Over the Wire Holdings Limited
ACN 151 872 730
2021
ANNUAL REPORT
Share Register
Auditor
Solicitors
Over the Wire Holdings Limited
ACN 151 872 730
GENERAL
This Annual Report is dated 27 October 2021.
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.
Over the Wire
overthewire.com.au
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New Chair
4
Chair’s Letter
5
CEO’s Report
6
Business Overview
8
Strategic Overview
10
Customer Service
11
Strategic acquisitions to accelerate growth
13
Positive Outlook
13
General Information
14
Corporate Directory
14
Director’s Report
15
Remuneration Report
25
Auditor Independence Declaration
37
Corporate Governance Statement
39
Financial Statements
50
Notes to the Financial Statements
55
Director’s Declaration
107
Independent Auditor Report
109
Contact Details
115
Directors’ Report
15
Remuneration Report
25
Notes to the Financial Statements
55
2021 ANNUAL REPORT
TABLE OF CONTENTS
Over the Wire 2021 Annual Report
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Over the Wire
I AM DELIGHTED TO BE JOINING OVER THE WIRE AT
THIS TIME – WHEN THE BUSINESS IS PERFORMING
STRONGLY AND FOCUSED ON GROWTH OPPORTUNITIES.
I LOOK FORWARD TO WORKING WITH THE BOARD AND
MANAGEMENT TEAM TO BUILD ON THE VERY
SOLID FOUNDATIONS ESTABLISHED
IN THE YEARS SINCE THE
COMPANY’S LISTING.
NEW CHAIR
INTRODUCING STEPHE WILKS
Following the retirement of our founding Chair John Puttick, Over the Wire announced
the appointment of experienced company Director Stephe Wilks as a new Non-Executive
Director and Chair of the Board of Directors, effective 1 July 2021.
Stephe is an active non-executive Director on the Board of several public and private
companies, across a range of commercial and operations disciplines, with a particular
emphasis on technology, governance, corporate finance and M&A. Stephe is Chair of 1st
Group Limited and non-executive director of ASX listed BluGlass Limited (ASX:BLG) and
Interactive Pty Limited.
He has extensive corporate finance, CEO, senior management and operational
experience,– particularly in the Australian and US markets, building on earlier work for
telcos in the UK, Australia and the Asia Pacific region. He previously held roles
as diverse as Chief Operating Officer of an aggressive wireless broadband
infrastructure company, Consulting Director of NM Rothschild & Sons,
and COO of Nextgen Networks.
overthewire.com.au
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Stephe Wilks
Chair of the Board of
Directors
Over the Wire 2021 Annual Report
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CHAIR’S LETTER
Dear Shareholders,
I am pleased to present the Over the Wire annual report for the year to 30 June 2021.
This is my first report as the Chair of the company’s Board of Directors following John
Puttick’s retirement.
I would like to start by thanking the staff, senior management, and my fellow Directors
for their many efforts during the year. Since the start of the pandemic all businesses,
including ours, have had to learn to adapt, change and grow in an increasingly complex
environment. Over the Wire’s people have risen to this challenge and worked tirelessly
to ensure the expectations of our shareholders, customers and other stakeholders
continue to be met.
Financially, it was another important year for the company as we executed and
commenced integrating the two largest acquisitions in the company’s history, while
continuing to drive organic growth and recurring revenue streams. Our overall revenue,
recurring revenue, earnings, margins and cash flows all recorded positive growth for the
year.
Our balance sheet remains strong, giving us the freedom and flexibility to pursue new
opportunities while also providing shareholders with a return on their investment.
The Board has declared a final dividend for 30 June 2021, of 2.25 cents per share fully
franked, taking the full-year payout to 4.0 cents per share, up from 3.75 cents per share
in the previous year.
The results for the year give us the confidence that we have the right strategy to
continue growing well into the future. The completion of our carrier interconnect project
will fundamentally transform our offering to the market and allow us to compete with
the biggest telcos in the country.
I would like to conclude by thanking my predecessor for his many contributions. John
was the inaugural Chairman of the company and guided us through our listing in 2015
and has played a key role in our many successes since then. On behalf of everyone at
Over the Wire, we wish you a happy retirement.
overthewire.com.au
Over the Wire 2021 Annual Report
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Over the Wire
CEO’S REPORT
I am pleased to report that the year under review has been a very successful one for Over the Wire.
As a business, we have faced significant challenges because of the external operating environment, but I am proud to say we
have risen to the occasion and delivered a positive result for shareholders. The achievements of the last 12 months leave us
very well positioned to meet whatever challenges lie ahead as we embark on an exciting new phase of growth.
We are beginning to feel the full benefit of the strategic investments we have made in recent years and our integrated Cloud.
Connect.Collaborate solution is delivering exceptional outcomes for clients. Our strong focus on customers ensures we can
retain them. We measure this through our customer retention rate that was again very high at 97.8% in the year to June 30,
2021.
Other highlights from the year include:
Completion of our multi-year Carrier Interconnect project which enables us to compete effectively with other Tier 1 carriers
Continued growth in recurring revenue and strong positive operating cashflows
Completion of the Zintel, Fonebox and Digital Sense acquisitions
Implementation of new Cloud availability zones in Perth and Adelaide
Increased international capacity and partnerships
Commencement of investment program to significantly upgrade the company’s core network (SuperCore)
FINANCIAL RESULTS
Throughout the year, we continued to focus on building our
recurring revenue streams, with total recurring revenue
growing 38% to $103.2 million compared to the previous
year. This component of revenue now represents 92% of
overall revenue, up from 85% in FY20. While non-recurring
revenue is an important part of our overall solutions
offering, our focus is and must be, on growing our recurring
revenue base.
It was particularly pleasing to see the strong growth in
recurring revenue throughout the year with a much stronger
second half than first half. While total revenue grew 25% in
the second half compared to the first half (mainly because
of acquisitions) our organic revenue increased 7%.
Our profit (EBITDA) for the year was $23.5 million (FY20:
$17.4 million) with EBITDA margin improving from 20% in
the previous year to 21%. The company also continued to
generate strong cash flows, with net cash from operating
activities in the year of $24.5 million, up 111% from $11.6
million in the previous year. Cash earnings per share (EPS)
rose 3% from 16.26 cents to 16.73 cents.
The results for the year were impacted by a delay in the
delivery of a major hardware supply contract due to
manufacturing and shipping delays. These types of supply
chain issues have not been unusual during the pandemic,
but unfortunately pushed completion of the project into the
FY22 year.
Our balance sheet remains strong and is enhanced by our
focus on converting revenue and earnings to cash. At the
end of the year, the company has $16.7 million cash on
hand and net assets of more than $100 million.
The Board has declared a final dividend for 30 June 2021, of
2.25 cents per share fully franked, taking the full-year payout
to 4.0 cents per share, up from 3.75 cents per share in the
previous year.
ACQUISITIONS
We continued our strategy of seeking value-adding
acquisitions to accelerate our growth and completed two
major transactions in FY21.
In August 2020, we acquired Fonebox and Zintel
Communications for a total upfront consideration of $36
million. The acquisitions give us control of a leading platform
provider of inbound telecommunication services in Australia
and New Zealand, delivering proven solutions to the
corporate and small/medium enterprise (SME) market and
introduces new solution capability to Over the Wire in the
areas of inbound telephony. They also delivered us about
9,000 new business customers.
With annual revenue of $19 million and EBITDA of $6
million, the businesses are expected to make a significant
contribution to Over the Wire’s future results. The
acquisitions were fully funded through a debt facility with
Westpac.
In October 2020 we acquired Digital Sense Hosting for
a total upfront consideration of $27 million. The price
comprised $21.6 million in cash and 1.4 million of OTW
shares. The acquisition of Digital Sense not only delivers us
some Enterprise and Government customers but provides a
strong platform to capitalise on the cloud industry’s strong
growth outlook. With revenue of $18.3 million and EBITDA of
$5.4 million for the 12 months to 30 June 2020, Digital Sense
is expected to make a significant contribution to Over the
Wire’s future results.
We will continue to seek out acquisitions in the future
where they make sense and enhance our value proposition
for clients. We have a strong track record of successfully
acquiring and integrating businesses and are determined to
maintain and enhance this record.
overthewire.com.au
Over the Wire 2021 Annual Report
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I WOULD ALSO LIKE
TO EXPRESS MY
GRATITUDE FOR THE
HARD-WORKING TEAM
AT OVER THE WIRE. IN
A CHALLENGING AND
EVER-CHANGING WORK
ENVIRONMENT THEY
HAVE CONSISTENTLY
STEPPED UP THE
MARK TO DELIVER
GREAT RESULTS FOR
OUR CLIENTS AND
SHAREHOLDERS.
Michael Omeros
Managing Director and Group CEO
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STRATEGY
Whether through organic growth, acquisition, or partnerships, our
goal remains to be a model “Telco of the Future”. All of our strategic
investments in infrastructure and partnerships over recent times have
been focused on ensuring we have the capacity, solutions and systems
to deliver exceptional client outcomes. We want to be the first stop
for all Australian and New Zealand businesses that have decided to
embrace digital transformation.
We remain fully committed to the growth and development of our
Cloud. Connect. Collaborate. solution and with the completion of
the Carrier Interconnect project, we now have all the elements of a
comprehensive, fully integrated platform that simplifies technology and
empowers business.
Completion of the Carrier Interconnect project was a particular highlight
of the year under review and allows Over the Wire to join an exclusive
group of Tier 1 carriers in Australia that can now offer full-service voice
capabilities. Other Tier 1 carriers include Telstra, Optus, TPG, MyNetFone
and Vocus. We see a range of opportunities to ramp up the growth
of our customer base and revenues in the voice space and begin to
challenge the incumbents through better solutions and better service.
OUTLOOK
As we head into a new financial year, our business is in great health and
ready to execute a range of growth-focused strategies.
Our priority, and area of greatest opportunity, is to maximise client
acquisition, operational leverage and savings from becoming a Tier 1
voice provider. At the end of June 2021, we had about 600,000 active
numbers on our NetSIP voice network. Our goal is to get this to more
than 1 million by the end of June 2022. To support this we’ll be rolling
out a fresh new NetSIP brand and leveraging our platform to deliver
white-label capabilities for the wholesale and partner ecosystem.
As a Tier 1 voice carrier, we will also be far less reliant on third-party
providers and unencumbered by legacy technology which will deliver
instant savings and about $2 million in additional earnings each year.
Other strategic priorities for the year include the roll-out of our Digital
Sense cloud platform infrastructure and capabilities to Melbourne and
Sydney and launching an international network offering to the wholesale
and partner networks. In the voice space, we are also working on a
white-labelled voice and cloud PBX offering to wholesale and partner
markets.
These strategies leave us confident of delivering on the target of 15%
growth in organic recurring revenue in the new year. Our confidence
is underpinned by a strong second half and a healthy pipeline of new
contracts and work.
I would like to take this opportunity to thank our outgoing Chair John
Puttick for his many contributions to Over the Wire’s success. John was
the inaugural Chair of the company, and we wish him all the best for
his retirement. John’s replacement Stephe Wilks is a very experienced
company director with a deep knowledge of the telecommunications
industry, and I look forward to working with him.
Over the Wire 2021 Annual Report
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Over the Wire
HOW WE AIM TO DO THIS
Providing a broad and integrated offering of products and services provides our customers with a complete solution from one
supplier dedicated to customer service.
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.
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 tailor 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.
OUR PRODUCTS
Reliable, flexible and
good value
OUR PEOPLE
Knowledgeable,
passionate and helpful
OUR PERFORMANCE
Superior service and
highly recommended
OUR PURPOSE IS TO SIMPLIFY TECHNOLOGY
TO EMPOWER BUSINESS.
BUSINESS OVERVIEW
overthewire.com.au
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OUR VISION IS TO BE THE
TECHNOLOGY SOLUTION
PROVIDER PASSIONATELY
PROMOTED BY OUR
CUSTOMERS.
Over the Wire 2021 Annual Report
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Over the Wire
Telco of the Future: beyond “speeds and feeds”
Our goal is to be the integrated platform underpinning the digital transformations of Australian and New Zealand business.
Challenging the current status quo, we are establishing the model for the telco of the future. For us this means:
Strategic infrastructure investments and partnerships
Automation, self-service capabilities, and AI
Business outcomes focus, supporting critical systems
Growing our partner ecosystem leveraging our integrated platform
Simplify technology to empower business
Software & IP
Infrastructure
Customer Service
Over the Wire
We are delivering on this goal through a focus on our core solution pillars, Cloud. Connect. Collaborate.
CLOUD
Public, Private & Dedicated Cloud
Hybrid &Multi-Cloud
Backup, Storage & Data Protection
DC Colocation
CONNECT
SD-WAN
Private IP
Internet
Private Mobile Data
Cloud Connectivity
International Ethernet
COLLABORATE
Cloud PBX
SIP & CTS
Mobile Fleet
SMS Gateway
Inbound Voice Routing & Analytics
SECURITY
MANAGEMENT
PORTAL & APIs
STRATEGIC OVERVIEW
overthewire.com.au
Over the Wire 2021 Annual Report
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CUSTOMER SERVICE
98.6%
97.1%
98.2%
97.3%
97.8%
96.0%
2015 2016 2017 2018 2019 2020 2021
CUSTOMER RETENTION
100%
80%
60%
40%
20%
0%
98.5%
Our dedication to customer service remains uncompromising and we have a culture which consistently delivers high levels
of customer service and retention. This is verified by our high levels of customer retention, shown in the graph below as
year on year customer revenue retained.
HAPPY CUSTOMERS
CASE STUDY: NATIONAL STORAGE UNLOCKS
EXPANSION GOALS USING OVER THE WIRE
MANAGED SD-WAN
INTRODUCTION
National Storage is one of the leading self-storage providers in Australia and New Zealand, with over 190 centres and more
than 70,000 residential and commercial customers. In December 2013, National Storage was the first independent, internally
managed and fully integrated self-storage business to list on the ASX. Since that time, National Storage has rapidly grown
both organically and via acquisition to become a $2.3b+ success story.
National Storage solutions include self-storage, business storage, climate-controlled wine storage, vehicle storage, vehicle and
trailer hire, packaging, insurance, logistics and other value-add services.
National Storage primed its growth strategy through the development of a market leading operational platform which
leverages Cloud Compute, a revenue management platform, and security control – all of which interfaces with an omni-
channel contact centre.
With their business moving at a dramatic pace, it has been essential for National Storage to partner with a reliable, well-
aligned technology provider that enables them to focus on their core business, growth and innovation. For the past
seven years, Comlinx has been that solutions partner – delivering national managed WAN, an IaaS Platform, SIP trunks and
hosted voice, the omni-channel contact centre and a cloud security wrap. Comlinx was acquired by Over the Wire, an ASX-
listed company, in November 2018.
Over the Wire has successfully implemented a VeloCloud SD-WAN product at National Storage to enable further technology-
driven innovation and to allow for the rapid deployment of new sites. Furthermore, VeloCloud will boost network
performance in areas where connectivity options are limited.
Over the Wire 2021 Annual Report
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Over the Wire
CONNECTIVITY
Since founding in 2000, National Storage has consistently
acquired new storage facilities that often challenge
communications owing to their suburban and regional
locations. Country towns, new metropolitan suburbs and
inner-city locations all have self-storage needs, but don’t
always benefit from great internet access. While the NBN roll-
out has the best of intentions, there are significant connectivity
black-spots, which often coincide with areas cheaper in rent,
and otherwise ideal for storage facilities.
This is where the Comlinx and Over the Wire relationship pays
dividends for National Storage. This leverages the combination
of the SD-WAN solution along with Over the Wire’s carrier
agnostic approach, able to connect through over 30 different
wholesale providers and ranging from mobile broadband,
to high-speed fibre optics, and everything in between. The
VeloCloud SD-WAN is able to bolster the performance of the
network, even when location tests the limits of aging and
unreliable copper infrastructure.
Using VeloCloud’s dynamic multi path optimisation, each
branch edge device optimises and enhances traffic flow to
make the most of the available connections, maximising
performance.
Scott Smith, General Manager at Over the Wire, advised, “we
implemented a VeloCoud SD-WAN solution to ensure National
Storage maintains a competitive edge using technology – and
to help them drive efficiency, speed to market and security
around their business. The solution gives our Network
Operations Centre and National Storage real-time visibility
and control across applications and their performance, whilst
also allowing for rapid, low touch deployment for new sites.
Network quality and resilience has improved as VeloCloud can
bond multiple lower cost links in fringe areas including copper,
NBN, fibre and 4G services. No longer is an additional service
‘redundant’ as a backup, instead being continually used to
increase available bandwidth. Latency-sensitive traffic, such
as video, is steered across the fastest link, whilst browsing
can take any available path. Furthermore, as an aggregator,
Over the Wire was able to introduce carrier redundancy for
maximum availability. ”
RAPID ACQUISITION, RAPID ONBOARDING
In 2018-19 National Storage acquired 35 new facilities and
only had a couple of weeks per site to deploy new business
systems. That’s not enough time for traditional fibre business
services to be installed, however VeloCloud SD-WAN link
bonding gave National Storage the ability to create adequate
BETTER CONNECTIVITY,
MORE INNOVATION
Over the Wire’s Scott Smith made it clear that he sees their
role as helping National Storage implement technology that
makes it simple for them to innovate. “National Storage is
an innovator in their chosen market and they have built an
incredibly scalable systems platform. It is our job to continue
to find ways to help National Storage simplify technology
to empower their business and maintain their leadership
position,“ he says.
Some examples of the functionality enhancements that
National Storage have achieved across their business with the
OTW network include:
Video broadcast updates of company news
Multimedia training for a more engaging experience
Videoconferencing so remote workers feel more involved
Reliable, fast and secure access to cloud-based core
business applications
There are other, less tangible, benefits of ensuring all of
National Storage’s centres have robust internet access, as
Barron astutely observes, “without solid connectivity, the team
at our branches often feel alienated. Working with Over the
Wire we’re now able to provide a great experience no matter
where people are.”
CASE STUDY: NATIONAL
STORAGE UNLOCKS EXPANSION
GOALS USING OVER THE WIRE
MANAGED SD-WAN
throughput using existing DSL combined with 4G data services.
Having a site live in a matter of hours was possible. At core
locations, including the data centres, an MPLS backbone is still
used.
National Storage’s GM Technology, Marcus Barron says that
“we can get connectivity to a newly acquired site by sending
out a VeloCloud box with a 4G SIM and automatically have it
on our network using internet access on day one instead of
waiting for a wired service to be delivered.”
Not only is an Over the Wire SD-WAN solution quick to deploy,
it’s also simple to configure.
NATIONAL STORAGE DOESN'T NEED TO
SEND TECHNICAL STAFF OUT, INSTEAD
THE VELOCLOUD UNIT IS DESPATCHED
FROM HEAD OFFICE PRE-CONFIGURED
FOR BRANCH STAFF TO SIMPLY UNPACK
AND CONNECT TO THE POWER.
overthewire.com.au
Over the Wire 2021 Annual Report
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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 FY22.
We remain focussed on achieving our vision and continuously improving the financial performance of the business and the
returns for our shareholders.
GROW
To identify,
understand, and
realise our
opportunities
to grow
Organic revenue
growth >15%
targeted
Invest in and
grow partner
and wholesale
segments
Selective future
acquisitions
Further enhance
our systems
and processes
for optimal
customer and
team experience
Self serve
interfaces for
partners and
customers
White label
capability
Continuously
focus on
how we are
improving the
experience for
our customers,
resulting in
retention and
growth
Purpose led
leadership
Build on our
performance
culture
Attract, develop
and retain great
talent
Living our values
Roll out DS Cloud
in Sydney &
Melbourne
Leverage
integrated
platform
Provide
innovative,
technology led
solutions
IMPROVE
For our systems
to reduce friction,
enhance customer
experience, and
support our growth
ENGAGE
For our people
to embody our
purpose and values,
and make a positive
contribution to their
and our success
FOCUS
For our customers to
value our technical
expertise and
strength of our
relationships
EVOLVE
To offer seamless
solutions to our
customers and
partners
Over the Wire continues to identify acquisition targets and strengthen its value proposition by following the same M&A
discipline that has resulted in a track record of successfully acquiring and then integrating businesses.
IPO to
2016
2017
2018
2019
2020
2020
2021
STRATEGIC ACQUISITIONS
TO ACCELERATE GROWTH
Over the Wire 2021 Annual Report
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Over the Wire
GENERAL INFORMATION
The financial report covers Over the Wire Holdings Limited as a consolidated entity consisting of Over the Wire Holdings Limited
and the entities it controls.
The report is presented in Australian dollars, which is Over the Wire Holdings Limited’s functional and presentational currency.
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:
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 19 August 2021. The directors
have the power to amend and/or reissue the financial report.
Share Register
Auditor
Solicitors
Bankers
Stock Exchange
Listings
Link Market Services
10 Eagle Street
Brisbane QLD 4000
PKF Brisbane Audit
Level 6, 10 Eagle Street
Brisbane QLD 4000
McCullough
Robertson Lawyers
Level 11,
Central Plaza Two
66 Eagle Street
Brisbane QLD 4000
Westpac
260 Queen Street
Brisbane QLD 4000
National
Australia Bank
259 Queen Street
Brisbane QLD 4000
Over the Wire
Holdings Limited
(OTW) shares
are listed on the
Australian Securities
Exchange (ASX)
CORPORATE DIRECTORY
DIRECTORS
Chair (resigned 1 July 2021)
John Puttick
DUniv QUT, FACS, ACA
Chair (appointed 1 July 2021)
Stephe Wilks
BSC, LLM
Managing Director & Group Chief Executive Officer
Michael Omeros
BE(Electronics), BInfoTech
Non-Executive Director (Non-Executive Director from 1 July 2020)
Brent Paddon
BInfoTech, GradDipBusAdmin
Non-Executive Director
Susan Forrester AM
BA, LLB (Hons), EMBA, FAICD
Non-Executive Director (appointed 1 July 2020)
Cathy Aston
BEc, MComm, GAICD, FFin
SECRETARY
Group General Counsel (resigned 1 October 2021)
Simone Dejun
LLM, Grad Dip Legal Practice, LLB,
BBus(Advertising)
Mergers & Acquisitions
(appointed as Company Secretary 1 October 2021)
Michael Stabb
FCA, MAICD, BBUS(ACCY,BUS
LAW), RTA
KEY MANAGEMENT
Chief Executive Officer (resigned 30 September 2021)
Scott Smith
Chief Technology Officer (moved to CISO role 1 March 2021)
Ben Cornish
Chief Operating Officer
Gary Pittorino
Chief Financial Officer
Ben Melville
overthewire.com.au
Over the Wire 2021 Annual Report
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DIRECTORS’
REPORT
01
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 2021.
Over the Wire 2021 Annual Report
16 /
Over the Wire
REVIEW OF
OPERATIONS
Total revenue from ordinary activities for
the year was $112,687K (2020: $87,611K),
representing an increase of 29% on the
corresponding year. The result demonstrates
demand from customers across all four product
lines including:
Data Networks and Internet revenue of $37,021K
(2020: $37,531K), representing a decrease of 1%
on the corresponding year;
Voice revenue of $34,945K (2020: $19,597K),
representing an increase of 78% on the
corresponding year;
Hosting revenue of $21,815K (2020: $10,134K),
representing an increase of 115% on the
corresponding year;
Security & Managed Services revenue of
$18,906K (2020: $20,349K), representing a
decrease of 7% on the corresponding year.
The Group continued to build upon its
geographic expansion strategy.
The below table shows revenue-growth figures
from 2020 to 2021:
DIRECTORS’
REPORT
The name of the directors who held office during or since the end of the year.
DIRECTORS & SECRETARY
Chair (Resigned 1 July 2021)
John Puttick
Chair (Appointed 1 July 2021)
Stephe Wilks
Managing Director
Group Chief Executive Officer
Michael Omeros
Non-Executive Director (Non-Executive
Director from 1 July 2020)
Brent Paddon
Non-Executive Director
Susan Forrester AM
Non-Executive Director (Appointed 1
July 2020)
Cathy Aston
Company Secretary
(resigned 1 October 2021)
Simone Dejun
Company Secretary
(Appointed 1 October 2021)
Michael Stabb
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
Security & Managed Services
There has been no significant change to the principal activities of the Group
during the year.
Revenue Growth
2020 to 2021 (Statutory) in Australia
QLD 28%
NSW 32%
VIC 15%
SA 20%
overthewire.com.au
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FINANCIAL POSITION
The financial position of the Group remains strong with net
assets increasing by $31,370K to $100,315K from $68,945K
due to the following factors:
New $36,000K loan facility in August 2020 and $20,000K
capital raise in September 2020 to support acquisitions of
both Zintel/ Fonebox and Digital Sense for total combined
consideration of $69,066K, including $15,955K of deferred
consideration and shares issued.
Net profit after tax for the year of $3,435K.
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
2021
$ ,000
2020
$ ,000
Profit before Income Tax Expense
4,848
7,214
Depreciation & Amortisation
17,425
9,756
Finance Costs
1,260
426
EBITDA
23,533
17,396
EBITDA was $23,533K (2020: $17,396K), representing an
increase of 35% on the corresponding year. Net Profit after
Income Tax Expense (NPAT) was $3,435K (2020: $5,033K),
representing a decrease of 35% on the corresponding
year. The increase in EBITDA was predominately due to the
acquisitions of Fonebox/ Zintel and Digital Sense as well as
organic growth over the current financial year. The decrease
in NPAT was predominately due to $3,907K amortisation
incurred on $51,819K of intangible assets with a limited life,
recognised through the acquisitions of Fonebox/ Zintel and
Digital Sense in the current financial year.
As at 30 June 2021, the Group had $16,696K in cash or cash
equivalents. Net cash flow from Operating Activities (before
Interest and Tax) for the 2021 year was $29,788K ($15,705K in
2020) demonstrating continued strong cash conversion.
The Group’s continued sound management of overhead
expenses in the underlying business, maintaining net debtor
days metrics and when combined with revenue growth
of 29%, 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 2020 of 2.25 cents per share fully
franked was paid in October 2020.
An interim dividend of 1.75 cents per share fully franked, for
the six months ended 31 December 2020, was paid in
April 2021.
Subsequent to year-end, on 19 August 2021, the Group
declared a fully franked final dividend of 2.25 cents per share,
for the year ended 30 June 2021. The dates of the dividend are
as follows:
Ex Date
– 13 September 2021
Record Date
– 14 September 2021
DRP Election Close Date
– 15 September 2021
Payment Date
– 14 October 2021
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.
DIRECTORS’ REPORT
Over the Wire 2021 Annual Report
18 /
Over the Wire
DIRECTORS’ REPORT
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
ACQUISITION OF ZINTEL AND FONEBOX
J2 AUSTRALIA CLOUD CONNECT
AUSTRALIA PTY LTD AND ZINTEL
COMMUNICATION LIMITED
On 31 August 2020, the Company acquired 100% of the
shares in J2 Australia Cloud Connect Pty Ltd and Zintel
Communications Limited for a total upfront consideration
of $36,000K. The upfront consideration comprised $36,000K
in cash, less a working capital adjustment of $43K to reflect
profits retained in the business by the vendor against a
target at settlement. The vendor provided a warranty that J2
Australia Cloud Connect Pty Ltd and Zintel Communications
Limited would be free of all debt at completion.
The acquisition of J2 Australia Cloud Connect Pty Ltd and
Zintel Communications Limited was fully funded through a
debt facility with Westpac.
The acquisition of J2 Australia Cloud Connect Pty Ltd and
Zintel Communications Limited has delivered approximately
9,000 business customers to Over the Wire and enhances
our existing voice offerings. With annual revenue of $19,000K
and EBITDA of $6,000K, J2 Australia Cloud Connect Pty Ltd
and Zintel Communications Limited is expected to make a
significant contribution to Over the Wire’s future results.
The strategic rationale for acquiring J2 Australia Cloud
Connect Pty Ltd and Zintel Communications Limited was:
Acquisition of a leading platform provider of inbound
telecommunication services in Australia and New Zealand,
delivering proven solutions to the corporate and small /
medium enterprise (SME) market.
Introduces new solution capability to Over the Wire in
the areas of inbound telephony services including call
routing intelligence, data intelligence, call management and
analytics reporting, via a proprietary technology platform.
Customer base offers cross sell opportunities, particularly
in outbound voice and Hosted Telephony services.
Highly capable team led by experienced management that
will be able to deliver a whole of business voice offering
to the Australian and New Zealand SME market with
complimentary capabilities, when combined with Over the
Wire subsidiary Faktortel.
Delivers platform capability to Over the Wire that further
complements our growth objectives within the Cloud Voice,
Mobility and Communications Platform (CPaaS) market.
ACQUISITION OF DIGITAL SENSE HOSTING
PTY LTD
On 30 October 2020, the Company acquired 100% of the
shares in Digital Sense Hosting Pty Ltd for a total upfront
consideration of $27,000K. The upfront consideration
comprised $21,600K in cash (of which $6,960K was via a loan
from the Group), 1,483,518 OTW shares ($5,400K in OTW
shares at an issue price of $3.64, being the volume weighted
average price for 10 trading days prior to the announcement
of the acquisition), plus or minus a working capital adjustment
to reflect profits retained in the business by the vendor
against a target at settlement. The vendor provided a
warranty that Digital Sense Hosting Pty Ltd would be free
of all debt at completion with the exception of approved
equipment finance.
The vendor is also entitled to receive a further deferred
consideration of up to $12,000K ($1,000K was paid during Jan
2021, up to $6,000K payable in September 2021 and up to
$5,000K payable in September 2022), based on a number of
performance measures being achieved.
The acquisition of Digital Sense Hosting Pty Ltd was fully
funded through an institutional share placement of $20,000K
and the Group’s cash reserves.
The acquisition of Digital Sense Hosting Pty Ltd has delivered
a number of Enterprise and Government customers to Over
the Wire and positions Over the Wire well to capitalise on
the cloud industry’s strong growth outlook. With revenue of
$18,300K and EBITDA of $5,400K for the 12 month period to
30 June 2020, Digital Sense Hosting Pty Ltd is expected
to make a significant contribution to Over the Wire’s
future results.
The strategic rationale for acquiring Digital Sense Hosting Pty
Ltd was:
Acquisition of a leading Sovereign Cloud platform provider
in Australia delivering proven solutions to the Enterprise
and Government markets.
Introduces further solution capability in the areas of
Infrastructure as a Service (IaaS), Desktop as a Service
(DaaS), Storage as a Service (STaaS) and Data Protection as
a Service (DPaaS).
Extensive Cloud offering offers cross sell opportunities
to existing Over the Wire customers and offers cross sell
opportunities of Over the Wire solutions to Digital Sense
Customers.
Digital Sense accelerates Over the Wire’s growth and
capability in our Cloud Solution pillar, resulting in further
diversification of revenue across each of the Cloud.
Connect. Collaborate. pillars.
overthewire.com.au
Over the Wire 2021 Annual Report
/ 19
DIRECTORS’ REPORT
ACQUISITION OF DIGITAL SENSE HOSTING
PTY LTD
Leverage Over the Wire’s existing national network to take
Digital Sense’s offering national.
Strengthens Over the Wire’s ability to provide a complete
and integrated solution set to Enterprise and Government
customers across their data, voice and cloud requirements.
High quality management team committed to long term
success.
High levels of recurring revenue with strong margins.
EVENTS SINCE THE END OF THE
FINANCIAL YEAR
DIVIDEND DECLARED
On 19 August 2021, the Company declared a fully franked final
dividend of 2.25 cents per share, for the year ended 30 June
2021. The dates of the dividend are as follows:
Ex Date
– 13 September 2021
Record Date
– 14 September 2021
DRP Election Close Date
– 15 September 2021
Payment Date
– 14 October 2021
As this final dividend was declared subsequent to year-end,
no provision has been made in the accounts for the dividend.
CHANGE IN DIRECTORS
From 1 July 2021 John Puttick resigned from the roles of Non-
executive Director and Chair of the Group and Stephe Wilks
was appointed as Non-executive Director and Chair of the
Group.
CHANGE IN KEY MANAGEMENT PERSONNEL
On 2 August 2021 Scott Smith resigned from the role of
Chief Executive Officer of Over the Wire, effective from 30
September 2021.
No 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.
CORONAVIRUS (COVID-19) PANDEMIC
The Group actively managed the impact of COVID-19 on its
team and business through 2021 and continues to monitor
the impact going forward. Our key focus throughout lock
downs 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
Revenue
While business has returned closer to pre-COVID levels in
2021, the Group continues to actively work with suppliers and
customers as the pandemic has created some additional lead
time requirements which while not impacting the recurring
side of the business, can impact the Group’s ability to recog-
nise revenue from non-recurring deals in a timely manner.
Working Capital
While having sufficient headroom, the Group continues to
closely monitor working capital to ensure that we are well
placed to be able to operate effectively both with our custom-
ers and suppliers.
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.
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.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
Over the Wire 2021 Annual Report
20 /
Over the Wire
INFORMATION ON DIRECTORS &
COMPANY SECRETARY
The following information is current as at the date of this report.
JOHN
PUTTICK
DUniv QUT, FACS, ACA
Former Non-Executive
Director and Chair of the
Group
John was appointed as Chair of the Group in December
2015 and resigned on 1 July 2021. He was the founder and
Chair 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 (ceased Chair role 1 July 2021)
Member of people and culture committee (ceased Chair
role 29 July 2020, ceased role 1 July 2021)
Member of audit and risk committee (ceased role 1 July
2021)
Direct and indirect interest in shares and options
Ordinary Shares
Over the Wire Holdings
174,557
DIRECTORS’ REPORT
STEPHE
WILKS
BSC, LLM
Non-Executive Director
and Chair of the Group
Stephe was appointed as Chair of the Group on 1 July 2021.
Stephe is an active non-executive Director on the Board
of several public and private companies, across a range of
commercial and operations disciplines, with a particular
emphasis on technology, governance, corporate finance
and M&A. Stephe is Chair of 1st Group Limited and non-
executive director of ASX listed BluGlass Limited (ASX:BLG)
and Interactive Pty Limited.
Stephe has extensive corporate finance, CEO, senior
management and operational experience, particularly in
the Australian and US markets, building on earlier work
for telcos in the UK, Australia and the Asia Pacific region.
He previously held roles as diverse as Chief Operating
Officer of an aggressive wireless broadband infrastructure
company, Consulting Director of NM Rothschild & Sons, and
COO of Nextgen Networks.
Other Current Directorships
Chair of 1ST Group Limited (ASX:1ST)
(appointed May 2021)
Non-Executive Director of Interactive Pty Ltd
(appointed September 2015)
Non-Executive Director of BluGlass Limited (ASX:BLG)
(appointed May 2018)
Former Directorships in last 3 years
Chair of Speedcast (ASX:SDA)
(appointed August 2019, delisted March 2021)
Chair of BrainChip Holdings Limited
(appointed February 2019)
Non-Executive Director of DataDot Technology
(appointed February 2016)
Special Responsibilities
Chair of the Board (appointed 1 July 2021)
Direct and indirect interest in shares and options
None
overthewire.com.au
Over the Wire 2021 Annual Report
/ 21
MICHAEL
OMEROS
MAICD, BE(Electronics)
(Hons), BInfoTech
Managing Director
Group 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
Direct and indirect interest in shares and options
Ordinary Shares
Over the Wire Holdings
13,031,141
DIRECTORS’ REPORT
BRENT
PADDON
BInfoTech,
GradDipBusAdmin
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 people and culture 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
INFORMATION ON DIRECTORS &
COMPANY SECRETARY
Over the Wire 2021 Annual Report
22 /
Over the Wire
INFORMATION ON DIRECTORS &
COMPANY SECRETARY
DIRECTORS’ REPORT
SUSAN
FORRESTER
AM
CATHY
ASTON
BA, LLB (Hons),
EMBA, FAICD
Non-Executive Director
BEc. MComm, GAICD, FFin
Non-Executive Director
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 Jumbo Interactive Limited
(ASX:JIN) (appointed September 2020)
Non-Executive Director of Plenti Group Ltd (ASX:PLT)
(appointed October 2020)
Former Directorships in last 3 years
Non-Executive Director of Viva Leisure Limited (ASX:VVA)
(appointed 18 October 2018)
Non-Executive Director of G8 Education Limited (ASX:GEM)
(appointed November 2011)
Non-Executive Director of National Veterinary Care Ltd
(ASX:NVL) (appointed February 2015)
Non-Executive Director, Xenith IP Group Limited (ASX:XIP)
(appointed October 2015)
Special Responsibilities
Member of audit and risk committee (appointed 29 July
2020)
Chair of people and culture committee (appointed as Chair
29 July 2020)
Direct and indirect interest in shares and options
Ordinary Shares
Over the Wire Holdings:
186,920
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, IVE Group (appointed December
2020), Chair of Audit, Risk & Compliance Committee
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
Chair of audit and risk committee (appointed as Chair 29
July 2020)
Member of people and culture committee (appointed 1
September 2020)
Direct and indirect interest in shares and options
None
overthewire.com.au
Over the Wire 2021 Annual Report
/ 23
INFORMATION ON DIRECTORS &
COMPANY SECRETARY
DIRECTORS’ REPORT
SIMONE
DEJUN
LLM, Grad Dip
Legal Practice, LLB,
BBus(Advertising)
Company Secretary
General Counsel
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 9 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
Former Directorships in last 3 years
None
Special Responsibilities
Company Secretary (resigned 1 October 2021)
Direct and indirect interest in shares and options
Ordinary Shares
Over the Wire Holdings:
642
Over the Wire 2021 Annual Report
24 /
Over the Wire
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 2021, and the numbers attended by each director were:
FULL MEETINGS OF DIRECTORS
Held
Attended
John Puttick
10
10
Stephe Wilks
N/A
N/A
Michael Omeros
10
10
Brent Paddon
10
10
Susan Forrester
10
10
Cathy Aston
10
10
MEETING OF COMMITTEES
Audit
Held
Attended
John Puttick
3
3
Stephe Wilks
N/A
N/A
Michael Omeros
N/A
N/A
Brent Paddon
3
3
Susan Forrester
3
3
Cathy Aston
3
3
People and Culture Committee
Held
Attended
John Puttick
3
3
Stephe Wilks
N/A
N/A
Michael Omeros
N/A
N/A
Brent Paddon
3
3
Susan Forrester
3
3
Cathy Aston
3
3
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.
DIRECTORS’ REPORT
overthewire.com.au
Over the Wire 2021 Annual Report
/ 25
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.
During the year the following fees were paid or payable for
non statutory audit services provided by the auditor of the
parent entity, its related practices and non-related audit firms:
Consolidated
Non Statutory Audit Services
2021
$ ,000
2020
$ ,000
Tax Compliance Services
31
19
Other Audit Services
47
-
Total Remuneration for Non
Statutory Audit Services
78
19
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 38.
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
2021 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:
DIRECTORS’ REPORT
A
E
C
G
B
F
D
H
Key management personnel (KMP) covered in this report
Remuneration policy and link to performance
Elements of remuneration
Remuneration expenses for executive KMP
Non-executive director arrangements
Other statutory information
Options and Performance Rights
Voluntary information: remuneration received
Over the Wire 2021 Annual Report
26 /
Over the Wire
A
B
KEY MANAGEMENT PERSONNEL (KMP) COVERED
IN THIS REPORT
John Puttick
Non-Executive Chair (appointed 1 December 2015, resigned 1 July 2021)
Michael Omeros
Managing Director and Group Chief Executive Officer (appointed 1 July 2011)
Brent Paddon
Non-Executive Director (appointed 1 July 2011)
(Non-Executive Director from 1 July 2020)
Susan Forrester AM
Non-Executive Director (appointed 1 December 2015)
Cathy Aston
Non-Executive Director (appointed 1 July 2020)
OTHER KEY MANAGEMENT PERSONNEL
Scott Smith
Chief Executive Officer (appointed 9 March 2020, resigned 30 September 2021)
Ben Cornish
Chief Technology Officer (moved into CISO role 1 March 2021)
Gary Pittorino
Chief Operating Officer
Ben Melville
Chief Financial 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)
(appointed Company Secretary role 1 October 2021)
From 1 July 2020 Brent Paddon and Cathy Aston were appointed as Non-executive Directors of the Group.
From 1 July 2021 John Puttick resigned from the roles of Non-executive Director and Chair of the Group and
Stephe Wilks was appointed as Non-executive Director and Chair of the Group.
There have been no further changes in KMP since the end of the reporting period other than those disclosed
above.
REMUNERATION POLICY AND LINK TO PERFORMANCE
During 2021 the people and culture committee was made up of four non-executive directors. 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.
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;
DIRECTORS’ REPORT
overthewire.com.au
Over the Wire 2021 Annual Report
/ 27
B
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.
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 2021 fixed remuneration increases given to three
executive KMP.
Scott Smith
Base Salary $300,000
Ben Melville
Base Salary $220,000
Gary Pittorino
Base Salary $240,000
During 2021, no new members of the KMP were
promoted from within the Group.
In 2021, elements of KMP remuneration were
dependent on the satisfaction of operational
performance conditions.
Short term incentive cash bonuses paid in
relation to 2020:
$61,964 for Michael Omeros linked to the
achievement of operational KPIs.
$15,491 for Scott Smith linked to the
achievement of operational KPIs.
$43,374 for Ben Cornish linked to the
achievement of operational KPIs.
$43,374 for Gary Pittorino linked to the
achievement of operational KPIs.
$7,745 for Ben Melville linked to the
achievement of operational KPIs.
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.
No performance rights were issued during the current
financial year.
SHORT-TERM INCENTIVES
– OPERATIONAL BONUSES
LONG-TERM INCENTIVES
C
DIRECTORS’ REPORT
Over the Wire 2021 Annual Report
28 /
Over the Wire
DIRECTORS’ REPORT
C
ELEMENTS OF REMUNERATION
SHORT-TERM INCENTIVES
Feature
Description
Max opportunity
Group CEO and CEO: 29% - 34% Total Fixed Remuneration
Other KMP executives: 29% - 31% Total Fixed Remuneration
Performance
metrics
The STI metrics align with our strategic priorities of financial growth, customer retention and
experience and fostering talented and engaged people.
Metric
Weighting
Reason for selection
Revenue
15%
New revenue committed is connected to the
level of incremental new business signed by
the Group.
Exit recurring-revenue
run rate
15%
The exit recurring- revenue run rate is
connected to the level of incremental new
business signed by the Group.
EBITDA
10%
Indicates the Group’s underlying profitability
Customer Churn
10%
Customer success and satisfaction is key to
our ongoing strategy.
Net Promoter Score
10%
Customer success and satisfaction is key to
our ongoing strategy.
Products per customer
5%
Customer success and satisfaction is key to
our ongoing strategy.
Staff engagement
25%
Reducing staff turnover will reduce costs
and hence improve EBITDA.
Individual performance
metrics
10%
Targeted metrics have been chosen that are
critical to individual roles.
Delivery of STI
100% of the STI award is paid in cash after the end of the financial year.
Board discretion
The Board has discretion to adjust remuneration outcomes up or down to prevent any
inappropriate reward outcomes, including reducing (down to zero, if appropriate) any STI
award.
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DIRECTORS’ REPORT
ELEMENTS OF REMUNERATION
LONG-TERM INCENTIVES
Executive KMP participate, at the Board’s discretion, in the Long Term Incentive (LTI) scheme comprising of annual
grants of performance rights which are subject to a 3 year Cash EPS compound growth performance condition.
Further details are shown below:
Feature
Description
Opportunity/
Allocation
CEO: 62% of Total Fixed Remuneration; Other KMP executives: 30 - 33% of Total fixed
remuneration.
The opportunity is divided by the share price on issue date to determine the number of
instruments.
The opportunity is pro-rata based on the starting or ending date in the role.
Performance
hurdle
The Group’s Cash Earnings per Share is assessed over 3 years to the end of FY 2022. Vesting
will occur based on the compound annual growth rate (CAGR) over this period compared
to a target of 15%. This is designed to focus executives on delivering sustainable long-term
shareholder returns.
CAGR of Cash EPS over the measurement period relative to base
year
Proportion to vest
Less than 10% p.a.
0%
10% to 15% p.a.
50%
> 15% p.a.
100%
Pro-rata vesting occurs between the 50th and 100th percentile.
Forfeiture and
termination
Performance rights will lapse if performance conditions are not met. Rights will be forfeited on
cessation of employment unless the Board determines otherwise, eg in the case of retirement
due to injury, disability, death or redundancy.
LINK BETWEEN REMUNERATION AND PERFORMANCE
FY 2021 PERFORMANCE AND IMPACT ON REMUNERATION
The Group’s performance in 2021 remained strong despite difficult trading conditions in our Australian and New
Zealand markets.
As a result of the financial performance and resulting shareholder returns, the Board awarded senior management
60% of the maximum short-term incentives. Senior management also received benefits in the form of shares after
satisfying the required service and performance conditions. These equity instruments had been granted in prior
years under the long-term incentive scheme.
C
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Over the Wire
REMUNERATION EXPENSES FOR EXECUTIVE KMP
The following table shows details of the remuneration expense recognised for the Group’s executive key
management personnel for the current and previous financial year measured in accordance with the
requirements of the accounting standards. Remuneration paid to directors and executives is valued at the cost to
the Group.
KEY MANAGEMENT PERSONNEL REMUNERATION
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
2021
301,271
57,668
(5,385)
5,833
30,422
66,080
-
455,890
14
2020
255,691
45,768
22,500
4,875
24,392
61,390
-
414,617
15
Brent
Paddon1
2021
-
-
-
-
-
-
-
-
-
2020
244,213
3,990
18,750
4,063
21,090
24,556
-
316,662
8
C
D
i
ELEMENTS OF REMUNERATION
HISTORICAL GROUP PERFORMANCE
We aim to align our executive remuneration to our strategic and business objectives to the creation of
shareholder wealth. The table below shows measures of the Group’s financial performance over the
last five years as required by the Corporations Act 2001. However, these are different to the measures
used in determining the variable amounts of remuneration to be awarded to KMPs. As a consequence,
there may not always be a direct correlation between the statutory key performance measures and the
variable remuneration awarded.
HISTORICAL GROUP PERFORMANCE OVER THE LAST FIVE YEARS
2021
2020
2019
2018
2017
Profit for the year attributable to owners of
Over The Wire Holdings Limited ($’000)
3,435
5,033
10,162
5,531
3,598
Basic earnings per share (cents)
6.038
9.749
20.713
12.625
8.270
Dividend payments ($’000)
2,204
1,806
1,305
984
761
Dividend payout ratio (%)
21.5
20.2
9.9
14.3
18.3
Total KMP incentives as percentage of profit/(loss) for
the year(%)
7.5
7.5
3.9
7.5
1.5
The dividend payout ratio is calculated based on dividends paid and net profit after tax before amortisation
(NPATA) for the year.
DIRECTORS’ REPORT
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REMUNERATION EXPENSES FOR EXECUTIVE KMP
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
****
$
$
$
$
$
$
$
$
%
Other Management Personnel
Scott Smith
2021
300,000
-
(15,577)
5,000
24,867
66,080
11,272
391,643
20
2020
75,308
-
5,929
1,295
6,438
15,348
1,928
106,236
16
Mike Stabb3
2021
-
-
-
-
-
-
-
-
-
2020
152,626
-
11,282
2,444
15,212
32,230
54,234
268,029
32
Ben Cornish4
2021
115,931
30,736
(5,641)
2,444
18,054
30,037
(12,800)
178,761
10
2020
196,523
22,430
16,500
3,575
21,723
42,973
65,771
369,496
29
Gary Pittorino
2021
236,306
4,282
(2,954)
4,000
26,105
45,055
2,087
314,881
15
2020
215,109
-
16,500
3,575
20,804
42,973
25,009
323,970
21
Ben Melville2
2021
213,560
1,361
777
3,667
21,058
45,055
5,108
290,586
17
2020
55,114
-
4,269
925
5,234
7,674
1,371
74,587
12
Total Executive
Directors &
Other KMPs
2021
1,167,069
94,047
(28,780)
20,944
120,507
252,307
5,667
1,631,761
16
2020
1,194,585
72,188
95,731
20,742
114,894
227,144
148,314
1,873,598
20
Total NED
Remuneration
(see section (e)
below)
2021
412,500
-
-
-
24,146
-
-
436,646
-
2020
190,125
-
-
-
-
-
-
190,125
-
Total KMP
remuneration
Expensed
2021
1,579,569
94,047
(28,780)
20,944
144,653
252,307
5,667
2,068,407
12
2020
1,384,710
72,188
95,731
20,742
114,894
227,144
148,314
2,063,723
18
1
Appointed as Non-executive Director from 1 July 2020
2
Appointed 9 March 2020
3
Ceased role as Chief Financial Officer on 9 March 2020
4
Moved into Chief Information Security Officer Role on 1 March 2021
*
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. These include negative amounts for rights forfeited during the year.
D
i
DIRECTORS’ REPORT
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32 /
Over the Wire
DIRECTORS’ REPORT
CONTRACTUAL ARRANGEMENTS WITH EXECUTIVE KMPS
Component
Group CEO description
CEO description
Other Executive KMP
description
Fixed Remuneration
$350,000
$300,000
Range Between $220,000
and $240,000
Contract Duration
Ongoing Contract
Ongoing Contract
Ongoing Contract
Notice by the individual/ company
6 months
1 month
1 - 6 months
Termination of employment
(without cause)
Entitlement to pro-rata STI for the year.
Unvested LTI will lapse.
At the discretion of the Board.
Termination of employment (with
cause)
STI is not awarded, and all unvested LTI will lapse.
RIGHTS GRANTED AS REMUNERATION - LONG TERM INCENTIVE PLAN
Name
Year
Granted
Balance
at Start
of year
Granted
during
year
Rights to deferred shares
Balance at
end of year
(unvested)
Maximum
value to
vest*
Vested
Forfeited
KMP
No.
No.
No.
%
No.
%
No.
$
Scott Smith1
2020
8,362
-
-
-
-
-
8,362
12,863
Mike Stabb2
2020
20,067
-
-
-
-
-
20,067
30,868
2019
13,333
-
-
-
(13,333)
100
-
-
2018
29,920
-
(29,920)
100
-
-
-
-
Ben Cornish3
2020
20,067
-
-
-
-
-
20,067
30,868
2019
13,333
-
-
-
(13,333)
100
-
-
2018
29,920
-
(29,920)
100
-
-
-
-
Gary
Pittorino
2020
20,067
-
-
-
-
-
20,067
30,868
2019
10,400
-
-
-
(10,400)
100
-
-
Ben Melville1
2020
3,345
-
-
-
-
-
3,345
5,145
1
Appointed 9 March 2020
2
Ceased role as Chief Financial Officer on 9 March 2020
3
Moved into Chief Information Security Officer Role on 1 March 2021
*
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.
ii
iii
REMUNERATION EXPENSES FOR EXECUTIVE KMP
D
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REMUNERATION EXPENSES FOR EXECUTIVE KMP
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 People and
Culture Committee.
The proportion of the cash bonus paid/payable or forfeited is as follows:
30 June 2021
Total STI Cash bonus
Total
Opportunity
$
Awarded
%
Forfeited
%
Executive Directors:
Michael Omeros
110,000
60
40
Other Key Management Personnel:
Scott Smith
110,000
60
40
Ben Cornish
75,000
60
40
Gary Pittorino
75,000
60
40
Ben Melville
75,000
60
40
DIRECTORS’ REPORT
E
iv
NON-EXECUTIVE DIRECTOR ARRANGEMENTS
Board fees are $150,000 ($117,000 in 2020) for John Puttick and $80,000 ($73,125 in 2020) for Susan Forrester, Brent
Paddon and Cathy Aston. In addition, they are paid $10,000 for chairing their respective committees. There are no
performance-based payments or retirement allowances.
From 1 July 2021 John Puttick resigned from the roles of Non-executive Director and Chair of the Group and Stephe
Wilks was appointed as Non-executive Director and Chair of the Group.
Consolidated
2021
$
2020
$
Base fees
Chair
150,000
117,000
Other Non-executive Directors
260,000
73,125
Total
410,000
190,125
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.
D
Over the Wire 2021 Annual Report
34 /
Over the Wire
F
G
OPTIONS AND PERFORMANCE RIGHTS
OPTIONS
At the date of this report, there were no unissued shares of Over the Wire Holdings Limited under option.
(2020: Nil)
PERFORMANCE RIGHTS
At the date of this report, there were 31,774 performance Rights over Over the Wire Holdings Limited shares. (2020:
102,494)
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
1/07/2020
Sold on
Market
Share
Purchase
Plan
Employee
Share
Scheme
Vested
Performance
Rights
Other
Changes
Balance at
30/06/2021
Directors
Michael Omeros
13,025,297
-
5,595
-
-
249
13,031,141
Brent Paddon
11,500,000
-
-
-
-
-
11,500,000
John Puttick
171,889
-
1,920
-
-
768
174,577
Susan Forrester
185,000
-
1,920
-
-
-
186,920
Cathy Aston
-
-
-
-
-
-
-
Total Directors
24,882,186
-
9,435
-
-
1,017
24,892,638
Other Key Management Personnel (OKMP)
Scott Smith
367,470
-
3,840
226
-
3,576
375,112
Ben Cornish
124,315
-
-
226
29,920
226
154,687
Gary Pittorino
421
-
-
226
-
6
653
Ben Melville
214
-
-
226
-
4
444
Total OKMP
492,420
-
3,840
904
29,920
3,812
530,896
Group Total
25,374,606
-
13,275
904
29,920
4,829
25,423,534
i
ii
DIRECTORS’ REPORT
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H
REMUNERATION RECEIVED
The amounts disclosed in the table below as executive KMP remuneration for FY 2021 reflect the actual benefits
received by each KMP during the reporting period. The remuneration values disclosed below have been
determined as follows:
FIXED REMUNERATION
Fixed remuneration includes base salaries received, payments made to superannuation funds, the taxable value
of non-monetary benefits received and any once-off payments such as sign-on bonuses or termination benefits,
see section D above for details.
Fixed remuneration excludes any accruals of annual or long-service leave.
SHORT-TERM INCENTIVES
The cash STI benefits represent the bonuses that were awarded to each KMP in relation to FY 2020 and which
were paid in February 2021.
LONG-TERM INCENTIVES
The value of performance rights was calculated by an independent valuer at the date the performance rights were
granted. The rights that vested in FY 2021 were granted in April 2018.
REMUNERATION RECEIVED DURING THE PERIOD
Executive
Fixed
Remuneration
Awarded STI
(cash)
Vested LTI
Total Value
Michael Omeros
389,188
61,964
-
451,152
Scott Smith
324,694
15,491
-
340,185
Ben Cornish1
165,982
43,374
116,987
326,344
Gary Pittorino
265,986
43,374
-
309,361
Ben Melville
234,996
7,745
-
242,741
Total executive KMP
1,380,847
171,949
116,987
1,669,783
Non executive Directors
438,164
-
-
438,164
Total KMP remuneration
1,819,011
171,949
116,987
2,107,947
1
Moved into Chief Information Security Officer Role on 1 March 2021
The amounts disclosed above are not the same as the remuneration expensed in relation to each KMP in
accordance with the accounting standards ($2,068,407 for 2021, see section D on page 31).
The directors believe that the remuneration received is more relevant to users for the following reasons:
The statutory remuneration expensed is based on historic cost and does not reflect the value of the equity
instruments when they are actually received by the KMPs.
The statutory remuneration shows benefits before they are actually received by the KMPs.
Share-based payment awards are treated differently under the accounting standards depending on whether
the performance conditions are market conditions (no reversal of expense) or non-market conditions (reversal
of expense where shares fail to vest), even though the benefit received by the KMP is the same (nil where
equity instruments fail to vest).
The information in this section has been audited together with the rest of the Remuneration Report.
DIRECTORS’ REPORT
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36 /
Over the Wire
DIRECTORS’ REPORT
END OF REMUNERATION REPORT
This report, incorporating the Remuneration Report is signed in accordance
with a resolution of Directors.
Michael Omeros
Managing Director
Brisbane
19 August 2021
Stephe Wilks
Chair
Brisbane
19 August 2021
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AUDITOR’S
INDEPENDENCE
DECLARATION
02
Over the Wire 2021 Annual Report
38 /
Over the Wire
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 2021, 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
19 AUGUST 2021
AUDITOR’S INDEPENDENCE DECLARATION
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CORPORATE
GOVERNANCE
STATEMENT
03
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 2021 corporate governance statement is dated as at 19 August 2021 and reflects the
corporate governance practices in place during the 2021 financial year to 19 August 2021. The
2021 corporate governance statement was approved by the board on 30 September 2021.
Over the Wire 2021 Annual Report
40 /
Over the Wire
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
Comply
Principle 1 – Lay solid foundations for management and oversight
1.1 Establish the functions expressly
reserved to the Board and those delegated to
management, and disclose those functions.
The Board is responsible for the overall corporate
governance of the company.
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.
Complies
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.
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.
Complies
1.3 Have a written agreement with each
director and senior executive setting out the
terms of their appointment.
The company has written agreements with each
director and senior executive. On appointment of
directors and senior executives the company will issue
necessary written agreements outlining the terms of
their appointment.
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
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 18
August 2021 is as follows:
Women on the Board – 40%
Women in Senior Executive positions – 14.3%
Women in the organisation – 29%
Partially Complies
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
CORPORATE GOVERNANCE STATEMENT
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CORPORATE GOVERNANCE STATEMENT
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
Comply
Principle 2 – Structure the Board to add value
2.1 The company should have a
nomination committee, which has at least
three members, a majority of independent
directors and is chaired by an independent
director.
The functions and operations of the
nomination committee should
be disclosed.
A combined People & Culture Committee (previously
called the Nominations and Remuneration
Committee) has been established with its own
charter and consists of:
Susan Forrester (committee chair);
Stephe Wilks;
Brent Paddon; and
Cathy Aston.
Complies
2.2 Have and disclose a board skills matrix,
setting out what the board is looking to
achieve in its membership.
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.
Partially
Complies
2.3 Disclose the names of the directors that
the Board considers to be independent
directors, and an explanation of why the
Board is of that opinion if a factor that
impacts on independence applies to a
director, and disclose the length of service
of each director.
The Board considers Stephe Wilks (appointed on 1
July 2021) to be an independent director.
The Board also considered that John Puttick
(appointed in December 2015 and resigned on 1 July
2021) was an independent director.
The Board also considers Susan Forrester
(appointed in December 2015) and Cathy Aston
(appointed in July 2020) to be independent directors.
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.
Complies
2.4 A majority of the Board should be
independent directors.
The Board comprised 5 directors, at all times 3 of
which were independent non-executive directors.
Complies
Over the Wire 2021 Annual Report
42 /
Over the Wire
2.5 The chair of the Board should be an
independent director and should not be
the CEO.
The chairman, Stephe Wilks (appointed 1 July 2021),
is a non-executive and independent director, as was
the previous chairman, John Puttick (resigned 1 July
2021).
Complies
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.
This is consistent with the Board Charter.
Complies
Principles and Recommendations
Compliance
Comply
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.
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.
The Board has established an Audit and Risk
Committee which operates under an audit and risk
committee charter and consists of:
Cathy Aston (committee chair);
Susan Forrester; and
Brent Paddon.
The committee includes two independent directors
and is chaired by an independent director.
Complies
CORPORATE GOVERNANCE STATEMENT
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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.
This is consistent with the approach to be adopted by
the Audit and Risk Committee and the Board.
Complies
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
Comply
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.
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.
The Board Charter and other applicable policies are
available on the company’s website.
Complies
6.2 Design and implement an investor
relations program to facilitate effective two-
way communication with investors.
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.
Complies
6.3 Disclose the policies and processes
in place to facilitate and encourage
participation at meetings of
security holders.
The company intends to facilitate effective
participation in the AGM, by conducting the AGM
using a hybrid model that will allow shareholders to
attend in person (if permitted by COVID restrictions
at the time of the AGM) or online, as well as the ability
to submit written questions ahead of and during the
AGM.
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
CORPORATE GOVERNANCE STATEMENT
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Over the Wire
CORPORATE GOVERNANCE STATEMENT
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.
The company has a combined Audit and Risk
Committee.
Complies
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.
The charter establishes the role of the
committee. Risk review was conducted in
this period.
Complies
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.
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.
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 Board does not believe that the company
has any such material risks.
Complies
Principles and Recommendations
Compliance
Comply
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.
The company has a combined People
and Culture Committee (formerly the
Nominations and Remuneration Committee).
The Committee comprises 4 independent
directors, including the chair. See 2.1 above.
Complies
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 People and Culture Committee charter is
available on the company’s website.
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.
Complies
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CORPORATE GOVERNANCE STATEMENT
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:
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);
A framework for individual performance review and 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 non-executive 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
overthewire.com.au/investors/
Over the Wire 2021 Annual Report
46 /
Over the Wire
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:
Represent, serve and protect the interests of shareholders;
Develop, implement, oversee, and review the strategies and performance of the company;
Optimise company performance and build sustainable 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
CORPORATE GOVERNANCE STATEMENT
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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:
Cathy Aston (committee chair);
Susan Forrester; and
Brent Paddon.
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, Corporate
Governance Statement - Continued annual Report 2020
37 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.
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:
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 overthewire.com.au/investors/
PEOPLE AND CULTURE
COMMITTEE
(PREVIOUSLY CALLED THE 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:
Susan Forrester (committee chair);
Brent Paddon;
Cathy Aston; and
Stephe Wilks (appointed 1 July 2021).
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 People and Culture
Committee information is available on the company’s website
at overthewire.com.au/investors/
CORPORATE GOVERNANCE STATEMENT
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48 /
Over the Wire
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 People and Culture 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 People and Culture
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
overthewire.com.au/investors/
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 overthewire.com.au/investors/
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable
as at 30 September 2021.
Over The Wire Holdings Limited
Issued capital ordinary shares: 59,561,827 as at
30 September 2021.
SUBSTANTIAL SHAREHOLDERS
Substantial shareholders in the company are set out below:
Ordinary Shares
Number
Held
% of Total
Shares
Issued
Michael Omeros
(Including Related Entities
and Indirect Holdings)
13,031,141
21.88%
National Nominees
Limited
11,974,008
20.10%
Brent Paddon (Including
Related Entities and
Indirect Holdings)
11,500,000
19.31%
Total Substantial
Shareholders
36,505,149
61.29%
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:
Ordinary Shares
Number Held
Number
of
Holders
1 – 1,000
301,308
765
1,001 – 5,000
1,743,304
684
5,001 – 10,000
1,837,073
248
10,001 – 100,000
4,671,112
207
100,001 – and Over
51,009,030
30
Total
59,561,827
2,042
Unmarketable Parcels
-
-
VOTING RIGHTS
The voting rights attached to each class of equity securities are
set out below:
ORDINARY SHARES
On a show of hands every member present at a meeting in
person, or by proxy, shall have one vote,
and upon a poll each share shall have one vote.
POLICIES
CORPORATE GOVERNANCE STATEMENT
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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 Access Digital (Escrow release date - 30
June 2022)
741,759
1.25%
Total Substantial Shareholders
741,759
1.25%
The 20 Largest Holders of Each Class of Quoted Equity Securities
Ordinary Shares
Michael Nictarios Omeros (Including Related Entities And Indirect Holdings)
13,031,141
21.88%
National Nominees Limited
12,560,298
21.09%
Brent Evans Paddon (Including Related Entities And Indirect Holdings)
11,500,000
19.31%
J P Morgan Nominees Australia Pty Limited
2,928,319
4.92%
UBS Nominees Pty Ltd
2,080,796
3.49%
Jay Heddon Binks
1,364,802
2.29%
BNP Paribas Noms Pty Ltd
1,279,236
2.15%
Agim Isai
741,759
1.25%
Eway Online Pty Ltd
741,759
1.25%
Christopher Peter Marciano
567,000
0.92%
Citicorp Nominees Pty Limited
476,436
0.80%
CS Fourth Nominees Pty Limited
431,566
0.72%
HSBC Custody Nominees (Australia) Limited
401,373
0.67%
Michael Stabb (Including Related Entities And Indirect Holdings)
381,732
0.64%
Scott Anthony Smith (Including Related Entities And Indirect Holdings)
375,112
0.63%
Wayne Albert Shaw
347,827
0.58%
Birkdale Holdings (QLD) Pty Ltd
337,139
0.57%
CS Third Nominees Pty Ltd
307,919
0.52%
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
188,312
0.32%
Ms Susan Margaret Forrester & Mr Bruce Forrester
186,920
0.31%
Total
50,229,446
84.33%
CORPORATE GOVERNANCE STATEMENT
Over the Wire 2021 Annual Report
50 /
Over the Wire
FINANCIAL
STATEMENTS
04
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/ 51
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR YEAR ENDED 30 JUNE 2021
Consolidated
Note
2021
$ ,000
2020
$ ,000
Revenue from Contracts with Customers
3
112,687
87,611
Other Income
4
131
50
Expenses
Data Centre & Colocation Expense
5
(6,881)
(3,516)
Calls & Communications Expense
5
(30,244)
(27,157)
Other Cost of Goods Sold
5
(15,128)
(15,343)
Employee Benefits Expense
5
(32,010)
(20,711)
Depreciation & Amortisation Expense
5
(17,425)
(9,756)
Finance Costs
5
(1,260)
(426)
Other Expenses
5
(5,022)
(3,538)
Profit Before Income Tax Expense
4,848
7,214
Income Tax Expense
6
(1,413)
(2,181)
Profit After Income Tax Expense for the Year Attributable to members
3,435
5,033
Other Comprehensive Income
1
-
Other Comprehensive Income for the Year, Net of Tax
1
-
Total Comprehensive Income for the Year Attributable to members
3,436
5,033
Basic Earnings per Share
7
6.038
9.749
Diluted Earnings per Share
7
6.012
9.716
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
FINANCIAL STATEMENTS
Over the Wire 2021 Annual Report
52 /
Over the Wire
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Consolidated
Note
2021
$ ,000
2020
$ ,000
Assets
Current Assets
Cash & Cash Equivalents
8
16,696
10,435
Trade & Other Receivables
9
10,717
9,328
Inventories
10
128
292
Other Current Assets
11
4,562
2,658
Total Current Assets
32,103
22,713
Non-Current Assets
Other Non-Current Assets
11
524
198
Property, Plant & Equipment
12
29,247
16,778
Intangibles
13
147,722
70,354
Total Non-Current Assets
177,493
87,330
Total Assets
209,596
110,043
Liabilities
Current Liabilities
Trade & Other Payables
14
14,446
9,310
Borrowings
15
9,054
3,925
Lease Liability
16
4,493
1,426
Current Tax Liability
17
1,391
987
Employee Benefits
18
3,129
1,954
Unearned Income
19
5,060
2,567
Deferred Consideration
24
4,686
-
Total Current Liabilities
42,259
20,169
Non-Current Liabilities
Borrowings
15
25,373
1,600
Lease Liability
16
14,814
9,523
Employee Benefits
18
225
115
Unearned Income
19
717
342
Deferred Consideration
24
4,684
-
Deferred Tax
20
21,209
9,349
Total Non-Current Liabilities
67,022
20,929
Total Liabilities
109,281
41,098
Net Assets
100,315
68,945
Equity
Issued Capital
21
74,710
44,321
Reserves
31
166
416
Retained Profits
22
25,439
24,208
Total Equity
100,315
68,945
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
FINANCIAL STATEMENTS
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR YEAR ENDED 30 JUNE 2021
Issued
Capital
Share
Based
Payment
Reserve
Foreign
Currency
Translation
Reserve
Retained
Profits
Total
Equity
Consolidated
Note
$ ,000
$ ,000
$ ,000
$ ,000
$ ,000
Balance at 1 July 2019
43,884
155
-
20,981
65,020
Profit after Income Tax for the Year
-
-
-
5,033
5,033
Other Comprehensive Income
-
-
-
-
-
Total Comprehensive Income for the Year
-
-
-
5,033
5,033
Transactions with Owners, in their Capacity
as Owners:
Dividends Paid
23
-
-
-
(1,806)
(1,806)
Dividend Reinvestment Plan
21
45
-
-
-
45
Performance Rights Issued
31
-
13
-
-
13
Movements as a result of existing Performance
Rights
31
-
248
-
-
248
Employee Share Plan
21
153
-
-
-
153
Tax Effect of Capitalised Costs
239
-
-
-
239
Balance at 30 June 2020
44,321
416
-
24,208
68,945
Issued
Capital
Share
Based
Payment
Reserve
Foreign
Currency
Translation
Reserve
Retained
Profits
Total
Equity
Consolidated
Note
$ ,000
$ ,000
$ ,000
$ ,000
$ ,000
Balance at 1 July 2020
44,321
416
-
24,208
68,945
Profit after Income Tax for the Year
-
-
-
3,435
3,435
Other Comprehensive Income
-
-
1
1
Total Comprehensive Income for the Year
-
-
1
3,435
3,436
Transactions with Owners, in their Capacity
as Owners:
Dividends Paid
23
-
-
-
(2,204)
(2,204)
Dividend Reinvestment Plan
21
81
-
-
-
81
Performance Rights Issued
31
-
-
-
-
-
Movements as a result of existing Performance
Rights
31
288
(251)
-
-
37
Shares Issued Net of Capital Raising Costs
21
29,409
-
-
-
29,409
Employee Share Plan
21
256
-
-
-
256
Tax Effect of Capitalised Costs
355
-
-
-
355
Balance at 30 June 2021
74,710
165
1
25,439
100,315
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
FINANCIAL STATEMENTS
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Over the Wire
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR YEAR ENDED 30 JUNE 2021
Consolidated
Note
2021
$ ,000
2020
$ ,000
Cash Flows from Operating Activities
Receipts from Customers
129,432
96,396
Payments to Suppliers & Employees
(99,644)
(80,691)
29,788
15,705
Interest Received
23
29
Interest Paid & Other Finance Costs Paid
(1,260)
(426)
Income Taxes Paid
(4,012)
(3,669)
Net Cash From / (Used In) Operating Activities
28(a)
24,539
11,639
Cash Flows from Investing Activities
Payments for Business Combinations (net of cash acquired)
(59,555)
(1,427)
Payments for Property, Plant & Equipment
(6,415)
(4,404)
Payments for Intangible Assets
(680)
(864)
Net Cash From / (Used In) Investing Activities
66,650
(6,695)
Cash Flows from Financing Activities
Proceeds from Issue of Shares (net of transaction costs)
24,009
-
Proceeds from Borrowings
37,019
2,170
Repayment of Borrowings
(7,098)
(4,025)
Repayment of Lease Liabilities
(3,436)
(1,219)
Dividends Paid
(2,123)
(1,760)
Net Cash From / (Used In) Financing Activities
28(b)
48,371
(4,834)
Net Increase (Decrease) in Cash & Cash Equivalents
6,260
110
Cash & Cash Equivalents at the Beginning of the Year
10,435
10,325
Foreign exchange movement in cash
1
-
Cash & Cash Equivalents at the End of the Year
8
16,696
10,435
Non-Cash Financing Activities
Shares Issued as Consideration for Business Acquisitions
5,400
-
Dividend Reinvestment plan
81
45
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
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CORPORATE GOVERNANCE STATEMENT
NOTES TO THE
FINANCIAL
STATEMENTS
05
For Year Ended 30 June 2021
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 19 August 2021 by the directors of the Company.
Over the Wire 2021 Annual Report
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Over the Wire
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 has determined there was no need to change its accounting policies as
a result of adopting the following standards:
Amendments to AASB 101 and 108: Definition of Material;
Amendments to AASB 3: Definition of a Business;
Amendments to AASB 1054: Disclosure of the effect of New IFRS Standards Not Yet issued in Australia;
Amendments to AASB 9 , 139 and 7: Interest Rate Benchmark reform; and
Revised Conceptual Framework for Financial Reporting.
The Group also elected to adopt the following amendments early:
Amendments to AASB 16: Covid-19-Related Rent Concessions; and
Where applicable - Amendments to AASB 1, 3, 116, 137 and 141: Annual Improvements 2018-2020 and Other
Amendments.
The amendments and revised conceptual framework listed above did not have any material impact on the amounts
recognised in prior periods and are not expected to significantly affect current of future periods.
During the year, the IFRS Interpretations Committee (IFRIC) published its final agenda decision on accounting for
configuration and customisation costs in a SaaS arrangement. The decision outlines the way certain configuration
and customisation costs should be treated when considered under the requirements of AASB 138: Intangible Assets.
While this decision will result in less costs meeting the criteria for being capitalised under AASB 138, review and ap-
plication of the decision by the Group has not resulted in any significant reduction in costs capitalised.
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 (‘IFRS’) 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.
NET CURRENT ASSET DEFICIENCY
The Group recorded a net current liability position of $10,156K (June 2020: net current asset position of $2,455K) as at 30 June
2021.
Given the Group’s net current liability position, the ability of the Group to continue as a going concern, including its ability to pay
its debts as and when they fall due, needs to be considered.
The net current liability position is due to the acquisitions of Zintel/ Fonebox, which was predominately funded through external
borrowings (refer to Notes 15 and 24), and Digital Sense, where a large portion of the consideration is a deferred earnout (refer
to Note 24).
The continuation of the Group as a going concern is dependent upon the continuation of generating future profits by the
underlying businesses.
It is on the basis of the Group’s ability to maintain future profits and cash inflows from operations, for which there is no
significant uncertainty, that the Directors have prepared the financial report on a going concern basis.
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B
C
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:
AASB 17: Insurance Contracts (applicable to annual reporting periods beginning on or after January 2023)
When effective, this Standard will replace the current accounting requirements applicable to Insurance Contracts
in AASB 4: Insurance Contracts. 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 101: Classification of Liabilities as Current or Non-current (applicable to annual reporting
periods beginning on or after January 2023)
The amendments specify the requirements for classifying liabilities as current or non-current. The amendments
clarify:
What is meant by a right to defer settlement;
That a right to defer settlement must exist at the end of the reporting date;
That classification in unaffected by the likelihood that an entity will exercise its deferral right; and
That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a
liability not impact its classification.
The Group is still assessing the impact these amendments will have on current practice and whether existing loan
agreements may require renegotiation.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Over the Wire
Holdings Limited (‘Company’ or ‘Parent Entity’) as at 30 June 2021 and the results of all subsidiaries for the year then
ended. The Company and its subsidiaries together are referred to in these financial statements as ‘the Group’.
Subsidiaries are all those entities over which the Company 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 Company. 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 derecognises the assets including goodwill, liabilities and non-
controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The
Group recognises the fair value of the consideration received and the fair value of any investment retained, together
with any gain or loss, in profit or loss.
NOTE 1:
SIGNIFICANT ACCOUNTING POLICIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Over the Wire
D
E
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.
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, the difference is recognised
as a gain directly in profit or loss 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 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 Group 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
Group receives all the information possible to determine fair value.
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.
FOREIGN OPERATIONS
The assets and liabilities of foreign operations are translated into AUD using the exchange rates at the reporting
date.
The income and expenses of foreign operations are translated into AUD using the monthly average rate at the dates
of the transactions.
Foreign currency differences are recognised in Other Comprehensive Income (“OCI”) and accumulated in the foreign
currency translation reserve, except to the extent that the translation difference is allocated to a Non-Controlling
Interest (“NCI”).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1:
SIGNIFICANT ACCOUNTING POLICIES
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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.
NOTE 1:
SIGNIFICANT ACCOUNTING POLICIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Over the Wire
G
H
I
INCOME TAX
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
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.
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 32. 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.
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
in current liabilities on the statement of financial position.
TRADE AND OTHER RECEIVABLES
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any 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.
NOTE 1:
SIGNIFICANT ACCOUNTING POLICIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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K
L
M
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.
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.
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:
Straight Line
Diminishing Value
Computer, Network & IT Plant & Equipment
13 - 33%
15 – 67%
Furniture and Fixtures
2½ - 33%
20 – 40%
Motor Vehicles
15%
N/A
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each
reporting date.
NOTE 1:
SIGNIFICANT ACCOUNTING POLICIES
J
INVENTORIES
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Over the Wire 2021 Annual Report
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Over the Wire
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.
NOTE 1:
SIGNIFICANT ACCOUNTING POLICIES
M
PROPERTY, PLANT AND EQUIPMENT
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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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.
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 fair value 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.
NOTE 1:
SIGNIFICANT ACCOUNTING POLICIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Over the Wire
P
Q
T
IMPAIRMENT OF NON-FINANCIAL ASSETS
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are
tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might
be impaired. Other non‑financial assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which
the assets 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.
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
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 Group commits itself to either purchase
or sale of the asset (i.e. trade date accounting is adopted).
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.
NOTE 1:
SIGNIFICANT ACCOUNTING POLICIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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T
U
FINANCIAL INSTRUMENTS
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.
Financial assets that meet the following conditions are subsequently measured at amortised cost:
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 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.
CREDIT-IMPAIRED FINANCIAL ASSETS
At each reporting date the Group assesses whether the financial assets carried at amortised cost are credit
impaired. A financial asset 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.
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.
NOTE 1:
SIGNIFICANT ACCOUNTING POLICIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Over the Wire
NOTE 1:
SIGNIFICANT ACCOUNTING POLICIES
V
W
X
Y
Z
EMPLOYEE BENEFITS
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 (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
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.
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.
DIVIDENDS
Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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NOTE 2: CRITICAL ACCOUNTING
JUDGEMENTS, ESTIMATES
AND ASSUMPTIONS
AA
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.
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 and concluded that there is no current material impact on the financial statements.
GOODS AND SERVICES TAX (‘GST’) AND OTHER SIMILAR
TAXES
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is
not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the
asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of
GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the
statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to, the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
tax authority.
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.
COMPARATIVE FIGURES
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
NOTE 1:
SIGNIFICANT ACCOUNTING POLICIES
AB
AC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Over the Wire
NOTE 2: CRITICAL ACCOUNTING
JUDGEMENTS, ESTIMATES
AND ASSUMPTIONS
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
and Note 13.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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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.
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.
CAPITALISATION OF INTERNALLY DEVELOPED SOFTWARE
Distinguishing between the research and development phases of a new customised software project and determining whether
the recognition requirements for the capitalisation of development costs are met requires judgement. After capitalisation,
management monitors whether the recognition requirements continue to be met and whether there are any indicators that
capitalised costs may be impaired.
BUSINESS COMBINATIONS
As discussed in Note 1, business combinations are initially accounted for on a provisional basis. The fair value of assets
acquired, liabilities and contingent liabilities assumed are initially estimated by the Group taking into consideration all available
information at the reporting date. Fair value adjustments on the finalisation of the business combination accounting is
retrospective, where applicable, to the period the combination occurred and may have an impact on the assets ad liabilities,
depreciation and amortisation reported.
NOTE 2: CRITICAL ACCOUNTING
JUDGEMENTS, ESTIMATES
AND ASSUMPTIONS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Over the Wire
NOTE 3: OPERATING SEGMENTS
AND PRODUCT LINES
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.
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.
DATA NETWORKS AND INTERNET
HOSTING (CLOUD AND DATA CENTRE COLOCATION)
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.
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).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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A
B
DESCRIPTION OF PRODUCT LINES
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.
Consolidated
2021
$ ,000
2020
$ ,000
Contract Revenue by Product Line
Data Networks and Internet
37,021
37,531
Voice
34,945
19,597
Hosting
21,815
10,134
Security & Managed Services
18,906
20,349
Total Contract Revenue by Product Line
112,687
87,611
Contract Revenue by Geographic Area
Australasia
112,687
87,611
Total Contract Revenue by Geographic Area
112,687
87,611
MANAGED SERVICES AND SECURITY
VOICE
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.
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.
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.
NOTE 3: OPERATING SEGMENTS
AND PRODUCT LINES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Over the Wire
NOTE 3: OPERATING SEGMENTS
AND PRODUCT LINES
NOTE 4: OTHER INCOME
Consolidated
2021
$ ,000
2020
$ ,000
Other Income
Interest Income
23
29
Provision for change in expected deferred
consideration payable
-
(35)
Other Sundry Income
108
56
Total Other Income
131
50
B
PRODUCT LINE INFORMATION PROVIDED
TO THE CHIEF OPERATING DECISION MAKERS (‘CODM’).
Revenue is derived from the transfer of goods and services over time and at a point in time in the following
product lines:
Consolidated
2021
$ ,000
2020
$ ,000
30 June 2021
Timing of Revenue Recognition
Contract Revenue by Product Line
At a point in
time
$ ,000
Over time
$ ,000
Data Networks and Internet
851
36,170
37,021
Voice
896
34,049
34,945
Hosting
224
21,591
21,815
Security & Managed Services
10,546
8,360
18,906
Total Contract Revenue by Product
Line
12,517
100,170
112,687
30 June 2020
Contract Revenue by Product Line
Data Networks and Internet
565
36,966
37,531
Voice
683
18,914
19,597
Hosting
11
10,123
10,134
Security & Managed Services
13,780
6,569
20,349
Total Contract Revenue by Product
Line
15,039
72,572
87,611
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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NOTE 5: EXPENSES
Consolidated
2021
$ ,000
2020
$ ,000
Profit before income tax includes the following
expenses:
Data Centre & Colocation Expense
Data Centre & Colocation - Cost of Sales
4,199
1,185
Data Centre & Colocation - Other Expenses
2,682
2,331
Total Data Centre & Colocation Expense
6,881
3,516
Calls & Communications Expense
Calls & Communications - Cost of Sales
30,112
27,085
Calls & Communications - Other Expenses
132
72
Total Calls & Communications Expense
30,244
27,157
Other Cost of Goods Sold
Hardware, Software & Maintenance
11,872
12,532
Other Cost of Goods Sold
3,256
2,811
Total Other Cost of Goods Sold
15,128
15,343
Employee Benefits
Salaries and Wages
25,078
16,801
Superannuation
2,241
1,524
Annual and Long Service Leave
313
(42)
Share-based Payments Expense
306
459
Other Employee Expenses
4,072
1,969
Total Employee Benefits
32,010
20,711
Depreciation
Computer, Network & IT Plant & Equipment
4,263
2,760
Furniture & Fittings
32
113
Motor Vehicles
2
3
Right of Use Assets
3,671
1,501
Total Depreciation
7,968
4,377
Amortisation
Amortisation of Internally Generated Software
734
552
Amortisation of other Intangibles
8,688
4,802
Amortisation of Borrowing Costs
35
25
Total Amortisation
9,457
5,379
Total Depreciation & Amortisation
17,425
9,756
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Over the Wire
Consolidated
2021
$ ,000
2020
$ ,000
Income Tax Expense
Current Tax
4,230
3,531
Deferred Tax – origination and reversal of temporary differences
(2,917)
(1,408)
Deferred Tax – adjustment recognised for prior periods
100
(8)
Adjustment recognised for prior periods
-
66
Aggregate Income Tax Expense
1,413
2,181
Deferred tax included in income tax expense comprises:
(Increase) / Decrease in Deferred Tax Assets
(669)
(1,722)
Increase / (Decrease) in Deferred Tax Liabilities
(2,248)
314
Deferred Tax – origination and reversal of temporary differences
(2,917)
(1,408)
Numerical Reconciliation of Income Tax Expense and Tax at Statutory Rate
Profit before income tax expense
4,848
7,214
Tax at the statutory rate of 30%
1,454
2,164
Consolidated
2021
$ ,000
2020
$ ,000
Finance Costs
Interest and Finance Charges Paid/Payable on Borrowings
741
226
Interest and Finance Charges Paid/Payable on Lease Liabilities
519
200
Total Finance Costs
1,260
426
Other Expenses
Legal, Accounting & Business Acquisition Costs
1,077
481
Premises
648
523
Licenses & Subscriptions
1,898
879
Travel & Marketing
619
493
Loss allowance & impairment of financial assets
263
550
General Expenses
517
632
Total Other Expenses
5,022
3,538
Total Expenses
107,970
80,447
Expenses increased largely due to the impact of acquiring Zintel/ Fonebox and Digital Sense in August and October respectively.
NOTE 5: EXPENSES
NOTE 6: INCOME TAX EXPENSE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Consolidated
2021
$ ,000
2020
$ ,000
Tax effect amounts which are not deductible/(taxable) in calculating
taxable income:
Entertainment
14
27
Accounting & Legal & Business Acquisition Costs
68
-
Share based payments
(75)
-
Provision for change in deferred consideration
-
10
Other Sundry Items
28
(86)
35
(49)
Adjustment recognised for prior periods
-
66
Movement in Timing Differences
-
-
Difference in overseas tax rates
(27)
-
Difference in tax balances acquired on business combinations
(49)
-
Income Tax Expense
1,413
2,181
The applicable weighted average effective tax rates are as follows:
29%
30%
NOTE 7: EARNINGS PER SHARE
NOTE 6: INCOME TAX EXPENSE
Consolidated
2021
2020
Reconciliation of Earnings to Profit or Loss
$,000
$,000
Earnings Used to Calculate Basic Earnings Per Share
3,435
5,033
Earnings Used to Calculate Diluted Earnings Per Share
3,435
5,033
Weighted Average Number of Ordinary Shares
,000
,000
Weighted Average Number of Ordinary Shares Outstanding During the Year Used in
Calculating Basic Earnings Per Share
56,895
51,626
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
246
174
Weighted Average Number of Ordinary Shares Outstanding During the Year Used in
Calculating Dilutive Earnings Per Share
57,041
51,800
Cents
Cents
Basic Earnings Per Share (Cents Per Share)
6.038
9.749
Diluted Earnings Per Share (Cents Per Share)
6.012
9.716
Earnings per share decreased predominately due the amortisation incurred on $51,819K of intangible assets with a limited life,
recognised through the acquisitions of Fonebox/ Zintel and Digital Sense in the current financial year.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Over the Wire 2021 Annual Report
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Over the Wire
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.
Consolidated
2021
$ ,000
2020
$ ,000
Trade & Other Receivables (Current)
Trade Receivables
6,728
7,952
Loss allowance
(471)
(384)
6,257
7,568
Term Deposits
527
257
Deposits Paid
295
183
Accrued Revenue
3,467
1,153
Other Receivables
171
167
Total Trade & Other Receivables
10,717
9,328
Consolidated
2021
$ ,000
2020
$ ,000
Cash & Cash Equivalents (Current)
Cash on Hand
3
1
Cash at Bank
16,693
10,434
Total Cash & Cash Equivalents
16,696
10,435
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
16,696
10,435
Balance as per Statement of Cash Flows
16,696
10,435
NOTE 8: CASH & CASH EQUIVALENTS
NOTE 9: TRADE & OTHER RECEIVABLES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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NOTE 10: INVENTORIES
NOTE 9: TRADE & OTHER RECEIVABLES
Consolidated
2021
$ ,000
2020
$ ,000
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
6,728
7,952
Less expected credit loss for specific balances
(210)
(122)
6,518
7,830
Expected credit loss - Based on weighted expected loss rate on remaining balances
at 3.99% for 30 June 2021 (2020: 2.35%)
(261)
(184)
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.
-
(78)
Total Loss Allowance
(471)
(384)
Movements in Loss Allowance of Receivables is as Follows:
Opening Balance
384
191
Amounts restated through opening retained earnings
-
-
Additional Provision Recognised
589
530
Receivables Written off During the Year as Uncollectable
(502)
(337)
Unused amount reversed
-
-
Closing Balance
471
384
Trade and Other Receivables decreased largely due to deferred payment terms offered to customers who were impacted
by COVID-19 in the prior year.
Consolidated
2021
$ ,000
2020
$ ,000
Inventories (Current)
Finished Goods – at Net Realisable Value
128
292
Total Inventories
128
292
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Over the Wire 2021 Annual Report
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Over the Wire
Consolidated
2021
$ ,000
2020
$ ,000
Other Assets (Current)
Prepayments - Maintenance Contracts
997
800
Prepayments - Other contracts
2,294
1,333
Prepayments - Other
1,271
525
Total Other Assets (Current)
4,562
2,658
Other Assets (Non-current)
Borrowing Costs
151
10
Prepayments - Maintenance Contracts
373
188
Total Other Assets (Non-current)
524
198
Total Other Assets
5,086
2,856
Amortisation of prepaid maintenance contracts recognised as a cost of providing
services during the period
1,949
2,259
Other Assets increased mainly due to the assets acquired through the acquisitions of Fonebox/ Zintel and Digital Sense in the
current financial year. This should be read in conjunction with the corresponding Unearned Income - Maintenance Contracts, at
Note 19.
NOTE 11: OTHER ASSETS
NOTE 12: PLANT & EQUIPMENT
Consolidated
2021
$ ,000
2020
$ ,000
Computer, Network & IT Plant & Equipment (Non-Current)
Computer, Network & IT Plant & Equipment – at cost
42,566
21,049
Less: Accumulated Depreciation
(30,624)
(14,563)
11,942
6,486
Furniture & Fixtures (Non-Current)
Furniture & Fixtures – at cost
660
480
Less: Accumulated Depreciation
(456)
(415)
204
65
Motor Vehicles (Non-Current)
Motor Vehicles – at cost
95
95
Less: Accumulated Depreciation
(91)
(89)
4
6
Right of Use (Non-Current)
Right of Use Assets – at cost
30,621
12,233
Less: Accumulated Depreciation
(13,524)
(2,012)
17,097
10,221
Total Plant & Equipment at written Down Value
29,247
16,778
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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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
$,000
Furniture
& Fixtures
$,000
Motor
Vehicles
$,000
Right of
Use Assets
$,000
Total
$,000
Balance at 1 July 2019
6,751
163
9
3,474
10,397
Additions Through Business Combinations
-
-
-
-
-
Additions
2,496
15
-
8,247
10,758
Transfers from inventory
-
-
-
-
-
Disposals
-
-
-
-
-
Depreciation Expense
(2,761)
(113)
(3)
(1,500)
(4,377)
Balance at 30 June 2020
6,486
65
6
10,221
16,778
Balance at 1 July 2020
6,486
65
6
10,221
16,778
Additions Through Business Combinations
4,118
3
-
5,321
9,442
Additions
6,248
168
-
4,579
10,995
Transfers from inventory
(2)
-
-
-
(2)
Transfer between classes
(647)
-
-
647
-
Disposals
-
-
-
-
-
Depreciation Expense
(4,263)
(32)
(2)
(3,671)
(7,968)
Exchange differences
2
-
-
-
2
Balance at 30 June 2021
11,942
204
4
17,097
29,247
Property, Plant and Equipment increased predominately due to the assets acquired through the acquisitions of Fonebox/
Zintel and Digital Sense in the current financial year.
Consolidated
2021
$ ,000
2020
$ ,000
Intangibles (Non-Current)
Goodwill – at Cost
61,890
29,032
61,890
29,032
Brand Value
7,210
5,510
Less: Accumulated Amortisation
(1,006)
(681)
6,204
4,829
Location and Right-to-Use
1,817
1,817
Less: Accumulated Amortisation
(1,018)
(874)
799
943
NOTE 13: INTANGIBLES
NOTE 12: PLANT & EQUIPMENT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Over the Wire 2021 Annual Report
80 /
Over the Wire
NOTE 13: INTANGIBLES
Consolidated
2021
$ ,000
2020
$ ,000
Customer Lists
95,269
43,950
Less: Accumulated Amortisation
(18,371)
(10,152)
76,898
33,798
Internally Generated Software
3,643
2,731
Less: Accumulated Amortisation
(1,712)
(979)
1,931
1,752
Total Intangibles
147,722
70,354
RECONCILIATIONS
Reconciliations of the written down value at the beginning and end of the current and previous financial year
are set out below:
Internally
Generated
Software
$,000
Goodwill
$,000
Brand
Value
$,000
Location
& Right
to Use
$,000
Customer
List
$,000
Total
$,000
Balance at 1 July 2019
1,440
29,032
5,071
1,108
38,193
74,844
Additions - Business Combinations
-
-
-
-
-
-
Additions
864
-
-
-
-
-
Disposals
-
-
-
-
-
-
Amortisation Expense
(552)
-
(242)
(165)
(4,395)
(5,354)
Balance at 30 June 2020
1,752
29,032
4,829
943
33,798
70,354
Balance at 1 July 2020
1,752
29,032
4,829
943
33,798
70,354
Additions - Business Combinations
-
32,858
1,700
-
51,319
85,877
Additions
913
-
-
-
-
913
Disposals
-
-
-
-
-
-
Amortisation Expense
(734)
-
(325)
(144)
(8,219)
(9,422)
Balance at 30 June 2021
1,931
61,890
6,204
799
76,898
147,722
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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NOTE 13: INTANGIBLES
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 2021.
Remaining
Amortisation Period
Carrying
Amount
Years
$ ,000
Location & Right to Use - Sanity
6
799
Location & Right to Use
799
Customer List - Faktortel
4
817
Customer List - Sanity
4
668
Customer List - Telarus
6
2,512
Customer List - SpiderBox
4
126
Customer List - VPN Solutions
6
5,700
Customer List - Access Digital
7
10,193
Customer List - Comlinx
7
9,387
Customer List - Zintel / Fonebox
9
22,147
Customer List - Digital Sense
9
25,348
Customer List
76,898
Brand - Sanity
1
50
Brand - Telarus
1
54
Brand - VPN Solutions
1
67
Brand - Access Digital
2
117
Brand - Zintel / Fonebox
4
417
Brand
705
Internally Generated Computer Software - 2018
1
55
Internally Generated Computer Software - 2019
2
358
Internally Generated Computer Software - 2020
3
605
Internally Generated Computer Software - 2021
4
913
Internally Generated Computer Software
1,931
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 3, the Group has one reportable segment, being IT and Telecommunications.
Brand Value has been recorded in relation to the acquisition of Faktortel, Comlinx & Digital Sense, 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Over the Wire 2021 Annual Report
82 /
Over the Wire
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 no growth perpetuity method was used in the 2021 calculation.
Key assumptions used for value-in-use calculations:
2021
2020
CGU – IT & Telecommunications:
EBITDA & Net Cash flow from Operations (growth rate)
7%
13%
Discount Rate
9%
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 adjusted for lease payments 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 its 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 3.5%, 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 12%, there
would still be no impairment charge required.
NOTE 14: TRADE & OTHER PAYABLES
Consolidated
2021
$ ,000
2020
$ ,000
Trade & Other Payables (Current)
Trade Payables
8,600
4,981
GST Payable
1,430
1,010
Accrued Expenses
3,339
2,624
Other Payables
1,077
695
Total Trade & Other Payables (Current)
14,446
9,310
Trade and Other Payables increased mainly due to the acquisitions of Fonebox/ Zintel and Digital Sense in the current financial
year as well as increased supplier costs for non-recurring sales in June 2021.
NOTE 13: INTANGIBLES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Consolidated
2021
$ ,000
2020
$ ,000
Borrowings (Current)
Term Loan
9,054
3,925
Total Borrowings (Current)
9,054
3,925
Borrowings (Non-Current)
Term Loan
25,373
1,600
Total Borrowings (Non-Current)
25,373
1,600
Total Borrowings
34,427
5,525
TERM LOAN
During the reporting period, the Group entered into a new finance facility agreement for the purpose of acquiring the share
capital of Fonebox / Zintel. 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 Group. The facility has a maturity date of 28 August 2023.
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 1.5 times
Net Leverage Ratio must at all times be less than 2.25 times
Debt to Capital Ratio must be no more than 50% at all times
As at and during the financial year ended 30 June 2021, 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 2021 being as follows:
Facility
Limit
Used
$,000
$,000
Term Loan
34,427
34,427
Credit Card Facilities
410
8
Multi-Option Facility
1,350
869
NOTE 15: BORROWINGS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Over the Wire 2021 Annual Report
84 /
Over the Wire
A
B
LEASE LIABILITIES
ASSOCIATED RIGHT OF USE ASSETS
NOTE 16: LEASE LIABILITIES
The Consolidated Group leases office premises, data centre premises and IT Equipment across QLD, NSW, VIC & SA.
Consolidated
2021
$ ,000
2020
$ ,000
Current
Lease Liability - Premises
1,989
1,119
Lease Liability - IT Equipment
2,504
307
Lease Liability - Current
4,493
1,426
Non-Current
Lease Liability - Premises
11,645
8,941
Lease Liability - IT Equipment
3,169
582
Lease Liability - Non-Current
14,814
9,523
Total Lease Liability
19,307
10,949
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 12).
Consolidated
2021
$ ,000
2020
$ ,000
Right of Use Assets
Properties/ Premises
11,896
9,125
IT Equipment
5,201
1,096
Total Written Down Value (Note 12)
17,097
10,221
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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C
D
E
AMOUNTS RECOGNISED IN THE CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME
CASH OUTFLOWS
Total cash outflows for leases for the year ended 30 June 2021 was $3,956K (2020: $1,419K)
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 $12K for the year ended 30 June 2021 (2020: $29K).
LEASES NOT YET COMMENCED TO WHICH THE CONSOLIDATED GROUP IS
COMMITTED
As at the date of this report, the Consolidated Group has not entered into any new lease agreements.
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.
NOTE 16: LEASE LIABILITIES
The Consolidated Statement of Comprehensive Income includes the following amounts relating to leases.
Consolidated
2021
$ ,000
2020
$ ,000
Right of Use Assets
Depreciation charge on properties/ premises (included in depreciation
and amortisation)
2,031
1,235
Depreciation charge on IT equipment (included in depreciation and
amortisation)
1,621
265
Interest expense on properties/ premises (included in finance costs)
347
174
Interest expense on IT Equipment (included in finance costs)
172
26
4,171
1,700
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Over the Wire 2021 Annual Report
86 /
Over the Wire
Consolidated
2021
$ ,000
2020
$ ,000
Current Tax Liability
Provision For Income Tax Payable
1,391
987
Total Current Tax Liability
1,391
987
NOTE 17: CURRENT TAX LIABILITY
NOTE 18: EMPLOYEE BENEFITS
Consolidated
2021
$ ,000
2020
$ ,000
Employee Benefits (Current)
Provision for Long Service Leave
1,108
820
Provision for Annual Leave
2,021
1,134
Other Employee Benefits Payable
-
-
Total Employee Benefits Payable (Current)
3,129
1,954
Employee Benefits (Non-Current)
Provision for Long Service Leave
225
115
Total Employee Benefits Payable (Non-Current)
225
115
Total Employee Benefits
3,354
2,069
Movement in Provisions
Provision for Long Service Leave
Balance at 1 July
935
809
Additional Provisions
246
149
Additions Through Business Combinations
234
-
Amounts Used
(82)
(23)
Balance at 30 June
1,333
935
Provision for Annual Leave
Balance at 1 July
1,134
1,302
Additional Provisions
1,749
1,039
Additions Through Business Combinations
777
-
Amounts Used
(1,640)
(1,209)
Exchange differences
1
-
Balance at 30 June
2,021
1,134
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Consolidated
2021
$ ,000
2020
$ ,000
Deferred Tax Consist Of:
Deferred Tax Assets (a)
6,667
3,728
Deferred Tax Liabilities (b)
(27,876)
(13,077)
Net Deferred Tax Asset / (Liability)
(21,209)
(9,349)
a) Deferred Tax Assets:
The Balance Comprises Temporary Differences Attributable to:
Accrued Expenses
192
293
Provision for Doubtful Debts
141
115
Employee Benefits
1,186
731
Claimable IPO Costs
448
201
Leases
4,700
2,388
Deferred Tax Asset
6,667
3,728
Consolidated
2021
$ ,000
2020
$ ,000
Unearned Income (Current)
Customer prepayments and deposits
4,208
1,688
Setup fees
16
19
Unearned income - maintenance contracts
836
860
Total Unearned Income (Current)
5,060
2,567
Unearned income (Non-current)
Unearned income - maintenance contracts
717
342
Total Unearned Income (Non-Current)
717
342
Total Unearned Income
5,777
2,909
Revenue recognised in the reporting period that was included in unearned income at
the beginning of the period
2,567
2,384
Unearned income increased predominately due to a significant customer deposit made in June 2021 for goods to be provided.
This should be read in conjunction with the corresponding prepaid maintenance contracts, at Note 11.
NOTE 19: UNEARNED INCOME
NOTE 20: DEFERRED TAX
NOTE 18: EMPLOYEE BENEFITS
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Over the Wire 2021 Annual Report
88 /
Over the Wire
Movement in Deferred Tax Assets
Accrued
Expenses
$,000
Prov. for
Doubtful
Debts
$,000
Employee
Benefits
$,000
Claimable
IPO Costs
$,000
Lease
Liability
$,000
Total
$,000
Balance at 1 July 2019
261
57
633
63
732
1,746
(Charged) / Credited to Profit or Loss
32
58
(24)
-
1,656
1,722
(Charged) / Credited through Equity
-
-
-
125
-
125
(Over) / Under Provision of Prior Year
-
-
122
13
-
135
Balance at 30 June 2020
293
115
731
201
2,388
3,728
(Charged) / Credited to Profit or Loss
(105)
(71)
142
-
700
666
(Charged) / Credited through Equity
-
-
-
208
-
208
Additions Through Business Combinations
4
97
313
39
1,612
2,065
(Over) / Under Provision of Prior Year
-
-
-
-
-
-
Balance at 30 June 2021
192
141
1,186
448
4,700
6,667
Consolidated
2021
$ ,000
2020
$ ,000
b) Deferred Tax Liabilities:
The Balance Comprises Temporary Differences Attributable to:
Accrued Revenue
(51)
(52)
Provision for Doubtful Creditors
(37)
(29)
Intangibles on Acquisitions
(23,468)
(10,500)
Property Plant & Equipment
(4,330)
(2,500)
Other
10
4
Deferred Tax Liability
(27,876)
(13,077)
Movement in Deferred Tax Liability
Accrued
Revenue
$,000
Prov. for
Doubtful
Creditors
$,000
Intangibles
on
Acquisitions
$,000
Property,
Plant &
Equipment
$,000
Other
$,000
Total
$,000
Balance at 1 July 2019
(89)
(63)
(11,903)
(707)
-
(12,762)
(Charged) / Credited to Profit or Loss
37
34
1,403
(1,793)
5
(314)
(Over) / Under Provision of Prior Year
-
-
-
-
(1)
-
Balance at 30 June 2020
(52)
(29)
(10,500)
(2,500)
4
(13,077)
(Charged) / Credited to Profit or Loss
1
(8)
2,578
(327)
6
2,250
Additions Through Business Combinations
-
-
(15,546)
(1,503)
-
(17,049)
(Over) / Under Provision of Prior Year
-
-
-
-
-
-
Balance at 30 June 2021
(51)
(37)
(23,468)
(4,330)
10
(27,876)
NOTE 20: DEFERRED TAX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Consolidated
2021
$ ,000
2020
$ ,000
Issued Capital
Ordinary Shares – Fully Paid
74,710
44,321
Total Issued Capital
74,710
44,321
MOVEMENTS IN ORDINARY SHARE CAPITAL
Date
No. of Shares
,000
Issue Price
$
Paid up
Amount
$,000
Balance
1 Jul 2019
51,602
43,884
Shares issued on DRP
10 Oct 2019
5
4.61
23
Employee Share Plan
13 Dec 2019
33
4.70
153
Tax Effect of Capitalised Costs
31 Dec 2019
-
-
239
Shares issued on DRP
7 April 2020
11
2.05
22
Balance
30 June 2020
51,651
44,321
Shares issued on DRP
15 Oct 2020
9
4.14
35
Shares issued for Share Placement
29 Oct 2020
5,000
4.00
19,085
Shares issued on Share Purchase Plan
30 Oct 2020
1,250
4.00
4,924
Shares issued on Acquisitions
30 Oct 2020
1,483
3.64
5,400
Employee Share Plan
1 Mar 2021
58
4.41
256
ESOP Shares Vested from Performance Rights
2 Mar 2021
100
2.89
288
Shares issued on DRP
7 Apr 2021
11
4.15
46
Tax Effect of Capitalised Costs
30 Jun 2021
-
-
355
Balance
30 June 2021
59,562
74,710
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 1 March 2021, 58,082 ordinary shares were issued to employees under an Employee Share Plan with an issue price of $4.41
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 2 March 2021, the Group issued 99,732 shares to key management personnel and select senior staff due to the vesting of the
2018 performance rights. Further details of the performance rights are set out in Note 31.
NOTE 21: ISSUED CAPITAL
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Over the Wire 2021 Annual Report
90 /
Over the Wire
Consolidated
2021
$,000
2020
$,000
Dividends
Interim fully franked ordinary dividend of 1.75 cents per share franked at the tax rate
of 30% (2020: 1.50 cents per share fully franked at 30%)
1,042
774
Final fully franked ordinary dividend of 2.25 cents per share franked at the tax rate of
30% (2020: 2.00 cents per share fully franked at 30%)
1,162
1,032
Total Dividends for the Financial Year
2,204
1,806
Subsequent to year-end, on 19 August 2021, the Company declared a fully franked final dividend of 2.25 cents per share, for the
year ended 30 June 2021. The dates of the dividend are as follows:
Ex date
– 13 September 2021
Record Date
– 14 September 2021
DRP Election Date
– 15 September 2021
Payment Date
– 14 October 2021
As this final dividend was declared subsequent to year-end, no provision has been made in the accounts for the dividend.
NOTE 21: ISSUED CAPITAL
NOTE 22: RETAINED PROFITS
NOTE 23: EQUITY – DIVIDENDS
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 2020 Annual Report.
Consolidated
2021
$ ,000
2020
$ ,000
Retained Profits
Retained Profits at the Beginning of the Financial Year
24,208
20,981
Profits After Income Tax Expense for the Financial Year
3,435
5,033
Dividends Paid
(2,204)
(1,806)
Retained Profits at the End of the Financial Year
25,439
24,208
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Consolidated
2021
$,000
2020
$,000
Franking Credits
Franking Credits Available at the Reporting Date Based on a Tax Rate of 30%
16,048
12,944
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%
1,106
987
Franking Credits available for Subsequent Financial Years based on a Tax Rate of 30%
17,154
13,931
NOTE 24: BUSINESS COMBINATIONS
NOTE 23: EQUITY – DIVIDENDS
A
J2 AUSTRALIA CLOUD CONNECT PTY LTD AND ZINTEL
AUSTRALIA LIMITED (TRADING AS FONEBOX AND ZINTEL)
On 31 August 2020, the Company acquired J2 Australia Cloud Connect Pty Ltd and Zintel Australia Limited
(“Fonebox / Zintel”)
The acquisition of Fonebox / Zintel has delivered approximately 9,000 business customers to Over the Wire and
enhances our existing voice offerings.
The original contracted price was $36,000K, comprising upfront consideration of $36,000K in cash, less a working
capital adjustment to reflect profits retained in the business by the vendor against a target at settlement. Upon
completion of the settlement accounts, the working capital adjustment was $43K payable to Over the Wire.
Accordingly the provisional adjusted purchase price is $35,957K.
DETAILS ON ACQUISITION
Company
Primary Business
Division
Acquisition
Purchase
price
Intangibles
Acquired
Cash to
Settle
$,000
$,000
$,000
J2 Australia Cloud Connect Pty
Ltd and Zintel Communications
Limited (Provisional)
Inbound
Telecommunications
100% of
shares
35,957
42,590
35,957
Total
35,957
42,590
35,957
The Group engaged the services of 22 Corporate Advisory Pty Ltd in order to provide the economic valuation of the
business acquisition of J2 Australia Cloud Connect Pty Ltd and Zintel Communications Limited, including purchase
price allocation, net assets acquired and intangibles (both identifiable and goodwill). At the date of these financial
statements, the amounts noted in relation to the business combination are provisional awaiting the finalisation of
tax balances. Provisional amounts may be retrospectively adjusted to reflect new information obtained about facts
and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of
the amounts recognised at that date.
Under the agreement, the vendor and its affiliates are restrained for three years from engaging in business similar
to or in competition with J2 Australia Cloud Connect Pty Ltd or Zintel Communications Limited in Australia and
New Zealand, including being restrained from inducing an employee of J2 Australia Cloud Connect Pty Ltd or Zintel
Communications Limited to terminate their employment or soliciting any clients of J2 Australia Cloud Connect Pty
Ltd or Zintel Communications Limited. The Vendor has provided customary warranties including those relating
to the share capital of J2 Australia Cloud Connect Pty Ltd and Zintel Communications Limited, that there are no
encumbrances, the completeness and accuracy of information relating to the accounts and records of J2 Australia
Cloud Connect Pty Ltd and Zintel Communications Limited and tax related matters.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Over the Wire
The assets being recognised as a result of the acquisitions are as follows:
J2 Australia Cloud Connect Pty Ltd and Zintel Communications Limited
Aug 2020
$ ,000
Assets
Current Assets
Cash & Cash Equivalents
37
Trade & Other Receivables
2,217
Other Current Assets
199
Total Current Assets
2,453
Non-Current Assets
Property, Plant & Equipment
828
Intangible Assets
233
Deferred Tax
191
Total Non-Current Assets
1,252
Total Assets
3,705
Liabilities
Current Liabilities
Trade & Other Payables
1,468
Lease Liability
157
Employee Benefits
547
Unearned Income
507
Total Current Liabilities
2,679
Non-Current Liabilities
Lease Liability
217
Employee Benefits
44
Total Non-Current Liabilities
261
Total Liabilities
2,940
Net Assets
765
NOTE 24: BUSINESS COMBINATIONS
A
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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ACQUIRED INTANGIBLES
Description
Brand
Value
Customer
List /
Relationships
Goodwill
(Provisional)
Total
Class:
Limited Life
Limited Life
Indefinite
Life
Treatment:
Amortised
and
Impaired
Amortised and
Impaired
Impaired
Rate:
Forecast
Use of
Brand
Churn/
Customer
Retention
Estimated
Useful Life:
5 years
10 years
$,000
$,000
$,000
$,000
$,000
J2 Australia Cloud Connect Pty
Ltd and Zintel Communications
Limited
Purchase Price:
36,000
Less: Working Capital Adjustment
(43)
Less: Identifiable Net Assets
(765)
Add: Deferred tax liability
recognised on limited life
intangibles
7,398
Intangible Assets upon Acquisition
42,590
Allocation of Intangibles:
500
24,160
17,930
42,590
Annual Forecast Amortisation
100
2,416
-
2,516
B
DIGITAL SENSE HOSTING PTY LTD
On 30 October 2020, the Company acquired Digital Sense Hosting Pty Ltd.
The acquisition of Digital Sense Hosting Pty Ltd has delivered a number of enterprise and Government customers to
Over the Wire and positions Over the Wire well to capitalise on the cloud industry’s strong growth outlook.
The total consideration was $39,000K which included a loan of $6,960K, resulting in a purchase price of $32,040K.
Upfront consideration was $27,000K comprising $21,600K in cash (of which, $6,960K was via a loan from the Group),
1,483,518 OTW shares ($5,400K in OTW shares at an issue price of $3.64, being the volume weighted average price
for 10 trading days prior to the announcement of the acquisition), plus or minus a working capital adjustment to
reflect profits retained in the business by the vendor against a target at settlement.
Upon completion of the settlement accounts, the working capital adjustment was $2,422K payable to the vendor.
Accordingly the provisional adjusted purchase price is $34,462K prior to present value discounting.
NOTE 24: BUSINESS COMBINATIONS
A
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Over the Wire
NOTE 24: BUSINESS COMBINATIONS
B
DETAILS ON ACQUISITION
Company
Primary
Business
Division
Acquisition
Purchase
price
Intangibles
Acquired
Shares
issued to
Settle
Shares
issued to
Settle
Cash to
Settle
Deferred
Consid-
eration
$,000
$,000
Units
$,000
$,000
$,000
Digital Sense
Hosting Pty
Ltd
(Provisional)
Cloud
Platform
Provider
100% of
shares
33,018
43,287
1,483,518
5,400
17,062
10,555
Total
33,018
43,287
1,483,518
5,400
17,062
10,555
The Group engaged the services of 22 Corporate Advisory Pty Ltd in order to provide the economic valuation of the
business acquisition of Digital Sense Hosting Pty Ltd, including purchase price, net assets acquired, intangibles (both
identifiable and goodwill) and deferred consideration. At the date of these financial statements, the amounts noted
in relation to the business combination are provisional awaiting the finalisation of tax balances. Provisional amounts
may be retrospectively adjusted to reflect new information obtained about facts and circumstances that existed as
of the acquisition date and, if known, would have affected the measurement of the amounts recognised at
that date.
The overall purchase consideration is a combination of cash, shares and deferred consideration.
Total deferred consideration recognised was $12,000K, present value discounted to $10,555K at 30 June 2021.
Deferred consideration is payable in three instalments in January 2021 (paid), September 2021, and September
2022, calculated with reference to agreed profitability and revenue scaling targets and is also conditional on
continued employment of the vendors of the Company. As at the date of this report, deferred consideration of
$9,370K remains payable. The deferred consideration has been recorded on the basis that the full amount will be
due and payable over the earn-out period.
Under the agreement, the vendor and its affiliates are restrained for five years from engaging in business similar
to or in competition with Digital Sense Hosting Pty Ltd in Australia, including being restrained from inducing an
employee of Digital Sense Hosting Pty Ltd to terminate their employment or soliciting any clients of Digital Sense
Hosting Pty Ltd. The Vendor has provided customary warranties including those relating to the share capital of
Digital Sense Hosting Pty Ltd, the completeness and accuracy of information relating to the accounts and records of
Digital Sense Hosting Pty Ltd and tax related matters.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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The assets being recognised as a result of the acquisitions are as follows:
Digital Sense Hosting Pty Ltd
Oct 2020
$ ,000
Assets
Current Assets
Cash & Cash Equivalents
1,573
Trade & Other Receivables
2,163
Other Current Assets
521
Total Current Assets
4,257
Non-Current Assets
Property, Plant & Equipment
8,614
Deferred Tax
322
Total Non-Current Assets
8,936
Total Assets
13,193
Liabilities
Current Liabilities
Trade & Other Payables
1,449
Lease Liability
1,052
Current Tax Liability
185
Employee Benefits
400
Unearned Income
482
Total Current Liabilities
3,568
Non-Current Liabilities
Borrowings
6,960
Lease Liability
4,766
Employee Benefits
20
Total Non-Current Liabilities
11,746
Total Liabilities
15,314
Net Liabilities
2,121
NOTE 24: BUSINESS COMBINATIONS
B
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Over the Wire 2021 Annual Report
96 /
Over the Wire
ACQUIRED INTANGIBLES
Description
Brand
Value
Customer
List /
Relationships
Goodwill
(Provisional)
Total
Class:
Indefinite
Life
Limited Life
Indefinite
Life
Treatment:
Impaired
Amortised and
Impaired
Impaired
Rate:
Churn/
Customer
Retention
Estimated
Useful Life:
10 years
$,000
$,000
$,000
$,000
$,000
Digital Sense Hosting Pty Ltd
Total consideration
39,000
Less: Loan provided
(6,960)
Purchase Price:
32,040
Less: PV discounting
(1,445)
Add: Provisional Working Capital
Adjustment
2,422
Add: Identifiable Net Liabilities
2,121
Add: Deferred tax liability recognised on
limited life intangibles
8,148
Intangible Assets upon Acquisition
43,287
Allocation of Intangibles:
1,200
27,159
14,928
43,287
Annual Forecast Amortisation
-
2,716
-
2,716
NOTE 24: BUSINESS COMBINATIONS
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 2021 or 30 June 2020.
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.
B
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Consolidated
2021
$ ,000
2020
$ ,000
Financial Assets
Cash & Cash Equivalents (Note 8)
16,696
10,435
Trade & Other Receivables (Note 9)
10,717
9,328
Total Financial Assets
27,413
19,763
Financial Liabilities
Trade & Other Payables (Note 14)
14,446
9,310
Borrowings (Note 15)
34,427
5,525
Lease Liabilities (Note 16)
19,307
10,211
Total Financial Liabilities
68,180
25,046
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 minimal exposure to fluctuations in foreign currencies due to the size of foreign operations.
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 2020
0 – 12
Months
1 – 2
Years
2 – 5
Years
> 5
Years
Total
Cash Flows
Carrying
Amount
$ ,000
$ ,000
$ ,000
$ ,000
$ ,000
$ ,000
Cash & Cash Equivalents
10,435
-
-
-
10,435
10,435
Trade and Other Receivables
9,328
-
-
-
9,328
9,328
Total
19,763
-
-
-
19,763
19,763
Contracted maturities at
30 June 2021
0 – 12
Months
1 – 2
Years
2 – 5
Years
> 5
Years
Total
Cash Flows
Carrying
Amount
$ ,000
$ ,000
$ ,000
$ ,000
$ ,000
$ ,000
Cash & Cash Equivalents
16,696
-
-
-
16,696
16,696
Trade and Other Receivables
10,717
-
-
-
10,717
10,717
Total
27,413
-
-
-
27,413
27,413
The Group has recognised a loss of $502K (2020: $530K) in profit and loss in respect of impairment of receivables for the year
ended 30 June 2021. The movements in the provision for impairment of receivables were outlined in Note 9.
NOTE 25: FINANCIAL RISK
MANAGEMENT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Over the Wire 2021 Annual Report
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Over the Wire
The table below sets out the maturity periods of the financial liabilities of the consolidated Group as at 30 June 2021 and 30 June
20. All carrying amounts of equipment finance are discounted contractual cash flows.
Contracted maturities
at 30 June 2020
< 6
Months
6 – 12
Months
1 – 2
Years
2 – 5
Years
> 5
Years
Total
Cash Flows
Carrying
Amount
$ ,000s
$ ,000s
$ ,000s
$ ,000s
$ ,000s
$ ,000s
$ ,000s
Trade & Other
Payables
9,310
-
-
-
-
9,310
9,310
Borrowings
1,962
1,962
1,690
-
-
5,614
5,525
Lease Liabilities
846
920
1,838
2,687
6,139
12,430
10,949
Total
12,118
2,882
3,528
2,687
6,139
27,354
25,784
Contracted maturities
at 30 June 2021
< 6
Months
6 – 12
Months
1 – 2
Years
2 – 5
Years
> 5
Years
Total
Cash Flows
Carrying
Amount
$ ,000s
$ ,000s
$ ,000s
$ ,000s
$ ,000s
$ ,000s
$ ,000s
Trade & Other
Payables
14,446
-
-
-
-
14,446
14,446
Borrowings
4,896
4,841
9,538
16,379
-
35,654
34,427
Lease Liabilities
2,533
2,452
4,013
7,350
4,617
20,965
19,307
Total
21,875
7,293
13,551
23,729
4,617
71,065
68,180
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 2021 or 30 June 2020.
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 were revised as at 30 June 2020 and as a
result rates were increased to account for the increased uncertainty. The adjustment to loss rates was made with reference to
the industries in which our customers operate and the expected impact of COVID-19 to that industry.
As a result of the impacts of COVID-19 now being reflected in the actual loss rates of the Group and reduced uncertainty, the
additional overlay has been removed in the current reporting period.
NOTE 25: FINANCIAL RISK
MANAGEMENT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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NOTE 25: FINANCIAL RISK
MANAGEMENT
The following table provides information regarding the credit risk relating to cash and money market securities based on
Moody’s counter-party credit ratings.
Consolidated
2021
$ ,000
2020
$ ,000
Cash & Cash Equivalents
Aa3 Rated
15,756
10,409
A1 Rated
765
5
A3 Rated
172
20
Unallocated
3
1
Total Cash & Cash Equivalents
16,696
10,435
The following table summarises the assumptions underpinning the consolidated Group's expected credit loss model.
Category
Consolidated Group definition of category
Basis for recognition of expected credit
loss provision
Performing
Customers have a low risk of default and a
strong capacity to meet contractual cash flows
12 month expected losses for Cash & Cash
Equivalents. Lifetime expected losses for
Trade & Other Receivables
Under-performing
Balances are past due, however there is no
further indication that interest or principal
repayments will be unrecoverable
Lifetime expected losses
Non-performing
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.
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 1.5:1, and accordingly the Directors consider interest rate and market risk to be low.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Over the Wire 2021 Annual Report
100 /
Over the Wire
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:
Consolidated
2022
$ ,000
2023
$ ,000
2% Decrease in Interest Rates
623
441
1% Decrease in Interest Rates
312
221
1% Increase in Interest Rates
(312)
(221)
2% Increase in Interest Rates
(626)
(443)
3% Increase in Interest Rates
(940)
(666)
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 1:1.5 making the Company an attractive lending proposition, and maintains regular contact
and good relationships with a variety of debt and equity funding institutions.
NOTE 25: FINANCIAL RISK
MANAGEMENT
NOTE 26: REMUNERATION OF
AUDITORS
Consolidated
2021
$ ,000
2020
$ ,000
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 (Statutory)
139
107
Other Audit Services
47
-
PKF Brisbane Pty Ltd
Other Services – Tax compliance services
31
19
Total
217
126
Contingent Assets
The Group had no contingent assets as at 30 June 2021 or 30 June 2020.
Contingent Liabilities
The Group had no contingent liabilities as at 30 June 2021 or 30 June 2020.
NOTE 27: CONTINGENT ASSETS
AND LIABILITIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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NOTE 28: CASH FLOW INFORMATION
Consolidated
2021
$ ,000
2020
$ ,000
(a) Reconciliation of Cash Flows from Operations with Profit After Income Tax
Profit After Income Tax
3,435
5,033
Non cash flows in profit/(loss):
Depreciation
7,968
4,377
Amortisation
9,457
5,379
Provision for Doubtful Debts
263
193
Other Non Cash Movements
(338)
646
Changes in Assets and Liabilities
(Increase) / Decrease in Trade and Other Receivables
3,254
(215)
(Increase)/ Decrease in Inventories
164
(75)
(Increase)/ Decrease in Other Assets
(1,510)
(399)
(Decrease)/ Increase in Deferred Tax Liabilities
(2,818)
(1,428)
(Decrease)/ Increase in Payables
2,292
(2,040)
(Decrease)/ Increase in Unearned Income
1,879
269
(Decrease)/ Increase in Provisions
274
(42)
(Decrease)/ Increase in Current Tax Liabilities
219
(59)
Net Cash Flows from Operating Activities
24,539
11,639
(b) Reconciliation of Cash Flows from Financing Activities
Lease Liability
Term Loan
Dividends Payable
Shares Issued
Total
$ ,000
$ ,000
$ ,000
$ ,000
$ ,000
Balance at 30 June 2019
3,653
9,551
-
-
13,204
Dividends declared
-
-
1,806
-
1,806
Shares issued
-
-
(46)
-
(46)
Net cash provided by/ (used in)
financing activities
9,51
(4,025)
(1,760)
-
(4,834)
Acquisition of leases
6,345
-
-
-
6,345
Other changes
-
-
-
-
-
Balance at 30 June 2020
10,949
5,525
-
-
16,473
Dividends declared
-
-
2,204
-
2,204
Shares issued
-
-
(81)
(24,009)
(24,090)
Net cash provided by/ (used in)
financing activities
(2,417)
28,902
(2,123)
24,009
48,371
Acquisition of leases
6,192
-
-
-
6,192
Other changes
4,583
-
-
-
4,583
Balance at 30 June 2021
19,307
34,427
-
-
53,733
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Over the Wire
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 2021
2021
$ ,000
2020
$ ,000
Assets
Current Assets
842
3,452
Non-Current Assets
133,451
64,245
Total Assets
134,293
67,697
Liabilities
Current Liabilities
27,257
18,017
Non-Current Liabilities
30,057
1,600
Total Liabilities
57,314
19,617
Net Assets
76,979
48,080
Equity
Issued Capital
74,710
44,321
Reserves
165
416
Retained Profits
2,104
3,343
Total Equity
76,979
48,080
PARENT ENTITY STATEMENT OF COMPREHENSIVE INCOME
FOR YEAR ENDED 30 JUNE 2021
2021
$ ,000
2020
$ ,000
Total Profit
965
1,309
Total Comprehensive Income
965
1,309
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 Pty Ltd) totalling $400,000, a bank guarantee facility
totalling $1,100,000 as well as an interlocking guarantee between all entities of the Group for the Group’s major loan facility.
CONTINGENT LIABILITIES
The parent entity did not have any contingent liabilities as at 30 June 2021 or 30 June 2020.
NOTE 29: PARENT INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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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 companies within the Group 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
Consolidated
2021
$ ,000
2020
$ ,000
Short –Term Employee Benefits
1,896
1,780
Long-Term Employee Benefits
21
21
Post-Employment Benefits
145
115
Termination Payments
-
-
Share based Payments
6
148
Key Management Personnel
2,068
2,064
Detailed remuneration disclosures are provided in the remuneration report on pages 25 to 36.
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.
Consolidated
2021
2020
Issue Date
1 Mar 2021
13 Dec 2019
Number of shares issued
58,082
32,648
Eligibility date
28 Feb 2021
31 Oct 2019
Share price on eligibility date
$4.41
$4.70
Consideration
-
-
Escrow period (from issue date)
3 years
3 years
Expense recognised in profit and loss
$256,142
$153,446
NOTE 30: RELATED PARTY
TRANSACTIONS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Over the Wire 2021 Annual Report
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Over the Wire
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. Performance rights are forfeited earlier than the test date, if, prior to the test
date it has been determined that there is no possibility of issued rights vesting.
The Performance Rights over Ordinary Shares have been issued in tranches as set out below.
2019
2020
Issue Date
1 June 2019
29 May 2020
Vesting Date & Test Date
30 September 2021
30 September 2022
Expiry Date
31 October 2021
31 October 2022
Exercise Price
$0.00
$0.00
Amount Payable on Grant
$0.00
$0.00
Grant Date Value
$4.88
$2.88
Performance Hurdles
Service Tenure & Cash 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 & Cash EPS
absolute Compound Annual
Growth Rate hurdle from
FY2019 to FY2022:
<10% p.a. 0%
10%-15% 50-100%
pro-rata
>15% pa 100%
Performance Rights Granted
to:
Mike Stabb
13,333
20,067
Ben Cornish
13,333
20,067
Gary Pittorino
10,400
20,067
Scott Smith
-
8,362
Ben Melville
-
3,345
Other Senior Staff
26,667
43,479
NOTE 31: SHARE-BASED PAYMENTS -
PERFORMANCE RIGHTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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NOTE 31: SHARE-BASED PAYMENTS -
PERFORMANCE RIGHTS
FAIR VALUE OF PERFORMANCE RIGHTS ISSUED
30 June 2020
Opening
Balance
Granted
Vested
Forfeited
Closing
Balance
Share-Based
Payment
Reserve
Qty
Qty
Qty
%
Qty
%
Qty
$
Mike Stabb*1
43,253
20,067
-
-
-
-
63,320
110,195
Ben Cornish*
43,253
20,067
-
-
-
-
63,320
110,195
Gary Pittorino*
10,400
20,067
-
-
-
-
30,467
25,795
Scott Smith*2
-
8,362
-
-
-
-
8,362
929
Ben Melville*2
-
3,345
-
-
-
-
3,345
372
Other Senior Staff
66,559
43,479
110,038
168,924
Total
163,465
115,387
-
-
-
-
278,852
416,410
30 June 2021
Opening
Balance
Granted
Vested
Forfeited
Closing
Balance
Share-Based
Payment
Reserve
Qty
Qty
Qty
%
Qty
%
Qty
$
Ben Cornish*
63,320
-
(29,920)
100
(13,333)
100
20,067
33,624
Gary Pittorino*
30,467
-
-
(10,400)
100
20,067
33,624
Scott Smith*2
8,362
-
-
-
-
8,362
14,011
Ben Melville*2
3,345
-
-
-
-
3,345
5,605
Other Senior Staff
173,358
-
(69,812)
100
(56,723)
100
46,823
78,457
Total
278,852
-
(99,732)
100
(80,456)
100
98,664
165,321
1 Ceased role as Chief Financial Officer on 9 March 2020
2 Appointed 9 March 2020
* Indicates KMP
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:
Consolidated
2021
2020
Weighted average fair value
-
$2.878
Weighted average life of the rights
-
2.3 Years
Expected share price volatility
-
48.0%
Risk-free interest rate
-
0.26%
As of the date of these financial statements no performance rights in respect of the 2021 financial year have been issued to
employees.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Over the Wire
DIVIDEND DECLARED
On 19 August 2021, the Company declared a fully franked final dividend of 2.25 cents per share, for the year ended 30 June
2021. The dates of the dividend are as follows:
Ex date
13 September 2021
Record Date
14 September 2021
DRP Election Close Date
15 September 2021
Payment Date
14 October 2021
As this final dividend was declared subsequent to year-end, no provision has been made in the accounts for the dividend.
CHANGE IN DIRECTORS
From 1 July 2021 John Puttick resigned from the roles of Non-executive Director and Chair of the Group and Stephe Wilks was
appointed as Non-executive Director and Chair of the Group.
CHANGE IN KEY MANAGEMENT PERSONNEL
On 2 August 2021 Scott Smith resigned from the role of Chief Executive Officer of Over the Wire, effective from 30 September
2021.
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.
Consolidated
2021
2020
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policies described in Note 1:
Name of Entity
Country of Incorporation
Equity Holding
Equity Holding
Over the Wire Pty Ltd
Australia
100 %
100 %
Netsip Pty Ltd
Australia
100 %
100 %
Faktortel Pty Ltd (Acquired 28 July 2015)
Australia
100 %
100 %
Faktortel Holdings Pty Ltd (Acquired 28 July 2015)
Australia
100 %
100 %
Aero Telecom Pty Ltd (Acquired 28 July 2015, Deregistered
29 January 2021)
Australia
0 %
100 %
Sanity Holdings Pty Ltd ( Acquired 30 November 2015)
Australia
100 %
100 %
OTW Corp Pty Ltd (Registered 25 September 2015)
Australia
100 %
100 %
Telarus Pty Ltd (Acquired 16 January 2017)
Australia
100 %
100 %
VPN Solutions Pty Ltd (Acquired 1 November 2017)
Australia
100 %
100 %
Access Digital Networks Pty Ltd (Acquired 1 November
2018)
Australia
100 %
100 %
Comlinx Pty Ltd (Acquired 1 November 2018)
Australia
100 %
100 %
Zintel Communications Pty Ltd (Acquired 31 August 2020)
(formerly J2 Australia Cloud Connect Pty Ltd)
Australia
100 %
-
Zintel Communications Limited (Acquired 31 August 2020)
New Zealand
100 %
-
Digital Sense Hosting Pty Ltd (Acquired 30 October 2020)
Australia
100 %
-
NOTE 32: SUBSIDIARIES
NOTE 33: SUBSEQUENT EVENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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DIRECTORS’
DECLARATION
06
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Over the Wire
DIRECTORS’
DECLARATION
In the directors’ opinion:
i The financial statements and notes set out on pages 50 to 106 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
b) giving a true and fair view of the financial position as at 30 June 2021 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 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
Stephe Wilks
Managing Director
Chair
Brisbane
Brisbane
19 August 2021
19 August 2021
DIRECTORS’ DECLARATION
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INDEPENDENT
AUDITOR’S
REPORT
07
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Over the Wire
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 2021, 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 2021
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.
Business combinations, including valuation of the acquired intangible assets and allocation of
goodwill
Why significant
How our audit addressed the key audit matter
During the year, the Company acquired 100% interest
in the following entities:
J2 Australia Cloud Connect Pty Ltd
Zintel Communications Limited
Digital Sense Hosting Pty Ltd
As disclosed in Note 13 and Note 24, the consolidated
entity recognised the following total amounts of
goodwill and other identifiable intangible assets in
connection with the acquisitions:
Goodwill
$32.86m
Brand Value
$ 1.70m
Customer Lists
$51.32m
$85.88m
Significant judgement is required in valuing the
acquired identifiable intangible assets and allocation of
goodwill. The Company engaged an independent
expert to assist in the valuation of identifiable intangible
assets.
Our work included, but was not limited to, the following
procedures:
Obtaining a detailed understanding of the acquired
business;
Assessing the competency and objectivity of the
independent expert and the scope of their work;
Analysing the independent expert’s report to
understand the valuation methodology and key
judgements made in determining the fair values such
as:
-
Marginal cash flow methodology
-
Capitalisation of costs
-
Growth rates
-
Discount rates
-
Estimated useful lives
Assessing the appropriateness of the valuation
methodology of the intangible assets employed by
the independent expert and evaluating the key
assumptions used in determining the fair values;
Assessing the fair value of the assets and liabilities
acquired, as determined by the independent expert;
Assessing the fair value of the consideration paid and
the recognition of deferred consideration upon the
acquisition date; and
In addition, we assessed the appropriateness of the
disclosures in relation to both the business
combination and intangible assets acquired included
in Notes 1(o), 2, 13, and 24.
2.
Impairment testing of intangible assets
Why significant
How our audit addressed the key audit matter
As at 30 June 2021 the carrying value of intangible
assets was $147.72m (2020: $70.35m), as disclosed in
Note 13. This represents 70% of total assets.
The consolidated entity’s accounting policy in respect
of intangible assets is outlined in Note 1(o).
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:
Our work included, but was not limited to, the following
procedures:
assessing and challenging:
-
the FY22 budget by comparing the budget to
FY21 and FY20 actuals;
-
the assumptions used for the growth rate by
comparing normalised average growth rate
from FY20 to FY21 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
INDEPENDENT AUDITOR’S REPORT
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Over the Wire
INDEPENDENT AUDITOR’S REPORT
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.
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 Unit (CGU);
and
the appropriateness of the disclosures including
those relating to sensitivities in the assumptions
used, included in Note 13.
3.
Recognition of revenue
Why significant
How our audit addressed the key audit matter
The recognition of revenue, totalling $112.69m and
associated unearned income liabilities of $5.78m 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 3 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 19 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 3 to
the financial statements:
Data networks and internet
Voice
Hosting
Security & Managed Services
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 are responsible for the other information. The other information comprises the information
included in the consolidated entity’s Annual Report, but does not include the financial report and our
auditor’s report thereon.
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Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
Directors’ Responsibilities for the Financial Report
The Directors of the company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the Directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the consolidated entity’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the consolidated entity or to
cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the consolidated entity’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors.
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the consolidated entity’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the consolidated entity to cease to
continue as a going concern.
INDEPENDENT AUDITOR’S REPORT
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Over the Wire
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the consolidated entity to express an opinion on the group financial report. We are
responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
From the matters communicated with the Directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2021. The Directors of the company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to
express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Over the Wire Holdings Limited for the year ended 30 June 2021
complies with section 300A of the Corporations Act 2001.
PKF BRISBANE AUDIT
CAMERON BRADLEY
PARTNER
BRISBANE
19 August 2021
INDEPENDENT AUDITOR’S REPORT
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CONTACT
DETAILS
WEBSITE
www.overthewire.com.au
EMAIL
info@overthewire.com.au
PHONE
1300 689 689
www.overthewire.com.au
BRISBANE
Level 24, 100 Creek Street
Brisbane QLD 4000
+61 7 3847 9292
SYDNEY
Level 10, 33 York Street
Sydney NSW 2000
+61 2 9191 9333
MELBOURNE
Level 25, 500 Collins Street
Melbourne VIC 3000
+61 3 9938 8222
ADELAIDE
168 Greenhill Rd
Parkside SA 5063
+61 8 7100 0600
Over the Wire 2021 Annual Report
116 /
Over the Wire
Over the Wire Holdings Limited
ACN 151 872 730