
122
731
100
-
(37)
-
-
63
-
125
-
13
445
23
-
264
-
732
1,656
-
-
-
201
2,388
-
-
-
-
-
-
-
-
-
-
-
$,000
1,224
161
(37)
398
-
1,746
1,722
125
-
135
3,728
76
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 21: DEFERRED TAX (CONTINUED)
b) Deferred Tax Liabilities:
The Balance Comprises Temporary Differences Attributable to:
Accrued Revenue
Provision for Change in Contingent Liability
Provision for Doubtful Creditors
Intangibles on Acquisitions
Property Plant & Equipment
Other
Deferred Tax Liability
Movement in Deferred Tax Liability
Consolidated
2020
$ ,000
2019
(restated)1
$ ,000
(52)
-
(29)
(10,500)
(2,500)
4
(89)
-
(63)
(11,903)
(707)
-
(13,077)
(12,762)
Accrued
Revenue
$,000
(202)
206
(93)
-
(89)
37
-
-
Balance at 1 July 2018
(Charged) / Credited to Profit
or Loss
Additions Through Business
Combinations
(Over) / Under Provision of
Prior Year
Balance at 30 June 2019
(Charged) / Credited to Profit
or Loss
Additions Through Business
Combinations
(Over) / Under Provision of
Prior Year
Balance at 30 June 2020
(52)
Prov. for
Change in
Contingent
Liability
$,000
-
-
-
-
-
-
-
-
-
Prov. for
Doubtful
Creditors
Intangibles
on
Acquisitions
Property,
Plant &
Equipment
Other
Total
$,000
(46)
(13)
(4)
-
(63)
34
-
-
$,000
(4,952)
1,133
$,000
(405)
(38)
(8,084)
(264)
-
-
(11,903)
1,403
(707)
(1,793)
-
-
-
-
$,000
$,000
-
-
-
-
-
5
-
(1)
(5,605)
1,288
(8,445)
-
(12,762)
(314)
-
-
(29)
(10,500)
(2,500)
4
(13,077)
1.
Reclassified and measured amounts due to introduction of AASB 16 - see note 3 for details.
77
ANNUAL REPORT 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 22: ISSUED CAPITAL
Issued Capital
Ordinary Shares – Fully Paid
Total Issued Capital
Movements in ordinary share capital
Balance
ESOP Shares vested from Performance Rights
Shares issued on Capital Raise
Shares issued on Acquisitions
Share placement
ESOP Shares Vested from Performance Rights
Employee Share Plan
Tax Effect of Capitalised Costs of IPO
Balance
Shares issued on DRP
Employee Share Plan
Tax Effect of Capitalised Cost
Shares issued on DRP
Balance
Consolidated
2020
$ ,000
44,321
44,321
Date
No. of Shares
Issue Price
,000
43,998
50
5,000
1,263
1,163
100
28
1 Jul 2018
23 Aug 2018
25 Oct 2018
1 Nov 2018
19 Nov 2018
10 Dec 2018
21 May 2019
30 Jun 2019
30 June 2019
51,602
10 Oct 2019
13 Dec 2019
31 Dec 2019
7 April 2020
5
33
-
11
30 June 2020
51,651
$
-
4.30
4.60
4.30
-
4.88
-
4.61
4.70
-
2.05
2019
$ ,000
43,884
43,884
Paid up
Amount
$,000
12,246
109
20,627
5,794
4,814
218
135
(59)
43,884
23
153
239
22
44,321
ORDINARY SHARES
Ordinary shares entitle the holder to participate in dividends and the proceeds of winding up the Company in proportion to
the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
SHARE BASED PAYMENTS - EMPLOYEE SHARES
On 21 May 2020, 32,648 ordinary shares were issued to employees under an Employee Share Plan with an issue price of
$4.70 per share and for nil consideration.
Shares acquired under this plan carry all of the same rights and obligations of other shares, except for any rights attaching
to shares by reference to a record date prior to the date of issue or transfer. Further details of the shares issued under the
Employee Share Plan are set out in note 31.
SHARE BASED PAYMENTS – PERFORMANCE RIGHTS
On 13 December 2019, the Group issued 115,387 performance rights to key management personnel and select senior staff
under an Employee Share Plan as a means of rewarding and incentivising key employees.
Further details of the performance rights, including details of rights issued during the financial year, are set out in note 31.
78
ANNUAL REPORT 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 22: ISSUED CAPITAL (CONTINUED)
CAPITAL RISK MANAGEMENT
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can
provide returns for shareholders and benefits to other stakeholders and to maintain an optimum capital structure to reduce
the cost of capital. Based on the current capital structure, issued capital is the only balance that the Group manages as
capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares, or sell assets to reduce debt.
The Group is subject to certain financing arrangement covenants and meeting these are given priority in all capital risk
management decisions. There have been no events of default on the financing arrangements during the financial year.
The capital risk management policy remains unchanged from the 30 June 2019 Annual Report.
NOTE 23: RETAINED PROFITS
Retained Profits
Retained Profits at the Beginning of the Financial Year
Profits After Income Tax Expense for the Financial Year
Dividends Paid
Retained Profits at the End of the Financial Year
1.
Reclassified and measured amounts due to introduction of AASB 16 - see note 3 for details.
NOTE 24: EQUITY – DIVIDENDS
Dividends
Interim fully franked ordinary dividend of 1.50 cents per share franked at the tax
rate of 30% (2019: 1.25 cents per share fully franked at 30%)
Final fully franked ordinary dividend of 2.00 cents per share franked at the tax
rate of 30% (2019: 1.50 cents per share fully franked at 30%)
Consolidated
2020
$ ,000
20,981
5,033
(1,806)
24,208
2019
(restated)1
$ ,000
12,124
10,162
(1,305)
20,981
Consolidated
2020
$,000
774
1,032
2019
$,000
644
661
Total Dividends for the Financial Year
1,806
1,305
Subsequent to year-end, on 20 August 2020, the Company declared a fully franked final dividend of 2.25 cents per share, for the
year ended 30 June 2020. The dates of the dividend are as follows:
Ex date
Record Date
DRP Election Date
Payment Date
14 September 2020
15 September 2020
16 September 2020
15 October 2020
As this final dividend was declared subsequent to year-end, no provision has been made in the accounts for the dividend.
79
ANNUAL REPORT 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 24: EQUITY – DIVIDENDS (CONTINUED)
Franking Credits
Franking Credits Available at the Reporting Date Based on a Tax Rate of 30%
Franking Credits that Will Arise From the Payment of the Amount of the Provision for
Income Tax at the Reporting Date Based on a Tax Rate of 30%
Consolidated
2020
$,000
12,944
987
2019
$,000
10,042
1,046
Franking Credits available for Subsequent Financial Years based on a Tax Rate of 30%
13,931
11,088
NOTE 25: FINANCIAL RISK MANAGEMENT
FINANCIAL RISK MANAGEMENT OBJECTIVES
The Group’s financial instruments consist mainly of deposits with banks, local money market instruments, accounts
receivable and payable, loans to and from subsidiaries, and leases.
The main purpose of non-derivative financial instruments is to raise finance for Group operations.
The Group does not have any derivative instruments at 30 June 2020 or 30 June 2019.
The totals for each category of financial instruments, measured in accordance with AASB 9 as detailed in the accounting
policies to these financial statements, are as follows.
Financial Assets
Cash & Cash Equivalents (Note 9)
Trade & Other Receivables (Note 10)
Total Financial Assets
Financial Liabilities
Trade & Other Payables (Note 15)
Borrowings (Note 16)
Lease Liabilities (Note 17)
Total Financial Liabilities
Consolidated
2020
$ ,000
10,435
9,328
19,763
9,310
5,525
10,211
25,046
2019
(restated)1
$ ,000
10,325
8,920
19,245
10,732
9,550
3,653
23,935
TREASURY RISK MANAGEMENT
The Boards overall risk management strategy seeks to assist the consolidated group in meeting its financial targets, whilst
minimising potential adverse effects on financial performance.
FINANCIAL RISK EXPOSURES AND MANAGEMENT
The main risks the Group is exposed to through its financial instruments are interest rate risk, liquidity risk and credit risk.
FOREIGN CURRENCY RISK
The Group has no material exposure to fluctuations in foreign currencies.
80
ANNUAL REPORT 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 25: FINANCIAL RISK MANAGEMENT (CONTINUED)
LIQUIDITY RISK
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents)
and available borrowing facilities to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised borrowing
facilities are maintained.
Cash flows realised from financial assets in the table below reflect management’s expectation as to the timing of realisation.
Actual timing may therefore defer from that disclosed.
Contracted maturities at
30 June 2019
Cash & Cash Equivalents
Trade and Other Receivables
Total
Contracted maturities at
30 June 2020
Cash & Cash Equivalents
Trade and Other Receivables
Total
0 – 12
Months
$ ,000
10,325
8,920
19,245
0 – 12
Months
$ ,000
10,435
9,328
19,763
1 – 2
Years
$ ,000
-
-
-
1 – 2
Years
$ ,000
-
-
-
2 – 5
Years
$ ,000
-
-
-
2 – 5
Years
$ ,000
-
-
-
> 5
Years
$ ,000
-
-
-
> 5
Years
$ ,000
-
-
-
Total
Cash Flows
Carrying
Amount
$ ,000
10,325
8,920
$ ,000
10,325
8,920
19,245
19,245
Total
Cash Flows
Carrying
Amount
$ ,000
10,435
9,328
19,763
$ ,000
10,435
9,328
19,763
The Group has recognised a loss of $530K (2019: $156K) in profit and loss in respect of impairment of receivables for the
year ended 30 June 2020. The movements in the provision for impairment of receivables were outlined in Note 10.
The table below sets out the maturity periods of the financial liabilities of the consolidated group as at 30 June 2020 and 30
June 2019. All carrying amounts of equipment finance are discounted contractual cash flows.
Contracted
maturities at
30 June 2019
Trade & Other
Payables
Borrowings
Lease Liabilities
Total
Contracted
maturities at
30 June 2020
Trade & Other
Payables
Borrowings
Lease Liabilities
Total
81
< 6
Months
6 – 12
Months
1 – 2
Years
2 – 5
Years
> 5
Years
Total
Cash Flows
Carrying
Amount
$ ,000s
10,732
2,289
770
13,791
$ ,000s
$ ,000s
$ ,000s
$ ,000s
$ ,000s
$ ,000s
-
-
-
1,635
486
2,121
3,925
774
4,699
1 – 2
Years
2,145
1,630
3,775
2 – 5
Years
-
-
288
288
10,732
10,732
9,994
3,948
9,550
3,353
24,674
23,935
> 5
Years
Total
Cash Flows
Carrying
Amount
< 6
Months
6 – 12
Months
$ ,000s
9,310
1,962
846
12,118
$ ,000s
$ ,000s
$ ,000s
$ ,000s
$ ,000s
$ ,000s
-
-
1,962
920
2,882
1,690
1,838
3,528
-
-
2,687
2,687
-
-
6,139
6,139
9,310
9,310
5,614
12,430
27,354
5,525
10,949
25,784
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 25: FINANCIAL RISK MANAGEMENT (CONTINUED)
CREDIT RISK
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised
financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the balance
sheet and notes to the financial statements.
There are no material amounts of collateral held as security at 30 June 2020 or 30 June 2019.
Credit risk is managed on a Group basis and reviewed regularly by the Board. It arises from exposures to customers as well
as through deposits with financial institutions.
The Board monitors credit risk by actively assessing the rating quality and liquidity of counter parties:
• only major Australian banks and financial institutions are utilised;
• potential customers with a monthly spend in excess of $1,000 are often rated for credit worthiness taking into account
their size, market position and financial standing; and
• customers that do not meet the Group’s strict credit policies may only purchase in cash or using recognised credit cards.
Due to the Coronavirus (COVID-19) pandemic, the calculation of expected credit losses has been revised as at 30 June
2020 and rates have increased to account for the increased uncertainty. The adjustment to loss rates has been made with
reference to the industries in which our customers operate and the expected impact of COVID-19 to that industry.
The following table provides information regarding the credit risk relating to cash and money market securities based on
Moody’s counter-party credit ratings.
Cash & Cash Equivalents
Aa3 Rated
A1 Rated
A3 Rated
Unallocated
Consolidated
2020
$ ,000
10,409
5
20
1
2019
$ ,000
10,131
193
-
1
Total Cash & Cash Equivalents
10,435
10,325
The following table summarises the assumptions underpinning the consolidated group's expected credit loss model.
Category
Consolidated group definition of category
Performing
Customers have a low risk of default and a
strong capacity to meet contractual cash flows
Under-performing
Non-performing
Balances are past due, however there is no
further indication that interest or principal
repayments will be unrecoverable
Basis for recognition of expected credit loss
provision
12 month expected losses for Cash & Cash
Equivalents. Lifetime expected losses for Trade
& Other Receivables
Lifetime expected losses
Balances are past due and there are other
indicators that interest or principal repayments
will be unrecoverable
Lifetime expected losses for Cash & Cash
Equivalents. Full balance of specific customer
for Trade & Other Receivables
Write-off
Confirmation that amounts will not be
recovered
Asset is written off
The consolidated group does not have any material credit risk exposure to any single receivable or group of receivables
under financial instruments entered into by the consolidated group.
82
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 25: FINANCIAL RISK MANAGEMENT (CONTINUED)
INTEREST RATE AND MARKET RISK
Market risk is the risk that changes in market prices, such as interest rates will affect the Company’s income or the value
of its holdings of financial instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising returns.
All of the Group’s equipment finance leases are at a fixed interest rate, and while the Group has term debt, the pricing is a
fixed margin above BBSY, the Group has significant cash and cash equivalents, and generally maintains a Debt-to-EBITDA
ratio of less than 1:1, and accordingly the Directors consider interest rate and market risk to be low.
SENSITIVITY ANALYSIS
A change in interest rates on the Term Loan would have the following impact on the post-tax profit over the remainder of the
expected term of the loan:
2% Decrease in Interest Rates
1% Decrease in Interest Rates
1% Increase in Interest Rates
2% Increase in Interest Rates
3% Increase in Interest Rates
Consolidated
2021
$ ,000
2022
$ ,000
76
38
(39)
(78)
(117)
4
2
(2)
(4)
(6)
DEBT MATURITY AND REFINANCING RISK
Refinancing risk is the risk that the Company is not able to refinance the full amount of its ongoing debt requirements on
appropriate terms and pricing. To reduce this risk, the Group maintains significant cash and cash equivalents, generally
maintains a Debt-to-EBITDA ratio of less than 1:1 making the Company an attractive lending proposition, and maintains
regular contact and good relationships with a variety of debt and equity funding institutions.
1.
Reclassified and measured amounts due to introduction of AASB 16 - see note 3 for details.
NOTE 26: REMUNERATION OF AUDITORS
Consolidated
2020
$ ,000
2019
$ ,000
107
19
126
102
22
124
During the financial year the following fees were paid or payable for services
provided by PKF Brisbane Audit, the auditor of the Group
PKF Brisbane Audit
Audit Services
PKF Brisbane Pty Ltd
Other Services – Tax compliance services
Total
NOTE 27: CONTINGENT ASSETS & LIABILITIES
CONTINGENT ASSETS
The Group had no contingent assets as at 30 June 2020 or 30 June 2019.
CONTINGENT LIABILITIES
The Group had no contingent liabilities as at 30 June 2020 or 30 June 2019.
83
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 28: CASH FLOW INFORMATION
(a) Reconciliation of Cash Flows from Operations with Profit After Income Tax
Profit After Income Tax
Non cash flows in profit/(loss):
Depreciation
Amortisation
Provision for Doubtful Debts
(Write-down) / Increase of Earn-out Payments
Other Non Cash Movements
Changes in Assets and Liabilities
(Increase) / Decrease in Trade and Other Receivables
(Increase)/ Decrease in Inventories
(Increase)/ Decrease in Other Assets
(Decrease)/ Increase in Deferred Tax Liabilities
(Decrease)/ Increase in Payables
(Decrease)/ Increase in Unearned Income
(Decrease)/ Increase in Provisions
(Decrease)/ Increase in Current Tax Liabilities
Net Cash Flows from Operating Activities
Consolidated
2020
$ ,000
2019
(restated)1
$ ,000
5,033
10,162
4,377
5,379
193
-
646
(215)
(75)
(399)
(1,428)
(2,040)
269
(42)
(59)
3,755
4,201
(226)
(4,058)
212
(2,754)
255
1,025
(1,412)
2,644
(1,656)
344
22
11,639
12,514
84
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 28: CASH FLOW INFORMATION (CONTINUED)
(b) Reconciliation of Cash Flows from Financing Activities
Balance at 1 July 2018
Dividends declared
Shares issued
Lease
Liability
$ ,000
1,664
-
-
Term Loan
Dividends
Payable
$ ,000
13,053
-
-
$ ,000
-
1,305
Shares
Issued
$ ,000
-
-
Total
$ ,000
14,717
1,305
-
(25,441)
(25,441)
Net cash provided by/ (used in) financing
activities
(1,529)
(3,502)
(1,305)
25,441
19,105
Acquisition of leases
Other changes
Balance at 30 June 2019
Dividends declared
Shares issued
Net cash provided by/ (used in) financing
activities
Acquisition of leases
Other changes
Balance at 30 June 2020
2,132
1,386
3,653
-
-
-
9,551
-
-
9,51
(4,025)
6,345
-
10,949
-
-
5,525
-
-
1,806
(46)
(1,760)
-
-
-
-
-
-
-
-
-
-
-
1.
Reclassified and measured amounts due to introduction of AASB 16 - see note 3 for details.
NOTE 29: PARENT INFORMATION
The following information has been extracted from the books and records of the parent and has been prepared in
accordance with Australian Accounting Standards.
PARENT ENTITY STATEMENT OF FINANCIAL POSITION
As At 30 June 2020
Assets
Current Assets
Non-Current Assets
Total Assets
Liabilities
Current Liabilities
Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued Capital
Reserves
Retained Profits
Total Equity
85
2020
$ ,000
3,452
64,245
67,697
18,017
1,600
19,617
48,080
44,321
416
3,343
48,080
2,132
1,386
13,204
1,806
(46)
(4,834)
6,345
-
16,473
2019
$ ,000
10,938
64,010
74,948
21,467
5,626
27,093
47,855
43,884
126
3,845
47,855
ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 29: PARENT INFORMATION (CONTINUED)
PARENT ENTITY STATEMENT OF COMPREHENSIVE INCOME
For Year Ended 30 June 2020
Total Profit
Total Comprehensive Income
2020
$ ,000
1,309
1,309
2019
$ ,000
5,509
5,509
GUARANTEES AND CONTRACTUAL COMMITMENTS
During the reporting period, Over the Wire Holdings Limited has a parent guarantee in place over the credit card facilities
operated by two of its subsidiaries (OTW Corp Pty Ltd and Over the Wire Ptd Ltd) totalling $400,000, as well as a bank
guarantee facility totalling $1,000,000.
CONTINGENT LIABILITIES
The parent entity did not have any contingent liabilities as at 30 June 2020 or 30 June 2019.
NOTE 30: RELATED PARTY TRANSACTIONS
Over the Wire Holdings Limited is the ultimate parent entity in the wholly owned Group comprising the Company and its
wholly owned controlled entities. Transactions between the Company and its controlled entities have been eliminated in the
consolidated financial statements.
The aggregate amounts of transactions between the Company and its controlled entities are in the respective classification
categories in the financial statements. The nature, terms and conditions of each different type of transaction area are as
follows:
• Fees charged by OTW Corp Pty Ltd to the members of the Group are in respect of the Company acting as a central
provider of corporate services to the Group, including employing all staff, providing office and administration services.
• Management fees charged by Over the Wire Holdings Limited to cover the costs of being listed on the Australian Securities
Exchange.
• A limited number of re-charged costs between Over the Wire Pty Ltd, Netsip Pty Ltd, Faktortel Pty Ltd, Telarus Pty Ltd and
Comlinx Pty Ltd, for discretionary operational reasons such as ease of reconciliations, facilitating a customer to receive a
single invoice despite ordering services from multiple companies, etc.
• Operational Loans for day-to-day working capital between the Company and its controlled entities are unsecured and
advanced on an interest free basis.
KEY MANAGEMENT PERSONNEL (KMP) COMPENSATION
Short –Term Employee Benefits
Long-Term Employee Benefits
Post-Employment Benefits
Termination Payments
Share based Payments
Key Management Personnel
Detailed remuneration disclosures are provided in the remuneration report on pages 16 to 22.
Consolidated
2020
$ ,000
1,780
21
115
-
148
2019
$ ,000
1,669
19
102
-
143
2,064
1,933
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ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 31: SHARE-BASED PAYMENTS - PERFORMANCE RIGHTS
EMPLOYEE SHARE PLAN
The Employee Share Plan was established to assist in maintaining a Company culture of promoting employee ownership.
Under the plan, employees who are employed on the anniversary of the Group's listing date are eligible to receive $1,000
of shares in the Company. The table below summarises details of shares issued to eligible employees under the Group's
Employee Share Plan.
Issue Date
Number of shares issued
Eligibility date
Share price on eligibility date
Consideration
Escrow period (from issue date)
Expense recognised in profit and loss
Consolidated
2020
2019
13 Dec 2019
21 May 2019
32,648
27,744
31 Oct 2019
31 Oct 2018
$4.70
-
3 years
$153,446
$4.88
-
3 years
$135,391
PERFORMANCE RIGHTS
In line with its remuneration policy, the Board approved the issue of performance rights under the OTW Performance Rights
Plan to key management personnel.
The Performance Rights will not give the holder a legal or beneficial interest in ordinary fully paid shares in Over the Wire
until those Performance Rights vest. Prior to vesting, Performance Rights do not carry a right to vote or receive dividends.
When the Performance Rights have vested, ordinary fully paid shares will be allocated, and these shares will rank equally
with existing Over the Wire Shares.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 31: SHARE-BASED PAYMENTS - PERFORMANCE RIGHTS
(CONTINUED)
The Performance Rights over Ordinary Shares have been issued in tranches as set out below.
Issue Date
1 April 2018
1 June 2019
29 May 2020
Vesting Date & Test Date
30 September 2020
30 September 2021
30 September 2022
2018
2019
2020
Expiry Date
Exercise Price
Amount Payable on Grant
Grant Date Value
Performance Hurdles
Performance Rights Granted to:
Mike Stabb
Ben Cornish
Gary Pittorino
Scott Smith
Ben Melville
Other Senior Staff
Fair Value of Performance Rights Issued
30 June 2019
Mike Stabb*
Ben Cornish*
Gary Pittorino*
Other Senior Staff
TOTAL
31 October 2020
31 October 2021
31 October 2022
$0.00
$0.00
$2.77
$0.00
$0.00
$4.88
$0.00
$0.00
$2.88
Service Tenure
& EPS absolute
Compound Annual
Growth Rate hurdle
from FY2017 to
FY2020:
<10% p.a. 0%
10%-15% 50-100%
pro-rata
>15% pa 100%
Service Tenure
& EPS absolute
Compound Annual
Growth Rate hurdle
from FY2018 to
FY2021:
<10% p.a. 0%
10%-15% 50-100%
pro-rata
>15% pa 100%
Service Tenure
& EPS absolute
Compound Annual
Growth Rate hurdle
from FY2019 to
FY2022:
<10% p.a. 0%
10%-15% 50-100%
pro-rata
>15% pa 100%
29,920
29,920
-
-
-
13,333
13,333
10,400
-
-
39,892
26,667
Granted
Vested
Forfeited
Opening
Balance
Qty
104,920
104,920
-
39,892
Qty
13,333
13,333
10,400
26,667
Qty
(75,000)
(75,000)
-
%
100
100
-
Qty
%
-
-
-
-
-
-
-
-
249,732
63,733
(150,000)
100
20,067
20,067
20,067
8,362
3,345
43,479
Share-
Based
Payment
Reserve
$
45,422
45,422
1,785
62,088
Closing
Balance
Qty
43,253
43,253
10,400
66,559
163,465
154,717
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ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 31: SHARE-BASED PAYMENTS - PERFORMANCE RIGHTS
(CONTINUED)
Granted
Vested
Forfeited
30 June 2020
Mike Stabb*1
Ben Cornish*
Gary Pittorino*
Scott Smith*2
Ben Melville*2
Opening
Balance
Qty
43,253
43,253
10,400
-
-
Other Senior Staff
66,559
TOTAL
163,465
115,387
1 Ceased role as Chief Financial Officer on 9 March 2020
2 Appointed 9 March 2020
* Indicates KMP
Qty
20,067
20,067
20,067
8,362
3,345
43,479
Qty
%
Qty
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Closing
Balance
Qty
63,320
63,320
30,467
8,362
3,345
110,038
278,852
Share-
Based
Payment
Reserve
$
110,195
110,195
25,795
929
372
168,924
416,410
The weighted average fair value of the performance rights granted to employees has been calculated by an independent
valuer at the date the performance rights were granted.
The weighted average fair value of performance rights granted is set out below. This value was calculated using the Black-
Scholes pricing model applying the following inputs:
Weighted average fair value
Weighted average life of the rights
Expected share price volatility
Risk-free interest rate
Consolidated
2020
$2.878
2019
$4.881
2.3 Years
2.3 Years
48.0%
0.26%
41.0%
1.10%
Historical share price volatility has been the basis for determining expected share price volatility as it is assumed that this is
indicative of future volatility.
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ANNUAL REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 32: SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policies described in Note1:
Consolidated
2020
2019
Name of Entity
Over the Wire Pty Ltd
Netsip Pty Ltd
Faktortel Pty Ltd (Acquired 28 July 2015)
Faktortel Holdings Pty Ltd (Acquired 28 July 2015)
Aero Telecom Pty Ltd (Acquired 28 July 2015)
Sanity Holdings Pty Ltd ( Acquired 30 November 2015)
OTW Corp Pty Ltd ( Registered 25 September 2015)
Telarus Pty Ltd ( Acquired 16 January 2017)
VPN Solutions Pty Ltd (Acquired 1 November 2017)
Access Digital Networks Pty Ltd (Acquired 1 November 2018)
Comlinx Pty Ltd (Acquired 1 November 2018)
NOTE 33: SUBSEQUENT EVENTS
Country of
Incorporation
Equity
Holding
Equity
Holding
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
DIVIDEND DECLARED
On 20 August 2020, the Company declared a fully franked final dividend of 2.25 cents per share, for the year ended 30 June
2020. The dates of the dividend are as follows:
Ex date
Record Date
DRP Election Close Date
Payment Date
14 September 2020
15 September 2020
16 September 2020
15 October 2020
As this final dividend was declared subsequent to year-end, no provision has been made in the accounts for the dividend.
ACQUISITION
On 11 August 2020, the Group signed a share purchase agreement to acquire 100% of the share capital in J2 Australia Cloud
Connect Pty Ltd and 100% of the share capital in Zintel Communications Limited.
The acquisition is due to settle on 31 August 2020, for consideration of $36,000K plus an adjustment for working capital.
The acquisition of both of the above businesses will strengthen the Group’s inbound call capability, while also providing
significant opportunities when combined with our existing outbound and hosted telephony platforms.
Details regarding the assets and liabilities acquired is not available at the date of this report as the transfer of ownership of
the business will be on 31 August 2020.
Except for the above, no other matter or circumstances have arisen since the end of the financial period which significantly
affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the
Group in future financial periods.
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ANNUAL REPORT 2020
6.0
DIRECTORS’
DECLARATION
91
ANNUAL REPORT 2020 DIRECTORS' DECLARATION
DIRECTORS’
DECLARATION
In the directors’ opinion:
i The financial statements and notes set out on pages 23 to 71 are in accordance with the
Corporations Act 2001, including:
a
complying with Accounting Standards, which, as stated in accounting policy Note 1 to the
financial statements, constitutes explicit and unreserved compliance with International
Financial Reporting Standards (IFRS) and the Corporations Regulations 2001; and
giving a true and fair view of the financial position as at 30 June 2020 and of the
performance for the year ended on that date of the Company and consolidated Group;
ii There are reasonable grounds to believe that the consolidated Group will be able to pay its
b
debts as and when they become due and payable.
The directors have been given the declarations by the Chief Executive Officer and the Chief
Financial Officer required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors.
Michael Omeros
Managing Director
Brisbane
20 August 2020
John Puttick
Chair Person
Brisbane
20 August 2020
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ANNUAL REPORT 2020
7.0
INDEPENDENT
AUDITOR’S
REPORT
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ANNUAL REPORT 2020
INDEPENDENT AUDITOR'S REPORT
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF OVER THE WIRE HOLDINGS LIMITED
Report on the Financial Report
Opinion
We have audited the accompanying financial report of Over the Wire Holdings Limited (the company), which
comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement
of comprehensive income, the consolidated statement of changes in equity and the consolidated statement
of cash flows for the year then ended, notes comprising a summary of significant accounting policies and
other explanatory information, and the directors’ declaration of the company and the consolidated entity
comprising the company and the entities it controlled at the year’s end or from time to time during the
financial year.
In our opinion the financial report of Over the Wire Holdings Limited is in accordance with the Corporations
Act 2001, including:
a)
Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020
and of its performance for the year ended on that date; and
b)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We are independent of the consolidated entity in accordance with the auditor independence requirements of
the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter is
provided in that context.
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1.
Implementation of AASB 16 Leases
Why significant
How our audit addressed the key audit matter
We have evaluated the application of AASB 16 and
tested the resulting impact on the consolidated
statement of financial position and consolidated
statement of comprehensive income. We have assessed
whether the accounting regarding leases is consistent
with the definitions of AASB 16 including factors such as
lease term, discount rate and measurement principles.
Specifically, our work in this area included:
• Discussions with management regarding the first-
time
checking
calculations on transition, including adjustments to
opening balances;
adoption methodology
and
• Assessing the integrity of the consolidated entity’s
AASB 16 lease workings and calculations prepared
by management;
• Assessing key judgements, including the internal
•
borrowing rate and renewal dates;
For a sample of leases, we agreed the consolidated
entity’s inputs in the AASB 16 lease calculation
model in relation to those leases such as key dates,
fixed and variable rent payments, renewal options
and
the
to
underlying signed lease agreements;
the relevant
incentives,
terms of
• Substantive testing of capitalised lease calculations
and the relevant unwinding of the lease asset and
lease liability; and
• Assessing the adequacy of the disclosures made
financial
the consolidated
in
by management
statements
The 30 June 2020 financial year was the first year of
adoption of Australian Accounting Standard AASB 16
Leases. The consolidated entity has a significant
volume of leases by value over property and data
centres.
AASB 16 replaces the existing standard AASB 117 and
specifies how a Company will recognise, measure,
present and disclose leases.
The Standard provides a single lessee accounting
model, requiring lessees to recognise assets and
liabilities for all leases unless the lease term is 12
months or less or the underlying asset has a low value.
The implementation of AASB 16 is considered a key
audit matter due to:
•
the complexity and judgements involved in the
application of AASB 16; and
the material adjustment to the entity’s assets and
liabilities as at 30 June 2019 and 1 July 2018 as a
result of the implementation of AASB 16.
•
The full retrospective approach was applied for the
conversion to AASB 16. Accordingly, the comparable
figures in prior periods have been restated.
The consolidated entity has disclosed its adoption of
AASB 16, including key judgements, in the note 3 to
the consolidated financial statements.
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ANNUAL REPORT 2020
INDEPENDENT AUDITOR'S REPORT - CONTINUED
2.
Impairment testing of intangible assets
Why significant
How our audit addressed the key audit matter
As at 30 June 2020 the carrying value of intangible
assets was $70.35m (2019: $74.84m), as disclosed in
Note 14. This represents 64% of total assets.
Our work included, but was not limited to, the following
procedures:
• assessing and challenging:
The consolidated entity’s accounting policy in respect
of intangible assets is outlined in Note 1.
An annual impairment test for goodwill and other
indefinite life intangible assets is required under
Australian Accounting Standard (AASB) 136
Impairment of Assets.
The evaluation of the recoverable amount requires the
consolidated entity to exercise significant judgement in
determining the key assumptions, which include:
• 5-year cash flow forecast;
• Terminal growth factor;
• Discount rate; and
• The determination that the consolidated entity has
one CGU, being the whole consolidated entity.
The outcome of the impairment assessment could vary
if different assumptions were applied. As a result, the
evaluation of the recoverable amount of intangible
assets including goodwill is an area of significant
estimation and judgement.
o
o
o
o
the FY21 budget by comparing the budget to
FY20 and FY19 actuals;
the assumptions used for the growth rate by
comparing normalised average growth rate
from FY19 to FY20 to the growth rate adopted
in the impairment model;
the key assumptions for long term growth in the
forecast cash flows by comparing them to
historical results and industry forecast deferrals
in light of the COVID-19 pandemic; and
the discount rate applied by comparing the
WACC to industry benchmarks.
•
testing, on a sample basis, the mathematical
accuracy of the cash flow models;
• agreeing inputs in the cash flow models to relevant
data including approved budgets and latest
forecasts; and
• performing sensitivity analysis in relation to key
assumptions including discount rate, growth rate and
terminal value.
Additionally, as part of our procedures, we assessed
•
the determination of Cash Generating Units (CGUs);
and
the appropriateness of the disclosures including
those relating to sensitivities in the assumptions
used, included in Note 14.
•
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ANNUAL REPORT 2020
INDEPENDENT AUDITOR'S REPORT - CONTINUED
3. Recognition of revenue
Why significant
How our audit addressed the key audit matter
The recognition of revenue, totalling $87.66m and
associated unearned income liabilities of $2.91m is
considered a key audit matter due to the number of
different revenue streams and the complexity in the
nature and timing of revenue generated by the
consolidated entity through each stream.
Note 4 to the financial statements details the revenue
streams of the consolidated entity and associated
accounting policies. Revenue amounts are disclosed in
the Consolidated Statement of Comprehensive Income,
and associated unearned income liabilities are
disclosed in Note 20 and the Consolidated Statement
of Financial Position.
Our work included, but was not limited to, the following
procedures:
We performed procedures on the significant revenue
streams as noted below and as disclosed in Note 4 to
the financial statements:
• Data networks and internet;
• Voice;
• Cloud and managed services; and
• Data centre co-location.
For a sample of contracts across each of the revenue
streams, we evaluated the individual contract where
applicable and agreed revenue amounts to the financial
statements and other records such as bank statements.
As part of these procedures we assessed the values
recorded and the timing of recognition over the service
period.
We considered the adequacy of the consolidated entity’s
revenue recognition accounting policies and assessed
compliance with the policies in terms of applicable
Australian Accounting Standards.
Other Information
The Directors of the company are responsible for the Other Information in the annual report. Other
Information is financial and non-financial information in the annual report of the consolidated entity for the
year ended 30 June 2020, 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, the auditor does
not and will not express an audit opinion or any form of assurance conclusion thereon, with the exception of
the Remuneration Report.
In connection with our audit of the financial report, our responsibility is to read the Other Information. In
doing so, we 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.
We are required to report if we conclude that there is a material misstatement of this Other Information in
the Financial Report and based on the work we have performed on the Other Information that we obtained
prior the date of this Auditor’s Report we have nothing to report.
Directors’ Responsibilities for the Financial Report
The Directors of the company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
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ANNUAL REPORT 2020
INDEPENDENT AUDITOR'S REPORT - CONTINUED
internal control as the Directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the consolidated entity’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the consolidated entity or to
cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the consolidated entity’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors.
• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the consolidated entity’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the consolidated entity to cease to
continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the consolidated entity to express an opinion on the group financial report. We are
responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
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.
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INDEPENDENT AUDITOR'S REPORT - CONTINUED
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
2020. 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
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2020.
In our opinion, the Remuneration Report of Over the Wire Holdings Limited for the year ended 30 June
2020, complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
PKF BRISBANE AUDIT
CAMERON BRADLEY
PARTNER
20 AUGUST 2020
BRISBANE
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ANNUAL REPORT 2020
CONTACT
DETAILS
WEBSITE
www.overthewire.com.au
EMAIL
info@overthewire.com.au
PHONE
1300 689 689
+61 7 3847 9292
BRISBANE
Level 24, 100 Creek Street
Brisbane QLD 4000
+61 7 3847 9292
SYDNEY
Level 9, 33 York Street
Sydney NSW 2000
+61 2 9191 9333
MELBOURNE
Level 8, 473 Bourke Street
Melbourne VIC 3000
+61 3 9938 8222
ADELAIDE
168 Greenhill Rd
Parkside SA 5063
+61 8 7100 0600
Over the Wire
100
ANNUAL REPORT 2020 101
ANNUAL REPORT 2020 Over the Wire
www.overthewire.com.au | 1300 689 689