Empowering and
enabling the world’s
supply chains
Annual Report 2020
wisetechglobal.com
a
Our innovations and global technology enable,
improve and empower the world’s supply chains.
WiseTech’s technology improves productivity,
connectivity and resource usage worldwide.
Contents
Financial highlights
FY20 progress
Chair’s letter
CEO’s message
Our vision and strategy
Our business
Our customers
Our innovation pipeline
Our expansion pipeline
Environment, social and governance
Board of Directors
2
4
6
8
10
12
14
16
18
20
42
Operating and financial review
Remuneration Report
Directors’ Report
Lead Auditor’s Independence
Declaration
Risk management
Financial Report
Independent Auditor’s Report
Shareholder information
Glossary
Corporate directory
44
51
65
68
69
71
125
133
135
136
VI DEO H IG H LIG HT
For over 25 years, our mission has been to improve the world by creating technology
to empower and enable the logistics industry globally. Find out more about us at:
https://wisetechglobal.com/who-we-are/about-us/
This annual report is a summary of WiseTech Global and its subsidiary companies’ operations, activities and financial position as at 30 June 2020.
References to “WiseTech”, “the Company”, “the Group”,“we”, “us” and “our” refer to WiseTech Global Limited (ABN 41 065 894 724) unless otherwise stated.
This document is dated 14 October 2020.
17,000+
customers using our software 1
160
countries licensed to use our software
1,100+
product upgrades in CargoWise in FY20
<1%
customer attrition annually 2
25 of the top 25
global freight forwarders use our solutions 3
42 of the top 50
third party global logistics providers are customers 3
1
2
3
Includes customers on CargoWise and platforms of acquired businesses whose customers may
be counted with reference to installed sites.
Annual attrition rate is a customer attrition measurement relating to the CargoWise application suite
(excluding any customers on acquired legacy platforms). A customer’s users are included in the customer
attrition calculation upon leaving i.e. having not used the product for at least four months. Based on attrition
rate <1% for each year of the last 8 financial years FY13–FY20.
Armstrong & Associates: Top 50 Global Third Party Logistics Providers List, ranked by 2019 logistics gross
revenue/turnover. Armstrong & Associates: Top 25 Global Freight Forwarders List, ranked by 2019 logistics
gross revenue/turnover and freight forwarding volumes.
W I S E T E C H G L O B A L A N N U A L R E P O R T 2 0 2 0
1
Our global operations are strong.
We delivered solid growth in FY20,
despite the impacts of COVID-19,
with revenues up 23% to $429.4m
and EBITDA up 17% to $126.7m.
Our FY20 financial performance reflects the momentum we are achieving
in delivering on our strategy of global growth and market penetration.
COVID-19 has accelerated the longer term trend away from legacy systems
towards integrated global logistics technology, and as a result we are seeing
increasing demand for our CargoWise offering. In the past nine months we have
signed global contracts with six significant new customers. In addition,
our existing large customers have increased usage of the CargoWise platform
by adding transactions and seats, adopting additional modules and functions
and increasing their demand for accelerated development and delivery
of customer co-funded product enhancements.
Revenue ($ million)
EBITDA ($ million)
NPAT/NPATA* ($ million)
.
4
9
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4
.
3
8
4
3
6
.
1
2
2
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8
3
5
1
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7
6
2
1
1
.
8
0
1
.
0
8
7
.
9
3
5
NPAT
NPATA
.
8
0
6
1
.
0
3
6
.
6
4
6
1
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4
8 5
4
4
.
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8
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9
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6
3
3
FY17
FY18
FY19
FY20
FY17
FY18
FY19
FY20
FY17
FY18
FY19
FY20
NPAT* = Net profit after tax
*NPAT = Net profit after tax attributable
attributable to equity holders
to equity holders.
NPATA = net profit after tax attributable
to equity holders of the parent before
acquired amortisation net of tax,
contingent consideration interest
unwind net of tax, and fair value
changes on contingent consideration.
NPATA is a non-statutory measure and
is a primary measure used by the
Chief Operating Decision Maker
(CODM) for the purpose of assessing
the Group’s performance.
2
F I N A N C I A L H I G H L I G H T S
Financial highlights
STRONG growth,
high recurring, high
quality revenue
$429.4m up 23%
20% CargoWise
growth despite
COVID-19 headwinds
89% recurring
revenue (Group)
97% recurring
revenue (CargoWise)
LOW
customer attrition
<1% every year
for last 8 years 1
annual customer
attrition rate
(minimal churn calculation
includes all forms e.g. bankruptcy,
consolidations, industry departure)
HIGH innovation
product development
investment
37% of revenue
51% of our people
$159.1m
innovation spend FY20 2
LOW sales and
marketing expense
Profitable, high
EBITDA margin
STRONG balance sheet,
cash generative
15% of revenue
11% of our people
– Sales automation
– Digital education
– Swift onboarding
– Open‑access licence
$126.7m EBITDA 3 up 17%
30% EBITDA margin
(CargoWise 48%)
NPAT of $160.8m
includes non-cash
(non-taxed) fair value
gain of $111.0m
$64.6m NPATA 4
up 3%
16%
operating cashflow
$223.7m
cash at 30 June 2020
$190.0m
undrawn debt
Total dividend
3.30 cents per share
1
2
3
4
Annual attrition rate is a customer attrition measurement relating to the CargoWise platform (excluding any customers on acquired legacy platforms).
A customer’s users are included in the customer attrition calculation upon leaving i.e. having not used the product for at least four months. Based on
attrition rate of <1% for each year of the last 8 financial years FY13–FY20.
Total investment in product development and innovation includes both expensed and capitalised amounts each year spent on product development
and innovation, patents and purchased external software licences used in our products.
The Group applied AASB 16 Leases from 1 July 2019 resulting in a positive $6.4 million EBITDA increase, minimal impact on NPAT and no change
to revenue in FY20.
NPATA – net profit after tax attributable to equity holders of the parent before acquired amortisation net of tax, contingent consideration interest
unwind (net of tax) and fair value changes to contingent consideration. NPATA is a non‑statutory measure and is a primary measure used by the
Chief Operating Decision Maker (CODM) for the purpose of assessing the Group’s performance.
W I S E T E C H G L O B A L A N N U A L R E P O R T 2 0 2 0
3
FY20 progress
We are focused on our long-term vision of delivering the operating
system that drives efficiency and digital transformation in global logistics.
Throughout FY20, we continued investing in expanding our technology
and operations globally. We extended the reach of the global CargoWise
integrated platform, increasing penetration and growing our addressable
markets through new modules and new geographies. We also invested in
transforming our content architectures, channels and brand, and growing
our R&D capacity.
Customer
demand
momentum
Increasing
market
share
Innovation
investment
growing
– Revenue generated
by existing customers
grew by $31.0m in FY20,
providing 71% of CargoWise
revenue growth
– Existing customer growth
was driven by increased
seats, usage and
customer spend
– Expanded global rollouts
for DHLGF, DSV/Panalpina
– Penetration of large globals
continues to grow: ~80%
of CargoWise revenue from
top 300 customers
– Each cohort of CargoWise
customers grew revenue
in FY20
– Top 10 customers represent
20% of revenue (FY19: 22%)
with no single customer >5%
– Increasing market share
with new customer wins,
and expanding across new
modules and regions
– New customer sign ups
for global rollouts gaining
momentum with six of the
world’s largest logistics
providers signing to
CargoWise since the start
of calendar 2020: Hellmann
Worldwide, Aramex,
a. hartrodt, Seafrigo, CEVA
Logistics and cargo-partner
– Recent rollouts expanded
to both Forwarding and
Global Customs
– Continuing wins in multi-
region and mid-size
customers including deugro
group and BLU Logistics
– Acquisitions expanding
– 42 of top 50 global 3PLs
network effect
and all top 25 global freight
forwarders are customers,
23 now use CargoWise
– Record number of users
on CargoWise in FY20
– Select acquired assets
gained new customer
wins and supported
global customers.
As these acquisitions
are integrated, specific
solutions are being adopted
by global customers e.g.
rates management
4
F Y 2 0 P R O G R E S S
– Continued extensive
product development
program investing $159.1m,
51% of people and 37%
of revenue in R&D
across WiseTech
– Delivered 1,100+
product upgrades
and enhancements to
CargoWise platform in FY20
(up 32% on FY19)
– Expanded core
platform – scaling,
functionality, productivity
and performance
– Accelerating development
capability across 40
development centres
– Built more technology
assets in pipeline of
initiatives, with focus on
global customs, global
data sets and enterprise
engines, regulatory
upgrades, international
ecommerce, landside
logistics and
CargoWise Neo
Acquisition
integration
progressing
Disciplined
financial
management
Building
scale
– Integration of our acquisitions
is progressing well
– Focused on preserving cash
and fortifying balance sheet
– In FY20 a further five
acquisitions were
undertaken that cover
software vendors in
South Korea, Switzerland
and Poland, along with
container yard and terminal
solutions and early-stage
machine-learning
classification specialists.
Together these added 600+
technologists and industry
experts since FY19
– Restructured earnout
arrangements for 22 acquired
businesses to better
align teams to deliver our
technology pipeline
– Robust balance sheet,
debt free ($190m undrawn
debt facility with additional
$200m accordion facility
in place)
– Executed cost savings
through 2H20, future
reduction initiatives
identified
– Cost initiatives in place
to remove duplicate
activities, functions and
refocus resources e.g.
streamline data centres,
support functions, removal
of leases, redeploy
resources to CargoWise
– Move to full digital
engagement for sales
and marketing
– Grown to over
17,000 customers,
40 development centres,
with people in over
30 countries
– CargoWise licensed
in 160 countries
– Reached ~19,000 CargoWise
Certified Practitioners
working within customer
or partner organisations
– Over 300 CargoWise
Partner agreements in place
for organisations referring,
promoting or implementing
CargoWise and over 50
independently operated
industry partner networks
– Added capacity,
strengthened management
team and Board
– Invested in updating
channel program, expanded
eLearning architecture
and global brand rollout
(launched 2H20)
W I S E T E C H G L O B A L A N N U A L R E P O R T 2 0 2 0
5
Chair’s letter
The resilience and productivity of our
people in the face of COVID-19 challenges
were exceptional and instrumental in achieving
our FY20 performance and expanding our
strong foundation for our future growth.
COVID-19: impact and our response
Our position as a leading global provider of logistics
execution software gave us early insight into the
impact of COVID‑19 on trade flows and supply
chains across the world. Our foremost priority was,
and continues to be, keeping our people, partners
and the communities we operate in as safe and
productive as possible.
We are proud of our employees and customers
in their efforts to keep global supply chains moving
across the world and within countries. Our people
moved seamlessly to remote working and delivered
outstanding productivity, increased product
innovation and growth in market share, along with
strong, high-quality revenue growth.
We initially saw volatility in logistics markets and
a marked slowdown in the movement of goods
across all modes of transport, with lower transaction
volumes recorded in late January through to May.
In response, we implemented cost saving initiatives
and deferred certain planned new product
launches. By June, however, a moderate recovery
was experienced with momentum improving and
continuing into July. By the end of July, CargoWise
user numbers were close to pre-COVID-19 levels.
Throughout this period, we have seen continuing
demand amongst CargoWise’s larger customers
to accelerate development and delivery of customer
co-funded product enhancements to enable
them to better navigate challenges posed by
the pandemic.
Focus on strategy driving strong performance
Our business remained resilient during FY20, rising
above the challenges of COVID-19, with our revenues
growing 23% to $429.4m.
Importantly, our core CargoWise offering continued
to achieve strong growth delivering FY20 revenue of
$263.0m, up 20% on FY19, reflecting new customer
signings and increased usage by existing customers.
Recurring revenue was strong at 97% and the
attrition rate remained below 1% for the eighth
consecutive year.
6
C H A I R ’ S L E T T E R
Our strategic acquisitions also contributed
to our revenue growth, with revenue attributable
to acquisitions up 29% in FY20 to $166.4m. In FY20,
we undertook five strategic acquisitions across
North America, South Korea, Switzerland and Poland.
Our acquisitions deliver additional skills in the
form of specialist technology teams and access
to intellectual property that we can converge with
our own technology as well as faster entry into new
markets and relevant customer bases.
EBITDA for the year was up 17% to $126.7m and
our EBITDA margin was strong at 30%, reflecting
continued revenue growth and 2H20 cost savings.
Our statutory NPAT was up 197% to $160.8m,
reflecting a non‑cash, non‑taxed fair value gain
of $111.0m from restructuring 22 acquisition earnout
obligations and other adjustments. Excluding this
fair value gain and $2.9m of contingent consideration
interest unwind (net of tax), FY20 underlying
NPAT was flat at $52.6m. This reflects increased
depreciation and amortisation expenses in FY20
due to greater investment in R&D and new
product development.
Financial strength and dividends
Our balance sheet and cash flows are strong.
As at 30 June 2020, cash and cash equivalents
was $223.7m, and we had no outstanding debt.
With a $190.0m undrawn debt facility in place plus
a further $200.0m accordion facility available to
us, we are well positioned to fund our growth and
leverage opportunities. Importantly, cash flows from
our operating activities was $146.3m demonstrating
the ability of our business to generate cash.
The Board declared a fully franked final dividend
of 1.60 cents per share (cps) for FY20, payable on
2 October 2020. Coupled with the FY20 interim
dividend of 1.70 cps, the total FY20 dividend was
3.30 cps and represents a payout ratio of 20% of
underlying NPAT.
We continue to offer a dividend reinvestment plan
that enables eligible shareholders to reinvest their
dividends to acquire additional WiseTech shares.
Our ongoing dividend policy is to target a dividend
payout ratio of up to 20% of our NPAT.
Outlook
Looking ahead, the COVID-19 challenges faced by
the logistics industry are accelerating the longer-
term trend towards consolidation and integration.
We are seeing increased demand amongst large
global logistics service providers for our technology
to drive efficiencies and productivity improvements.
We are gaining momentum in our market penetration
and have a strong foundation for long-term growth.
Looking ahead, our strategic focus is on investment
in innovation across our CargoWise platform and
accelerated integration of our acquired businesses.
In terms of our FY21 guidance, given the ongoing
impacts of COVID-19 are still unknown, our guidance
is subject to assumptions set out in detail in our
FY20 Results presentation. Based on these
assumptions, and subject to no material adverse
events, we expect FY21 revenue to grow between
9% to 19%, to $470m to $510m, and our EBITDA to
grow between 22% to 42%, to $155m to $180m.
Board activities
As WiseTech continues to expand its technology
leadership, global reach and geographic footprint,
we are aligning the Board composition to support
the business’ needs as we grow.
During FY20, we appointed an additional
independent Non-Executive Director to the Board,
Arlene Tansey, on 1 June 2020. Arlene brings
considerable ASX-listed company governance
experience, corporate expertise and financial
acumen along with more than 30 years’
international experience in financial services
and investment banking.
Independent Non-Executive Director, Christine
Holman, resigned from the Board on 18 October 2019.
We will continue to work on our Board evolution with
the recruitment of an additional independent Non-
Executive Director in FY21 to support the business
objectives and long-term growth strategy.
Environment, social and governance
– corporate social responsibility
The Board places significant importance on
corporate social responsibility, culture, governance
and accountability. We are committed to ensuring
that the high corporate governance standards are
achieved. Our corporate governance policies and
practices are set out in our Corporate Governance
Statement (available on pages 32 to 41).
The Board believes that to have a sustainable
business, WiseTech needs to continue to make
a positive contribution to the communities that
it is part of. Our technology solutions have an
important role to play in solving the complex pain
points of the logistics industry and improving
resource usage. See pages 20 to 41 for details
of our ESG performance.
Our people
With a team of over 2,100 people globally,
spanning more than 60 nationalities and ranging
in age from 18 to 75+, we are proud of our highly
diverse and inclusive workforce. At WiseTech, 33%
of our employees and 43% of our Board are female
and we remain dedicated to encouraging and
supporting more women to enter the technology
and logistics industries.
Our people are driven by a culture that enables and
empowers innovation, encourages bold ideas, and
underpins our shared vision of building the operating
system for global logistics. The resilience and
productivity of our people in the face of COVID-19
challenges were exceptional and instrumental in
achieving our FY20 performance and expanding our
strong foundation for our future growth.
On behalf of the Board, I would like to thank our CEO,
Richard White, for his inspiring leadership and vision,
and the adept WiseTech Global teams for their
agility and dedication as we navigate unchartered
territory together.
Finally, we thank our shareholders, employees,
customers and the communities in which we
operate for their support and the continued trust
placed in us.
The WiseTech Global team is committed to
delivering on our strategic objectives and vision,
while driving long-term shareholder value.
Andrew Harrison
Chair
W I S E T E C H G L O B A L A N N U A L R E P O R T 2 0 2 0
7
CEO’s message
We are building a world-leading technology
organisation, with a clear goal to empower
and enable the world’s supply chains.
There has never been a greater need for the
digitisation and globally integrated logistics
technology that CargoWise provides.
Emerging stronger from the challenges
of the COVID-19 environment
I want to thank our dedicated people for their
resilience and focus during these challenging times.
They have been the embodiment of our culture,
which makes me extremely proud to be a part
of the WiseTech family.
As COVID-19 swept across the world earlier this year,
the logistics industry and the technology we provide
became of critical importance. Our real-time data
sets allowed us to be amongst the first companies
to call out the dramatic impact COVID-19 would have
on industrial production and global trade and the
likely impact on many businesses, including our own.
Our ability to deliver FY20 revenue growth of 23%
and EBITDA growth of 17%, in line with our guidance,
despite the disruption of the pandemic is a testament
to our people, the strength of our product offering,
business model, our value proposition and to the
many logistics customers that drove their businesses
despite harsh lockdowns and other adversity.
Throughout FY20, our software platform and data
centres powerfully supported our customers
across the world. Our people exemplified our
culture, focusing on execution, delivering significant
increases in productivity. Despite this challenging
environment, we took necessary actions to prioritise
critical technology development, improve cost
efficiencies, safeguard our financial strength, and
continue to build our competitive position.
Our investment in R&D increased by 41% to $159.1m,
representing 37% of our revenue. We added more
than 1,100 new product features and enhancements
to our CargoWise platform, an increase of 32%
on last year. Through these enhancements, we are
increasing the scalability, security and reach of our
global platform. Across our development teams,
we are expanding our technology lead at a rapid
rate, building more global capabilities, data sets and
adjacent technologies to expand our addressable
market. Read more on pages 12 to 19.
Importantly, we continued to increase the penetration
of our CargoWise product. Demand is accelerating
for our technology that enables data visibility across
the entire supply chain, automation, and deep
integration on a single platform.
It took us more than a decade to sign up our first
seven global customers but momentum has been
gaining pace. In the past nine months, we have
signed six new customers who have committed
to CargoWise global rollouts. These include Aramex,
Seafrigo, a. hartrodt, cargo-partner and top 25 global
freight forwarders, Hellmann Worldwide Logistics
and CEVA Logistics.
This is in addition to our 17 existing global rollout
customers which include the world’s largest logistics
organisations DHL Global Forwarding, DSV/Panalpina,
and Bolloré. Given large global customers take
multiple years to roll out the CargoWise platform
across their sites globally, usage and transaction
revenues are expected to continue to grow
over time.
Strategic acquisition integration
In recent years, we have completed over 40
acquisitions. These acquisitions have delivered
significant knowledge and development resources
to optimise and accelerate our technology pipeline
and expand our geographic footprint.
COVID-19 provided the impetus to renegotiate and
fully or partially close out earnout obligations for
22 of our acquisitions by replacing nearly all cash
payments with equity. This has not only improved
liquidity but also, given the impacts of COVID-19
on supply chains and business, better aligned these
acquisitions to evolving business needs and the
fine‑tuning of the CargoWise technology pipeline.
Our acquisition integration is a multi-staged,
multi-year process. The operational integration of
most acquisition assets is well progressed with the
focus now on leveraging the acquired technology
and skill sets to expand CargoWise with native
components and to convert customers onto the
CargoWise platform. The final stage of integration will
involve taking action to deliver operational and cost
efficiencies including eliminating duplication and
8
C E O ’ S M E S S A G E
inefficiencies across all functions, growing revenues,
enhancing margins and bringing all our acquired
platforms into our data centres.
Structural sector changes accelerated
by COVID-19
Never before has logistics and the global supply
chain been more critical and visible in ensuring the
movement of goods around the world. And we have
seen this become even more evident during this
pandemic period.
Apart from the immediate short-term challenges
posed by COVID-19 in terms of disruption to supply
chains, the pandemic, which was initially a headwind,
has provided our business with a unique opportunity.
It has accelerated the long-term trend away
from legacy systems littered with bolt-together
micro-point systems and inherent cyber security
risks, towards integrated global logistics technology
that facilitates the ability of our customers to
navigate the new world normal.
WiseTech is ideally placed to address this growing
demand. CargoWise provides a highly integrated,
fully digital, global logistics execution platform that
increases productivity and visibility and provides
functional depth and rich data-driven automation.
Our technology enables logistics service providers
to better plan, visualise and control their global
operations, whilst mitigating risk and facilitating
regulatory compliance.
The move to working remotely has further reinforced
our value proposition with many of our customers
moving swiftly and successfully to a working from
home environment facilitated by our technology.
The next horizon - Product, Penetration
and Profitability
Looking ahead, we are taking clear steps to build
upon our solid foundation for future growth. Given
our market position, product strength and industry
tailwinds from COVID-19 pressures, we are focused
on Product, Penetration and Profitability.
Over the next three years, we will concentrate
on expanding our technology lead, by realigning
additional resources to our CargoWise product suite.
We will accelerate key native customs projects,
prioritising the largest markets and major customer
pain points.
With the penetration of fully digital and highly
automated global logistics solutions still in the
early stages, the opportunity for growth is vast.
We will drive market penetration by refining and
focusing our high-performance sales team to
drive further global rollouts across the top 25
global freight forwarders and the top 200 logistics
providers. This will be complemented by our
significant channel partner footprint across
46 countries, which is focused on referring,
promoting or implementing our platform and
supporting our global rollouts in expansion activities.
In addition, our continued digital‑first approach will
further expand digital sales tools and processes for
our valuable customers and key markets.
We have a solid financial foundation and will
continue to focus on driving profitability across our
global operations. This will include automating our
manual customer facing and internal functions that
are high volume and automatable via a self-service
portal. We will also look at removing duplication
and centralising or regionalising where possible
and aligning product teams to key development
resources and scale in Sydney.
I encourage you to read more about our long-term
vision and FY21 management focus on pages 10
and 11. Collectively, these actions and objectives will
further stimulate customer growth, increase existing
customer usage, accelerate and build our global
presence and drive operational efficiencies.
Our vision and commitment
Our vision is unwavering – to be the operating
system for global logistics. There has never been
a greater need for the digitisation and globally
integrated logistics technology that
CargoWise provides.
We are ideally positioned for continued growth
and further market penetration. We have
a well-considered, comprehensive plan to deliver
on our strategic objectives, and our strong balance
sheet, strong cash flows and robust liquidity mean
we have significant financial firepower to fund
our growth.
Importantly, we have a product pipeline and R&D
program that will ensure we have a competitive edge
and significant opportunity to continue to improve
margins and profitability. We have an exciting future
ahead of us and the entire WiseTech Global team
and I are committed to our long-term vision.
On behalf of the WiseTech Global team, I want
to thank each of our shareholders for your
investment and support as we continue to build
a world-leading organisation, with a clear goal to
empower and enable the world’s supply chains.
Richard White
Founder and CEO
W I S E T E C H G L O B A L A N N U A L R E P O R T 2 0 2 0
9
Our vision and strategy
Our long-term vision is to build the operating system for global logistics.
We are well progressed with our strong foundation, extensive
resources and global footprint. Evolving logistics industry dynamics
and the COVID-19 environment provide further tailwinds to advance
our market leadership.
Foundation
established
FY15–17
Resources
+ global foothold
FY18–20
Penetration
+ efficiency
FY21–23
– CargoWise platform
– Grew CargoWise EBITDA
newly launched
margin to 48%
– Completed 34 acquisitions
to fuel resources and
geographic footprint for
our technology pipeline
– Almost tripled global
workforce to 2,100 with
40 development centres
in 23 countries
– Reached 14 global rollouts
with world’s largest logistics
providers: e.g. DSV/Panalpina,
Bolloré Logistics, Aramex,
Hellmann Worldwide
– Execute global CargoWise
rollouts and expanding
rollout pipeline – targeting
top 200 global logistics
providers
– Extract efficiencies from
40+ acquired operations,
remove duplication across
functions and platforms
– Bring acquired technology
platforms into WiseTech
data centres
– Complete 30 native customs
builds in CargoWise + large
global engines
– Invested further $348m
– Launch CargoWise
in R&D
– Expanded further into
new markets
– Established domain
leadership in global logistics
execution technology
– Near doubled revenues
comprehensively into
geo-footholds and progress
conversion of acquired
customers
– Release CargoWise Neo
platform
– Moved to Seat +
Transaction Licensing
– Developed our
expansion strategy
– Raised $160m in capital
– Signed world’s largest
freight forwarder DHLGF
for global rollout
– IPO and ASX‑listed
WiseTech Global
– Established corporate
infrastructure
– Acquired businesses
in China, South Africa
and Europe
– Invested $120m
in innovation
and R&D
– Built our internal
M&A engine and
origination pipeline
– Added ~1,800 new
CargoWise features
– Grew our global workforce
by 75%
– Doubled our revenues
1 0
O U R V I S I O N A N D S T R A T E G Y
FY21 management priorities
Expand
technology
lead
Product
Expand
market
penetration
Penetration
– Investment and focus on CargoWise product suite: launch CargoWise Neo
and additional engines and platforms
– Accelerate key native customs projects - focus delivery on largest
markets and major customers
– Draw adjacencies into native module builds inside the
CargoWise architecture
– Accelerate data agreements and full integration with major carriers
for sea, air, rail and road
– Integrate data sets and drive automation within CargoWise stack
– Expand digital sales tools
– Sales team to target top 25 global freight forwarders and top 200 global
logistics providers
– Enhance Delta sales team – expand team with further talent and
additional support
– Marketing and digital activities focus on CargoWise
– Leverage international footprint
– Expand existing global rollouts
– Expand existing customer usage
– Leverage acquired customers
Drive
operational
efficiency
Profitability
– Remove duplication in global operations
– Automate high volume, manual customer facing and internal functions
via a self-service portal
– Establish regional centre in Hamburg (post Brexit EU headquarters)
– Build global Network Operations Centre in Bangalore
– Align all geographic product teams with key development resources
and scale in global headquarters (Sydney)
W I S E T E C H G L O B A L A N N U A L R E P O R T 2 0 2 0
1 1
Our business
We are a leading developer and provider of software solutions to the
logistics execution industry globally. Our mission is to change the world
by creating breakthrough products that empower those that own, enable
and operate the supply chains of the world. We create software products
that are renowned for their productivity, functional depth, data integration,
regulatory compliance, global capability and value.
Our industry‑leading flagship product, CargoWise,
is a cloud-based, global platform, purpose-built
to meet the diverse needs of the logistics industry.
CargoWise enables our customers to execute highly
complex logistics transactions in areas such as
freight forwarding, customs, warehousing, shipping,
tracking, land transport, international ecommerce
and cross-border compliance as well as manage
their operations on one database across multiple
users, functions, offices and countries.
Translated into 30 languages and operating across
multiple currencies, CargoWise offers truly global
capabilities for a global industry. Our customers
stay, and grow transactions and users, due to the
power, depth and productivity of CargoWise. The
efficiency of our CargoWise operations is the result
of innovation in our business model and internal
architectures and focus on building globally scalable
processes to systematically remove the constraints
to growth.
We customise through configuration engines,
offer a single global SaaS price list and we support
our customers through a digitally delivered global
education and content platform, along with external
partner organisations based in 46 countries.
These are a few of the many elements that scale
out efficiency and help to drive and maintain our
48% CargoWise EBITDA margin.
We are actively expanding CargoWise through
relentless innovation and acquiring software vendors
to fuel our resources and technology pipeline.
Every new geography and adjacency we acquire add
a valuable point on our strategic map, accelerate
the network effects and make CargoWise even more
compelling to local and global logistics providers
and their customers.
TH E N E T WO R K E FFECT
CARG OWI S E B E N E FITS
In FY20, we further enhanced our global network
effect with targeted partner programs through
CargoWise Partners, Certified Practitioners and
industry partners for freight forwarding.
We have over 300 CargoWise Partner agreements
in place for organisations referring, promoting
or implementing CargoWise, and have qualified
~19,000 CargoWise Certified Practitioners who
work within the logistics industry and across our
customer or partner organisations.
– Cost reduction
– Productivity gains
– Ease of scalability and expansion
– Intelligent automation
– Risk mitigation
– Sustainability and maintainability
1 2
O U R B U S I N E S S
I T Y
L
A
N
T I O
C
CargoWise
Customs
E F U N
SIV
N
E
T
X
E
CargoWise
Warehouse
CargoWise
Forwarding
CargoWise
Enterprise
COMPRE
H
E
N
S
I
V
E
I
N
T
E
G
R
A
T
I
O
N
CargoWise
Optimisation
Productivity
at the centre of everything
CargoWise
Rates & Contracts
T
R
U
L
Y
G
L
O
B
A
L R
E
A
CH
S
E
I
T
I
L
BI
A
P
A
CargoWise
Ecommerce
C E C
N
L I A
P
D E E P C O M
CargoWise
Carrier
CargoWise
Transport
CargoWise
Parcel
CargoWise
Geocompliance
CargoWise
Global Data
Learn more about the power of CargoWise: https://cargowise.com/news/industry-insights
How technology helps
logistics companies do
more with less
Hear from our experts on why
the logistics industry needs a
single platform solution
Increase efficiency and
accuracy of operations with
direct messaging
W I S E T E C H G L O B A L A N N U A L R E P O R T 2 0 2 0
1 3
Our customers
Our 17,000+ customers range from large multi-national logistics
companies to small and mid-sized regional and domestic enterprises across
160 countries. Our customers include all of the top 25 global freight forwarders
and 42 of the top 50 global third party logistics companies. Yet, we are still in
early penetration of those relationships across our extensive customer base.
With digital transformation and a shift to highly automated global logistics
technology within the industry still in the early stages, our opportunity for
growth is vast.
CargoWise revenue
by customer cohort
(A$million, FY15-FY20)
250
200
150
100
50
0
FY15
FY16
FY17
FY18
FY19
FY20
FY06 & prior
FY13
FY14
FY07
FY15
FY08
FY16
FY09
FY17
FY10
FY18
FY11
FY19
FY12
FY20
MAR K E T PE N E TR ATI O N
Our 17,000+ existing customers provide
significant opportunity for increased usage
and geographic expansion.
Growth opportunities include:
–
Increasing uptake and progress of
global rollouts for the world’s largest
logistics providers
– Delta sales team focus on top 200
of world’s logistics organisations
– Every cohort of CargoWise customers
over the last 12 years grew revenue in FY20
The COVID-19 challenges faced by global
logistics providers, coupled with already
intense pressures such as increasing
regulation, capital constraints, margin
pressure, geo-political tensions and
demand for faster throughput, are
accelerating the longer-term trend
towards industry consolidation and
away from legacy systems. Within this
environment, we are seeing increased
demand amongst large global logistics
providers for technology solutions that
drive cost efficiencies, improve staff
productivity and mitigate risk. CargoWise
has these attributes deeply embedded
in its DNA and facilitates logistics
management ability to plan, visualise and
control global operations. As we grow, we
are seeing a surge in transactions and
increased demand for CargoWise along
with expanded global rollouts.
We have also seen increased demand from
our larger customers to co-fund CargoWise
product enhancements alongside our
own R&D investments to give them early
access to our developments.
We believe CargoWise is the market-leading
platform for global logistics execution and
we are well positioned to strengthen our
position in the global market over the near
term and long term. There is a significant
runway available in both the top 25 global
freight forwarders, the top 200 logistics
providers and other international and
domestic logistics segments.
1 4
O U R C U S T O M E R S
Expanding market share with global rollouts
As we expand our technology platform and
geographic reach, we have gained momentum
in signing up global rollouts for the world’s largest
freight forwarders. While it took more than
a decade to sign our first seven global rollouts,
this has accelerated with six significant signings
in the last nine months committing to CargoWise
including CEVA Logistics, Aramex, Seafrigo Group,
a. hartrodt, Hellmann Worldwide and cargo-partner.
New large customers take multiple years to rollout
CargoWise across their global business. As the rollout
progresses, usage and transaction revenues continue
to grow with customers progressively adding new
countries, adopting new modules, and implementing
our productivity tools. This is evident with our large
logistics customers DHLGF and DSV/Panalpina, both
expanding their global rollouts in FY20.
Today, we have 23 large global freight forwarders 1, 11 of which are in the top 25, who
have either completed their rollouts or are currently in the process of a global rollout
on the CargoWise platform.
CEVA LOGISTICS
CARGO-PARTNER
HELLMANN WORLDWIDE
A. HARTRODT
ARAMEX
PANALPINA 3
LOGWIN
SEAFRIGO GROUP
GEODIS
XPO
JAS
LF LOG
DHL
UTi 2
DEWELL
BOLLORÉ
Launch of
CargoWise
WTC
IPO
GEFCO
2000–2008
TOLL
ROHLIG
MAINFREIGHT
LOGISTICS PLUS
OIA
WACO/TIGERS
DSV
YUSEN
Prior
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
“Essential to our decision was
uncompromising delivery of
real-time and accurate data
visibility, a high degree of
automation and a strong
compliance and risk mitigation.”
“We have chosen the CargoWise
single platform solution which
fully responds to our needs and
ambitions. This new tool will
gradually replace all of our
existing TMS software.”
“By implementing CargoWise,
CEVA Logistics will further
improve productivity and
efficiency as we strive to lead the
way in multimodal forwarding and
contract logistics operations.”
– Hellmann Worldwide
– Bolloré Logistics 4
– CEVA Logistics
Learn more about our customers by watching our short video series:
https://video.wisetechglobal.com/customer‑profiles
1 A large global freight forwarder is defined here as having 10 or more countries and 400 or more operational staff on CargoWise.
2 UTi was acquired by DSV and rolled onto CargoWise from FY16.
3 Panalpina was acquired by DSV in August 2019 and DSV commenced moving major Panalpina operational activities onto CargoWise in FY20.
4 Lloyd’s Loading List article on 4 December 2018.
W I S E T E C H G L O B A L A N N U A L R E P O R T 2 0 2 0
1 5
Our innovation pipeline
We have invested over 4.6m development hours in building CargoWise.
Our focus on product innovation positions us at the forefront of technology
in managing international and cross-border logistics, changes in trade
patterns and evolving logistics regulations.
Our product development capability and capacity
are fundamental to our business as it is the key
to our competitiveness, customer attraction
and retention.
Over the past five years, we have invested $438m
in R&D, expanding our pipeline of commercialisable
innovations and delivering ~3,900 product upgrades
and enhancements across our global platform. The
extent of this future pipeline can be seen in the high
level of capitalised development versus expensed
maintenance annually. We are building significant
assets. During FY20, our development teams
delivered more than 1,100 product upgrades and
enhancements to the CargoWise global platform.
We are moving fast to leverage our platform,
actively expanding our reach across the supply
chain, and accelerating our integration into
adjacencies, geographies and ecosystems.
We are building a true global solution that will
operate across borders, regulatory boundaries
and freight modes.
Along with resources invested into our data centres
and scalable technology for growth in volumes, data
storage and usage, we further invest in application
machine learning, natural language processing,
automations and guided decision support.
We leverage our transactional, global logistics
and trade data sets to extend CargoWise
functionality and enterprise capabilities. We are also
developing the next-generation global engines for
schedules, rates, bookings, tracking, invoicing and
reconciliation; global customs and cross-border
compliance; international ecommerce; landside
logistics and land transport; and our CargoWise Neo
platform, which is designed for users of
logistics services.
1,100+
product upgrades
and enhancements
in FY20
37%
of revenue invested
in R&D in FY20
51%
employees focus
on product
development
$438m
invested in last
five years
4.6m+
development hours
over two decades
>860,000
unit tests executed
every 45 minutes
1 6
O U R I N N O V A T I O N P I P E L I N E
Investing in building powerful engines, new products and global data sets
S C H EDUL
E
S
R ATES
B O OKIN
G
E T TING
&
N
R
E
C
ONCI L I
N
A TIO
Freight forwarders
Consolidators/NVOCC
Carriers
3PLs
BCO/Shippers
TR A C KING
&
EVEN T
S
Extending CargoWise functionality
Deepening functionality, adding global data
sets and automations, and extending reach
with new adjacent modules, functions and
enterprise capabilities.
Global engines and ecosystem
Next-generation global engines for schedules, rates,
bookings, tracking, invoicing and reconciliation.
CR O S S BO
R
D
E
R
A
D
i
r
e
c
t
&
Ele
ctronic A g e n
c
t
n
e
m
y L o dge
D
E
C
O
N
S
O N LINE
SHO P
R O OF OF
P
DELIV E R Y
O N LINE
ORDE R
LAS T - M I L E DELIV
E
R
Y
(
F
e
d
Ex, DHL ,
U P
3PL
S, etc)
T AL
S
HIPPER P O R
N LI N
E R ETAILE
R
’
S
O
Ecommerce
F
U
L
FIL
MENT C E
T RE
N
E
S
U
O
H
O
LIDATIO N W A RE
I M PORT
CUSTO M S
T I O NAL BO
R
A
D
E
R
E X PORT
3PL
D
PARTY C A R
ER N
T
N
I
FIR S T
T
H
I
R
- M I LE PIC
K
U
P
R IERS
A T B ORD
E
R
IN C OUNT
R
Y
F
r
e
i
g
h
t
F
o
r
w
r
e
i
r
r
a
C
er • Cus t o m s A g ent •
a
r
d
Global customs and
cross-border compliance
Global customs platform addressing border
clearances, customs entries, permits, certificate
of origin, rules of origin, accounting, tariffs,
classification and a multitude of complex
data and documentation.
A
I
R
C
ONSOL I D A
T I O N
C
O
N
S
O
CUSTO M S
LIDATION W A
E
S
U
O
R E H
International ecommerce
Platform for the international ecommerce
fulfilment supply chain combines shipping,
customs, international freight forwarding, parcel,
final mile delivery and full track and trace from
origin to destination.
C A RRIERS
Air · Sea · R o
a
d
TE R M I N A LS & PO
R
T
S
T M A NAGEMEN
T S
R
Y
S
T
E
M
S
LTL · FTL · Parcel · Port
NSP O
A
R
T
G
A
T
E
P
O
R
T
S
&
Y
A
R
D
H T STATION &
&
Y
A
R
D MANAG E M E
R FREI G
E
IN
A
T
N
O
C
S
M
E
T SYST
N
W A R EHOUSES
f
o
s
R
E
M
U
tics ser v i c e s
is
g
o
l
PRO
V
I
D
E
R
s
o
f
l
o
g
i
s
tic
s servic
neo
S
N
CO
es
Landslide logistics and land transport
Optimising efficiency in landside logistics for
depots, warehouses, carriers and terminals.
Modeless TMS capable of operating across
regulatory boundaries and freight modes.
CargoWise Neo
Global integrated platform for consumers of
logistics services, technology suite connecting
importer, exporter and freight user with community
of logistic providers and information sets.
W I S E T E C H G L O B A L A N N U A L R E P O R T 2 0 2 0
1 7
Our expansion pipeline
In FY20, we announced five valuable geographic and adjacent acquisitions
across North America, South Korea, Switzerland and Poland. Since 2018,
we have completed 34 acquisitions, making a total of 38 since our IPO.
We now have significant development product and market capabilities
that allow us to build out and optimise our technology pipeline and
leverage our expanded geographic footprint.
Securing new markets and technology
Our strategic assets are providing key development capacity to fuel our technology pipeline.
We have amassed over 1,200 leading experts, technologists and industry people, providing significant
development capacity and local feet on the ground.
The value from each asset is in the skilled staff we acquire, the local infrastructure, and importantly,
the new capabilities for CargoWise.
We are building out the world’s
customs and border compliance
platform to cover ~90%
of manufactured trade flows
With each cross-border acquisition,
we integrate and fully embed it into
our CargoWise platform, making our
full execution platform seamlessly
available in each region and to our
thousands of existing customers.
We’ve seen tangible
business benefits since
joining WiseTech, including
improved productivity,
control systems, and
information use across
Bysoft. I have the support
of a fantastic, innovative
and motivated team.
Edneia Chebabi
Managing Director, Bysoft
Our geographic foothold businesses
A R G E N T I N A
B E LG I U M
B R A Z I L
CA N A DA
F R A N C E
G E R M A N Y
I R E L A N D
I TA LY
N E T H E R L A N D S
N O R WAY
P O L A N D
S O U T H A F R I CA
S O U T H KO R E A
S PA I N
S W E D E N
S W I T Z E R L A N D
TA I WA N
T U R K E Y
U K
U R U G UAY
1 8
O U R E X P A N S I O N P I P E L I N E
We are adding new technologies
to build out the operating system
for global logistics
We accelerate the convergence of
technologies by adding targeted
acquisitions of software vendors in key
adjacencies to our innovation pipeline that
provide a core element for ecosystems.
We also grow and enhance our extensive
data and transaction sets through our
acquisitions. We look for adjacencies we
can scale from domestic multi-region
functionality to global capability.
Our adjacent technology businesses
WiseTech has improved and
secured hosted infrastructure,
provided management training
unprecedented in its rigor, and
proactively helped us to deploy
their productivity application,
PAVE. As part of WiseTech we
have never been more healthy
or high performing.
Michael Thomas
Managing Director, Trinium
G LO B A L R AT E S M A N AG E M E N T
L A N D S I D E /C O N TA I N E R
S P E C I A L I S T W M S
T R A N S P O R T M A N AG E M E N T S O LU T I O N S
C O M P L I A N C E
G LO B A L S H I P P I N G
MACHINE LEARNING
M E S S AG I N G
1
Integration that generates long-term value
Acquisition integration is a multi-stage, multi-
year process. It involves integrating operations,
product development and reshaping each strategic
asset’s commercial foundations, covering content
architectures, channel development, sales,
licensing and servicing and support systems.
With the operational integration well progressed
and most earnouts closed out, we are now focused
on aligning resources and leveraging the acquired
technology to expand our CargoWise platform.
We are also focusing on operational efficiencies
and removal of duplications across functions,
thereby enhancing margins within businesses.
We are working hard to ensure that we are able
to scale and leverage the unique capabilities of
our acquired assets to ensure we create value
for WiseTech.
We integrate operations, develop product and build a commercial foundation
to support efficient growth of revenue and long-term value creation
Integrate operations
3–12 months
Integration process
Build product +
commercial foundation
Foothold: 12–36 months
Adjacency: 3+ years
Grow revenue +
expand margins
1 BorderWise is fully integrated in CargoWise.
Extract efficiencies
Accelerate integration and execution
W I S E T E C H G L O B A L A N N U A L R E P O R T 2 0 2 0
1 9
Environment, social
and governance
Our philosophy is one of enablement and empowerment.
We have a broad range of stakeholders and believe that through our
technology and customer offerings we have a role to play in supporting
the strength, reliability and efficiencies of the global logistics supply chain.
We are committed to improving the world of logistics and making a positive
contribution to the communities that we are part of.
Stakeholder engagement and quality governance are key to the ongoing
success of our business and integral to our approach to sustainability.
Our people
Our people are the core of who we are.
Our collective experiences, shared values
and individual skills have allowed us to deliver
industry-leading solutions.
We have a flat, low‑hierarchy management system
with small, diverse teams made up of individuals
with a wide range of professional backgrounds
and experience.
Through this, we create a work environment that
stimulates creativity and supports bold ideas
and innovations, with a focus on freedom
and responsibility.
Culture and values
Our culture of innovation and productivity means
we tackle the complex problems and challenges of
the logistics and technology industries with a ‘test
first, fail quickly, and improve rapidly’ approach.
Our future growth and innovation are driven
by the talent, motivation and enthusiasm of
our global team. We encourage our people
to have bold ideas and create bold products.
We believe automation and technology should
be embraced as efficiencies that allow people
time to perform real and meaningful work.
Our values are part of our cultural DNA and
our mantras are the basis for a work environment
that is empowering.
Every day working at
WiseTech brings a new
challenge. And challenges
bring out my creativity,
and they push me to work
at the limits of my ability.
Sometimes you have
to take a step back and
try and find a solution
where everyone gets
what they need.
WiseTech Global Australia
WiseTech Global Australia
2 0
E N V I R O N M E N T , S O C I A L A N D G O V E R N A N C E
Our values
We work
continuously to
improve our culture
so that it empowers
and drives us
We work hard to
improve ourselves,
our colleagues,
our teams, our
products and
our business
We have a clear
purpose and
a shared vision
We manage
ourselves and
focus on results
We lead when we
see the need and
inspire and support
each other always
We strive for
excellence at
all times and in
everything we do
We focus on the
deeper needs of
real customers in
our chosen markets
We invent things
our customers
did not know they
needed and cannot
live without
Our mantras
Lead with content
Anyone can talk to anyone at any time for any reason
Find the root cause and solve for that
Win-win or no deal
Productivity at the centre of everything
Slower today, faster forever
Creative abrasion fuels collaboration
Lead others, manage yourself
Culture eats strategy for lunch
W I S E T E C H G L O B A L A N N U A L R E P O R T 2 0 2 0
2 1
Our credo
Our culture is not by accident. Our creativity is by design. Our people define us.
We favour principles over policy, open
and frank communication over secrecy,
agreement over control, results over
busywork. We realise that real creativity
is delicate and dies with processes,
bureaucracy, chain of command and
centralised decision making.
Our work environment is flat and open,
hierarchy rises only when essential and
recedes immediately. We know that ‘little
things are infinitely the most important’
and that ‘culture eats strategy for lunch’.
We actively embed our creativity, the seeds
to our success and the antidote to many
problems, deep within our people
and culture.
We love to challenge the status quo and to
think of breakthrough ideas in order to build
something delightfully better. We cannibalise
that which needs to be superseded, improve
that which is imperfect and add that which is
missing, and we have fun!
We think bold ideas and build bold products
that people don’t know they want… until they
see them, and can’t live without… because
they come to love them.
We strive every day to build products that
surprise and delight our customers and
empower their success, but we also give
incredible value to our customers so they
drive us to flourish and grow.
We are truly, deeply, passionate about what
we do and we use all of our empathy, energy,
focus, courage, talent, drive and logic to
confront the really big stuff that others
will not.
We surround ourselves with incredibly smart
people with diverse and eclectic experience,
an abundance of talents and motivation
fuelled by purpose.
We care deeply, have real ownership, and
a sense of connection in every place and
in every role. We belong.
We stand with humility on the shoulders of
the many that have led us here. We owe them
our dedication, our energy and our results.
Corporate grind be damned! We’re doing
something that really matters, and it requires
us to strive, learn, grow and flourish.
We will change the world: one innovation
at a time.
Richard White
Founder and CEO
2 2
E N V I R O N M E N T , S O C I A L A N D G O V E R N A N C E
We foster an environment that encourages
innovation at WiseTech Global.
We do this by focusing on four key elements:
1
2
3
We welcome questions, we encourage enquiring minds, and we demand impactful change.
People with questioning and enquiring minds are inherently curious and never satisfied with
the status quo. They encourage others to see things differently. Our people connect the
unconnected, think creatively, solve problems, and come up with game-changing solutions.
We encourage our people to take risks, tackle the difficult and complex,
and find the root cause.
The ideas that change the world are the result of resilience, grit and perseverance.
Innovators have to withstand negativity, take on board criticism and questions, and
keep evolving their ideas into tangible solutions. Our people are tenacious, pushing
past the obstacles that hold them back to make their innovations better, stronger and
more effective.
We create a safe environment where failure is supported as a key step towards success.
If people are afraid to fail, they will be afraid to try. By stretching themselves, testing and
failing, our people gain a more sophisticated understanding of the problems they are trying
to solve. We reward success, support failure, and strive to eliminate inaction. Our teams
support this vision and each other, creating a work environment that encourages openness
and collaboration and sharing of learnings from iterative steps.
4
We celebrate diversity of thought.
Our workforce is made up of individuals who share common values, ambition, and respect
for each other. However, they do not share the same thoughts, opinions or backgrounds.
This enables us to challenge each other, break down boundaries, and interrogate our own
thinking to shift paradigms.
W I S E T E C H G L O B A L A N N U A L R E P O R T 2 0 2 0
2 3
Ethics and integrity
Honesty, respect and transparency are the
foundations of our culture. Ethics and integrity
run through all parts of WiseTech Global and we
promote ethical and responsible decision-making
by our employees and Directors.
Everyone at WiseTech is required to complete
training and testing on our policies, including our
Code of Conduct, Respect and Dignity at Work
Policy, Securities Trading Policy, Whistleblower
Protection Principles, and Anti‑Bribery and
Corruption Policy.
Diversity and inclusion
We are proud of our highly diverse and inclusive
workforce and are strongly committed to diversity
and inclusion.
We foster a culture that values and achieves
diversity in our workforce and on our Board
and this is reflected in our Diversity and
Inclusion Principles.
We are committed to treating everyone equally
and with respect. We believe our current levels
of female representation compare well to those
of other technology companies and are positive
in the context of both the logistics industry and
technology for business-to-business software.
These levels of female participation reflect our
commitment to merit-based employment and
promotion. We continue to encourage more
women to enter technology and logistics
– the industries from which we draw our talent.
Achieving a gender diversity outcome of
>40% on the board has not required significant
incremental effort, specific actions undertaken
include a requirement for recruitment firms
to present 50/50 candidate lists.
In the short term, our objective is to broadly
maintain levels of female representation in our
business at, or above, the following levels:
30% O F O U R B OA R D
20% O F O U R S E N I O R M A N AG E M E N T
30% O F O U R WO R K FO R C E
In FY21, we will conduct analysis to consider
opportunities to increase gender diversity across
the company, including whether to increase targets.
We believe it’s essential to further develop the
potential for qualified females to enter our industry:
software development for logistics execution.
Through a comprehensive and multi-faceted effort
at the early education stage, greater technology
industry participation across genders will
be encouraged.
To enable this, we identify and support suitable
initiatives to encourage girls and young women to
pursue a career in technology, with a longer-term
aim of increasing the female talent pool available.
See pages 29 to 31 for examples.
We promote the principles of merit and fairness
when making decisions about recruitment,
development, promotion, remuneration and flexible
work arrangements, recruit from a diverse pool
of qualified candidates (making efforts to identify
prospective employees who have diverse attributes)
and encourage and foster a commitment to diversity
by people at all levels of our global business.
For more information, please see our Corporate
Governance Statement on pages 32 to 41 .
In addition, as an Australian-based company, we
lodge a report annually on Australian employees,
with the Workplace Gender Equality Agency which
is available at: https://www.wgea.gov.au.
Employees by function
(%, as at 30 June 2020)
Employees by region
(%, as at 30 June 2020)
Employees by age
(%, as at 30 June 2020)
Product design and development
51%
Australia and New Zealand
Sales and marketing
Technical and product support
General and administration
11%
21%
17%
Europe
South Africa
Asia
North America
Latin America
Middle East
35%
30%
3%
15%
10%
5%
2%
Under 30
30-44
45 and over
19%
51%
30%
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Growing our global workforce
Since 2016, we have added more than 1,200
talented people to our global workforce through
strategic acquisitions – a vital component in
managing the high competition for technology
resources as we grow.
Our global workforce spans across more than
55 offices worldwide with highly skilled people,
technologists and industry experts that are part
of the WiseTech Global Group. Our acquisition
businesses are not only chosen for their business
alignment and strategic value but their strong
cultural fit. Predominantly founder‑led businesses,
they bring unique industry experts and developers,
along with local knowledge and a strong
customer base.
Working closely with our businesses to embed and
unify our WiseTech culture into their operations,
we integrate transformative elements of the
WiseTech Way. With our highly engineered approach
to technology development and commercial
foundation components, we encourage teams to
grow through self-integration, while respecting their
local heritage and culture and introducing the best
aspects of our cultural DNA.
Employee wellbeing
We take the health, safety and wellbeing of our
people seriously. As the impacts of COVID-19
became clear, our digital platforms and
architectures, including PAVE, allowed WiseTech’s
global offices and teams to move rapidly and
successfully to a remote work environment.
And due to the productivity gains we experienced
in 2H20, we have committed to a hybrid remote
working model from 2021.
Through our policies, support services and wellbeing
initiatives, we empower team members of our
WiseTech family to take personal responsibility
for their wellbeing, health and relationships.
Prior to our remote work arrangements, our wellness
initiatives in our global headquarters included
subsidised gym memberships, free breakfasts and
healthy snacks, lunchtime sport, health campaigns,
and company-funded social activities. Our global
offices also offer a mixture of these, with some
providing healthy snacks and fruit, access to local
sporting activities, transportation support and
subsidised gym memberships.
Our global teams have embraced our new virtual
environment with team cooking classes, fancy dress
meetings, meet and greets for new staff members,
and Friday social gatherings, all while introducing
their home life to their global colleagues.
Our focus is on empowering our people with
the skills needed to face new challenges. One of
the practical ways we did this at the start of
COVID-19, was rapidly implementing a concentrated
resilience training program for selected team leaders
delivered in short daily sessions online. This enabled
a refocus on long-term objectives, understanding
physiological and psychological impacts, and
practical tools to manage self-care and
support teams.
We continue to expand this program, now rolling
out across our core innovation and product
development workforce in key regions.
Our monthly Cake Day is a long‑held tradition, taking place across global offices for employees to attend.
New employees are welcomed, and birthdays and long service are celebrated. Cake Days allow ideas to be
discussed, business news and stories shared, and questions asked. We’ve continued this symbolic tradition
remotely, now digitally broadcast to all our staff worldwide.
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In September 2019, we marked R U OK? Day in our Australian headquarters with a morning tea and
a conversation about mental health.
We know that our productivity as a company depends on high-performing teams, and those in turn depend
on environments in which our people thrive. Healthy environments require that we take time to deepen trust
and honesty within our teams, enabling team members to take risks, innovate and know that it is safe to fail.
By building these environments, it is safe to say when we are not ok, and to access the support needed.
We have strong support systems in place including
our global Employee Assistance Program that
offers short-term, solution-focused counselling
to employees who may be experiencing issues,
concerns or anxiety, whether at home or work-
related, as well as additional professional guidance
counselling. This is offered at no cost to our people
and is delivered by external, qualified professionals.
We value and support family life, and in FY20 we
introduced an improved global paid parental leave
policy for our people globally. Primary caregivers will
be provided with four months leave at full pay and
secondary caregivers will be provided at least two
weeks of parental leave at full pay, regardless
of which country they live.
Our Workplace Health and Safety Policy is designed
to ensure that we provide a safe and healthy
workplace for our people (in‑office or remote)
and visitors. As a software development company,
our employees are not exposed to hazardous
work and we operate our business in a safe and
environmentally responsive manner to protect our
employees, the community and the environment.
Ergonomics are a part of the workday environment
in the office with ergonomics assessments, sit‑to‑
stand desks, large computer monitors, and high-
quality chairs available as needed.
In our remote work environment, we are introducing
processes to ensure our people have access to
ergonomic equipment and resources to enable
a safe remote work environment. Employees are
encouraged to observe and practise safe working
methods to support a healthy and safe work culture
and environment.
Developing our people
Our talented workforce is at the centre of everything
we do. We provide a range of programs that
encourage and help our people continually develop
their skills and knowledge.
WiseTech has an education and training professional
certification program and employee education
assistance for doctorate, master and bachelor
degrees. We also assist employee development with
mentoring programs (for new starters), facilitated
rotations through multiple development teams, and
theory of constraints training.
Our people believe in knowledge-sharing and have
implemented learning sessions to provide their
global team members with insights into topics
that support skill development.
We also introduced LinkedIn Learning to all our
employees, providing global access to over 10,000
video tutorials in a variety of languages and on
an extensive range of topics that can be viewed
anywhere, anytime, on any device, online and offline.
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E N V I R O N M E N T , S O C I A L A N D G O V E R N A N C E
As we moved to remote working, we further
enhanced our digital offering by providing our
employees with access to Stack Overflow, an online
Q&A platform that allows our teams and people to
share knowledge and lead with content.
Remuneration
Our innovation and growth strategy is dependent
on recruiting and retaining talent. We compete in
a highly mobile global market for our skill sets,
so we offer remuneration designed to attract,
motivate and retain leaders and talented employees
who drive our success.
Remuneration can include a mix of cash and
deferred equity in fixed pay and performance
incentives, along with education support and staff
benefits. Our remuneration approach focuses on
performance outcomes and is applied without bias.
Our Remuneration Committee oversees
and receives periodic reports regarding our
remuneration structure, succession plans,
recruitment and retention policies, and
achievements against diversity objectives.
For more information, and to learn more about
our approach to remuneration, see our
Remuneration Report on pages 51 to 64.
Share ownership
Our goal is for all our employees to be shareholders.
Many of our longer-term employees were WiseTech
Global shareholders for years prior to our ASX
listing in 2016. Since then, we have provided further
opportunities for our growing global workforce
to invest through the purchase of shares and
participation in equity awards or in remuneration
equity as part of their remuneration package.
Since 2018, we have provided an ‘Invest As You Earn’
(“IAYE”) program where employees can purchase
WiseTech Global shares via monthly deductions
from their salary. In FY20, the number of IAYE
participants accounted for 21% of eligible employees
in 19 countries, an increase of over 16% compared
with the participant number in the beginning of 2019.
Our WiseTech employees receive compliance
training to ensure they understand and abide
by our Securities Trading Policy and Market
Disclosure and Communications Principles.
Prevention of harassment
and discrimination
Respect for ourselves and our colleagues is
part of the WiseTech DNA. Discrimination, bullying,
or harassment of any kind is not accepted.
Our Respect and Dignity at Work Policy addresses
these areas and establishes complaint procedures
to ensure that any complaints or concerns are
investigated in a confidential and sensitive manner.
Our employees undertake detailed training and
compliance testing on equal opportunity and
our approach to these issues.
Anti-bribery and corruption
Our Anti‑Bribery and Corruption Policy prohibits
our staff from engaging in any activity which
constitutes bribery or corruption. We are committed
to conducting our business activities in an ethical,
lawful and socially responsible manner, and in
accordance with the laws and regulations of the
countries in which we operate.
Ethical labour and the Modern
Slavery Act
WiseTech Global is committed to upholding and
respecting human rights for all people as articulated
in the UN Guiding Principles on Business and Human
Rights, the Universal Declaration of Human Rights,
the International Covenant on Civil and Political
Rights, the International Covenant on Economic,
Social and Cultural Rights, and the International
Labour Organization’s Declaration on Fundamental
Principles and Rights at Work.
We take a zero-tolerance approach towards any
form of forced or compulsory labour, debt bondage,
child labour or human trafficking and expect our
partners and suppliers to do the same. We may
avoid or cease working with suppliers or businesses
that are known or suspected to engage in forms
of forced or compulsory labour if other avenues
such as engagement with the supplier fail to address
root causes and produce improvements in the
supplier’s practices.
We have implemented education channels and
a remediation framework to address our obligations
under Australia’s Modern Slavery Act 2018 (Cth)
and will publish our first Modern Slavery Statement
in due course.
In the meantime, please read our Human Rights
Principles for more information.
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Environment
Global logistics is one of the world’s oldest and
largest industries worth US$9 trillion 1. Our software
is designed to maximise performance, minimise
energy and resource use, and reduce risks across
the global supply chain.
Our innovations drive business efficiencies
that enhance logistics execution worldwide.
The CargoWise platform is used across 160
countries to digitise and integrate the data that
enables goods to move through the supply chain.
Bringing together cleansed and verified global data
sets, this information is used to facilitate key parts
of the global cargo chain, including the management
of rates, schedules, bookings, tracking,
and reconciliation.
Increased productivity can have widespread
environmental benefits.
Examples include:
– reduction in road trips
– reduced carbon emissions
– improvement in land transport impact
on local communities
– optimised load configuration.
Efficiency improvements available through
CargoWise also facilitate the removal of numerous
manual tasks through automation. This reduces
paper, electricity usage, commercial costs,
and wasted resources.
We believe our global footprint and operational
activities contribute significantly to the
improvement of resource usage that impacts
climate change.
As a leading software solutions provider, WiseTech
Global is not directly involved in the manufacture
or physical transport of goods. As a result, our
environmental footprint is relatively small across our
global workforce and primarily comprises the energy
consumption, GHG emissions relating to business
travel and employee commute to and from the
office (although this has reduced during COVID‑19),
water consumption and waste relating to and office
consumables typical of an office‑based business.
As we move to a hybrid work model, this impact
will further reduce.
All our businesses around the world comply with
local environmental regulations. We seek to recycle
as much waste as possible and reduce energy
use through energy‑efficient devices and power
management systems. Our offices use energy‑
efficient lighting and occupancy detection sensors
to conserve energy for lighting and air-conditioning.
We invest in and utilise our own technology to
efficiently link our more than 55 offices and global
workforce through our productivity workflow
management system, video conferencing, team ware
tools and communication software. In our Sydney
headquarters, we process all discarded electronic
devices in a secure and environmentally
responsible manner.
We optimise the energy efficiency of our
three data centres that we operate in Australia,
the United States and the United Kingdom, notably
in relation to cooling requirements and actively
evolving components of our software to reduce
the data storage required for transactions executed
on our CargoWise platform.
Going forward we will look at ways to measure the
environmental impact of our operations, take steps
to further reduce our environmental footprint and
report back to investors on an annual basis on
our progress.
1 Armstrong & Associates Global 3PL Market Size Estimates as of March 2020.
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WiseTech in
the community
We believe it is critical to encourage and
support the next generation of innovation leaders.
Our people are passionate about knowledge-
sharing, and through their actions help improve
the industry and communities in which they live
and work.
The WiseTech Academy
In FY20, we further enhanced our professional
development offering (for both our employees
and the broader community) through the launch
of WiseTech Academy.
The purpose of the Academy is to upskill the
global supply chain industry through accessible
and affordable online learning, providing
a steppingstone to individuals looking to launch
or build their career in the dynamic world
of supply chain logistics.
WiseTech Academy is an approved Registered
Training Organisation and can deliver nationally
recognised courses within their scope. We provide
WiseTech Academy courses free for our people.
Building the next generation
of technology innovators
Through an active, targeted program of
scholarships and sponsorships with university and
school groups, we are helping inspire young people
about Science, Technology, Engineering and Maths
(“STEM”) subjects. Our purpose is to encourage
young people to pursue careers in technology.
Some of our FY20 activities in Australia and
across our global offices include:
– Titanium sponsor of the Australian Computer
Society Foundation events: The BiG Day In
and BiG Day In Junior. This year, the BiG Day In
went digital and we were able to connect with
thousands of school students from around
Australia, talking about how they can advance
their potential through a career in technology.
Our long-standing platinum
sponsorship of the National
Computer Science School (“NCSS”).
The NCSS consists of a number of
programs run throughout the year, including
a 10-day summer school for years 11 to 12
school students hosted by The University
of Sydney providing an intensive
computer programming and website
development course.
This year we hosted a breakfast for the
students and some of our people spoke
about their professional paths to technology.
The sponsorship also supports the NCSS
challenge, a six-week programming challenge
for students from primary school and up,
and the Girl’s Programming Network,
supporting and inspiring high school girls
interested in technology.
VI DEO H IG H LIG HT
Watch our NCSS 2020 highlight reel:
https://video.wisetechglobal.com/
national-computer-science-school-1
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– We sponsor scholarships through The University
of Technology Sydney including Women in
Engineering and IT (see story on page 31)
and the Bachelor of Information Technology.
At The University of New South Wales, we sponsor
business information technology, computer
science and software engineering students.
– Our Technology Internship programs run in
winter and summer, providing technology and
engineering students opportunities to experience
an innovation centre and learn disciplined
processes and our test-driven approach.
Our people are able to give back to the
community by providing mentorship and training,
while also expanding their own leadership skills.
– Our team in Sweden participated in improving and
managing a Higher Vocational Education program
at a school in Stockholm. The International
Business Logistics (Green Management) program
helped students gain relevant competency within
logistics with a focus on customs regulation and
compliance and understanding the importance
of technology solutions in logistics operations.
The team also assisted students with finding
internship placements.
– In Turkey, our senior management is involved in
a volunteer program run by the Tübider Informatics
Industry Association aimed at organising mentors
and scholarships for technology students.
– Our team in Spain continues to dedicate time
to provide training programs to students across
universities and training centres in Madrid
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E N V I R O N M E N T , S O C I A L A N D G O V E R N A N C E
and Barcelona, on a range of topics including
information technology, informatics engineering,
international trade, and administration
and finance.
– In South Korea, our team developed an
extensive apprenticeship program for students
to gain IT and professional on-the-job and
off-the-job training.
– Our management team continued to dedicate
time to promoting the criticality of technology
in education curriculum, diversity, culture,
and innovation. This included participating in
industry thinktanks, roundtables and at forums,
for example, CBA Women in Focus Conference,
CSIRO Data61+ Live Conference, The Australian
Chamber of Commerce and Industry, International
Chamber of Commerce Australia, and the ACS
Reimagination Thought Leaders’ Summit.
Giving back to our communities
Our global teams and people engage in a variety
of local activities to give back to their communities.
Throughout FY20, a sample of our activities included:
– Our global teams rallied together and donated
$40,000 to Australia’s bushfire relief funds.
WiseTech Global committed to matching the
donation amount with a grand total of $80,000
donated to funds that supported
affected communities.
– In Germany, our team supports the charitable
works of a Berlin-based organisation that helps
homeless children. They also donate to Interplast,
an organisation that provides medical support
for people in developing countries that may need
plastic surgery as a result of burns, war injuries or
congenital malformations.
– In the United States, our teams provided children’s
book author, Ty Allan Jackson, with free access
to our home office shipping app, enabling under-
privileged children to receive much needed books
during COVID-19 lockdown. They also donated
to local food banks and the Red Cross.
– Our team in Brazil contributed to COVID-19
campaigns that provided safety equipment
and food to those unable to access these basic
and critical resources.
– In Switzerland, our team donated much needed
protective masks to elderly care homes to
support COVID-19 prevention in the most
vulnerable communities.
– For the 17th year, our team in Australia provided
pro-bono training services through their online
learning platform to Médecins Sans Frontières.
Enabling and empowering tomorrow’s technologists
Behind every breakthrough product is a team of extraordinary innovators.
For WiseTech, developing the next generation of technologists goes hand in hand with
building next-generation technologies—truly changing the world means rigorously doing
both. Nurturing young minds, showcasing great role models and inspiring young people
about STEM projects are part of our DNA.
Through scholarships and sponsorships, we encourage more students to choose IT in
their tertiary studies. We also provide mentorship and interning opportunities to help them
realise their potential early on and open their eyes to a new world of possibilities. This year,
WiseTech proudly sponsored the Lucy Mentoring Program, which connects women studying
engineering and technology at the University of Technology Sydney with professionals for
a one-to-one mentoring relationship.
Breaking down the barriers stopping females from pursuing careers in technology is
essential. This means encouraging young girls and women to lean into their skills and natural
interests to become extraordinary innovators.
At WiseTech, we believe that learning never stops. Familiar with overcoming new challenges
with creativity and resilience, our mentors adapted quickly to supporting their mentees while
working remotely – even offering ‘virtual shadowing’ through online screen‑sharing. Hiring
talented and passionate people who want to give back to our communities, improve our
industry and develop future technologists is important to WiseTech.
We will change the world: one innovation – and extraordinary innovator – at a time.
Technology is shaping our future. I believe
I have a responsibility to share my skills and
experiences, and encourage more women
to embrace who they are and do the same.
At WiseTech, my views matter, and collectively,
we are making a real difference.
Alina Sherbakov
Software Developer
Data privacy
Data privacy is important. WiseTech Global and its
subsidiaries recognise this and comply with relevant
data-privacy regulations, including the EU General
Data Protection Regulation. We take the security
and safety of all our customer data very seriously.
Political donations
WiseTech Global does not make donations to
political parties. We make our decisions and invest
our resources based on appropriate economic,
commercial, environmental, and governance criteria.
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Corporate Governance Statement
A governance framework has been established to
support our business and help us to deliver on our
strategy. This framework provides the structure
through which our strategy and business objectives
are set, our performance is monitored, and the risks
we face are managed.
We are committed to excellence in corporate
governance, transparency and accountability.
We regularly review our governance arrangements
and practices to reflect changes in our business and
in market practices, expectations, and regulation.
ASX Recommendations
The ASX Corporate Governance Council has
developed corporate governance principles
and recommendations for ASX-listed entities
(“ASX Recommendations”) in order to promote
investor confidence and to assist entities in
meeting stakeholder expectations. The ASX
Recommendations are not prescriptions, but
guidelines. Under the ASX Listing Rules, we are
required to provide the statements below
disclosing the extent to which we have followed
the ASX Recommendations.
This statement explains how the Board oversees
the management and corporate governance of
WiseTech Global.
The main principles and policies adopted by
us are summarised below. Details of our key
principles and policies and the charters for the
Board and each of its Committees are available
on our website at: https://ir.wisetechglobal.com/
investors/?page=corporate‑governance
This statement is as at 14 October 2020 and has
been approved by the Board of WiseTech Global.
Our FY20 governance framework
This Corporate Governance Statement benchmarks
our corporate governance practices against the
3rd edition of the ASX Recommendations, released
in March 2014. WiseTech Global followed all of the
ASX Recommendations throughout FY20.
WiseTech Global intends to follow all of the
recommendations set out in the 4th edition
of the ASX Recommendations for the financial
year commencing 1 July 2020.
Shareholders
WiseTech Global Limited Board
Oversees management on behalf of shareholders
Audit
Committee
Oversees financial
reporting and financial
risk management
Nomination
Committee
Considers Board
composition and
succession planning
Related Party
Committee
Reviews proposed
transactions between
the Company and its
related parties
Remuneration
Committee
Oversees the
remuneration and
incentive framework
for all our people
CEO
Responsible for day-to-day management of WiseTech Global and the implementation of our strategy
Management team
Responsible for running the business and delivering on our strategic objectives
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Board composition
Our Board currently comprises a total of seven
Directors — five independent Non‑Executive
Directors (including our Chair) and two
Executive Directors.
Biographies of the Board members, including details
of their qualifications, tenure and experience, can be
found on pages 42 and 43, and on our website.
Board Committees
The Board may from time to time establish
appropriate committees to assist in performing
its responsibilities. Four Committees operated
throughout FY20:
– the Audit Committee;
– the Nomination Committee;
– the Related Party Committee; and
– the Remuneration Committee.
Please refer to page 43 for further information
regarding the Committee meetings (including the
number of times each Committee met throughout
the reporting period and the individual attendances
of the members at those meetings).
Corporate governance principles
and policies
We have implemented a principles-based
governance model whereby practical sets of
principles are provided to guide behaviour.
These principles are designed to give direction on
our approach to business conduct. More structured
policies are implemented where appropriate.
This combination of principles and policies
provides us with a governance model that we
believe both provides shareholders with confidence
in the responsible management of WiseTech Global
and at the same time allows creativity to flourish
by minimising bureaucracy, multiple chains of
command and centralised decision-making
where appropriate and in the best interests of
the Company.
You can find copies of our corporate policies
and principles on our website at: https://
ir.wisetechglobal.com/investors/?page=corporate‑
governance
Principle 1: Lay solid foundations
for management and oversight
Responsibilities of the Board
The Board is responsible for our overall corporate
governance, including establishing and monitoring
key performance goals, and is committed to
maximising performance, generating appropriate
levels of shareholder value and financial returns,
and sustaining our long-term growth and success.
In conducting business in accordance with these
objectives, the Board seeks to ensure that we
are properly managed to protect and enhance
shareholder interests, and that we and our Directors,
officers and staff, operate in an appropriate
environment of corporate governance. Accordingly,
the Board has created a framework for managing
WiseTech Global, which includes relevant internal
controls, risk management processes and corporate
governance principles, policies and practices which
the Board believes are appropriate for our business
and which are designed to promote the responsible
management and conduct of WiseTech Global.
The Board has approved a Board Charter which
governs the operations of the Board, its role
and responsibilities, composition, structure and
membership requirements.
The Board’s role is to:
– represent and serve the interests of shareholders
by overseeing and appraising our strategies,
policies and performance;
– optimise our performance and build sustainable
value for shareholders;
– set, review and ensure compliance with our values
and governance framework (including establishing
and observing high ethical standards); and
– ensure that shareholders are kept informed
of our performance and major developments.
Matters which are specifically reserved for the
Board or its Committees include:
– appointing the Chair;
– determining the size, composition and structure
of the Board;
– appointing the CEO and overseeing the
performance review of the CEO;
– establishing and monitoring succession
planning for the CEO and senior management;
– approving the overall remuneration policy,
including non-executive director, executive
director and senior management remuneration;
– overseeing compliance with continuous
disclosure obligations;
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– approving the annual report and financial
statements;
– overseeing and approving strategies for
WiseTech Global to maintain a strong balance
sheet and sound credit rating;
– approving the dividend policy and authorising
payment of dividends; and
– approving and monitoring the systems and
policies to ensure integrity of budgets, financial
statements and other reporting.
The CEO is responsible for running the day-to-day
affairs of WiseTech Global under delegated authority
from the Board and to implement the strategies
and policies approved by the Board. The CEO has
systems of risk management and controls in place
and those risks are monitored and managed by
management, and material exceptions or issues
are reported to the Board.
In carrying out management responsibilities, the
CEO must report to the Board in a timely and clear
manner and ensure all reports to the Board present
a true and fair view of our financial condition and
operational results. The role of management is to
support the CEO and implement the running of
the general operations and financial business of
WiseTech Global in accordance with the delegated
authority of the Board.
Appointment of Directors
Prior to the appointment of any new
Non-Executive Director, appropriate checks are
conducted to determine whether the candidate has
the capabilities needed, and is fit and proper,
to undertake the responsibilities of the role.
On appointment, each Director receives a formal
letter, outlining the key terms, conditions and
expectations of their appointment. All new Directors,
other than the CEO, must stand for election by
shareholders at the first Annual General Meeting
(“AGM”) after their appointment and all Directors,
other than the CEO, must stand for re-election no
later than the third AGM after their previous election
or re-election.
Before each AGM, the Board reviews the
performance of each Director standing for
election or re-election and advises shareholders
if it recommends their election or re-election.
Arlene Tansey, having been appointed to the Board
in June 2020, together with Maree Isaacs, who is
retiring by rotation, will stand for re-election at
the 2020 AGM. The Notice of AGM will provide
information on each Director’s background, skills
and experience. The Board considers that each
candidate continues to make a valuable
contribution to the Board.
CEO and senior executives
The CEO and senior executives have clearly
understood goals and accountabilities and
employment contracts setting out their terms
of employment, duties, rights and responsibilities,
and entitlements on termination of employment.
Company secretaries
WiseTech Global Limited has two company
secretaries, appointed by the Board. The company
secretaries are directly accountable to the Board,
through the Chair, on all matters related to the
proper functioning of the Board. This includes
advising the Board and its Committees on
governance matters and procedures, coordinating
Board business (including preparing and maintaining
Board and Committee papers) and providing a point
of reference for dealings between the Board
and management.
Diversity and Inclusion Principles
We value a strong and diverse workforce and
are committed to diversity and inclusion in our
workplace. We have implemented Diversity and
Inclusion Principles, designed to foster a culture
that values and achieves diversity in our workforce
and on our Board. The main objectives are to ensure
that we:
– promote the principles of merit and fairness
when making decisions about recruitment,
development, promotion, remuneration and
flexible work arrangements;
– recruit from a diverse pool of qualified candidates,
making efforts to identify prospective employees
who have diverse attributes and seeking to ensure
diversity of those involved in selection processes
when selecting and appointing new employees
and Board members;
– embed the importance of diversity within
our culture by encouraging and fostering a
commitment to diversity by people at all levels
of our global business;
– leverage our employees’ unique skills, values,
backgrounds and experiences, which will assist
with understanding our customer needs across
our global business; and
– develop an inclusive work environment that helps
enable each employee to show their full potential,
regardless of their background, gender, age, work
status, marital status, religious or cultural identity.
Our Diversity and Inclusion Principles include
a requirement for the Board to set measurable
objectives for achieving gender diversity and
to assess annually both the objectives and the
Company’s progress in achieving them.
3 4
E N V I R O N M E N T , S O C I A L A N D G O V E R N A N C E
A copy of our principles is available on our
website at: https://ir.wisetechglobal.com/
investors/?page=corporate‑governance
Examples of our commitment to a range of
initiatives across tertiary, secondary and primary
education are:
We pride ourselves on our highly diverse and
strongly inclusive workforce. We remain committed
to diversity and inclusion.
Diversity refers to all the characteristics that make
individuals different from each other. They include
attributes or characteristics such as religion, race,
ethnicity, language, gender, sexual orientation,
disability, age and any other ground for potential
unlawful discrimination. Diversity is about our
commitment to treating individuals equally
and with respect.
The ages of our employees range from 18 to 75+.
Our people are made up of more than 60
nationalities working together. The percentage
of women at Board and senior management levels
and across our organisation as at 30 June 2020 was:
Board
Senior management 1
All employees
2020
2019
43
22
33
43
22
33
1
Senior management is determined by assessing the role, scope and
responsibilities of managers with reporting levels CEO-1 and CEO-2.
We believe our current levels of female
representation compare well to other technology
companies and are positive in the context of
both the logistics industry and technology for
business-to-business software. In the short term,
our objective is to broadly maintain levels of female
representation in our business at, or above, the
following levels:
30% O F O U R B OA R D
20% O F O U R S E N I O R M A N AG E M E N T
30% O F O U R WO R K FO R C E
We also invest in developing the potential for
qualified females to enter our industry: software
development for logistics execution. We believe
this broader technology industry challenge
requires comprehensive and multi-faceted effort
at the early education stage to encourage greater
industry participation across both genders.
Our initiatives include programs to encourage
girls and young women to pursue technology
careers, with a longer-term aim of increasing
the female talent pool available.
– sponsorship of the National Computer Science
School, including its Girl’s Programming Network;
– sponsorship of cooperative university
scholarships recipients, including Women in
Engineering and IT;
– our Technology Internship programs run in
winter and summer, providing technology and
engineering students opportunities to experience
an innovation centre and learn disciplined
processes and our test-driven approach;
– sponsorship of the Lucy Mentoring Program,
which connects women studying engineering
and technology at the University of Technology
Sydney with professionals for a one-to-one
mentoring relationship; and
– our management team continued to dedicate
time to promoting the criticality of technology
in education curriculum, diversity, culture,
and innovation. This included participating in
industry thinktanks, roundtables and at forums,
for example, CBA Women in Focus Conference,
CSIRO Data61+ Live Conference, The Australian
Chamber of Commerce and Industry, International
Chamber of Commerce Australia, and the ACS
Reimagination Thought Leaders’ Summit.
For more information on our diversity and
community activities, please see pages 20 to 31.
Review of Board, Committee
and Director performance
The Board has agreed that it will conduct periodic
evaluations of its performance, including its
Committees, and of each Director. The evaluation
process will involve the Chair holding one-to-one
interviews with each Director on their performance
and the performance of the Board as a whole, its
Committees and the performance of the other
Directors. The performance of the Chair will
be evaluated by one of the other Non-Executive
Directors in a one-to-one interview with the Chair and
incorporating feedback from the other Directors. The
Board will then review and discuss the collated results
of those interviews to determine ways to enhance the
effectiveness and efficiency of the Board.
An evaluation of the performance of the Board,
its Committees and each Director during FY20
was conducted in accordance with the process
outlined above.
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3 5
Review of CEO and senior
executives’ performance
The Board reviews the performance of the CEO
annually against performance measures and other
agreed goals in accordance with the business
requirements of the Company. The CEO reviews
the performance of the senior executives regularly,
but no less than annually, based on their agreed
performance measures. Performance reviews in
accordance with these processes were conducted
in respect of the CEO and senior executives
during FY20.
Principle 2: Structure the board
to add value
Nomination Committee
The Nomination Committee’s role is to assist and
advise the Board in relation to the following matters:
– the process for nomination and selection
of Directors;
– necessary and desirable competencies
and experience of Directors;
– the process to review Director contributions
and the performance of the Board and
Board Committees;
– Board succession plans;
– Director induction programs; and
– Board diversity.
The Nomination Committee Charter sets out the role,
responsibilities and composition of the Committee
and provides that the Committee must comprise
a majority of independent Directors, an independent
Chair and a minimum of three members.
A copy of the charter is available on our
website at: https://ir.wisetechglobal.com/
investors/?page=corporate‑governance
The Nomination Committee comprised these
Directors throughout FY20: Teresa Engelhard,
Chair; Andrew Harrison; and Richard White.
Board skills matrix
The Board is responsible for Board succession
planning, the appointment of new directors and
continuing professional development of directors.
In doing so, it has regard to the balance of skills,
diversity, experience, independence and expertise
on the Board. The Board uses a skills matrix which
identifies the skills and experience needed to
support WiseTech in achieving its strategy and
meeting its regulatory and legal requirements.
The Board believes that all areas in the skills matrix
are currently well represented on the Board.
3 6
E N V I R O N M E N T , S O C I A L A N D G O V E R N A N C E
The key skills and experience that comprise
the matrix include:
Capability
Number of Directors
with the capability
Executive and
international leadership
Experience in a senior
executive role in the area
of global organisation,
operations and strategy
Technology
Experience in a senior
executive role in the area
of b2b information technology
Logistics industry
Experience and expertise
or formal qualifications in
the area of global logistics
Risk strategy
Senior executive experience
in strategic risk frameworks
including assessment,
control and management
at a global level
Financial acumen
and accounting
Financial literacy or
accounting qualifications
and/or experience in the area
of financial reporting integrity
Human capital management
People management and
human resources expertise
in the area of talent management
and organisational change
Governance and board
Knowledge and experience in
the area of executing a prudent
corporate governance framework
Entrepreneurship/change
Board or senior executive
experience in the area
of entrepreneurial
enterprises and rapidly
changing business
environments; and
Mergers and acquisitions
Board or executive
experience with M&A
and business integration
Legend
High level of skills or experience
Relevant skills or experience
Board tenure and diversity
As at 30 June 2020, these were:
Tenure
Tenure
Diversity
Board, his significant experience, the existence of
Richard White’s voting control over more than 46%
of the Company’s issued share capital as at 30 June
2020 and the lack of other factors referred to in the
ASX Recommendations and Board Charter which
might lead the Board to query his independence.
Diversity
0-3 years
3-6 years
12+ years
0-3 years
29%
14%
3-6 years
57%
12+ years
29%
14%
57%
Male
Female
57%
Male
43%
Female
Independence of Directors
The Board considers an independent Director
to be a Non-Executive Director who is not
a member of our management team and who is
free of any business or other relationship that might
influence or reasonably be perceived to influence in
a material respect the unfettered and independent
exercise of their judgement. The Board considers
a range of factors relevant to assessing the
independence of Directors in accordance with
the ASX Recommendations. The Board considers
quantitative and qualitative principles of materiality
for the purposes of determining ‘independence’
on a case-by-case basis.
The Board considers that Andrew Harrison
(the Chair of the Board), Teresa Engelhard (Chair
of the Remuneration and Nomination Committees),
Charles Gibbon, Michael Gregg (Chair of the Audit
and Related Party Committees) and Arlene Tansey
are independent Directors, free from any business
or any other relationship that could materially
interfere with, or reasonably be perceived to
interfere with, the independent exercise of the
Director’s judgment and each is able to fulfill the
role of an independent Director for the purposes of
the ASX Recommendations. On this basis, the Board
consists of a majority of independent Directors.
Charles Gibbon held 5.36% of the Company’s
issued share capital as at 30 June 2020 and joined
the Board in 2006. The Board (absent Charles
Gibbon) has specifically taken these factors into
account when considering whether Charles Gibbon
should be considered to be independent. The Board
does not consider those factors to be sufficiently
dominant or influential in the circumstances so as
to conclude he is not independent or that his
interests will be different to those of shareholders
with smaller stakes. In particular, the Board had
regard to Charles Gibbon’s conduct to date on the
Richard White and Maree Isaacs, as members
of management, are not considered by the Board
to fulfil the role of independent Directors.
The Board regularly reviews the independence
of each Director in light of interests disclosed
to the Board and will disclose any change to
the ASX as required by the ASX Listing Rules.
57%
43%
Director orientation, education
and access to advice
An orientation program will be tailored to
meet the needs of each new Director, including
briefings on our strategy, financial, operational
and risk management matters and our
governance framework.
As part of the Board meeting cycle, the Directors
receive regular briefings on the business and
key developments in areas such as governance,
regulatory and accounting matters.
Principle 3: Act ethically
and responsibly
Code of Conduct
Our Code of Conduct outlines the ethical standards
expected of all our Directors, senior executives
and employees. WiseTech Global is committed to
maintaining ethical standards in how we conduct our
business activities and stakeholder relationships.
WiseTech Global’s reputation as an ethical business
organisation is important to our ongoing success.
A copy of the Code of Conduct is available on
our website at: http://ir.wisetechglobal.com/
investors/?page=corporate‑governance
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Principle 4: Safeguard integrity
of corporate reporting
Audit Committee
The Audit Committee assists the Board in fulfilling its
corporate governance and oversight responsibilities
in relation to our financial reports and financial
reporting process and internal control structure,
management of financial risks and the external
audit processes.
In October 2019, Michael Gregg was appointed Chair
of the Audit Committee following Christine Holman’s
resignation from the Board. Also in October 2019, the
Board approved an amended charter and renamed
the Audit and Risk Management Committee as the
Audit Committee.
The Committee’s role is to assist the Board to carry
out its responsibilities, including:
The Audit Committee Charter sets out the role,
responsibilities and composition of the Committee
and provides that the Committee must comprise
only Non-Executive Directors, a majority of
independent Directors, an independent Chair
who is not Chair of the Board, and a minimum
of three members. In accordance with its charter,
it is intended that all members of the Committee
should have familiarity with general financial and
accounting practices, and at least one member must
have accounting or related financial management
expertise. A copy of the charter is available on
our website at: https://ir.wisetechglobal.com/
investors/?page=corporate‑governance
The composition of the Committee during FY20
is set out below:
– Michael Gregg, joined the Committee as Chair
with effect from 24 October 2019;
– Charles Gibbon;
– review and monitoring of the Company’s financial
– Andrew Harrison; and
reports and statements;
– review and oversight of systems of financial and
tax risk management, internal financial controls
and regulatory compliance;
– review of the adequacy of the Group’s corporate
reporting processes; and
– liaison with, and monitoring the performance
and independence of, the external auditor.
– Christine Holman, Chair until 18 October 2019.
Non-committee members, including members
of management and our external auditor, may attend
meetings of the Audit Committee by invitation of
the Committee Chair.
Whenever we’re working on
a project we never take the
quickest or easiest way out.
We go for the solution that
is best.
WiseTech Global Australia
3 8
E N V I R O N M E N T , S O C I A L A N D G O V E R N A N C E
Related Party Committee
Taking into account existing long-standing related
party transactions for property and data centres
between WiseTech Global and its co-founders, and
the potential for future transactions, the Board has
a Related Party Committee comprising independent
Directors to consider and review transactions.
The Related Party Committee’s role is to support
the Company’s compliance with related party rules
and disclosure obligations.
The Related Party Committee Charter sets out
the role, responsibilities and composition of the
Committee and provides that the Committee
must comprise only independent Directors,
an independent Chair who is not Chair of the Board,
and a minimum of three members. A copy of the
charter is available on our website at:
https://ir.wisetechglobal.com/
investors/?page=corporate‑governance
The composition of the Committee during FY20
is set out below:
– Michael Gregg, Chair;
– Charles Gibbon, from 24 October 2019;
– Andrew Harrison; and
– Christine Holman, until 18 October 2019.
CEO and Chief Financial Officer assurance
The Board receives regular reports about
the operational results and financial condition
of WiseTech Global.
The Board has received and considered a declaration
from each of the CEO and the Chief Financial Officer
in relation to the financial statements in accordance
with ASX Recommendation 4.2. The declaration states
that, in their opinion, the financial records of WiseTech
Global 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 and that the opinion has been formed
on the basis of a sound system of risk management
and internal control which is operating effectively.
Principle 5: Make timely
and balanced disclosure
Market Disclosure and
Communications Principles
Our Market Disclosure and Communications
Principles establish procedures to help ensure that:
– we comply with our continuous disclosure
obligations contained in the ASX Listing Rules
and the Corporations Act 2001; and
– all our stakeholders have equal and timely access
to information we make available.
A copy of the principles is available on our
website at: https://ir.wisetechglobal.com/
investors/?page=corporate‑governance
Principle 6: Respect the rights
of security holders
Investor relations
The Company also has an investor relations program
to facilitate effective communication with investors
– primarily through our AGMs and our website.
Our AGM is an excellent opportunity for the
Company to provide information to shareholders
and to receive feedback from shareholders
(including opportunity for shareholders to ask
questions about the business operations and
management of the Company). Our AGM is
typically held in November in Sydney.
In response to the potential health risks arising
from the COVID-19 pandemic, our 2020 AGM
will be held as a virtual meeting online. There will
not be a physical meeting, but shareholders and
proxyholders can participate online, ask questions
and vote in real time during the AGM by logging on
to the online platform at: https://agmlive.link/WTC20
Our website includes a separate ‘Investors’ section,
where shareholders and other stakeholders
can access information about WiseTech Global,
including annual reports and presentations, ASX
announcements and share price information.
External auditor
KPMG has been appointed as WiseTech Global’s
external auditor. The terms of appointment of the
auditor include a requirement to attend our AGM
and be available at the AGM to answer any questions
from shareholders relevant to the audit.
Shareholders can elect to receive their annual
reports, notices of meeting and dividend statements
online or in print. In addition, shareholders are able
to communicate electronically with us and our share
registry, Link Market Services, including being able
to lodge proxy forms online.
W I S E T E C H G L O B A L A N N U A L R E P O R T 2 0 2 0
3 9
Internal audit
During FY20, as a consequence of the growth
of the Group and the increased proportion of the
business outside Australia, the Audit Committee
determined that it was appropriate to form an
internal audit and risk management function.
Prior to the establishment of an internal audit
function, the Board has continued to review
internal controls and risk management processes
in conjunction with the oversight provided by
senior management, including the CEO and Chief
Financial Officer. Although the establishment of
an internal audit function has been delayed by the
COVID-19 pandemic, since the end of FY20, an
external provider has been engaged to assist in the
performance of the delivery of internal audit and risk
management services.
Whistleblower Protection Principles
Our Whistleblower Protection Principles establish
mechanisms and procedures for employees to
report suspected unethical or illegal conduct
in a manner which protects the whistleblower
and gathers the necessary information for us to
investigate such reports and act appropriately.
Principle 7: Recognise
and manage risk
Risk Management Principles
We view risk management as a continual process,
integral to achieving our corporate objectives,
effectively managing our assets and creating
and maintaining shareholder value.
Our Board is responsible for overseeing the risk
management framework and has reviewed specific
risks in FY20, such as cyber risk, whistleblower
provisions, insurance risks, succession planning
and M&A transactions and integration risks.
Risk management is also delegated to the Risk
Committee, a management committee for which
the CEO is responsible, and which oversees
a system of internal controls and risk management
and monitors and manages those risks. Members of
the Risk Committee hold regular meetings with the
CEO during which risks are discussed and analysed,
and any necessary actions are determined.
Material exceptions or issues are reported to the
Board. In FY20, the Audit Committee has reviewed
the financial risks of the business and the controls
and mitigations in place to address those financial
risks. A review of the risk management framework
was conducted during FY20. Going forward, the
Company intends to review its risk management
framework annually to ensure the framework
remains sound and continues to achieve the
above objectives.
Our 2020 annual report includes a discussion
of the main risks affecting WiseTech Global.
4 0
E N V I R O N M E N T , S O C I A L A N D G O V E R N A N C E
Principle 8: Remunerate fairly
and responsibly
Remuneration Committee
The Remuneration Committee’s role is to assist
and advise the Board in relation to:
– our remuneration policy and incentive framework,
including its application to Directors;
– the process for overseeing performance
accountability and effective monitoring of
management, including setting and evaluating
performance against goals and targets;
– recruitment, retention and termination strategies;
– achievement against diversity objectives in
relation to remuneration; and
– the annual Remuneration Report to shareholders.
The Remuneration Committee Charter sets out
the role, responsibilities and composition of the
committee and provides that the committee must
comprise a majority of independent Directors, an
independent Chair who is not Chair of the Board,
and a minimum of three members.
A copy of the charter is available on our
website at: https://ir.wisetechglobal.com/
investors/?page=corporate‑governance
The Remuneration Committee comprised
these Directors throughout FY20:
– Teresa Engelhard, Chair;
– Charles Gibbon; and
– Michael Gregg.
Remuneration Report
Our Remuneration Report describes the policies
and practices regarding the remuneration of
Non-Executive Directors and the remuneration
of Executive Directors and senior executives.
Securities Trading Policy
Our Securities Trading Policy outlines the rules
for Directors and employees trading in WiseTech
Global securities. The purpose of the policy is to
assist Directors and employees to comply with
their obligations under the insider trading provisions
of the Corporations Act 2001 and to protect the
reputation of the Company, its Directors
and employees.
Our policy establishes staff trading windows and
prohibits the use of hedges or derivatives which
operate to limit the economic risk of unvested,
or vested but subject to disposal restrictions,
WiseTech Global securities including securities
issued in connection with equity-based
remuneration schemes.
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4 1
Board of Directors
Andrew Harrison, Independent Chair and Non-Executive Director
Andrew joined the Board in 2015 and was appointed Chair in September 2018.
Andrew is an experienced company director and corporate adviser. He is currently
the non-executive chairman of ASX-listed Bapcor Limited (a director since March 2014)
and a non-executive director of Moorebank Intermodal Company Ltd and Vend Ltd.
Andrew has previously held executive roles and non-executive directorships with public
and private companies, including as CFO of Seven Group Holdings, group finance director
of Landis+Gyr, CFO and a director of Alesco Limited and a director of Estia Health Limited
(November 2014 to October 2018), IVE Group Limited (November 2015 to November 2018)
and Xenith IP Limited (October 2015 to September 2018). Andrew’s experience includes
senior manager at Ernst & Young (Sydney and London) and Gresham Partners Limited,
and an associate at Chase Manhattan Bank (New York). Andrew holds a Bachelor of
Economics from The University of Sydney and a Master of Business Administration from
the Wharton School at the University of Pennsylvania and is a Chartered Accountant.
Richard White, Executive Director, Founder and CEO
Richard founded WiseTech Global in 1994 and has been CEO and an Executive Director
since then. Richard has over 30 years of experience in software development, embedded
systems and business management and over 20 years of freight and logistics industry
experience. Prior to founding WiseTech Global, Richard was the managing director of Real
Tech Systems Integration (a provider of computer consulting and systems integrations
services) and CEO of Clear Group (a distributor of computer related equipment). Richard
holds a Master of Business in IT management from the University of Technology, Sydney.
Teresa Engelhard, Independent Non-Executive Director
Teresa joined the Board in 2018 and is chair of the Nomination Committee and the
Remuneration Committee. Teresa has more than 20 years’ international experience as
a director, executive and venture capitalist in the technology, software and energy sectors.
Teresa is currently a non-executive director of ASX-listed Origin Energy Limited (since May
2017) and two non‑profit organisations: StartupAUS and LaunchVic. She is also a former
director of ASX-listed Redbubble Limited (August 2011 to October 2017) and a former
managing partner of Jolimont Capital. Teresa holds a Bachelor of Science (Hons) from the
California Institute of Technology (Caltech) and a Master of Business Administration from
Stanford University and is a graduate of the Australian Institute of Company Directors.
Charles Gibbon, Independent Non-Executive Director
Charles joined the Board in 2006, served as Chair from 2006 to 2018, and has been
a shareholder since 2005. Charles is a director of Shearwater Growth Equity Pty Ltd and
has previously been a director of Monbeef Pty Ltd, Photolibrary Pty Ltd and the former
ASX-listed Health Communication Network Limited. Charles has over 20 years of experience
in institutional funds management, has previously been a member of the Investment
Committee of Quadrant Capital Funds I, II and III for Quadrant Private Equity and has held
roles as the CEO of Russell Private Equity, CEO of Risk Averse Money Managers Pty Ltd,
a director of Morgan Grenfell Australia, and an associate director of Schroders Australia.
Charles holds a Bachelor of Science in Mathematics from Otago University and Master of
Commerce (Hons) from the University of Canterbury.
4 2
B O A R D O F D I R E C T O R S
Michael Gregg, Independent Non-Executive Director
Michael joined the Board in 2006 and has been a shareholder since 2005. Michael is also
chair of the Audit Committee and the Related Party Committee. Michael is a director of
Shearwater Growth Equity Pty Ltd, is the chairman of Community Connections Australia
and is a former director of Jeenee Communications Pty Ltd and Playground (XYZ)
Holdings Pty Ltd. Previously, Michael was the managing director of the former ASX‑listed
Health Communication Network Limited. Michael has also held executive positions in the
telecommunications, transport and retail industries. Michael holds a Bachelor of Science
from The University of Sydney and a Master of Business Administration from the
Australian Graduate School of Management and is a Graduate of the Australian
Institute of Company Directors.
Maree Isaacs, Executive Director, Co‑founder and Head of Invoicing & Licensing
Maree co-founded WiseTech Global with Richard White in 1994 and has been an Executive
Director since 1996. Maree is focused on invoicing and licensing, group operations,
quality control and administration. Maree is also a Company Secretary of WiseTech
Global. Prior to co‑founding WiseTech Global, Maree worked at Real Tech Systems
Integration and Clear Group.
Arlene Tansey, Independent Non-Executive Director
Arlene joined the Board in June 2020 and is a professional director with more than 30
years’ international experience in financial services and investment banking. Arlene is
currently a non‑executive director of ASX‑listed Aristocrat Leisure Limited (since July
2016), Healius Limited (since August 2012) and TPG Telecom Ltd (since July 2020). She is
also a non-executive director of Infrastructure NSW, Lendlease Investment Management
Limited and the Australian National Maritime Museum Foundation and Council. She is
a former non-executive director of Adelaide Brighton Limited (April 2011 to October 2019).
Arlene has a Juris Doctor from the University of Southern California Law Center and an
MBA Finance and International Business from New York University and is a Fellow of the
Australian Institute of Company Directors and a member of Chief Executive Women
and the International Women’s Forum Australia.
Director attendance at meetings in FY20
The number of Directors’ meetings and meetings of Committees of Directors held during the financial year
and the number of meetings attended by each Director are set out below. The table reflects the number of
meetings held during the time the Director held office, or was a member of the Committee, during the year.
Directors also frequently attend meetings of Committees of which they are not members.
Board
Audit
Committee
Nomination
Committee
Related
Party Committee
Remuneration
Committee
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Andrew Harrison
Richard White
Teresa Engelhard
Charles Gibbon
Michael Gregg
Christine Holman 1
Maree Isaacs
Arlene Tansey 2
18
18
18
18
18
4
18
2
18
18
18
18
18
4
18
2
6
-
-
6
4
2
-
-
6
-
-
6
4
2
-
-
2
2
2
-
-
-
-
-
2
2
2
-
-
-
-
-
5
-
-
5
5
-
-
-
5
-
-
5
5
-
-
-
-
-
3
3
3
-
-
-
-
-
3
3
3
-
-
-
1 Christine Holman resigned from the Board on 18 October 2019.
2 Arlene Tansey was appointed to the Board on 1 June 2020.
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Review of operations
Principal activities
We are a leading provider of software solutions to the logistics industry globally. We develop, sell and implement software
solutions that enable logistics service providers to facilitate the movement and storage of goods and information, domestically
and internationally. We provide our solutions to over 17,000 customers across 160 countries.
Our industry‑leading flagship technology, CargoWise, is a deeply integrated, global software platform for logistics service
providers that enables them to execute highly complex logistics transactions and manage their operations on one database
across multiple users, functions, offices, corporations, currencies, countries and languages. We operate our own data centres
in Europe, Australasia and the Americas and deliver our CargoWise platform principally through the cloud. We predominantly
provide our platform on demand, as a service, which customers can access any and all functionality as needed and pay for
such usage monthly.
Our customers range from small and mid-sized domestic and regional logistics providers to large multi-national and global
logistics providers, including all of the top 25 global freight forwarders and 42 of the top 50 global third party logistics providers
(3PLs) 1. Our software solutions are designed to assist our customers to better address the complexities of the logistics industry.
Our flagship solution, CargoWise can dramatically increase productivity, reduce costs and mitigate risks and is delivered
as a single, global, highly integrated software platform.
Innovation and productivity are at the core of what we do. We invest significantly in product development and have achieved
strong and profitable growth throughout our history. Through product development and our targeted strategic acquisitions,
we are expanding CargoWise’s integrated global platform. Our vision is of a comprehensive global logistics execution solution
for our customers, capable of managing from the first‑mile road movement, connecting to long‑haul air, sea, rail and road,
crossing international borders, all while navigating complex regulatory frameworks with improved compliance, safety, visibility,
predictability, manageability and productivity.
In addition to the strong organic growth from our existing CargoWise platform, since the beginning of FY20, we have completed
the acquisition of five additional software businesses – either spanning new geographies focusing primarily on customs or new
adjacencies with the potential to grow to global capacity. These acquisitions are at various stages of integration and, once fully
integrated, they will expand the functionality, scope and value of our industry-leading technology to provide a strong base
to further accelerate our growth.
We have now secured a strong foundation for future technology development and geographic expansion, with 40 product
development centres worldwide and our people in more than 55 offices across Australia, Argentina, Belgium, Brazil, Canada,
Chile, China, Finland, France, Germany, Ireland, Italy, Japan, Malaysia, the Netherlands, New Zealand, Norway, Poland, the
Philippines, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Turkey, the United Arab Emirates, the
United Kingdom, the United States and Uruguay.
Summary of statutory financial performance
During the year to 30 June 2020, despite the impact of COVID‑19 on industry volumes and deferred product rollout,
we delivered significant revenue growth driven by continued strong organic growth across our global business as we increased
market penetration, customer usage and increased adoption of our technology. We continued our significant investment
in innovation and development, expanding our global footprint and securing strategic assets in new geographies and adjacent
technologies which together will accelerate our future growth.
Revenue for FY20 increased 23% to $429.4m (FY19: $348.3m)
Operating profit increased $0.3m to $80.5m (FY19: $80.2m)
Net profit after tax increased 197% to $160.8m (FY19: $54.1m)
NPATA 2 increased 3% to $64.6m (FY19: $63.0m)
Basic earnings per share increased 185% to 50.3 cents (FY19: 17.7 cents)
1 Armstrong & Associates: Top 50 Global Third Party Logistics Providers List ranked by 2019 logistics gross revenue/turnover.
Armstrong & Associates: Top 25 Global Freight Forwarders List ranked by 2019 logistics gross revenue/turnover and freight
forwarding volumes.
2 NPATA – net profit after tax attributable to equity holders of the parent before: acquired amortisation net of tax, contingent
consideration interest unwind net of tax, and fair value changes on contingent consideration. NPATA is a non‑statutory measure and
is a primary measure used by the Chief Operating Decision Maker (CODM) for the purpose of assessing the Group’s performance.
4 4
Operating and financial reviewfor the year ended 30 June 2020OPERATING AND FINANCIAL REVIEW Summary financial results 1
Recurring On-Demand revenue
Recurring One-Time-Licence (“OTL”) maintenance revenue
OTL and support services
Total revenue
Cost of revenues
Gross profit
Product design and development 2
Sales and marketing
General and administration
Total operating expenses
Operating profit
Net finance costs
Fair value gain on contingent consideration
Profit before income tax
Tax expense
Net profit after tax
Net profit after tax attributable to:
Equity holders of the parent
Non-controlling interests
Net profit after tax
Key financial metrics
Recurring revenue %
Gross profit margin %
Product design and development as % total revenue 2
Sales and marketing as % total revenue
General and administration as % total revenue
Capitalised development investment ($m) 3
R&D as a % of total revenue 4
FY20
$M
309.2
72.8
47.4
429.4
(83.5)
345.9
(115.4)
(62.3)
(87.7)
FY19
$M
249.8
57.8
40.7
348.3
(66.7)
281.6
(84.2)
(47.7)
(69.5)
(265.4)
(201.3)
80.5
(9.8)
111.0
181.8
(21.0)
160.8
160.8
–
160.8
FY20
89%
81%
27%
15%
20%
74.2
37%
80.2
(5.4)
1.6
76.4
(22.3)
54.1
54.1
–
54.1
FY19
88%
81%
24%
14%
20%
46.9
32%
Change
$M
Change
%
59.4
15.0
6.7
81.1
(16.8)
64.3
(31.2)
(14.6)
(18.2)
(64.1)
0.3
(4.4)
109.4
105.4
1.3
106.7
106.7
–
106.7
24%
26%
17%
23%
25%
23%
37%
31%
26%
32%
–
81%
n.a.
138%
(6)%
197%
197%
n.a.
197%
Change
FY20 5
1pp
–
3pp
1pp
–
27.3
5pp
97%
91%
19%
12%
21%
56.3
34%
1 Differences in tables are due to rounding.
2 Product design and development includes $30.5m (FY19: $18.1m) depreciation and amortisation but excludes capitalised
development investment.
Includes patents and purchased external software licences used in our products.
3
4 R&D is total investment in product design and development expense, excluding depreciation and amortisation, but including
capitalised development investment.
5 Excluding acquisitions; acquisitions are those businesses acquired since 2012 and not embedded into the CargoWise platform.
4 5
Operating and financial reviewfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 Revenue
Total revenue grew 23% to $429.4m (FY19: $348.3m). Increased revenue growth came from:
– increased transaction and user growth within the existing CargoWise customer base;
– new CargoWise customers won in the period and growth from customers won in FY19 and FY18;
– growth in revenue from paid product enhancements from large customers; and
– growth in revenue from strategic assets (primarily the full year impact of FY19 acquisitions).
Revenues from our existing and new CargoWise customers increased by $43.4m, a 20% growth on FY19 with $31.0m
(FY19: $46.8m) from existing customers and $12.4m (FY19: $7.7m) from new customers. Growth predominantly reflected
increased usage of the CargoWise platform by existing customers adding transactions, seats and new sites, utilising additional
modules, use of new products and features and growth from industry consolidation. The impact of COVID-19 disruptions
on industry volumes and necessary deferment of some new products planned for 2H20, was partially offset by further
on-boarding of new users, deeper penetration with large customers, increasing paid product enhancements and increased
platform adoption.
During 2H20 we delivered an increase in paid product enhancement revenue as large customers paid for technology developments
in the pipeline to be accelerated – ensuring earlier delivery of technology enhancements for their use. Over time these paid
product enhancements are deployed across the global platform and available to all customers, which drives future recurring
revenue growth. We expect this customer-led paid product enhancements demand to continue to grow.
Existing and new CargoWise customer revenue growth included $11.4m of favourable foreign exchange movements (FY19: $9.2m
of favourable foreign exchange movements).
In FY20, revenue growth for CargoWise was achieved across all existing customer cohorts (from FY06 through to FY20).
Revenue from customers on acquired platforms increased by $37.8m, driven by the $27.6m full period impact of acquisitions
completed in FY19 and $10.3m increase related to five acquisitions completed in FY20. Revenue from acquired platforms
included $0.6m of favourable foreign exchange movements.
We buy strategic assets in the form of software companies and specialist technology teams. These bring additional skills,
increase speed to market and access to intellectual property (IP) to converge with our own technology. Smaller, targeted
acquisitions are a risk reduction and global expansion strategy. These provide safer, faster, stronger entry into new key markets
along with talented industry experts and developers, local management, local infrastructure and relevant customer bases.
Over time, we utilise these assets to expand the reach of CargoWise geographically and build globally scalable adjacencies.
These assets tend to have higher levels of one time licence (OTL) and/or support services revenue and the revenues may be flat
or reduce as we transition the businesses over time to our commercial model.
Revenue from OTL and support services rose to $47.4m (FY19: $40.7m), reflecting the contribution from acquired businesses
as they typically have higher proportions of OTL or consulting revenue.
Recurring revenue 97% of our CargoWise revenue is recurring revenue. The change from 99% in prior year reflected the increase
in paid product enhancement revenue from large customers paying for technology development to be accelerated for their
use. This is classified as non‑recurring revenue. Recurring revenue for the Group increased from 88% in FY19 to 89% in FY20
reflecting lower levels of non‑recurring professional services in the acquired businesses.
Customer attrition The attrition rate for the CargoWise platform continued to be extremely low, at under 1%, as it had been
for the previous eight years since we started measuring 1. Our customers stay and grow their transaction usage due to the
productivity of our platform.
Licensing and transition All new CargoWise customers use our transaction‑based Seat Plus Transaction Licensing (“STL”)
revenue model. In FY20 we significantly progressed the conversion of all CargoWise customers on the historical OTL and
Module User Licence (“MUL”) models to STL. Over time, we will transition the licence models of our acquired businesses.
Overall, including acquisitions, the percentage of On-Demand licence model revenue is 72% of total revenue (FY19: 72%),
reflecting the higher levels of OTL and support services revenue in acquisitions compared to our CargoWise platform.
Foreign exchange Our revenue is invoiced in a range of currencies, reflecting the global nature of our customer base and,
as a result, may be positively or negatively impacted by movements in foreign exchange rates. As we continue to acquire
businesses in new geographies, the range of currencies in which we invoice and incur costs expands.
1 Annual attrition rate is a customer attrition measurement relating to the CargoWise platform (excluding any customers on acquired
platforms). A customer’s users are included in the customer attrition calculation upon leaving i.e. having not used the product for
at least four months.
4 6
Operating and financial reviewfor the year ended 30 June 2020OPERATING AND FINANCIAL REVIEW Gross profit and gross profit margin
Gross profit increased by $64.3m, up 23%, to $345.9m (FY19: $281.6m). Gross profit growth was mainly driven by organic revenue
growth and the full period impact of the FY19 acquisitions.
Gross profit margin remained steady at 81% (FY19: 81%), reflecting the power and efficiency of the CargoWise platform, even
with the impact of over 40 lower margin acquisitions and COVID‑19. During FY20 CargoWise gross profit margin rose to 91%
(FY19: 89%). The acquired businesses have, on average, higher product and service support costs and lower cost leverage due
to their smaller size and commercial/licence model maturity, which means they typically have a lower gross profit margin than
CargoWise. For each business acquired, we expect the dilutive impact of their existing gross profit margin to reduce over time
as they evolve to our more efficient commercial model and as they integrate with or convert onto the CargoWise platform.
The transition of acquired businesses occurs over multiple years.
Operating expenses
Total research and development investment In FY20 we continued our significant investment in product innovation to further
develop our software platform and to build our innovation pipeline. Our research and development investment for the year was
$159.1m (FY19: $113.0m), reflecting 37% of total revenue (FY19: 32%). With our research and development investment we delivered
over 1,100 product upgrades to our CargoWise platform in FY20, further improving the scalability, functionality, productivity
and performance, and also building out more technology assets across our businesses utilising our 40 product development
centres worldwide.
Product design and development expense increased by 37% to $115.4m (FY19: $84.2m), reflecting:
– our significant ongoing and accelerated investment in the development and maintenance of CargoWise;
– increased investment in expanding and retaining our skilled development workforce;
– increased amortisation, primarily due to continued capitalised development investment, the full-year impact of FY19
and newly commercialised products including GLOW; and
– $17.7m increase in FY20 for acquired businesses which typically have relatively higher levels of maintenance and
support costs.
Capitalised development investment rose significantly, up 58% to $74.2m (FY19: $46.9m) reflecting increased commercialisable
technology assets from product developments focused on extending CargoWise functionality, building out our global customs
capability (including native customs builds in Asia, Europe and LATAM), international logistics, international ecommerce and
acquisition product integrations. Costs related to development activity that is not commercialisable and maintenance costs
are expensed.
Sales and marketing expense During FY20, we invested 15% of revenue (FY19: 14%) or $62.3m (FY19: $47.7m) in sales and
marketing. The increase reflects $7.6m from acquisitions (mostly driven by the full period impact of FY19 acquisitions).
The remainder of the spend relates to investments to support CargoWise’s geographic expansion, multi-lingual capabilities
and growth into new technologies.
General and administration expense We increased our investment in supporting and growing our business globally to $87.7m
(FY19: $69.5m), representing 20% of total revenue (FY19: 20%). The increase was driven by:
– the full period impact of FY19 acquisitions and costs from newly acquired businesses in FY20 with their own general and
administration costs;
– costs of key management teams, including Founder MDs, for almost all of the strategic assets acquired; and
– headcount additions in finance, people, administration and IT to support the expansion of our global operations in addition
to increase in global compliance and corporate governance costs (such as increased D&O Insurance premiums).
Our G&A expense, excluding M&A costs, was 19% of revenue in FY20.
The Group applied AASB 16 Leases from 1 July 2019. Refer to note 3 to the financial statements for further information.
Throughout FY20 we did not receive any material benefit from any COVID‑19 government support programs globally.
Net finance income
Fair value gain on contingent consideration This reflects the impact of contingent consideration liability reassessment
in 1H20 and the renegotiated earnout arrangements completed in May and July 2020. In FY20, these arrangements resulted
in a reduction of the contingent consideration liability and a corresponding fair value gain of $111.0m (FY19: $1.6m).
Other net finance costs Net finance costs in FY20 of $9.8m (FY19: $5.4m) included $10.0m of non‑cash interest unwind
on contingent consideration of which $4.1m ($2.9m net of tax) relates to the closeout of earnouts relating to 22 acquisitions
as disclosed by the Company in May and July 2020. Finance income of $3.1m (FY19: $1.9m) reflected interest received
on cash reserves.
4 7
Operating and financial reviewfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 Cash flow
We continued to generate positive operating cash flows, with $146.3m of operating cash flow, up 16% on FY19. FY20 net
cash flows from operating activities were $129.9m (FY19: $112.5m). Investing activities in long‑term assets to fund future
growth included:
– $57.0m in new acquisitions as well as contingent payments for acquisitions made in prior years (FY19: $237.2m);
– $70.4m in intangible assets as we further developed and expanded our commercialisable technology, resulting in capitalised
development investment for both commercialised products and those yet to be launched (FY19: $43.8m); and
– $20.1m in assets mostly related to spend on data centres and IT infrastructure to enhance the scalability and reliability
of our platform, increase capacity for future growth and for upgrades to our facilities (FY19: $6.6m).
Dividends of $11.1m (FY19: $9.0m) were paid in cash during FY20, with shareholders choosing to reinvest an additional $0.5m
of their dividends via the dividend reinvestment plan.
Our closing cash balance of $223.7m at 30 June 2020 provides significant liquidity and ability to fund our strategic
growth opportunities.
FY20 strategic highlights
We are focused on our long term vision of delivering the operating system to drive efficiency and digital transformation in
global logistics, and throughout FY20 we have continued investing to expand our technology and operations globally. We are
extending the reach of the global CargoWise integrated platform, expanding technology to increase market penetration and
new addressable markets, growing our commercial foundation to new geographies, investing in transforming our content
architectures, channels and brand while also growing our R&D capacity.
– Overall, 42 of the top 50 global 3PLs 1 are now WiseTech Global customers, as are all of the top 25 Global Freight Forwarders 2
with 23 of those on CargoWise, yet global penetration is still in the early stage with significant growth runway for years to
come. Additionally, of the top 25 Global Freight Forwarders, 10 have either rolled out or are currently in the process of global
rollouts on CargoWise with current rollouts for DHL Global Forwarding and DSV/Panalpina progressing well. Recent multi‑year
contract signings include freight forwarding and customs global rollout UAE‑based Aramex International (35 countries),
Seafrigo Group (12 countries) and top-25 global forwarder Hellmann Worldwide (42 countries).
– Throughout FY20 we continued our extensive product development program, investing $159.1m and 51% of our people
in product development delivering over 1,100 product upgrades (up 32% on FY19) and enhancements to the CargoWise
platform. We also progressed innovations in Australasia, Brazil, China, Taiwan, Europe, and the United States and across our
global adjacencies including global rates management, border compliance, transport management solutions and landside
logistics. We invested resources into machine learning, natural language processing, process automation and guided decision
support, driven by vast volumes of transactional and global data sets to enable enhanced compliance, due diligence, risk
assessment and risk mitigation.
– We invested over $60m in sales and marketing, continuing to drive adoption of our technologies while also investing in our
global re-brand of WiseTech and CargoWise along with expansion of our content and digital delivery platforms.
– Throughout FY20 we progressed the integration of our strategic acquisition assets. These businesses are performing to our
expectations through various stages of operational integration, product and technology development, and reshaping their
commercial foundation, while managing their day-to-day operations. In 2H20, we worked collaboratively with 22 of our
acquisitions to close out or restructure earnouts, with equity replacing cash payments to provide the Company additional
liquidity. This action will allow us now to better align resources into the core, ensure prioritisation of our CargoWise
technology development and facilitate future actions to drive group efficiency.
– In FY20 we completed a further five valuable geographic and adjacent acquisitions across North America, South Korea,
Poland and Switzerland covering customs, machine learning and container yard and terminal management. Having completed
over 40 acquisitions in recent years, we have now assembled the significant resources and development capability to fuel
our CargoWise technology pipeline and therefore we intend to slow our pace of acquisitions for the near term.
1 Armstrong & Associates: Top 50 Global Third Party Logistics Providers List, ranked by 2019 logistics gross revenue/turnover.
2 Armstrong & Associates: Top 25 Global Freight Forwarders List, ranked by 2019 logistics gross revenue/turnover and freight
forwarding volumes.
4 8
Operating and financial reviewfor the year ended 30 June 2020OPERATING AND FINANCIAL REVIEW Post balance date events
Since period end, the Directors have declared a fully franked final dividend of 1.60 cents per share, payable on 2 October 2020.
The dividend will be recognised in subsequent period financial statements.
Outlook for 2021
The impacts of COVID‑19 are continuing to evolve with the situation remaining fluid. Whilst there has been a marked short‑term
recovery as economies reopen, considerable uncertainty remains given recent COVID-19 outbreaks and the ongoing risk
of a second wave. There is also prevailing uncertainty in relation to sovereign risk and geopolitical risk.
WiseTech provides the following guidance on the basis that market conditions do not materially change, noting in particular
that declines in industrial production and/or global goods trade may adversely impact guidance and vice versa. Based on and
subject to the underlying assumptions set out in the WiseTech FY20 Results Investor Presentation the Company currently
anticipates FY21 revenue growth in the range of 9% to 19% (representing revenue of $470m to $510m) and EBITDA growth of 22%
to 42% (representing $155m to $180m).
4 9
Operating and financial reviewfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 Five year financial summary 1
Recurring On-Demand revenue
Recurring OTL maintenance revenue
OTL and support services
Total revenue
Cost of revenues
Gross profit
Operating expenses
Product design and development
Sales and marketing
General and administration
Total operating expenses
Operating profit
Finance income
Finance costs
Fair value gain on contingent consideration
Share of profit/(loss) of equity accounted investees
Profit before income tax
Tax expense
Net profit after tax
Net profit after tax attributable to:
Equity holders of the parent
Non-controlling interests
Net profit after tax
Key financial metrics
Recurring revenue %
Gross profit margin %
Product design and development as % of total
revenue 2
Sales and marketing as % of total revenue
General and administration as % of total revenue
Capitalised development investment ($m) 3
Total R&D as a % of total revenue 4
FY16
$M
85.7
15.5
1.6
102.8
(15.4)
87.4
(30.4)
(22.8)
(29.5)
(82.8)
4.6
1.3
(2.4)
–
–
3.5
(1.3)
2.2
2.2
–
2.2
98%
85%
30%
22%
29%
17.7
40%
FY17
$M
127.3
15.1
11.4
153.8
(26.1)
127.7
(35.6)
(16.7)
(33.9)
(86.2)
41.5
4.6
(1.9)
–
(0.1)
44.2
(12.0)
32.2
31.9
0.3
32.2
93%
83%
23%
11%
22%
22.0
33%
FY18
$M
171.0
27.7
22.9
221.6
(38.7)
182.9
(53.4)
(24.6)
(46.6)
(124.6)
58.4
1.4
(2.7)
–
0.0
57.2
(16.4)
40.8
40.8
0.0
40.8
90%
83%
24%
11%
21%
35.3
34%
FY19
$M
249.8
57.8
40.7
348.3
(66.7)
281.6
(84.2)
(47.7)
(69.5)
(201.3)
80.2
1.9
(7.3)
1.6
–
76.4
(22.3)
54.1
54.1
–
54.1
88%
81%
24%
14%
20%
46.9
32%
FY20
$M
309.2
72.8
47.4
429.4
(83.5)
345.9
(115.4)
(62.3)
(87.7)
(265.4)
80.5
3.1
(12.9)
111.0
–
181.8
(21.0)
160.8
160.8
–
160.8
89%
81%
27%
15%
20%
74.2
37%
1 Differences in tables are due to rounding.
2 Product design and development expense includes $30.5m (FY19: $18.1m, FY18: $12.2m, FY17: $7.2m and FY16: $7.0m) depreciation
and amortisation but excludes capitalised development investment.
Includes patents and purchased external software licences used in our products.
3
4 R&D is total investment in product design and development expense, excluding depreciation and amortisation, but including
capitalised development investment each year.
5 0
Operating and financial reviewfor the year ended 30 June 2020OPERATING AND FINANCIAL REVIEW This Remuneration Report sets out our approach to remuneration for key management
personnel (“KMP”) in accordance with the requirements of section 300A of the
Corporations Act 2001. The report covers company performance and remuneration
outcomes for the period from 1 July 2019 to 30 June 2020. The information
provided in this report has been audited as required by section 308(3C) of the
Corporations Act 2001.
Remuneration Committee and governance
The Board is responsible for ensuring that WiseTech’s remuneration strategy and framework support the Group’s performance
and that executives and Non-Executive Directors are rewarded fairly and responsibly with regard to legal and corporate
governance requirements. The Remuneration Committee oversees remuneration matters and, where appropriate, makes
recommendations to the Board. The Committee comprises three independent Non-Executive Directors: Teresa Engelhard
(Chair), Charles Gibbon and Michael Gregg. Further information on the Committee’s responsibilities is set out in the
Remuneration Committee Charter available at: http://ir.wisetechglobal.com/investors/?page=corporate‑governance
Annual remuneration review
The Remuneration Committee and the Board review remuneration annually to ensure there is an appropriate balance between
fixed and at‑risk pay and that it reflects both short and long‑term performance objectives linked to WiseTech’s strategy.
Independent remuneration consultants
WiseTech Global has protocols in place to ensure that any external advice is provided in an appropriate manner and is free from
undue influence of management. To inform remuneration policy reviews, during FY20, the Remuneration Committee engaged
Ernst & Young to advise on market practices. For the purposes of section 206L of the Corporations Act 2001, Ernst & Young did
not provide remuneration recommendations in relation to KMP.
Key management personnel
WiseTech’s KMP comprise all Directors and those executives who have specific authority and responsibility for planning,
directing and controlling the activities of the Group. In this report, the term “Executive KMP” refers to the KMP excluding
Non-Executive Directors.
The KMP for the period from 1 July 2019 to 30 June 2020 were:
Andrew Harrison
Teresa Engelhard
Charles Gibbon
Michael Gregg
Chair and Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Christine Holman
Non-Executive Director, resigned 18 October 2019
Arlene Tansey
Non‑Executive Director, appointed 1 June 2020
Richard White (“RW”)
Executive Director, Founder and Chief Executive Officer (“CEO”)
Maree Isaacs (“MI”)
Executive Director, Co‑founder and Head of Invoicing & Licensing
Andrew Cartledge (“AC”)
Chief Financial Officer
Brett Shearer (“BS”)
Chief Technology Officer
5 1
Remuneration ReportWISETECH GLOBAL ANNUAL REPORT 2020 Our remuneration strategy and framework
WiseTech’s future growth and innovation rely on the talent, motivation and enthusiasm of our people across the world. We aim
to reward our high-performance global workforce with a remuneration and incentive program aligned to our business strategy,
specialised operations, and aspirations for sustained growth.
Our remuneration framework reflects our goals to:
– attract, develop, motivate and retain highly skilled people;
– drive a culture where financial rewards are directly linked to contributions and performance;
– ensure all reward decisions are made free from bias and in a way that supports diversity;
– drive commercially responsible decisions on remuneration; and
– deliver market competitive fixed remuneration across our workforce.
As a priority, we build multi‑year deferred equity components into fixed base remuneration across our global workforce
to further align employees’ interests with those of shareholders, encourage value-creating behaviours and support staff
retention within the Group. This equity is granted at the start of the financial year and vests in four equal annual tranches.
During FY20, WiseTech has sought to further increase the proportion of total remuneration that is delivered as a multi-year
deferred equity component across our global team members. Where appropriate, deferred equity is also used to deliver
a component of sales incentives and for sign-on or retention awards for key team members. Development team bonus pool
incentives related to specific innovation achievements that require extra discretionary effort from team members are also
delivered as deferred equity.
Our Invest As You Earn equity investment program enables employees to acquire WiseTech shares by investing up to 20%
of their post‑tax salary with an annual incentive of one free share right for each five shares acquired during the year. The free
share rights vest two years after grant. In FY20, approximately 21% of eligible employees across 19 countries have chosen
to participate and invest in WiseTech shares via this program.
5 2
Remuneration ReportREMUNERATION REPORT Executive performance incentive framework
Our executive team’s performance incentive framework is focused on annual financial targets and operational Key Performance
Indicators (“KPIs”) that are lead measures for key strategic priorities. In any year, our financial and strategic outcomes reflect
the successful execution of many prior years’ deliverables. Conversely, the operational and strategic actions undertaken this
year are expected to deliver shareholder value for many years into the future. Product development deliverables are examples
of leading operational KPIs focused on strategic priorities.
To ensure alignment with shareholders’ interests, we aim for 100% of performance incentives to be paid in deferred equity
(other than for Executive Director, Maree Isaacs, due to the size of her co-founder equity holding). Our view is that this
approach: fixed‑remuneration equity vesting over four years, combined with performance equity incentives vesting over three
years, removes the need for a separate long-term incentive.
Remuneration outcomes and the link between performance and reward for our people
Component
Structure
Strategic objective/performance link
Fixed annual remuneration
Cash and deferred equity (Remuneration
equity: granted during the financial year
with deferred vesting over the following
three years)
Total fixed remuneration set at competitive
levels to attract and retain talent who
can support growth, execute strategy,
deliver economic outcomes and build
shareholder value
Based on:
– role and responsibility;
– capability, competencies and
contribution; and
– internal and external relativities
Deferred equity fixed remuneration aligns
with long-term shareholder interests and
supports staff retention
Ensures execution and accountability with
actions, direct outcomes and meaningful
lead measures that correlate to lag
economic outcomes but may have limited
fiscal impact on current period financials
Longer-term lag outcomes ultimately
reflected in growth in revenue, EBITDA and
Total Shareholder Return (“TSR”)
Reflects our focus and strategy
Deferred equity ensures strong link with
creation of shareholder value, aligns with
long-term shareholder interests and
supports staff retention
Builds further alignment with long-term
shareholder interests
Ensures alignment with long-term
shareholder interests
Performance equity incentives
Deferred equity with a one-year
performance period and vesting over
the following three years
Performance measures:
– financial and operational targets
weighted to individual areas of control
and key actions with measurable
effects; and
– development team pool bonuses are
related to specific innovation pipeline
achievements
Optional post-tax investment
program: Invest As You Earn
(“IAYE”)
Invest up to 20% of post-tax salary monthly
with potential to receive one free share right
for every five shares purchased – the share
rights have a two-year vesting period
Minimum equity holding
requirement
Available for all employees (subject to
local regulations)
Executive KMP must maintain 100% of
fixed remuneration in WiseTech equity
(in the form of shares or share rights)
It is expected that, in the event of an employee (including Executive KMP) ceasing employment, unvested share rights (whether
related to performance incentives or remuneration equity) will lapse; however, in exceptional circumstances (including genuine
retirement), the Board retains discretion to determine that some, or all, of the unvested share rights will not lapse.
5 3
Remuneration ReportWISETECH GLOBAL ANNUAL REPORT 2020 Executive KMP share ownership policy
Executive KMP are required to maintain a minimum WiseTech equity holding equal to 100% of fixed remuneration within five
years of appointment. Each Executive KMP satisfied this objective as at 30 June 2020.
Trading in WiseTech securities
All KMP must comply with WiseTech’s Securities Trading Policy, which includes a requirement that Restricted Employees
(including non‑director Executive KMP) can only trade WiseTech securities during specified trading windows and after obtaining
written clearance to trade. The policy prohibits short-term trading of WiseTech securities and the purchase or creation of hedge
or derivative arrangements which operate to limit the economic risk of WiseTech securities under employee share plans.
New share issues
To meet the Company’s obligations when share rights vest, the Board prefers the issue of new shares (to a maximum of 1%
of issued share capital in any 12-month period) while reserving the right to buy shares on-market and off-market where
appropriate. During FY20, 76,122 shares were purchased on‑market, at an average price of $22.92 per share, primarily on behalf
of participants in the IAYE program.
Outcomes for FY20 and the link to WiseTech performance
The tables below summarise the performance of WiseTech shares for the period since our ASX listing in April 2016 and for FY20,
and our financial performance for the five years from FY16 to FY20. The information has been considered in conjunction with
an assessment of individual performance of senior managers by the CEO, which is reviewed by the Remuneration Committee,
when determining Executive KMP remuneration.
Period
Period start
Share price
at start of
period
Share price
30 June 2020
Change in
share price
Change in
ASX 200
WTC
performance
v ASX 200
Dividends
paid per
share WTC TSR 2
Since listing
11 April 2016
FY20
1 July 2019
$3.35 1
$27.71
$19.35
$19.35
477.6%
‑30.2%
19.6%
-10.9%
458.0%
$0.1005
482.0%
‑19.3%
$0.0365
‑30.0%
IPO offer price.
1
2 Total shareholder return with dividends reinvested.
Revenue ($m)
Revenue growth
EBITDA ($m)
NPAT 1 ($m)
NPATA 2 ($m)
Earnings per share (cents)
Dividends 3 per share (cents)
Change in share price during the year 4
FY16
102.8
47%
15.8
2.2
3.7
0.8
0.60
32%
FY17
153.8
50%
53.9
31.9
33.6
10.9
2.20
56%
FY18
221.6
44%
78.0
40.8
44.8
13.9
2.70
126%
FY19
348.3
57%
108.1
54.1
63.0
17.7
3.45
77%
FY20
429.4
23%
126.7
160.8
64.6
50.3
3.30
-30%
1 NPAT attributable to equity holders of the parent.
2 NPATA is net profit after tax attributable to equity holders of the parent before acquired amortisation and contingent
consideration interest unwind (net of tax) and before contingent consideration fair value changes. NPATA is a non‑statutory
measure and is a primary measure used for the purpose of assessing the performance of the Group. It is derived from audited
financial statements.
3 Dividends declared in respect of the financial year.
4 Percentage change in the closing share price on the last business day in the current year over that on the last business day
in the prior year. FY16 share price change is calculated based on the change in the closing price on 30 June 2016 over the IPO
offer price of $3.35.
5 4
Remuneration ReportREMUNERATION REPORT Board assessment of WiseTech’s FY20 performance against key indicators
In assessing performance in relation to determining equity incentives of Executive KMP, the Board considers the market
conditions and short-term performance in the context of WiseTech’s longer-term strategy. In FY20, key indicators were
impacted by the changed market conditions due to the COVID‑19 pandemic which caused a reduction in FY20 financial
performance consistent with revised guidance provided to the market on 19 February 2020.
In light of the challenges and extra demands from the COVID-19 crisis, the Board viewed the performance of the executive team
and global workforce to be exemplary, in particular the timely and effective efforts to:
– implement remote ways of working;
– implement targeted cost reduction and cash bolstering initiatives including the restructuring of earnouts for acquired entities;
– continue to deliver key product development outcomes and innovations;
– generate customer sales and support the acceleration of global rollouts by large customers; and
– evolve integration and alignment plans with acquired entities.
Notwithstanding the Board’s assessment of strong executive performance in the face of the COVID-19 crisis, in order to ensure
alignment and shared impact from the lower than planned financial results across shareholders and executives, the Board
determined that no stretch (above target) performance bonuses would be awarded across the executive team. For the
13‑member senior management team reporting to the CEO, 37% of the total target performance incentive pool was distributed
for FY20. For Executive KMP, the specific KPIs and performance assessments which underpin the FY20 performance incentive
awards, and the Board’s assessment of the performance of the CEO, are detailed below.
Key performance
indicator
Revenue growth
Performance outcome
23% growth in revenue to $429m vs $440m to $460m
target
Board
assessment
Executive KMP
Below target
RW, AC, MI
EBITDA
17% growth in EBITDA to $127m vs $145m to $153m target
Below target
RW, AC, MI
Recurring revenue
24% growth in recurring revenue to $382m
Below target
RW, AC, MI
Recurring revenue 97% of CargoWise revenue and 89%
of total revenue
Operational efficiency
Operating expenses control, total operating expenses
62% of total revenue
At target
RW, AC, BS
Product development
outcomes
1,100 product enhancements and upgrades delivered
during FY20 from a multi-year pipeline of key
technologies, and development
Above target
RW, BS
Customer sales and
global rollouts
Large customer wins and global rollouts agreed, including
deugro, Aramex and Hellmann Worldwide Logistics
Above target
RW
Customer and licence
transition
Transition of CargoWise customers to STL, our preferred
licence model, effectively completed
At target
RW, MI
Performance against the relevant financial and operational criteria above makes up at least 70% of each Executive KMP’s
performance incentive opportunity. The remainder relates to strategic outcomes particular to each Executive KMP’s role in the
organisation as described below:
– Maree Isaacs: contract management, legacy conversion, licensing transition and pricing;
– Andrew Cartledge: integration of acquired businesses, cash flow, and financial risk management; and
– Brett Shearer: global rollout progress, platform scalability, reliability, security, and cyber-risk management.
5 5
Remuneration ReportWISETECH GLOBAL ANNUAL REPORT 2020 Remuneration awarded for FY20
The remuneration awarded to the Executive KMP in relation to performance during FY20 is set out in the table below,
including the performance incentives resulting from the assessment of KPI outcomes described above. The table also shows
the performance outcome for each Executive KMP as a percentage of target opportunity and of maximum opportunity.
Performance incentives outcomes for senior managers, including the Executive KMP, are determined by the CEO with input
and review by the Remuneration Committee and approval by the Board.
Equity incentives for Executive KMP are delivered as multi‑year deferred equity, with a grant date, post year‑end, in August
2020 and vesting in four equal instalments, immediately on grant and then in July 2021, 2022 and 2023. The grant of equity
was determined using the market value based on the WiseTech share price at the end of the annual performance period
in June 2020.
In FY20, our Founder and CEO, Richard White, was remunerated solely with fixed pay as we believe that his significant equity
holdings provide adequate motivation and alignment with those of other shareholders. Co-founder and Executive Director,
Maree Isaacs, also owns a significant amount of WiseTech equity, thus her performance incentive was paid in cash.
The timeline for FY20 performance equity incentives is shown below:
FY20 Performance period
Pricing
Grant
1st qtr
vests
2nd qtr vests
3rd qtr vests
Final qtr vests
1 July
2019
30 June
2020
1 July
2021
1 July
2022
1 July
2023
Remuneration awarded for FY20
Short-term
Deferred equity
Fixed cash 1
Cash
incentive
Equity
incentive
Jul 20
Jul 21
Jul 22
Jul 23
Total
potential
remuneration
% of target/
maximum
incentive
awarded
Richard White
$1,000,000
–
Maree Isaacs
$400,000 $100,000
–
–
–
–
–
–
–
–
–
–
$1,000,000
N/A
$500,000
50%/50%
Andrew Cartledge
$625,000
– $62,500 $25,000 $87,500 $87,500 $87,500
$975,000
50%/30%
Brett Shearer
$375,000
– $50,000
$37,500 $87,500 $87,500 $87,500
$725,000
100%/67%
1 Fixed cash includes superannuation but excludes any allowances or non‑monetary benefits. In particular, the amounts do not
include the value related to annual and long service leave entitlements.
Short-term remuneration awarded for FY20 includes any performance incentives paid in cash after the period end and the
value of the first tranche of FY20 performance equity incentives which vest immediately on grant in August 2020. Subsequent
tranches of FY20 performance incentives, which vest in a further three annual tranches: July 2021 to July 2023, are shown under
the ‘Deferred equity’ heading. Andrew Cartledge and Brett Shearer were awarded total FY20 performance equity incentives
of $250,000 and $200,000, respectively. Andrew Cartledge and Brett Shearer were awarded fixed remuneration equity
of $100,000 and $150,000 respectively in FY20, which vest in four equal annual tranches: July 2020 to July 2023. These values
are also included under the ‘Deferred equity’ heading.
The value of the equity incentives in the table reflects face value at the date the grant was determined. The actual value at
vesting will depend on the WiseTech share price at the date of vesting. It is expected that, in the event of an Executive KMP
ceasing employment, unvested share rights will lapse; however, in exceptional circumstances (including genuine retirement),
the Board retains discretion to determine that some, or all, of the unvested share rights will not lapse.
5 6
Remuneration ReportREMUNERATION REPORT
Actual remuneration received in FY20
Current year remuneration
Prior years’
remuneration
Fixed cash 1
Cash
incentive
Equity
incentive
Deferred
equity
Total
Equity
growth
Total including
equity growth
Richard White
$1,000,000
–
Maree Isaacs
$400,000
$100,000
–
–
–
–
$1,000,000
$500,000
–
–
Andrew Cartledge
$625,000
Brett Shearer
$375,000
–
–
$62,500
$50,000
$295,822
$983,822
$437,697
$169,257
$594,257
$234,691
$1,000,000
$400,000
$1,421,019
$828,947
1 Fixed cash includes superannuation but excludes any allowances or non‑monetary benefits. In particular, the amounts do not
include the value related to annual and long service leave entitlements.
In this table, Executive KMP remuneration received in FY20 is separated into remuneration received for employment in FY20
and deferred equity incentives from previous years that vested in FY20.
Current year remuneration FY20 fixed cash remuneration, plus any FY20 performance incentive payments paid in cash
or equity which vested immediately on grant in August 2020.
Prior years’ remuneration Any deferred equity awards from prior periods that vested during FY20, but excluding the value
of any vested equity disclosed as ‘current year remuneration’ in the corresponding table in the FY19 Remuneration Report.
Equity growth The value of the vested equity shown in the table is the face value at date of original award (under the headings
Equity incentive and Deferred equity). Equity growth is the value contribution from the change in share price change from
award to vesting dates.
For any share rights that do not automatically convert to ordinary shares at vesting but are exercisable at the discretion of the
Executive KMP, the values in the table reflect the market value at the vesting date regardless of whether the share rights have
been exercised.
Please note the actual remuneration outcomes in the tables above differ from the required statutory disclosures on page 64
which are prepared in accordance with the relevant accounting standards and represent a blend of actual amounts and
accounting accruals. We believe that presenting the information above provides shareholders with greater clarity and
transparency of Executive KMP remuneration.
Vesting of previous performance equity incentives
Vesting of deferred equity components of Executive KMP performance incentives each year is subject to consideration by the
Board. The Board assessed the longer-term impacts of the historical operational performance on the business along with TSR
relative to the ASX 200 accumulated index and determined that the relevant tranches of FY18 and FY19 performance equity
incentives be vested fully in July 2020.
5 7
Remuneration ReportWISETECH GLOBAL ANNUAL REPORT 2020 FY21 remuneration
The Board considers that the existing remuneration approach and framework are working effectively. As such, no substantive
changes are planned for FY21.
The timelines for FY21 fixed remuneration equity and performance equity incentives are shown below:
Remuneration equity
FY21 Remuneration period
Pricing
Grant
1st qtr vests
2nd qtr vests
3rd qtr vests
Final qtr vests
30 June
2020
1 July
2021
1 July
2022
1 July
2023
1 July
2024
Performance equity incentives
FY21 Performance period
Pricing
Grant
1st qtr
vests
2nd qtr vests
3rd qtr vests
Final qtr vests
1 July
2020
30 June
2021
1 July
2022
1 July
2023
1 July
2024
Executive Directors
Our Executive Directors, Richard White and Maree Isaacs, as co‑founders of WiseTech Global, each have significant equity
interests and, as such, their motivations and interests are firmly aligned with those of our other shareholders. Therefore, their
FY21 remuneration will contain no deferred equity components.
Founder and CEO, Richard White, will continue to receive fixed remuneration of $1 million per annum in FY21. Co‑founder and
Head of Invoicing & Licensing, Maree Isaacs, will receive fixed remuneration of $400,000 per annum and a performance
incentive opportunity of up to 50% of fixed remuneration annually, based on achievement of multi‑year strategic goals related
to operational delivery on contract management, legacy conversion and pricing. In view of Maree Isaacs’ significant existing
ownership of WiseTech equity, the Board determined this performance incentive will be cash-based.
Non-director Executive KMP
Our non‑director Executive KMP remuneration structure features:
– fixed remuneration consisting of cash base salary, superannuation and remuneration equity. The combination of cash and
deferred equity to comprise fixed remuneration is designed to encourage long‑term sustainable decision‑making and
alignment of interests with those of shareholders. The remuneration equity is priced at the start of the financial year and
vests in four equal tranches in July 2021, 2022, 2023 and 2024; and
– a target performance equity incentive opportunity set as a percentage of fixed remuneration for target high performance.
Performance criteria will include company financial outcomes and achievement of strategic goals and project outcomes
related to each Executive KMP’s role. For non‑director Executive KMP, the performance incentives will be in the form
of deferred equity over three years, normally delivered as share rights with vesting after the end of the performance period
in four equal tranches: immediately on grant in August 2021, July 2022, July 2023 and 2024. Prior to any vesting in a given
year, the Board considers relative TSR compared to the ASX 200 accumulated index and retains the discretion to cancel the
vesting of that tranche. The grant of equity will be determined using the market value based on the WiseTech share price
at the end of the annual performance period in June 2021.
5 8
Remuneration ReportREMUNERATION REPORT Executive KMP FY21 remuneration
Founder and CEO
Richard White
Co-founder and
Head of Invoicing
& Licensing
Maree Isaacs
Chief Financial Officer
Andrew Cartledge
Chief Technology
Officer
Brett Shearer
Fixed remuneration – cash
$1,000,000
$400,000
Fixed remuneration
– remuneration equity
–
–
$625,000
$100,000
$475,000
$150,000
Total fixed remuneration
$1,000,000
$400,000
$725,000
$625,000
Target performance incentives
(% of fixed remuneration)
Maximum performance incentives
(% of fixed remuneration)
Form of performance incentives
N/A
N/A
N/A
50%
50%
69%
103%
32%
48%
Taking into account
Maree Isaacs’
significant equity
holding, incentive
will be in cash
3‑year
deferred equity
3‑year
deferred equity
Performance criteria applicable to
performance incentives
– at least 70% financial, operational and strategic lead targets, including measures such
as revenue growth, EBITDA, operational efficiency, product development outcomes,
customer sales and global rollouts; and
– up to 30% for individual outcomes, as selectively applied to individual roles with
incentive outcomes, determined by the CEO with approval by the Board
As in prior years, for any individual Executive KMP, the Board, on the recommendation of the CEO, may use discretion to grant
an additional reward for substantial outperformance (maximum), usually capped at an additional 50% of target.
Overview of Non-Executive Director remuneration
The Board sets Non-Executive Director remuneration at a level that enables the Group to attract and retain Directors with
an appropriate mix of skills and experience. The remuneration of the Non-Executive Directors is determined by the Board
on recommendation from the Remuneration Committee within a maximum annual fee pool.
Non-Executive Directors receive a base fee inclusive of statutory superannuation contributions. Non-Executive Directors
do not receive any performance-based remuneration.
Non-Executive Director fee pool and structure
The maximum amount of fees than can be paid to Non-Executive Directors is capped by a pool approved by shareholders.
The current fee pool is $1,500,000 per annum, approved by shareholders at the 2018 Annual General Meeting.
Market practice and survey data are considered when determining the appropriate level of fee for Board members. The table
below outlines the Board and committee fees effective for FY20 and FY21. During FY20, the presentation of the fees was
amended to be inclusive of superannuation. The Board has determined to not increase fees for FY21.
Board
Audit Committee
Nomination Committee
Related Party Committee
Remuneration Committee
Chair fee Member fee
$271,003
$164,250
$21,900
$10,950
–
$10,950
$10,950
–
–
–
5 9
Remuneration ReportWISETECH GLOBAL ANNUAL REPORT 2020 Non-Executive Director remuneration and equity holdings
The following tables detail Non-Executive Directors’ remuneration in respect of FY20 and the prior period, together with details
of WiseTech Global Limited ordinary shares held directly, indirectly or beneficially by each Non‑Executive Director and their
related parties:
Andrew Harrison
Teresa Engelhard
Charles Gibbon
Michael Gregg
Christine Holman 1
Arlene Tansey 2
Total
Board and
committee fees
Superannuation
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
$260,475
$239,577
$170,000
$172,962
$160,000
$182,692
$163,768
$165,000
$56,667
$92,500
$12,500
–
$823,410
$852,731
$21,003
$19,436
$16,150
$16,431
$15,200
$16,314
$15,558
$15,675
$5,383
$8,787
$1,188
–
$74,481
$76,643
Total
$281,478
$259,013
$186,150
$189,393
$175,200
$199,006
$179,326
$180,675
$62,050
$101,288
$13,688
–
$897,891
$929,374
1 Christine Holman resigned on 18 October 2019.
2 Arlene Tansey was appointed on 1 June 2020.
Andrew Harrison
Teresa Engelhard
Charles Gibbon
Michael Gregg
Christine Holman
Arlene Tansey
Shares held on
30 June 2019 1
Shares acquired
Shares disposed
Shares held on
30 June 2020 2,3
40,567
42,894
17,349,014
13,850,738
5,717
–
–
–
–
14,104
3,000
1,000
–
–
–
–
–
–
40,567
42,894
17,349,014
13,864,842
8,717
1,000
1 Or date of appointment, if later. Arlene Tansey was appointed on 1 June 2020.
2 Or date of resignation, if earlier. Christine Holman resigned on 18 October 2019.
3 Number of shares held on 30 June 2020 and at the date of this report for current Non‑Executive Directors.
Non-Executive Director KMP share ownership policy
The Board has established a policy that each Non-Executive Director should accumulate and hold WiseTech shares equivalent
to the value of their base Director’s fees within three years of their appointment to the Board. Each Non-Executive Director
satisfied this objective as at 30 June 2020, other than Arlene Tansey, who was appointed to the Board effective 1 June 2020.
6 0
Remuneration ReportREMUNERATION REPORT Related party transactions
During FY20, the Group was party to ongoing arrangements with entities associated with Executive Director, Founder and CEO,
Richard White. These transactions were negotiated and agreed on normal terms and conditions no more favourable than those
it is reasonable to expect the entity would have adopted if dealing with an unrelated person at arm’s length. Further details
of these arrangements are disclosed in note 22 to the financial statements included in this annual report.
Key terms of Executive KMP employment contracts
The following table outlines the key terms of the Executives’ employment contracts as at the date of this report:
Commencement date
Notice period
15 April 2019
12 months
1 July 2017
7 September 2015
3 months
6 months
1 April 2018
3 months
Richard White
Maree Isaacs
Andrew Cartledge
Brett Shearer
The employment contracts do not contain contractual termination benefits.
Executive KMP equity ownership
The following tables provide details of ordinary shares and share rights (being rights to acquire ordinary shares) held in
WiseTech Global Limited directly, indirectly or beneficially by each Executive KMP and their related parties:
Richard White
Maree Isaacs
Andrew Cartledge
Brett Shearer
Shares held on
30 June 2019
Shares acquired
as part of
remuneration 1
Other shares
acquired
Shares
disposed
Shares held on
30 June 2020
142,501,537
11,642,252
235,340
490,066
–
–
25,396
25,814
–
–
60
–
(2,452,364)
140,049,173 2
(218,087)
(77,005)
(35,998)
11,424,165 2
183,791
479,882
1. Shares acquired from vesting or exercise of share rights granted as part of remuneration.
2 Number of shares held on 30 June 2020 and as at the date of this report.
Share rights
held on
30 June 2019
Vested and
converted
or exercised
Awarded
Share rights
held on
30 June 2020
Lapsed
Richard White 2
Maree Isaacs 2
Andrew Cartledge
Brett Shearer
–
–
40,398
33,943
–
–
–
–
28,880
16,041
(25,396)
(25,814)
–
–
–
–
–
–
43,882
24,170
Including
share rights
vested but
not yet
exercised 1
–
–
6,329
–
1 Depending on the terms of a grant, on vesting, share rights may automatically convert to ordinary shares, or become exercisable.
The Executive KMP can choose when to convert the exercisable share rights to ordinary shares. Share rights are converted
to ordinary shares at nil cost to the Executive KMP.
2 Richard White and Maree Isaacs have not been awarded any share rights as at the date of this report.
6 1
Remuneration ReportWISETECH GLOBAL ANNUAL REPORT 2020 Schedule of Executive KMP share rights and conditions
Details of share rights granted in FY20
Grant
Share rights
granted
Grant date
Fair value at
grant date
Vesting schedule
Andrew
Cartledge
FY19 Performance Equity Incentives
25,319
30‑Aug‑19
$36.93
FY20 Remuneration Equity
3,553
30‑Aug‑19
$36.93
4 annual tranches commencing
30 Aug 2019
4 annual tranches commencing
1 Jul 2020
2019 IAYE Share Rights
FY19 Special Project Bonus
Brett
Shearer
8
51
24‑Jan‑20
30‑Aug‑19
$24.74
2 years after grant
$36.93
4 annual tranches commencing
30 Aug 2019
FY19 Performance Equity Incentives
10,660
30‑Aug‑19
$36.93
FY20 Remuneration Equity
5,330
30‑Aug‑19
$36.93
4 annual tranches commencing
30 Aug 2019
4 annual tranches commencing
1 Jul 2020
Notes:
1 Share rights are rights to acquire ordinary shares at no cost to the participant.
2 There are no further performance conditions after grant but share rights generally lapse on ceasing employment.
3 FY19 Performance Equity Incentives and FY20 Remuneration Equity become exercisable on vesting and expire 10 years
after grant date.
4 The first annual tranches of the FY19 Performance Equity Incentives and the FY19 Special Project Bonus vested immediately on grant,
then subsequent tranches vest on 1 July each year.
5 2019 IAYE Share Rights automatically convert to shares on vesting.
6 The allocation price, the share price used to calculate the number of share rights granted for the FY19 Performance Equity Incentives
and Special Project Bonus and FY20 Remuneration Equity, was $28.14 – the Volume Weighted Average Price for the five business days
to 30 June 2019.
7 Our plan rules grant the Board clawback powers. If, in the opinion of the Board, a participant acts fraudulently or dishonestly
or is in breach of his or her obligations to any Group company, the Board may deem any award of share rights held by the participant
to be forfeited. No clawbacks occurred in FY20.
8 No dividends or dividend equivalents are paid on share rights.
6 2
Remuneration ReportREMUNERATION REPORT Details of share rights affecting current and future remuneration
Grant
Grant date
Vested
in prior
years
Vested
in FY20
Unvested at
30 Jun 2020
Future vesting schedule
FY17 Performance Equity Incentives
29-Sep-17
53,711
17,903
-
N/A
Andrew
Cartledge
FY18 Performance Equity Incentives
29-Sep-18
FY19 Performance Equity Incentives
30‑Aug‑19
FY20 Remuneration Equity
30‑Aug‑19
2018 IAYE Share Rights
2019 IAYE Share Rights
25‑Jan‑19
24‑Jan‑20
-
-
-
-
-
Brett
Shearer
FY17 Remuneration Equity
1‑Jun‑17
1,196
FY17 Performance Equity Incentives
27-Nov-17
17,360
FY18 Performance Equity Incentives
29-Sep-18
FY19 Special Project Bonus
1-May-19
FY19 Special Project Bonus
30‑Aug‑19
FY19 Performance Equity Incentives
30‑Aug‑19
FY20 Remuneration Equity
30‑Aug‑19
-
-
-
-
-
7,493
14,986
6,329
18,990
2 annual tranches from
1 July 2020
3 annual tranches from
1 July 2020
-
-
-
598
8,681
4,732
446
12
3,553
4 annual tranches from
1 July 2020
16
vesting on 15 Jan 2021
8
-
-
vesting on 24 Jan 2022
N/A
N/A
9,465
2 annual tranches from
1 July 2020
1,341
3 annual tranches from
1 July 2020
39
3 annual tranches from
1 July 2020
2,665
7,995 3 annual tranches from
1 July 2020
-
5,330 4 annual tranches from
1 July 2020
Notes:
1 Share rights are rights to acquire ordinary shares at no cost to the participant.
2 There are no further performance conditions after grant but share rights generally lapse on leaving service.
3 Share rights awarded for Performance Equity Incentives, Special Project Bonuses and Remuneration Equity become exercisable
on vesting and expire 10 years after grant date. IAYE Share Rights automatically convert to ordinary shares on vesting.
4 No share rights under the above grants have lapsed.
5 Our plan rules grant the Board clawback powers. If, in the opinion of the Board, a participant acts fraudulently or dishonestly
or is in breach of his or her obligations to any Group company, the Board may deem any award of share rights held by the participant
to be forfeited. No clawbacks occurred in FY20.
6 No dividends or dividend equivalents are paid on share rights.
6 3
Remuneration ReportWISETECH GLOBAL ANNUAL REPORT 2020 Other statutory disclosures – Executive KMP remuneration
The following table of Executive KMP remuneration has been prepared in accordance with accounting standards and the
Corporations Act 2001 requirements, for the period from 1 July 2019 to 30 June 2020 and the prior period:
Short-term
benefits
Cash
incentive
Post
employment
Share-based
payments
Long-term
benefits
Share rights
Other 1
Total
Total
Performance
-related
Base salary
and benefits
$978,997
$975,001
–
–
$378,997
$150,000
Super-
annuation
$21,003
$24,999
$21,003
$345,000
$150,000
$25,000
–
–
–
–
$245,661
$1,245,661
$184,104
$1,184,104
$102,467
$652,647
$68,790
$588,790
$605,557
$602,025
$355,687
$326,440
–
–
–
–
$21,003
$678,728
$156,075
$1,461,363
$24,535
$490,520
$139,355
$1,256,345
$21,003
$385,752
$101,740
$864,182
$20,531
$280,431
$75,581
$702,983
Richard
White
Maree
Issacs
Andrew
Cartledge
Brett
Shearer
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
–
–
23%
25%
46%
39%
39%
40%
N/A
N/A
Total
FY20
$2,319,239
$150,000
$84,010
$1,064,481
$605,943
$4,223,674
FY19
$2,248,466
$150,000
$95,065
$770,951
$467,830
$3,732,312
1 Long‑term benefits – Other relate to annual and long service leave.
6 4
Remuneration ReportREMUNERATION REPORT The Directors present their report together with the consolidated financial statements of the Group, comprising WiseTech
Global Limited and its controlled entities, for the financial year ended 30 June 2020 and the auditor’s report thereon.
Information in the Financial Report referred to in this report, including the Operating and financial review and the Remuneration
Report, or contained in a note to the financial statements referred to in this report, forms part of, and is to be read as part of,
this report.
Directors
The names and details of the Company’s Directors in office during the financial year and until the date of this report are set out
below. Directors were in office for this entire period unless otherwise stated.
– Andrew Charles Harrison (Chair);
– Richard John White (Founder & CEO);
– Teresa Engelhard;
– Charles Llewlyn Gibbon;
– Michael John Gregg;
– Christine Francis Holman (resigned 18 October 2019);
– Maree McDonald Isaacs; and
– Arlene Mary Tansey (appointed 1 June 2020)
The qualifications, experience and special responsibilities of the Directors, including details of other listed company
directorships held during the last three years, are detailed on pages 42 and 43 of this report.
Directors’ meetings and their attendance at those meetings for FY20 (including meetings of committees of Directors) are
detailed on page 43 of this report.
Company Secretaries
David Rippon, Corporate Governance Executive and Company Secretary
BSc (Hons) Mathematics
As Company Secretary, David is responsible for company secretarial and corporate governance support for WiseTech Global
Limited and the WiseTech Group. After an initial career in the UK as an actuary, David held senior corporate office roles at AMP
Limited and Henderson Group (now Janus Henderson Group plc) in Australia, before joining WiseTech Global as Corporate
Governance Executive and Company Secretary in 2017.
Maree Isaacs
Details of Maree’s qualifications and experience are disclosed on page 43 of this report.
Review of operations
Information on the principal activities, operations and financial position of the Group and its business strategies and prospects
is set out in the Operating and financial review on pages 44 to 50 of this report.
Dividends
Details of dividends paid during FY20 and the prior period are disclosed in note 8 to the financial statements included
in this report.
Significant changes in the state of affairs
There have been no significant changes in the state of affairs of the Group during the year.
6 5
Directors’ ReportWISETECH GLOBAL ANNUAL REPORT 2020 Events subsequent to balance date
Since the period end, the Directors have declared a fully franked final dividend of 1.60 cents per share, payable on 2 October 2020.
The dividend will be recognised in subsequent financial statements.
Other than the matters discussed above, there has not arisen in the interval between the end of the financial year and the
date of this report any item, transaction or event of a material and unusual nature, likely, in the opinion of the Directors of the
Company, to affect significantly the operations of the Group, the results of those operations or the state of affairs of the Group
in future financial years.
Likely developments and expected results
For further information about likely developments in the operations of the Group, refer to the Operating and financial review
on pages 44 to 50 of this report.
Environmental regulation and performance
The operations of the Group are not subject to any particular or significant environmental regulations under a Commonwealth,
State or Territory law of Australia.
Indemnification and insurance of Directors and other officers
WiseTech’s constitution provides that every person who is or has been a Director or Company Secretary of the Company
or a subsidiary of the Company is indemnified by the Company to the maximum extent permitted by law. The indemnity covers
liabilities and legal costs incurred by the person as a director or company secretary.
In accordance with the Company’s constitution, the Company has entered into deeds with each of the Directors providing
indemnity, insurance and access. No Director has received benefits under an indemnity from the Company during or since
the end of the financial year.
During FY20, the Company paid a premium under a contract insuring certain current and former officers of the Group (including
the Directors) against liability that they may incur as an officer of the Company. Disclosure of the nature of the liability and the
amount of the premium is prohibited by the confidentiality clause of the contract of insurance.
Share rights
At the date of this report, WiseTech had 2,339,252 share rights outstanding across 1,099 holders. The share rights relate to
grants of deferred equity to employees under the Equity Incentives Plan and have a range of vesting dates through to July 2024.
The share rights are not subject to further performance conditions, but are subject to employment conditions. On vesting,
the holder is entitled to receive one ordinary share at no cost to the holder. 1,059,940 share rights were converted to ordinary
shares during the financial year.
Proceedings on behalf of the Group
Under section 237 of the Corporations Act 2001, no application has been made in respect of the Group and no proceedings
have been brought or intervened in or on behalf of the Group under that section.
Remuneration Report
Information on WiseTech’s remuneration framework and the outcomes for FY20 for key management personnel and the
proposed framework for FY21, is included in the Remuneration Report on pages 51 to 64 of this report.
6 6
Directors’ ReportDIRECTORS’ REPORT Corporate governance
Our Corporate Governance Statement for FY19 is available from our website: https://ir.wisetechglobal.com/
investors/?page=corporate‑governance
Our FY20 statement will be published in September 2020.
Non-audit services
During the year, KPMG, the Company’s auditor, performed certain other services in addition to the audit and review of the
financial statements. Details of the amounts paid to the auditor of the Group, KPMG, and its network firms for audit and
non‑audit services are provided in note 23 to the financial statements included in this report.
The Board has considered the non-audit services provided during FY20 by the auditor and in accordance with written advice
provided by resolution of the Audit Committee, is satisfied that the provision of those non‑audit services during FY20 by the
auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for
the following reasons:
– all non-audit services were subject to the corporate governance procedures adopted by the Group and have been reviewed
by the Audit Committee to ensure they do not impact the integrity and objectivity of the auditor; and
– the non-audit services provided did not undermine the general principles relating to auditor independence as set out in
APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work,
acting in a management or decision-making capacity for the Company, acting as an advocate for the Group or jointly sharing
risks and rewards.
Lead auditor’s independence declaration
The lead auditor’s independence declaration is set out on page 68 of this report and forms part of the Directors’ Report for the
financial year ended 30 June 2020.
Signed in accordance with a resolution of the Directors.
Andrew Harrison
Chair
18 August 2020
Richard White
Executive Director, Founder and CEO
18 August 2020
6 7
Directors’ ReportWISETECH GLOBAL ANNUAL REPORT 2020 Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of WiseTech Global Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of WiseTech Global Limited
for the financial year ended 30 June 2020 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Caoimhe Toouli
Partner
Sydney
18 August 2020
KPMG, an Australian partnership and a member
firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Liability limited by a scheme approved
under Professional Standards
Legislation.
6 8
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001LEAD AUDITOR’S INDEPENDENCE DECLARATION
We recognise and manage a variety of business risks that could affect our operations and financial results. The main risks
affecting WiseTech Global, and the steps we take to manage or mitigate these risks, are described below.
Ability to attract and retain key personnel
Our success is dependent on attracting and retaining key personnel, in particular, our Founder and CEO, Richard White and
members of the senior management and product development teams. In addition, we need to attract and retain highly skilled
software development engineers.
The loss of key personnel or delay in their replacement could adversely impact our ability to operate our business and increase
the potential loss of business process knowledge.
To mitigate this risk, we have invested and continue to invest, in our workforce by recruiting key individuals and also in processes
and systems to ensure knowledge and skills are maintained within the Group to enable its continued and stable growth.
Our remuneration framework also delivers flexible components designed to support the recruitment, motivation and retention
of our staff.
Execution of integration of acquired businesses
In recent years, we have completed a number of strategic acquisitions, the integration of which can include product development
and transitioning of customers to our CargoWise platform. There is a risk that customers do not transition (or require more
financial and management resources, or time to complete, than originally planned) or that the acquisitions fail to generate the
benefits that we expected or provide an adequate return on the resources invested in them.
Our acquisition strategy has resulted, and is likely to continue to result, in us expanding our presence in new international
jurisdictions with exposure to greater risk of political, legal and economic instability or different legal and regulatory systems
and frameworks compared to the regions in which we currently operate.
To mitigate our risks, we tailor the acquisition and integration approach to each acquisition to address geographic and political
risk and the region in which the acquisition business is based.
We have adopted an integration framework characterised by a three-phased approach to:
– integrate the target: operations and workforce;
– develop the product capability and commercial foundation; and
– grow revenue from new capabilities and conversion of the acquired customer base.
This process is designed to be delivered through a combination of self-integration toolkits and the utilisation of our architectures
and engines (such as PAVE). We also engage the talented teams in our 40 product development centres and over 55 offices
worldwide. When considering a target for potential acquisition, we also assess the capabilities of the business to support the
integration and product development phases mentioned above.
WiseTech Global operation in a competitive industry
We compete against other commercial logistics service software providers and within the marketplace face the risk that:
– competitors could increase their competitive position through product innovation or expansion, aggressive marketing
campaigns, product innovation, price discounting or acquisitions;
– our software products may fail to meet our customers’ expectations;
– we may fail to anticipate and respond to technology changes as quickly as our competitors;
– logistics service providers may continue to operate in-house developed systems in preference to commercial logistics
software; and
– new competitors could emerge and develop products (including cloud-based software) which compete with our products.
We believe that our deeply integrated, open‑access platform, which provides an efficient platform for global rollouts and
an efficient consolidation tool for large 3PLs and our commitment to relentlessly invest in product development, are the most
effective mitigants to this risk. We continue to invest significantly in product development and innovation, investing $438m
since FY16. In FY20, we invested 37% of our revenues in product development and innovation and delivered over 1,100 product
upgrades to the platform. We also acquire smaller software vendors in key geographic regions and technology adjacencies,
enlarging our global footprint and technology capacity and capability.
6 9
Risk managementWISETECH GLOBAL ANNUAL REPORT 2020 Failure to retain existing customers and attract new customers
Our business success depends on our ability to retain and grow usage by our existing customers and our ability to attract new
customers. There is a risk that our customers reduce their use of our software, in terms of the users and volume of transactions,
or that they cease to use our software altogether. There is a risk that if customers reduce their usage of our software, our revenue
could decrease.
We mitigate this risk by:
– providing our customers with open access to our platform to new sites/geographies;
– continuing to innovate and add more modules and functionality which drive productivity benefits for our customers and
respond to industry and regulatory changes faced by customers; and
– providing a platform which enables rapid onboarding of users without additional contract negotiations.
Our success in managing this risk is characterised by our high (97%) level of recurring revenue for our CargoWise platform and
our low (<1%) level of annual customer attrition (by CargoWise customers).
Decline in trade volumes and economic conditions
Our customers are logistics service providers whose business operations depend on regional and global logistics activities which
are closely linked to regional and global trade volumes. A decline in regional and global trade volumes and recessionary economic
conditions, including, but not limited to, the effects of the COVID‑19 pandemic, may adversely affect our financial performance.
Our software provides an integrated logistics execution solution which increases productivity and drives efficiency
in a complex, highly regulated and competitive industry. We believe that risks associated with a reduction in trade volumes
and economic conditions would be offset by the opportunities which present themselves from changes in trade routes,
regulation, trade patterns and increased competition amongst our customers.
Impact of foreign currency on financial results
As a global business, the majority of our revenue (FY20: 75%) is invoiced in currencies other than Australian dollars; therefore,
our financial results are influenced by movements in the foreign exchange rates of currencies including the US dollar, pound
sterling and euro.
This risk is partially offset by natural hedges where we also incur operational costs in the same foreign currency. Where
appropriate, we also seek to denominate new customer contracts in Australian dollars and may also utilise foreign exchange
contracts to hedge the currency risks on a portion of forecast exposures.
Disruption or failure of technology systems
The performance, reliability and availability of our technology platform, data centre and global communication systems
(including servers, the internet, hosting services and the cloud environment in which we provide our products) are critical to our
business. There is a risk that these systems may be adversely affected by disruption, failure, service outages or data corruption.
Prolonged disruption to our IT platform, or operational or business delays, could damage our reputation and potentially lead
to a loss of customers, legal claims by customers, and an inability to attract new customers.
We mitigate this risk by operating: separate data centres in three distinct regions around the world to reduce reliance on any
individual data centre; a global network of support centres providing 24/7 365 support internally; and for our customers,
automated replication of data as well as disaster recovery planning and testing. Our technology framework provides for
segregation of data, backups stored on independent infrastructures and critical access monitoring.
Security breach and data privacy
Our products involve the storage and transmission of our customers’ confidential and proprietary information and our risks
include security breaches of our customers’ data and information by unauthorised access, theft, destruction, loss of information
or misappropriation or release of confidential customer data.
To mitigate our risks, we have adopted a layered approach to protecting customer data that includes physical security, system
security, policy, governance, logging and auditing. We have completed an independent Service Organization Control audit
of our key WiseCloud systems in Australia, the United States and the United Kingdom. We perform penetration testing on our
key business systems (including our acquired businesses) and remediate any potential issues identified by the testing.
WiseTech Global and its subsidiaries recognise the importance of data privacy, and comply with relevant data privacy
regulations, including the EU General Data Protection Regulation, to safeguard the security and privacy of all customer data.
7 0
Risk managementRISK MANAGEMENT Financial Report contents
for the year ended 30 June 2020
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
Corporate information
Basis of preparation
Changes in accounting policies
Revenue
Finance income
Income tax
Earnings per share
Dividends
Intangible assets
Property, plant and equipment
Cash and cash equivalents
Trade receivables
Other assets
Trade and other payables
Deferred revenue
Other liabilities
Borrowings
Lease liabilities
Share capital and reserves
Business combinations and acquisition of non-controlling interests
Employee benefits
Key management personnel transactions
Auditor’s remuneration
Reconciliation of net cash flows from operating activities
Segment information
Financial instruments
Group information
Deed of Cross Guarantee
Parent entity information
Other policies and disclosures
Directors’ declaration
Independent Auditor’s Report
72
73
74
76
77
77
79
79
81
81
84
84
85
88
89
89
91
91
92
92
93
93
96
98
102
104
105
106
107
108
1 1 6
1 1 9
1 2 1
122
124
125
W I S E T E C H G L O B A L A N N U A L R E P O R T 2 0 2 0
7 1
Revenue
Cost of revenues
Gross profit
Product design and development
Sales and marketing
General and administration
Total operating expenses
Operating profit
Finance income
Finance costs
Fair value gain on contingent consideration
Net finance income/(costs)
Profit before income tax
Income tax expense
Net profit for the year
Net profit for the year attributable to:
Equity holders of the parent
Non-controlling interests
Other comprehensive income
Items that are/or may be reclassified to profit or loss
Cash flow hedges – effective portion of changes in fair value, net of tax
Exchange differences on translation of foreign operations
Other comprehensive (loss)/income for the year, net of tax
Notes
4
5
26
26
6
2020
$M
429.4
(83.5)
345.9
(115.4)
(62.3)
(87.7)
2019
$M
348.3
(66.7)
281.6
(84.2)
(47.7)
(69.5)
(265.4)
(201.3)
80.5
80.2
3.1
(12.9)
111.0
101.3
181.8
(21.0)
160.8
160.8
–
160.8
3.2
(19.2)
(16.0)
1.9
(7.3)
1.6
(3.8)
76.4
(22.3)
54.1
54.1
–
54.1
–
6.2
6.2
Total comprehensive income for the year, net of tax
144.7
60.3
Total comprehensive income for the year, net of tax attributable to:
Equity holders of the parent
Non-controlling interests
Earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
144.7
–
144.7
7
7
50.3
50.3
60.4
(0.1)
60.3
17.7
17.7
The Group has initially applied AASB 16 Leases at 1 July 2019, using the modified retrospective approach. Refer note 3. Under
this approach, comparative information is not restated and the cumulative effect is recognised in retained earnings at the date
of initial application.
These Consolidated financial statements should be read in conjunction with accompanying notes.
7 2
Consolidated statement of profit or loss and other comprehensive incomefor the year ended 30 June 2020FINANCIAL REPORT
Assets
Current assets
Cash and cash equivalents
Trade receivables
Derivative financial instruments
Current tax receivables
Other current assets
Total current assets
Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax assets
Derivative financial instruments
Other non-current assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Deferred revenue
Current tax liabilities
Employee benefits
Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Employee benefits
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
Notes
2020
$M
2019
$M
11
12
26
13
9
10
6
26
13
14
17
18
15
21
16
17
18
21
6
16
19
223.7
59.6
3.7
3.6
18.7
260.1
50.8
–
3.8
9.2
309.3
323.9
885.0
783.7
70.0
10.4
0.9
1.3
967.6
1,276.9
47.9
–
10.4
22.7
5.8
18.2
52.2
157.2
–
35.4
1.8
47.1
32.0
116.4
273.5
1,003.4
779.8
(37.5)
261.2
1,003.4
15.8
6.5
–
0.8
806.8
1,130.6
35.2
0.2
0.2
19.0
4.7
13.1
96.6
169.0
0.5
0.2
1.4
33.7
159.2
195.0
364.1
766.6
668.5
(25.7)
123.8
766.6
The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Refer note 3. Under this
approach, comparative information is not restated and the cumulative effect is recognised in retained earnings at the date
of initial application.
These Consolidated financial statements should be read in conjunction with accompanying notes.
7 3
Consolidated statement of financial positionas at 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 Share
capital
$M
Treasury
share
reserve
$M
Acquisition
reserve
$M
Notes
Cash
flow
hedge
reserve
$M
Share-
based
payment
reserve
$M
Foreign
currency
translation
reserve
$M
Retained
earnings
$M
Total
$M
Non-
controlling
interests
$M
Total
equity
$M
288.8
(13.6)
(16.8)
–
–
–
–
–
–
19
360.1
(24.4)
23.5
8
–
19
0.5
(4.5)
19
21
–
–
–
–
–
–
–
–
–
14.6
(6.0)
–
3.4
–
–
–
–
–
(0.1)
–
–
–
–
–
–
–
–
379.6
(12.4)
(0.1)
–
–
(2.1)
668.5
(25.9)
(19.0)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
12.8
(4.7)
85.1
351.7
0.4
352.2
–
–
–
–
–
–
–
–
(6.0)
–
10.9
–
–
4.8
–
54.1
54.1
–
54.1
6.3
–
6.3
(0.1)
6.2
6.3
54.1
60.4
(0.1)
60.3
–
–
–
–
–
–
–
–
–
–
–
–
–
335.7
23.4
(9.5)
(9.5)
–
–
0.5
(4.5)
(8.6)
–
–
–
(6.0)
10.9
2.7
6.1
–
–
(15.4) 356.6
–
–
–
–
–
–
–
–
–
–
–
335.7
23.4
(9.5)
0.5
(4.5)
–
(6.0)
10.9
6.1
–
356.6
–
–
–
(2.1)
(0.3)
(2.4)
17.6
1.6
123.8 766.6
–
766.6
Balance as at
1 July 2018
Net profit for
the year
Other
comprehensive
income/(loss)
Total
comprehensive
income/(loss)
Transactions with
owners
Issue of share
capital
Shares issued under
acquisition
Dividends declared
and paid
Shares issued
under dividend
reinvestment plan
(“DRP”)
Transaction costs
(net of tax)
Vesting of share
rights
Vesting shares
withheld
Equity settled
share-based
payment
Tax benefit
from equity
remuneration
Revaluation by
subsidiary due to
hyperinflationary
economy
Total contributions
and distributions
Changes in
ownership interest
Acquisition of
non-controlling
interest without
a change in control
Balance as at
30 June 2019
7 4
Consolidated statement of changes in equityfor the year ended 30 June 2020FINANCIAL REPORT Share
capital
$M
Treasury
share
reserve
$M
Acquisition
reserve
$M
Notes
Cash
flow
hedge
reserve
$M
Share-
based
payment
reserve
$M
Foreign
currency
translation
reserve
$M
Retained
earnings
$M
Total
$M
Non-
controlling
interests
$M
Total
equity
$M
Balance as at
1 July 2019
Initial application
of AASB 16
As at 1 July 2019
Net profit for the
year
Other
comprehensive
income/(loss)
Total
comprehensive
income/(loss)
Transactions with
owners
Issue of share
capital
Shares issued
under acquisition
Dividends declared
and paid
Shares issued
under DRP
Transaction costs
(net of tax)
Vesting of share
rights
Vesting shares
withheld
Equity settled
share-based
payment
Tax benefit
from equity
remuneration
Revaluation by
subsidiary due to
hyperinflationary
economy
Total contributions
and distributions
Changes in
ownership interest
Acquisition of
non-controlling
interest without
a change in control
Balance as at
30 June 2020
668.5
(25.9)
(19.0)
3
–
–
–
668.5
(25.9)
(19.0)
–
–
–
–
–
–
24.8
(24.8)
86.0
–
0.5
(0.1)
–
–
–
–
–
–
–
–
–
26.3
–
–
(7.6)
–
19
19
8
19
19
21
–
–
–
–
3.1
–
–
(0.3)
–
–
–
–
–
111.3
(6.1)
2.7
20
–
–
(0.8)
–
–
–
–
3.2
3.2
–
–
–
–
–
–
–
–
–
–
–
–
17.6
–
17.6
–
–
–
–
–
–
–
–
(8.8)
–
17.2
–
–
8.4
1.6
123.8 766.6
–
1.6
0.1
0.1
123.9
766.6
–
160.8
160.8
(19.2)
–
(16.0)
–
–
–
–
–
766.6
0.1
766.6
160.8
(16.0)
(19.2)
160.8
144.7
–
144.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
89.1
(11.6)
(11.6)
–
–
0.5
(0.4)
(17.5)
–
–
–
–
17.2
5.5
(2.1)
0.2
0.2
(23.5)
92.8
–
–
–
–
–
–
–
–
–
–
–
–
89.1
(11.6)
0.5
(0.4)
–
–
17.2
(2.1)
0.2
92.8
–
–
–
(0.8)
–
(0.8)
779.8
(32.1)
(17.0)
3.2
26.0
(17.6)
261.2 1,003.4
– 1,003.4
The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Refer note 3. Under this
approach, comparative information is not restated and the cumulative effect is recognised in retained earnings at the date
of initial application.
These Consolidated financial statements should be read in conjunction with the accompanying notes.
7 5
Consolidated statement of changes in equityfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 Operating activities
Receipts from customers
Payments to suppliers and employees
Income tax paid
Net cash flows from operating activities
Investing activities
Acquisition of businesses, net of cash acquired
Payments for intangible assets
Purchase of property, plant and equipment
Disposal of assets held for sale
Interest received
Net cash flows used in investing activities
Financing activities
Proceeds from issue of shares
Transaction costs on issue of shares
Treasury shares acquired
Repayment of borrowings
Repayment of lease liabilities (2019: finance lease liabilities)
Interest paid
Dividends paid
Net cash flows (used in)/from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 July
Effect of exchange differences on cash balances
Net cash and cash equivalents at 30 June
Notes
2020
$M
2019
$M
456.4
(310.0)
(16.5)
129.9
(57.0)
(70.4)
(20.1)
–
3.1
373.3
(246.9)
(14.0)
112.5
(237.2)
(43.8)
(6.6)
0.7
1.9
(144.4)
(285.1)
24.8
(0.4)
(24.8)
(0.8)
(5.9)
(2.4)
(11.1)
(20.6)
(35.2)
260.1
(1.3)
223.7
360.1
(6.6)
(30.4)
(1.2)
(0.7)
(1.9)
(9.0)
310.3
137.7
121.8
0.6
260.1
24
20
8
11
11
The application of AASB 16 has led to operating lease payments previously included in cash from operating activities that
are now included as repayment of lease liabilities within financing. The net cash from operating activities and net cash used
in financing activities for the current period have each increased by $6.4m.
The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Refer note 3. Under this
approach, comparative information is not restated and the cumulative effect is recognised in retained earnings at the date
of initial application.
These Consolidated financial statements should be read in conjunction with accompanying notes.
7 6
Consolidated statement of cash flowsfor the year ended 30 June 2020FINANCIAL REPORT 1. Corporate information
WiseTech Global Limited (“Company”) is a company domiciled in Australia. These Consolidated financial statements comprise
the Company and its controlled entities (collectively “Group”) for the year ended 30 June 2020. The Company’s registered
office is at Unit 3a, 72 O’Riordan Street, Alexandria, NSW 2015, Australia.
The Group is a for‑profit entity and its principal business is providing software to the logistics services industry globally.
2. Basis of preparation
Statement of compliance
These Consolidated financial statements are general purpose financial statements, which have been prepared in accordance
with the requirements of the Corporations Act 2001, Australian Accounting Standards (AASBs) and other authoritative
pronouncements of the Australian Accounting Standards Board. The Consolidated financial statements also comply with
International Financial Reporting Standards (“IFRS”) and interpretations (“IFRICs”) adopted by the International Accounting
Standards Board.
Material accounting policies adopted in the preparation of these financial statements are presented alongside the relevant
notes and have been consistently applied unless stated otherwise. Other significant accounting policies which are relevant
to understand the basis of preparation of these Consolidated financial statements are included in note 30.
The Consolidated financial statements have been prepared on an accruals basis and are based on historical costs except for:
– Derivative financial assets which are measured at fair value in accordance with AASB 9 Financial Instruments; and
– Contingent consideration which is measured at fair value in accordance with AASB 13 Fair Value Measurement.
The Consolidated financial statements have been prepared on a going concern basis, which contemplates continuity of normal
business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.
The Consolidated financial statements were authorised by the Board of Directors on 18 August 2020.
Accounting policies
With the exception of the impact of the first time application of AASB 16 Leases, the impact of which is described in note 3,
the accounting policies applied in these Consolidated financial statements are the same as those applied in the Group’s
Consolidated financial statements as at, and for the year ended 30 June 2019.
Going concern
The accompanying Consolidated financial statements have been prepared assuming the Company will continue as a going concern.
The ability of the Company to continue as a going concern has not been impacted by the outbreak of the COVID-19 pandemic.
The Company supplies software as a service (“SaaS”) to the logistics industry which is a critical service to that market sector.
The logistics sector continues to be a critical element of the global economy. The Company’s customer base is significant and
comprises large, medium and small operators. The Company is not subject to concentration of credit risk. The Company has
no borrowings at 30 June 2020 and has sufficient cash to meet all committed liabilities and future expected liabilities.
Key accounting estimates and judgements
In preparing these Consolidated financial statements, management has made judgements, estimates and assumptions
that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses
including accompanying disclosures. Changes in these judgements, estimates and assumptions could result in outcomes that
require a material adjustment in future periods. Information on key accounting estimates and judgements can be found in the
following notes:
Accounting judgements, estimates and assumptions
Note
Page
Income tax determination in relation to assets and liabilities
Recognition and recoverability of other intangible assets
Recoverability of goodwill
Trade receivables expected credit losses
Lease terms
Valuation of contingent consideration
Revenue recognition is excluded on the grounds that the policy adopted in the area is sufficiently objective.
6
9
9
12
18
26
83
86
87
90
94
1 1 1
7 7
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 2. Basis of preparation (continued)
Functional and presentational currency
These Consolidated financial statements are presented in Australian dollars.
Rounding of amounts
Unless otherwise expressly stated, amounts have been rounded off to the nearest whole number of millions of dollars and one
place of decimals representing hundreds of thousands of dollars in accordance with ASIC Corporations Instrument 2016/191,
dated 24 March 2016. Amounts shown as “‑” represent zero amounts and amounts less than $50,000 which have been rounded
down. There may be differences in casting the values in the Consolidated financial statements due to rounding in millions to one
place of decimals.
Presentation of results
The Group has presented the expense categories within the Consolidated statement of profit or loss on a functional basis.
The categories used are cost of revenues, product design and development, sales and marketing and general and administration.
This presentation style provides insight into the Company’s business model and enables users to consider the results of the
Group compared to other major SaaS companies. The methodology and the nature of costs within each category are further
described below.
Cost of revenues
Cost of revenues consists of expenses directly associated with securely hosting the Group’s services and providing support
to customers. Costs include data centre costs, personnel and related costs (including salaries, benefits, bonuses and
share-based payments) directly associated with cloud infrastructure and customer consulting, implementation and customer
support, contracted third party costs, related depreciation and amortisation and allocated overheads.
Product design and development expenses
Product design and development expenses consist primarily of personnel and related costs (including salaries, benefits,
bonuses and share-based payments) directly associated with the Company’s product design and development employees,
as well as allocated overheads. When future economic benefits from development of an intangible asset are determined
probable and the development activities are capable of being reliably measured, the costs are capitalised as an intangible
asset and then amortised to profit or loss over the estimated life of the asset created. The development activities comprise
the design, coding and testing of a chosen alternative for new or improved software products, processes, systems and services.
The amortisation of those costs capitalised is included as a product design and development expense.
Sales and marketing expenses
Sales and marketing expenses consist of personnel and related costs (including salaries, benefits, bonuses, commissions and
share-based payments) directly associated with the sales and marketing team’s activities to acquire new customers and grow
revenue from existing customers. Other costs included are external advertising, digital platforms, marketing and promotional
events, as well as allocated overheads.
General and administration expenses
General and administration expenses consist of personnel and related costs (including salaries, benefits, bonuses and
share‑based payments) for the Company’s executive, Board of Directors, finance, legal, human resources, mergers and
acquisitions and administration employees. They also include legal, accounting and other professional services fees, insurance
premiums, acquisition and integration costs associated with the Company’s ongoing acquisition strategy, other corporate
expenses and allocated overheads.
Overhead allocation
The presentation of the Consolidated statement of profit or loss and other comprehensive income by function requires certain
overhead costs to be allocated to functions. These allocations require management to apply judgement. The costs associated
with Group’s facilities, internal information technology and non-product related depreciation and amortisation are allocated
to each function based on respective headcount.
7 8
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 3. Changes in accounting policies
The Group has initially adopted AASB 16 Leases from 1 July 2019. A number of other new standards are effective from 1 July 2019
but they do not have a material effect on the Group’s Consolidated financial statements.
AASB 16 introduced a single, on-balance sheet accounting model for lessees. As a result, the Group, as a lessee, has introduced
right-of-use assets, which are recorded in property, plant and equipment, representing its right to use underlying assets, and
lease liabilities representing its obligation to make lease payments.
The Group has applied AASB 16 using the modified retrospective approach, under which the cumulative effect of initial
application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented has not been
restated i.e. it is presented, as previously reported, under AASB 117 Leases and related interpretations.
The details of changes in accounting policies are disclosed in note 18.
4. Revenue
Disaggregation of revenue from contracts with customers
The Company has concluded that disclosing a disaggregation of revenue types amongst ‘Recurring On-Demand licence revenue’,
‘Recurring OTL maintenance revenue’ and ‘OTL and support services’ best reflects how the nature, amount, timing and uncertainty
of the Group’s revenues and cash flows are affected by economic factors, and that further disaggregation is not required to achieve
this objective. Revenue by geographic location is disclosed in note 25.
Revenue
Recurring On-Demand licence revenue
Recurring OTL maintenance revenue
OTL and support services
Total revenue
2020
$M
309.2
72.8
47.4
429.4
2019
$M
249.8
57.8
40.7
348.3
The Group applies the following five steps in recognising revenue from contracts with customers:
Identify the contract with the customer;
1.
2. Identify the performance obligations in the contract;
3. Determine the transaction price;
4. Allocate the transaction price to performance obligations based on their relative standalone selling price; and
5. Recognise revenue when, or as, performance obligations are satisfied.
Revenue is recognised upon transfer of control of promised products and services to customers in the amount that reflects
the consideration expected to be received in exchange.
The Group’s revenue primarily consists of licence fees from customers to access or use computing software.
Revenue recognition approach
Recurring On-Demand Licence revenue
The majority of revenue is derived from recurring On-Demand Licences, where customers are provided the right to access the
Group’s software as a service, without taking possession of the software. These arrangements include the ongoing provision
of standard customer support and software maintenance services.
Revenue is recognised over the contract period and is based on the utilisation of the software (numbers of users and
transactions). Customers are typically billed on a monthly basis in arrears and revenue is recognised for the amount billed.
Recurring One-Time-Licence (“OTL”) maintenance revenue
Additional recurring revenue is derived from the recurring maintenance fees charged to customers on OTL arrangements and
is recognised over time during the maintenance period.
7 9
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 4. Revenue (continued)
OTL and support services
OTL fee revenue is derived when the Group sells, in a one-off transaction, the perpetual right to use the software. This licence
revenue is recognised at the point in time when access is granted to the customer and the one-off billing is raised.
Support services revenue mainly consists of fees charged for business consultancy and paid feature services delivered upon
specific customer requests. These contracts are typically short‑term (less than 12 months) and are charged on a fixed‑fee basis.
Consulting revenue is recognised on a proportional performance basis and ratably over the contract term. Paid features service
revenue is recognised at the time when the requested feature is completed and can be accessed by customers.
Contracts with multiple performance obligations
The Company enters into contracts with its customers that can include promises to transfer multiple performance obligations.
A performance obligation is a promise in a contract with a customer to transfer products or services that are distinct.
Revenue (including any discounts) is allocated between separate goods and services on a relative basis of a standalone
selling prices. The standalone selling prices reflect the price that would be charged for a specific product or service if it was
sold separately.
For On-Demand licensing contracts, there are a series of distinct goods and services including access to software maintenance
and support provided to customers that are treated as a single performance obligation because they are delivered in the same
pattern over a period of time.
Material rights in the form of contract renewal options or incremental discounts
Contracts may involve customers having the option to obtain discounts upon renewal of existing arrangements. AASB 15
Revenue from Contracts with Customers considers a material right to be a separate performance obligation in a customer
contract which gives the customer an option to acquire additional goods or services at a discount or free of charge.
The inclusion of these clauses may give rise to a change in the timing of revenue recognition.
The Group assessed renewal options on current contracts. Based on this assessment, there were no renewal options which
gave rise to material rights, which would need to be accounted for as separate performance obligations.
Costs of obtaining a customer contract
AASB 15 requires that incremental costs associated with acquiring a customer contract, such as sales commissions,
be recognised as an asset and amortised over a period that corresponds with the period of benefit.
An assessment of commissions paid by the Group was performed in connection with the sale of software products.
This assessment concluded that as these commissions were conditional on future performance or service by the recipient
of the commission, and therefore were not incremental to obtaining the contract. Consequently, under current arrangements
costs of obtaining a contract are expensed in the period incurred.
Principal versus agent
Where the Group has arrangements involving multiple parties to provide goods and services to customers, judgement
is required to determine if the Group acts as a principal or an agent.
The Group is an agent if its role is to arrange a third party to provide the goods or service; or it is to deliver a third party’s
goods or service on their behalves. The Group is a principal if it has the primary responsibility for fulfilling the promised goods
or service delivery; and has the discretion in establishing the price for the specified goods or service.
Where the Group is acting as a principal, revenue is recognised on a gross basis in accordance with the transaction price
defined in contracts with customers. Where the Group is acting as an agent, revenue is recognised at a net amount reflecting
the commission or margin earned.
Contract balances
The timing of revenue recognition, customer billings and cash collections results in trade receivables, unbilled receivables
(contract assets) and deferred revenue (contract liabilities) recognised on the Group’s Consolidated statement
of financial position.
Generally, the Group invoices customers as service is provided in accordance with the agreed-upon contract terms, either
at periodic intervals (e.g. monthly or quarterly) or upon completion; also at times, billing occurs after the revenue recognition,
resulting in contract assets (unbilled receivables). For certain customer contracts, the Group receives advance payments
before revenue is recognised, resulting in contract liabilities (deferred revenue). These balances, as well as their movements
from the prior reporting period, are disclosed in notes 13 and 15 respectively.
8 0
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 5. Finance income
Interest income
Total finance income
6.
Income tax
(a)
Income tax expense
2020
$M
3.1
3.1
2019
$M
1.9
1.9
Income tax expense/(benefit) comprises current and deferred tax expense/(benefit) and is recognised in profit or loss, except
to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.
The components of tax expense comprise:
Current tax
Deferred tax
Adjustment for prior years – current tax
Adjustment for prior years – deferred tax
Income tax expense
The prima facie tax on profit before income tax is reconciled to the income tax expense as follows:
Accounting profit before income tax
Accounting profit before income tax
At Australia’s statutory income tax rate of 30% (2019: 30%)
Adjusted for:
Other assessable income
Non-deductible expenses
Capital gain on asset disposal
Non-deductible acquisition expense
Under provision for income tax in prior year
Adjusted for:
Tax effect of:
Earnout adjustments
Different tax rates in overseas jurisdictions
Research and development
Deferred tax adjustments
Non-taxable income
Income tax expense
2020
$M
10.6
10.0
4.4
(4.0)
21.0
2020
$M
181.8
181.8
54.5
0.7
1.3
–
0.4
0.1
57.0
(33.3)
0.5
(2.5)
–
(0.6)
21.0
2019
$M
19.9
2.3
(0.3)
0.5
22.3
2019
$M
76.4
76.4
22.9
0.5
0.6
0.1
1.0
0.1
25.2
(0.5)
0.4
(1.6)
(0.7)
(0.5)
22.3
8 1
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020
6.
Income tax (continued)
Significant accounting policies
Current tax
Current tax comprises the expected payable or receivable on the taxable income or loss for the year and any adjustment
to tax payable or receivable in respect of previous years.
The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received.
That reflects uncertainty related to income taxes.
It is measured using tax rates for each jurisdiction enacted or substantively enacted at the reporting date. Current tax assets
and liabilities are offset only if certain criteria are met.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
– Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss;
– Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group
is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the
foreseeable future; and
– Taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the
extent that it is probable that future taxable profits will be available against which they can be used.
Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable
temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits, adjusted for rewards
of existing temporary differences are considered, based on the business plans for the individual subsidiaries in the Group.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the
related tax benefit will be realised. Such reductions are revised when the probability of future taxable profit improves.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become
probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax
rates enacted or substantively enacted at the reporting date, and reflects uncertainty related to income taxes, if any.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects,
at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if certain criteria are met.
8 2
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 6.
Income tax (continued)
(b) Movement in deferred tax balances
2019
Software development costs
Customer relationships and brands
Intellectual property
Property, plant and equipment
Future income tax benefits
attributable to tax losses and offsets
Provisions
Revenue timing
Transaction costs
Employee equity compensation
Unrealised foreign exchange
Net tax liabilities
2020
Software development costs
Customer relationships and brands
Intellectual property
Goodwill
Property, plant and equipment
Future income tax benefits
attributable to tax losses and offsets
Provisions
Revenue timing
Cash flow hedge
Transaction costs
Employee equity compensation
Unrealised foreign exchange
Other
Net tax liabilities
Opening
balance
$M
Charged
to profit
or loss
$M
Charged
to goodwill
$M
Exchange
differences
$M
Charged
to equity
$M
27.3
4.1
1.5
(0.7)
(0.7)
(4.7)
–
(1.6)
(2.6)
(0.2)
22.3
8.0
(0.6)
(0.6)
(0.2)
(2.7)
(2.2)
(0.4)
1.3
0.2
(0.1)
2.7
–
1.5
1.9
–
(0.6)
1.6
0.5
(0.7)
–
–
4.3
–
0.1
–
–
–
(0.1)
–
0.1
(0.1)
–
–
–
–
–
–
–
–
–
(2.1)
–
–
(2.1)
Opening
balance
$M
Charged
to profit
or loss
$M
Charged
to goodwill
$M
Exchange
differences
$M
Charged
to equity
$M
35.3
5.2
2.8
–
(0.9)
(4.0)
(5.5)
0.1
–
(3.0)
(2.5)
(0.3)
–
27.2
14.4
(0.8)
(3.3)
1.1
(0.4)
(5.8)
(3.5)
(1.0)
–
0.8
4.8
(0.4)
0.1
6.0
–
0.3
0.5
–
–
–
0.8
–
–
0.7
–
–
–
2.3
–
(0.1)
0.1
(0.1)
–
0.1
0.1
–
–
–
–
–
–
0.1
–
–
–
–
–
–
–
–
1.4
–
–
–
(0.1)
1.3
Total
$M
35.3
5.2
2.8
(0.9)
(4.0)
(5.5)
0.1
(3.0)
(2.5)
(0.3)
27.2
Total
$M
49.7
4.6
(0.1)
1.0
(1.3)
(9.7)
(8.0)
(0.8)
1.4
(1.5)
2.3
(0.8)
–
36.7
Key accounting estimates and judgements – Income tax
The Group is subject to tax in numerous jurisdictions. Significant judgement is required in determining the related assets
or provisions as there are transactions in the ordinary course of business and calculations for which the ultimate tax
determination is uncertain. The Group recognises liabilities based on estimates of whether additional tax will be due. Where
the final tax outcome of these matters is different from the amount that was initially recognised, such differences will impact
on the results for the year and the respective income tax and deferred tax assets or provisions in the year in which such
determination is made. The Group recognises tax assets based on forecasts of future profits against which those assets may
be utilised; tax losses in subsidiaries of $8.7m (FY19: $1.9m) have not been recognised.
8 3
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 7. Earnings per share
The following reflects the income and share data used in the basic and diluted earnings per share (“EPS”) computations:
Profit attributable to equity holders of the Company ($M)
Basic weighted average number of ordinary shares (in millions)
Basic EPS (cents)
Profit attributable to equity holders of the Company ($M)
Basic weighted average number of ordinary shares (in millions)
Shares issuable in relation to equity-based compensation schemes (in millions)
Diluted weighted average number of ordinary shares (in millions)
Diluted EPS (cents)
2020
160.8
319.7
50.3
160.8
319.7
0.1
319.8
50.3
2019
54.1
306.4
17.7
54.1
306.4
0.1
306.4
17.7
Significant accounting policies
Basic EPS is calculated by dividing profit for the year attributable to equity holders of the Company by the weighted average
number of ordinary shares outstanding during the year.
Diluted EPS is calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted
average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that
would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
8. Dividends
Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been approved
prior to the reporting date.
The following dividends were declared and paid by the Company during the year:
Dividends on ordinary shares declared and paid:
Final dividend in respect of previous reporting period
(FY19: 1.95 cents per share, FY18: 1.65 cents per share)
– Paid in cash
– Paid via DRP
Interim dividend for the current reporting period
(FY20: 1.70 cents per share, FY19: 1.50 cents per share)
– Paid in cash
– Paid via DRP
Franking credit balance
2020
$M
2019
$M
5.9
0.3
5.2
0.2
11.6
4.7
0.3
4.3
0.2
9.5
Franking amount balance as at the end of the financial year
28.1
19.4
Final dividend on ordinary shares
Final dividend for FY20: 1.60 cents per share (FY19: 1.95 cents per share)
5.2
6.2
After the reporting date, a dividend of 1.60 cents per share was declared by the Board of Directors. The dividend has not been
recognised as a liability and will be franked at 100%.
8 4
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 9.
Intangible assets
Computer
software
$M
Development
costs (WIP)
$M
External
software
licences
$M
Goodwill
$M
Intellectual
property
$M
Customer
relationships
$M
Trade
names
$M
Patents
$M
Total
$M
81.8
36.6
3.8
236.6
23.4
16.8
6.2
0.2
405.4
(25.7)
56.2
56.2
–
34.7
–
(10.1)
0.2
–
36.6
36.6
46.8
(34.7)
–
–
0.1
(2.0)
(0.1)
(12.0)
1.8
1.8
0.1
–
0.8
(0.9)
0.1
236.5
236.5
–
–
352.6
–
12.4
11.4
11.4
–
–
14.2
(5.2)
0.4
(4.7)
12.1
(0.5)
5.6
–
(45.0)
0.2
360.3
12.1
5.6
–
–
6.9
(2.2)
0.6
–
–
7.3
(1.1)
0.3
0.2
0.1
360.3
47.0
–
–
–
–
–
381.7
(19.4)
14.0
81.0
48.7
1.9
601.5
20.8
17.4
12.1
0.3
783.7
At 1 July 2018
Cost
Accumulated
amortisation and
impairment
Net book value
At 1 July 2018
Additions
Transfers/
reclassifications
Acquisition via
business combination
Amortisation
Exchange differences
Net book value
at 30 June 2019
At 30 June 2019
Cost
116.2
48.7
4.7
601.6
38.6
24.3
13.8
0.3
848.2
Accumulated
amortisation and
impairment
Net book value
At 1 July 2019
Additions
Transfers/
reclassifications
Acquisition via
business combination
Amortisation
Exchange differences
Net book value
at 30 June 2020
At 30 June 2020
(35.2)
81.0
81.0
–
–
48.7
48.7
71.5
101.2
(101.2)
–
(17.4)
(0.3)
–
–
0.1
(2.9)
1.9
1.9
2.8
–
–
(1.0)
–
(0.1)
601.5
(17.9)
20.8
(6.9)
17.4
(1.6)
12.1
–
(64.5)
0.3
783.7
601.5
20.8
17.4
12.1
–
–
60.0
–
(8.5)
–
–
3.4
(6.5)
(0.3)
–
–
0.2
(2.5)
(0.2)
–
–
1.6
(1.6)
0.1
0.3
0.1
783.7
74.4
–
–
–
–
–
65.1
(29.0)
(9.1)
164.5
19.1
3.6
652.9
17.4
14.9
12.2
0.4
885.0
Cost
217.1
19.1
6.6
653.0
41.6
24.1
15.2
0.4
977.0
Accumulated
amortisation and
impairment
Net book value
(52.6)
164.5
–
19.1
(3.0)
3.6
(0.1)
(24.2)
652.9
17.4
(9.1)
14.9
(3.0)
12.2
(0.1)
(92.0)
0.4
885.0
8 5
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 9.
Intangible assets (continued)
Intangible assets
Useful life
Amortisation method Recognition and measurement
Computer
software
5 to 10 years
Straight-line
Development
costs (WIP)
Not applicable
Not amortised
External
software
licences
Goodwill
Intellectual
property
Customer
relationships
1 to 10 years
Straight-line
Indefinite
Not amortised
3 to 10 years
Straight-line
10 years
Straight-line
Trade names
10 to 15 years
Straight-line
Patents
10 years
Straight-line
Computer software comprises the historic cost of
development activities for products transferred from
development costs (WIP) when project/products are
considered ready for intended use and the historic cost
of acquired software. Computer software is carried at historic
cost less accumulated amortisation and impairment losses.
Development costs are costs incurred on internal software
development projects. Development costs are only
capitalised when they relate to the creation of an asset
that can be used or sold to generate benefits and can
be reliably measured.
External software licences are carried at historic cost or fair
value at the date of acquisition less accumulated amortisation
and impairment losses.
Goodwill acquired in a business combination is measured
at cost and subsequently at cost less any impairment losses.
The cost represents the excess of the cost of a business
combination over the fair value of the identifiable assets
and liabilities acquired.
Intellectual property assets are carried at their fair value
at the date of acquisition less accumulated amortisation
and impairment losses.
Customer relationships are carried at their fair value at the
date of acquisition less accumulated amortisation and
impairment losses.
Trade names are carried at their fair value at the date
of acquisition less accumulated amortisation and
impairment losses.
Patents costs are carried at historic cost less accumulated
amortisation and impairment losses.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset
to which it relates. All other expenditure, including expenditure on internally generated goodwill, is recognised in profit or loss
as incurred.
Key accounting estimates and judgements – Measurement of other finite life
intangible assets
Management has made judgements in respect of intangible assets when assessing whether an internal project in the
development phase meets the criteria to be capitalised, and on measuring the costs and economic life attributed
to such projects. On acquisition, specific intangible assets are identified and amortised over their estimated useful lives.
The capitalisation of these assets and the related amortisation charges are based on judgements about their value and
economic life.
Management also makes judgements and assumptions when assessing the economic life of intangible assets and the pattern
of consumption of the economic benefits embodied in the assets. Amortisation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate. The economic lives for internal projects, which includes internal
use software and internally generated software, and acquired intangibles are between five and 10 years.
8 6
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 9.
Intangible assets (continued)
Recoverability of other finite life intangible assets
Other intangible assets with finite life are reviewed at each reporting period to determine whether there is any indication
of impairment. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the
impairment loss (if any). The recoverable amount is the higher of fair value less costs of disposal and value in use.
If an impairment occurs a loss is recognised in profit or loss for the amount by which an asset’s carrying amount exceeds its
recoverable amount. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates
the recoverable amount of the cash generating unit (“CGU”) to which the asset belongs.
Impairment testing of goodwill
The carrying amount of goodwill is tested for impairment annually at 30 June and whenever there is an indicator that the asset
may be impaired. If an asset is deemed to be impaired, it is written down to its recoverable amount.
For the purposes of impairment testing, goodwill is allocated to each of the cash generating units (CGUs), or group of CGUs,
expected to benefit from the synergies of the business combination. A CGU is the smallest identifiable group of assets that
generate cash inflows that are largely independent of the cash inflows from other assets or group of assets.
At 30 June 2020, the lowest level within the Group for which information about goodwill is monitored for internal management
purposes is the consolidated Group which comprises a group of CGUs. All acquisitions are made with the intention of delivering
benefits of revenue growth and synergy to the group. All CGUs are expected to benefit from synergies and sharing of expertise
from these acquisitions.
Key accounting estimates and judgements – Impairment testing of goodwill
Determining whether goodwill is impaired requires judgement to allocate goodwill to CGUs and judgement and assumptions
to estimate the fair value of a CGU or group of CGUs. The Group has determined that goodwill is tested at a single group of CGU
level. The valuation model (being a value in use model) which is used to estimate the recoverable amount of the group of CGUs,
requires an estimate of the future cash flows expected to arise from the group of CGUs and a suitable discount rate in order
to calculate net present value.
Key assumptions in the Group’s discounted cash flow model as at 30 June 2020
A value‑in‑use discounted cash flow model has been used at 30 June 2020 to value the Group’s CGUs. Financial plans
approved by the Board for year ending 30 June 2021 and management projections for years ending 30 June 2022 to 30 June 2025.
These include projected revenues, gross margins and expenses and have been determined with reference to historical company
experience, industry data and management’s expectation for the future.
Management has considered the impacts of COVID‑19 in forecast cash flows and longer term projects.
The following inputs and assumptions have been adopted:
Post‑tax discount rate per annum
Pre‑tax discount rate per annum
Terminal value growth rate
Sensitivity analysis
2020
9.4%
12.0%
2.5%
2019
10.2%
13.3%
3.0%
Management has performed sensitivity analysis and assessed reasonable changes for key assumptions and has not identified
any instances that could cause the carrying amount of the group of CGUs, over which goodwill is monitored, to exceed its
recoverable amount.
8 7
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 10. Property, plant and equipment
Plant and
equipment
$M
Leasehold
improvements
$M
Right-of-use
assets
$M
At 30 June 2018
Cost
Accumulated depreciation
Net book value
At 1 July 2018
Additions
Acquisition via business combination
Depreciation
Exchange differences
Disposals
Net book value at 30 June 2019
At 30 June 2019
Cost
Accumulated depreciation
Net book value
At 1 July 2019
Recognition of right-of-use assets on initial application of AASB 16
Additions
Acquisition via business combination
Remeasurement of Right-of-use assets
Transfers
Depreciation
Exchange differences
Disposals
Net book value at 30 June 2020
At 30 June 2020
Cost
Accumulated depreciation
Net book value
30.4
(19.4)
10.9
10.9
5.8
2.4
(7.3)
0.3
–
12.0
39.1
(27.1)
12.0
12.0
(0.4)
21.7
(0.1)
–
0.1
(7.7)
(0.4)
(0.7)
24.5
58.1
(33.5)
24.5
6.5
(3.2)
3.4
3.4
1.4
0.1
(1.1)
–
–
3.8
8.1
(4.3)
3.8
3.8
(0.2)
0.2
0.8
–
(0.1)
(1.0)
(0.1)
(0.3)
3.2
8.1
(4.9)
3.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
42.1
9.5
2.5
(0.1)
–
(10.9)
(0.6)
(0.2)
42.3
52.8
(10.5)
42.3
Total
$M
36.9
(22.6)
14.3
14.3
7.2
2.5
(8.4)
0.3
–
15.8
47.2
(31.3)
15.8
15.8
41.5
31.4
3.3
(0.1)
–
(19.6)
(1.1)
(1.1)
70.0
119.0
(49.0)
70.0
Significant accounting policies
Refer to note 18 for the accounting policy for Right-of-use assets.
Plant and equipment and leasehold improvements are carried at cost less, where applicable, any accumulated depreciation
and impairment losses.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in the Consolidated statement of profit
or loss.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can
be measured reliably. All other repairs and maintenance are recognised as expenses in the Consolidated statement of profit
or loss during the financial period in which they are incurred.
8 8
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 10. Property, plant and equipment (continued)
Depreciation
Items of property, plant and equipment are depreciated on a straight-line basis calculated using the cost of the item less
its estimated residual values over its estimated useful life. Prior to adoption of AASB 16 on 1 July 2019, leased assets were
depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain
the ownership by the end of the lease term.
The assets’ depreciation methods, residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period. The annual depreciation rates used for each class of depreciable assets are:
Class of fixed asset
Depreciation rate
Plant and equipment
5%–50%;
Leasehold improvements
10%–20%; and
Right-of-use assets
Term of lease 1
1 Lease terms range between 1–10 years.
11. Cash and cash equivalents
Cash at bank and on hand
The effective interest rate on cash and cash equivalents was 1.09% per annum (2019: 2.25% per annum).
2020
$M
223.7
2019
$M
260.1
Significant accounting policies
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
12. Trade receivables
Trade receivables
Provision for impairment of trade receivables
2020
$M
61.7
(2.1)
59.6
2019
$M
52.5
(1.7)
50.8
The carrying value of trade receivables is considered a reasonable approximation of fair value due to the short-term nature
of the balances.
The movements in the provision for impairment of trade receivables during the year was as follows:
Opening balance
Acquisition via business combination
Impairment loss recognised
Amount written off
Closing balance
2020
$M
1.7
–
1.4
(1.0)
2.1
2019
$M
1.5
0.4
0.4
(0.7)
1.7
8 9
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020
12. Trade receivables (continued)
Trade receivables that were considered recoverable as at 30 June 2020 were as follows:
Not past due
Past due 0–30 days
Past due 31–60 days
Past due more than 60 days
2020
$M
45.7
7.0
1.5
5.3
59.6
2019
$M
40.1
5.9
3.4
1.4
50.8
Significant accounting policies
Trade receivables include amounts due from customers for services performed in the ordinary course of business. Trade
receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets.
Other trade receivables are classified as non‑current assets.
Trade receivables are initially recognised at fair value. A specific provision for impairment of trade receivables is established
when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms.
An expected credit loss provision is recognised in respect of all other receivables.
The Group does not hold any collateral as security over any trade receivable balances.
Key accounting estimate and judgements on trade receivables – Expected credit losses
The Group recognises loss allowances for expected credit losses (ECLs) on trade receivables.
When estimating ECLs, the Group considers reasonable and supportable information that is relevant and available. This includes
qualitative and quantitative information and analysis, based on the Group’s historical experience and informed credit assessment.
The Group assumes that credit risk on an individual trade receivable has increased if it is more than 30 days past due.
The Group considers a trade receivable to be in default when the debtor is unlikely to pay its credit obligations to the Group
in full, without recourse by the Group to actions such as realising security (if any is held).
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls
(i.e. the difference between the cash flows due to the entity in accordance with the customer contract and the cash flows that
the Group expects to receive). At 30 June 2020, the ECL model also incorporated estimates of potential credit losses resulting
from impact of COVID-19.
Presentation of allowance for ECL in the Consolidated statement of financial position
Loss allowances for trade receivables are deducted from the gross carrying amount of trade receivables.
Write-off
The gross carrying amount of a trade receivable is written off when the Group has no reasonable expectations of recovering
the balance in its entirety or a portion thereof. For customers, the Group individually makes an assessment with respect
to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group expects
no significant recovery from the amount written off. However, trade receivables that are written off could still be subject
to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.
9 0
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 13. Other assets
Current
Prepayments
Unbilled receivables
Deposits
Indirect tax receivables
Other
Non-current
Prepayments
Other
Movements in unbilled receivables:
Opening balance
Acquisition via business combination
Accrued revenue recognised
Subsequently invoiced and transferred to trade receivables
Exchange differences
Closing balance
Significant accounting policies
2020
$M
2019
$M
12.5
2.8
1.6
0.6
1.2
18.7
0.5
0.9
1.3
2020
$M
3.0
0.5
2.5
(3.5)
0.3
2.8
3.4
3.0
1.2
0.9
0.7
9.2
–
0.8
0.8
2019
$M
2.4
0.6
2.5
(2.5)
–
3.0
Unbilled receivables represent the revenue recognised to date but not yet invoiced to customers due to the timing of the
accounting invoicing cycle.
14. Trade and other payables
Trade payables
Other payables and accrued expenses
2020
$M
19.9
27.9
47.9
2019
$M
7.8
27.4
35.2
All amounts are short term and the carrying values are considered to be a reasonable approximation of fair value.
Significant accounting policies
Trade and other payables represent the liabilities for goods and services received by the entity that remain unpaid at the end
of the reporting period.
9 1
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 15. Deferred revenue
Deferred revenue
2020
$M
22.7
22.7
2019
$M
19.0
19.0
Deferred revenue reflects the value of advance payments made by customers who have been invoiced for services that will
be provided in the future.
Movements in deferred revenue:
Opening balance
Acquisition via business combination
Revenue recognised in current year
Advanced payments received
Exchange differences
Closing balance
2020
$M
19.0
4.2
2019
$M
10.1
5.7
(33.0)
(32.0)
32.4
0.1
22.7
34.9
0.3
19.0
The Group does not disclose further qualitative information related to remaining performance obligations, as they are either
part of a contract that has an original expected duration of one year or less; or the associated revenue is recognised in the
amount to which the Group has a right to invoice.
16. Other liabilities
Current
Contingent consideration
Customer deposits
Customer payables
Indirect taxes payable
Other current liabilities
Non-current
Contingent consideration
Other non-current liabilities
2020
$M
23.7
25.4
0.5
1.8
0.8
52.2
30.5
1.5
32.0
84.2
2019
$M
69.8
21.7
2.4
1.7
1.1
96.6
157.1
2.1
159.2
255.9
See note 26 for accounting policy and measurement of contingent consideration.
Customer deposits represent amounts paid in advance by customers to prepay for services in exchange for price discounts.
9 2
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT
17. Borrowings
Current
Bank loans
Non-current
Bank loans
2020
$M
2019
$M
–
–
–
–
–
0.2
0.2
0.5
0.5
0.7
Bank debt facilities
An unsecured syndicated facility was executed on 24 December 2018 between Westpac Banking Corporation, The Hongkong
and Shanghai Banking Corporation Limited and Citibank, N.A. The facility has a total syndicated commitment of $190.0m,
plus an additional $200.0m accordion facility, and matures in March 2022. The facility is undrawn as at 30 June 2020.
Other bank loans
The Group acquired a controlling interest in Softship GmbH (“Softship”) on 1 July 2016, which had a debt contract with
Commerzbank for $1.4m (Euro 1.0m), having a maturity of eight years and a fixed interest rate of 3.29% per annum.
The unsecured bank loan was fully repaid in May 2020.
Finance lease liabilities
Prior to 1 July 2019 finance lease liabilities recognised in accordance with AASB 117 were classified as borrowings. $0.5m of finance
lease liabilities were transferred to lease liabilities upon adoption of AASB 16. Refer note 18.
18. Lease liabilities
Current
Lease liabilities
Non-current
Lease liabilities
2020
$M
10.4
10.4
35.4
35.4
45.8
2019
$M
0.2
0.2
0.2
0.2
0.5
Definition of a lease
(i)
The Group assesses whether a contract is, or contains, a lease based on the definition of a lease under AASB 16. A contract
is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange
for consideration.
On transition to AASB 16, the Group elected to apply the practical expedient to grandfather the assessment of which
transactions are leases.
At inception or on reassessment of a contract that contains a lease component, the Group allocates consideration in the
contract to each lease and non-lease component based on their relative standalone prices.
9 3
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020
18. Lease liabilities (continued)
(ii) As a lessee
The Group leases properties, motor vehicles and office equipment. As a lessee, the Group previously classified leases
as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and
rewards of ownership. Under AASB 16, the Group recognises right-of-use assets and lease liabilities for most leases.
However, the Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets
(e.g. office equipment) and leases with lease terms with less than 12 months. The Group recognises the lease payments
associated with these leases as an expense on a straight-line basis over lease term.
The Group presents right-of-use assets in “property, plant and equipment”.
The Group presents lease liabilities separately on the face of the Consolidated statement of financial position.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset
is initially measured at cost which comprises the initial amount of the lease liability adjusted for any lease payments made
at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove
the underlying asset or to restore the underlying asset or the site on which it is located, less any incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end
of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease or, if that rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and
makes certain adjustments to reflect the terms of the lease and the type of asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
– Fixed payments, including in substance fixed payments;
– Variable lease payments that depend on an index variation, initially measured using the index or value as at the
commencement date;
– Amounts expected to be payable under a residual value guarantee; and
– The exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional
renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination
of a lease unless the Group is reasonably certain not to terminate early.
The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made.
It is remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in the
estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment
of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain
not to be exercised.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the right-of-use asset carrying
amount, or is recorded in profit or loss if the right‑of‑use carrying amount has been reduced to nil.
Key accounting estimates and judgements – Lease term
The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include
renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term,
which affects the amount of lease liabilities and right-of-use assets recognised.
Transition
At transition, for leases classified as operating leases under AASB 117, lease liabilities were measured at present values of the
remaining lease payments, discounted at the Group’s incremental borrowing rate as at 1 July 2019.
At transition, for leases classified as operating leases under AASB 117, right‑of‑use assets are measured at either:
– Their carrying amount as if AASB 16 had been applied since the commencement date, discounted using the Group’s
incremental borrowing rate at the date of initial application; or
– An amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.
9 4
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 18. Lease liabilities (continued)
The Group used the following practical expedients when applying AASB 16 to leases previously classified as operating leases
under AASB 117.
– Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term;
– Excluded initial direct costs from measuring the right-of-use asset at the date of initial application; and
– Did not recognise right-of-use assets and liabilities for leases of low-value asset.
At transition, for leases classified as finance leases under AASB 117, the carrying amounts of the right‑of‑use asset and the lease
liability at 1 July 2019 were maintained at values recognised immediately before that date.
(a)
Impacts on transition
On transition to AASB 16, the Group recognised right-of-use assets and additional lease liabilities, recognising the difference
in retained earnings. The impact on transition is summarised below.
Right-of-use assets recognised in property, plant and equipment
Lease liabilities
Derecognition of previous operating lease balances
Deferred tax asset
Retained earnings
1 Jul 2019
$M
42.1
(43.4)
1.4
–
(0.1)
When measuring lease liabilities for leases that were classified as operating leases, the Group discounted lease payments using
its incremental borrowing rate at 1 July 2019. The weighted average rate applied is 3.8%.
The lease liabilities as at 1 July 2019 can be reconciled to the operating lease commitments as at 30 June 2019 as follows:
Operating lease commitments at 30 June 2019 (under AASB 117)
Leases with less than 12 months of lease term at transition
Non-lease component (service charges) from operating leases
Extension options reasonably certain to be exercised
Discounted using the incremental borrowing rate at 1 July 2019
Operating leases transitioned to AASB 16
Finance lease liabilities recognised as at 30 June 2019
Leases of low-value assets
Finance leases transitioned to AASB 16
Lease liabilities recognised at 1 July 2019
(b)
Impacts for the year
1 Jul 2019
$M
1 Jul 2019
$M
47.3
(0.6)
(0.9)
1.3
(4.1)
0.5
(0.1)
43.0
0.4
43.4
As a result of the application of AASB 16, the Group recognised $42.1m of right‑of‑use assets. The movements during the year
ended 30 June 2020 in right‑of‑use asset balances are described below:
Right-of-use (ROU) assets
ROU assets recognised in property, plant and equipment
Additions
Additions through business combinations
Remeasurement of ROU assets
Early termination
Depreciation
Exchange difference
Closing balance
30 Jun 2020
$M
42.1
5.9
2.5
3.5
(0.2)
(10.9)
(0.6)
42.3
9 5
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020
18. Lease liabilities (continued)
As a result of application of AASB 16, the Group recognised $43.4m of lease liabilities. The movements during the year ended
30 June 2020 in lease liability balances are described below:
$2.6m of depreciation charges and $0.4m of interest costs were capitalised to Development costs (WIP).
The Group adopted AASB 16 using the modified retrospective approach on transition and accordingly has not restated
comparative information. The reclassification and adjustments arising from the new standard are therefore recognised
in the opening Consolidated statement of financial position as at 1 July 2019.
19. Share capital and reserves
Lease liabilities
Lease liabilities recognised
Additions
Additions through business combinations
Remeasurement of lease liabilities
Early termination
Payments
Unwinding interest on lease liabilities
Exchange difference
Closing balance
Ordinary shares issued and fully paid
At 1 July 2018
Shares issued for cash
Shares issued for acquisition of subsidiaries
Shares issued to employee share trust
Shares issued under DRP
Transaction costs (net of tax)
At 30 June 2019
At 1 July 2019
Shares issued for acquisition of subsidiaries
Shares issued to employee share trust
Shares issued under DRP
Transaction costs (net of tax)
At 30 June 2020
30 Jun 2020
$M
43.4
5.9
2.5
3.5
(0.2)
(10.1)
1.8
(1.1)
45.8
$M
288.8
335.7
23.5
24.4
0.5
(4.5)
Shares
(thousands)
299,932
16,064
1,291
850
24
–
318,161
668.5
318,161
3,845
1,250
24
–
668.5
86.0
24.8
0.5
(0.1)
323,280
779.8
Ordinary shares participate in dividends and the proceeds on winding-up of the Company in proportion to the number
of shares held. At shareholders’ meetings, each ordinary share is entitled to one vote when a poll is called; otherwise,
each shareholder has one vote on a show of hands.
The Company does not have a par value in respect of its issued shares.
9 6
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 19. Share capital and reserves (continued)
Nature and purpose of reserves
Treasury share reserve
(i)
The reserve for the Company’s treasury shares comprises the cost of the Company’s shares held by the WiseTech Global
Limited Employee Share Trust. At 30 June 2020, the Trust held 1,474,894 shares of the Company (2019: 1,283,578 shares).
(ii) Acquisition reserve
The acquisition reserve comprises the cumulative consideration paid to acquire minority interests in excess of the fair value
of the net assets when attaining control, in addition to the difference between the share price at the time of the agreement
to issue shares and the share price on the date of issue when the Group’s shares are issued under acquisition agreements.
(iii) Cash flow hedge reserve
The cash flow hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow
hedging instruments.
(iv) Share-based payment reserve
The share-based payment reserve represents the value of unvested shares and unissued shares as part of the share-based
payment scheme.
Foreign currency translation reserve
(v)
The foreign currency translation reserve comprises all foreign currency differences arising from the translation of the financial
statements not in Australian dollar functional currency.
Capital management
Management controls the capital of the Group in order to maintain a sustainable debt to equity ratio, generate long-term
shareholder value and ensure that the Group can fund its operations and continue as a going concern. The Group’s capital
and debt include ordinary share capital and financial liabilities, supported by financial assets.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure
in response to changes in these risks and in the market. These responses include the management of debt levels, distributions
to shareholders and share issues.
Throughout FY20 the Group issued $86.0m in shares to pay for obligations under acquisition agreements. In addition, at
30 June 2020 the Group has an undrawn debt facility of $190.0m, to apply towards future strategic initiatives. The total equity
of the Group at 30 June 2020 is $1,003.4m (2019: $766.6m) and total cash and cash equivalents at 30 June 2020 are $223.7m
(2019: $260.1m). The total bank loans at 30 June 2020 are $nil (2019: $0.7m).
The Group is not subject to any externally imposed capital requirements.
9 7
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 20. Business combinations and acquisition
of non-controlling interests
Acquisitions in 2020
During the year ended 30 June 2020, the Group completed the following five acquisitions:
Business acquired
Date of acquisition
Description of acquisition
Cypress 1
16 Sep 2019
Tariff management software provider in the USA
Depot Systems 1
1 Oct 2019
Leading US-based container yard and terminal management logistics
solutions provider
Ready Korea
31 Dec 2019
Leading customs, bonded warehouse and trade compliance solutions
provider in South Korea
Sisa
SAD EC 1
1 Asset acquisitions.
3 Feb 2020
Leading customs and freight forwarding solutions provider in Switzerland
2 Mar 2020
Customs solutions provider in Poland
None of the acquisitions completed during the period is individually significant. Accordingly, key information on these
acquisitions has been presented on an aggregated basis as set out below.
Details of the fair value of identifiable assets acquired, liabilities assumed, and goodwill determined are set out in the following
tables. The identification and fair value measurement of the assets and liabilities acquired are provisional and amendments
may be made to these figures up to 12 months following the date of acquisition if new information is obtained about facts
and circumstances that existed at the acquisition date and, if known, would have affected the measurement of the amounts
recognised as of that date.
Cash and cash equivalents
Trade receivables
Other current assets
Intangible assets
Property, plant and equipment
Trade and other payables
Deferred revenue
Current tax liabilities
Other current liabilities
Lease liabilities
Deferred tax liabilities
Fair value of net identifiable assets acquired (100%)
Total consideration paid and payable
Less: Fair value of net identifiable assets acquired
Goodwill
Total
acquisitions
$M
12.8
5.4
2.4
5.2
3.7
(1.9)
(4.2)
(0.9)
(0.9)
(2.5)
(1.6)
17.5
76.3
(17.5)
58.8
Goodwill
The total goodwill arising on acquisitions is $58.8m which relates predominantly to the key management, specialised know‑how
of the workforce, employee relationships, competitive position and service offerings that do not meet the recognition criteria as
an intangible asset at the date of acquisition. The total amount of goodwill expected to be deductible for tax purposes is $6.5m.
9 8
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 20. Business combinations and acquisition
of non-controlling interests (continued)
Consideration
Total upfront consideration was $48.2m (equity shares issued $3.0m and cash paid of $45.4m including $0.2m of foreign
exchange difference arising between the acquisition date and payment) with further contingent consideration payable
of $31.0m. Contingent consideration is based on a number of milestones including the successful integration of acquired
intellectual property and transfer of customers into CargoWise and in certain acquisitions performance in future periods based
on selected revenue and profitability targets of the acquisition. These targets take account of the performance expectations
of the acquired business in the context of their contribution across the Group. At acquisition, the discounted fair value of these
arrangements is $28.1m. These acquisitions included $12.8m of cash and cash equivalents acquired.
In addition to consideration paid, an additional $0.7m of debt like items were settled by the Group following the completion
of the acquisition and are recorded in the Consolidated statement of cash flows as investing activities, acquisition of businesses,
net of cash acquired.
The Group incurred acquisition‑related costs of $1.3m (FY19: $4.7m) to external service providers in addition to internal costs
which are recorded within general and administration expenses.
Contribution of acquisitions to revenue and profits
In total, these acquisitions contributed $10.3m to Group revenue and a reduction to net profit of $0.2m from their respective
dates of acquisition. If the acquisitions had been acquired from 1 July 2019, the contribution to the Group revenue would have
been $22.4m and a reduction to net profit of $0.8m.
Additional investment in Softship
During the year ended 30 June 2020, the Group made payments of $0.8m towards obligations under previously announced
share purchase agreements for the acquisition of Softship shares. This resulted in an increase in the acquisition reserve of $0.8m.
Acquisitions in 2019
During the year ended 30 June 2019, the Group completed the following fourteen acquisitions:
Business acquired
Date of acquisition
Description of acquisition
Ulukom
2 Jul 2018
Logistics and customs solutions provider in Turkey
SaaS Transportation 1 2 Jul 2018
Less Than Truckload (LTL) transport management solution provider in the
United States
Fenix
Pierbridge
2 Jul 2018
2 Jul 2018
Canadian customs management solutions provider
Parcel shipping transportation management solutions provider to medium and
large enterprises in the United States
Multi Consult 1
19 Sep 2018
Customs solutions, freight forwarding, local transport management solutions
and warehouse management solutions provider in Italy
Trinium 1
1 Oct 2018
Intermodal trucking transportation management systems provider in the United
States and Canada
Taric
Tankstream
CargoIT
2 Oct 2018
8 Oct 2018
1 Nov 2018
Customs management solutions provider in Spain
Learning management system provider in Australia
Customs management and logistics solutions provider in Sweden
SmartFreight
1 Nov 2018
Parcel and LTL shipping software provider
DataFreight
1 Nov 2018
Customs, freight forwarding and warehouse management software solutions
provider in the United Kingdom
Systema
1 Feb 2019
Customs management solutions provider in Norway
ContainerChain
1 Apr 2019
Container optimisation solutions provider to the shipping and landside logistics
communities in Asia Pacific, Europe and the United States
Xware
1 May 2019
Messaging integration solutions provider in Sweden
1 Asset acquisitions.
Containerchain is considered a significant acquisition during FY19. All other acquisitions completed during the period are not
considered individually significant and key information on these acquisitions has been presented on an aggregated basis.
9 9
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 20. Business combinations and acquisition
of non-controlling interests (continued)
The details of the fair value on acquisition of identifiable assets acquired, liabilities assumed, and goodwill determined are set
out in the following tables and are considered final, as the measurement period for acquisition accounting has closed.
Containerchain
$M
Other
acquisitions
$M
At
acquisition
$M
Revision in
FY20
$M
Cumulative
total
$M
Cash and cash equivalents
Trade receivables
Other current assets
Intangible assets
Property, plant and equipment
Trade and other payables
Deferred revenue
Current tax liabilities
Employee benefits
Other current liabilities
Borrowings
Deferred tax asset
Deferred tax liabilities
Fair value of net identifiable assets
acquired (100%)
Total consideration paid and payable
Less: Fair value of net identifiable assets
acquired
Goodwill
5.7
4.8
1.9
6.6
0.7
(7.1)
(0.2)
–
(0.9)
(1.0)
–
0.1
–
10.6
97.6
(10.6)
87.0
11.5
5.9
3.3
23.4
1.4
(5.0)
(5.5)
(4.7)
(1.3)
(0.8)
(0.2)
–
(4.5)
23.5
291.8
(23.5)
268.3
17.2
10.7
5.2
30.0
2.1
(12.1)
(5.7)
(4.7)
(2.2)
(1.8)
(0.2)
0.1
(4.5)
34.1
389.4
(34.1)
355.3
–
–
0.1
–
(0.4)
(0.1)
–
(0.1)
–
–
–
–
(0.6)
(1.1)
–
1.1
1.1
17.2
10.7
5.3
30.0
1.7
(12.2)
(5.7)
(4.8)
(2.2)
(1.8)
(0.2)
0.1
(5.1)
33.0
389.4
(33.0)
356.4
Update to provisional accounting
Goodwill in respect of acquisitions in the period ended 30 June 2019 has been increased by $1.1m following the update
to provisional accounting. This resulted in a corresponding reduction in net assets of $1.1m. Details of the update are provided
in the table above.
Containerchain
On 1 April 2019, the Group acquired a 100% interest in Containerchain. The total consideration paid was $97.6m, including $5.7m
cash acquired.
A valuation was undertaken in relation to the acquired intangibles with respect to trade names of $2.1m and intellectual property
of $4.3m. Intangibles valued at $0.2m were also acquired at date of acquisition.
The methodology used to derive the value of customer relationships was the multi-period excess earnings method (“MEEM”).
The MEEM considers the present value of net cash flows expected to be generated by the customer relationships, by excluding
any cash flows related to contributory assets.
The royalty relief method was used to value the trade name and intellectual property whereby it considers the discounted
estimated royalty payments that are expected to be avoided as a result of the patents or trademarks being owned.
The trade receivables balance represents the gross contractual amounts due of $5.0m, of which $0.2m was expected
to be uncollectible at the date of acquisition.
The goodwill is attributable predominantly to the key management, specialised know-how of the workforce, employee
relationships, competitive position and service offerings that do not meet the recognition criteria as an intangible asset at the
date of acquisition. The goodwill is not deductible for tax purposes.
Containerchain contributed $4.0m to Group revenue and a reduction to net profit of $0.1m from the date of acquisition. If it had
been acquired from 1 July 2018, the contribution to the Group revenue would have been $16.1m with a reduction to net profit
of $0.5m.
1 0 0
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 20. Business combinations and acquisition
of non-controlling interests (continued)
Other acquisitions
Goodwill
The total goodwill arising on other acquisitions is $268.3m which relates predominantly to the key management, specialised know‑how
of the workforce, employee relationships, competitive position and service offerings that do not meet the recognition criteria
as an intangible asset at the date of acquisition. The total amount of goodwill expected to be deductible for tax purposes is $33.1m.
Consideration
Total upfront consideration was $159.0m ($136.3m paid in cash and $22.7m in equity shares issued) with further contingent
and deferred consideration payable of $141.1m. Contingent consideration, consisting of fixed and variable components are
based on a number of milestones, including performance-related targets and the integration of the acquired businesses with
the Group such as the development of pre-existing capabilities into the Group’s existing product. Deferred consideration
represents the calculation of the final upfront consideration made subsequent to the completion date. At acquisition, the
discounted value of these arrangements is $132.8m. Other acquisitions included $11.5m of cash and cash equivalents acquired.
In addition to the consideration paid, an additional $1.0m of debt like items were settled by the Group following the completion
of the acquisitions and are recorded in Consolidated statement of cash flows as investing activities, acquisition of businesses,
net of cash acquired.
Contribution of acquisitions to revenue and profits
In total, these acquisitions contributed $45.3m to Group revenue and a reduction to net profit of $0.9m from their respective
dates of acquisition. If the acquisitions had been acquired from 1 July 2018, the contribution to the Group revenue would have
been $60.8m and nil change to net profit.
Additional investment in Softship
During the year ended 30 June 2019, the Group acquired all remaining shares of Softship through a squeeze‑out process
under German law, such that it is now a wholly-owned subsidiary. The squeeze-out process is expected to conclude in FY20.
$2.4m was paid for the additional shares, with $2.1m recorded as an increase in the acquisition reserve and $0.3m offset to the
remaining non-controlling interest balance.
Significant accounting policy
Business combinations occur where an acquirer obtains control over one or more businesses.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities
or businesses under common control. Under the acquisition method, the business combination will be accounted for from
the date that control is attained whereby the fair value of the identifiable assets acquired and liabilities (including contingent
liabilities) assumed is recognised (subject to certain limited exemptions).
Consideration transferred, including any contingent consideration is required to be measured at fair value on the date of acquisition
which takes into account the perspective of a ‘market participant’ and is a measurement of the amount that the Group would have
to pay to such a participant for them to assume the remaining obligations under the contracts to acquire these businesses.
Contingent consideration obligations are classified as equity or liability in accordance with AASB 132 Financial Instruments:
Presentation. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified
as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, other contingent consideration
is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration
are recognised in profit or loss. Where the accounting standards require that an obligation to be settled in shares is classified
as a liability, changes in measurement from the point of initial recognition through to when the milestone is achieved and the
number of shares to be granted is determined, are recognised in profit or loss. Subsequently, once the number of shares is fixed
and determined, any changes in the value of the shares to be granted between the milestone being achieved and the point
of settlement, are recognised in acquisition reserve within equity (see note 19).
The Group only has contingent consideration obligations classified as liabilities at the reporting date.
As a consequence any changes in the fair value of contingent consideration that do not meet the requirements above, such
as a subsequent renegotiation and settlement of the obligation, does not result in any change to the measurement of goodwill.
Instead, changes to the fair value of contingent consideration classified as a liability is recognised in the profit or loss.
Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss
immediately. Transaction costs are expensed as incurred except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts
are generally recognised in the Consolidated statement of profit or loss.
1 0 1
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 21. Employee benefits
Wages and salaries
Share-based payment expense
Defined contribution superannuation expense
Total employee benefit expense (Gross before capitalisation)
Annual leave and long service leave
Current
Annual leave
Long service leave
Non-current
Long service leave
Total annual leave and long service leave
Significant accounting policies
2020
$M
241.2
17.2
12.5
270.9
2020
$M
15.0
3.2
18.2
1.8
1.8
20.0
2019
$M
177.0
10.9
10.7
198.5
2019
$M
10.0
3.1
13.1
1.4
1.4
14.5
Short-term employee benefits
Short‑term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly within
12 months after the end of the annual reporting period in which the employees render the related service, including wages,
salaries and sick leave. Short‑term employee benefits are measured at the (undiscounted) amounts expected to be paid
when the obligation is settled.
The Group’s obligations for short‑term employee benefits such as wages, salaries and sick leave are recognised as a part of current
trade and other payables in the Consolidated statement of financial position. The Group’s obligations for employees’ annual leave
and long service leave entitlements are recognised as employee benefits in the Consolidated statement of financial position.
Long-term employee benefits
Provision is made for employees’ long service leave and not expected to be settled wholly within 12 months after the end of the
annual reporting period in which the employees render the related service. Long‑term employee benefits are measured at the
present value of the expected future payments to be made to employees.
Expected future payments incorporate anticipated future wage and salary levels, duration of service and employee departures
and are discounted at rates determined by reference to market yields at the end of the reporting period on corporate bonds
that have maturity dates that approximate the terms of the obligations. Any remeasurements for changes in assumptions
of obligations for long‑term employee benefits are recognised in profit or loss in the periods in which the changes occur.
The Group’s obligations for long‑term employee benefits are presented as non‑current employee benefits in its Consolidated
statement of financial position, except where the Group does not have an unconditional right to defer settlement for at least
12 months after the end of the reporting period, in which case the obligations are presented as current employee benefits.
Defined contribution superannuation benefits
All obligations for contributions in respect of employees’ defined contribution superannuation benefits are recognised
as an expense as the related service is provided.
1 0 2
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 21. Employee benefits (continued)
Share-based payment transactions
The Company has a number of share-based payment arrangements that were granted to employees during FY20. These related
to shares or share rights granted as part of employee remuneration packages (base remuneration and performance bonus),
Christmas bonuses and arrangements following completion of business acquisitions. The awards were granted on various
dates in FY20 based on a specified monetary value to each recipient and a share price at the time the offer is determined.
The fair value of these arrangements was deemed to be the function of the number of share rights granted and the share price
at grant date. Share rights granted may vest in predetermined tranches. Share rights were also granted as part of a matching
process under the employee ‘invest as you earn’ programme which operated during the year. Vesting is dependent on
continued employment with the Group. The fair value of the grant is recognised in profit or loss to match to each employee’s
service period until vesting. Upon cessation of employment unvested rights are forfeited. The cost recognised in prior periods
in respect of forfeited rights is credited to profit or loss.
The total value of share‑based payments recognised in the share‑based payment reserve during the year was $17.2m
(2019: $10.9m) of which $13.3m was recognised in profit and loss and $3.9m was capitalised as part of directly attributable
development costs which are required to be recognised as internally developed intangibles (refer note 9).
1 0 3
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 22. Key management personnel transactions
Key management personnel (“KMP”) compensation
The total remuneration of the KMP of the Company are as follows:
Short‑term employee benefits
Post‑employment benefits
Other long‑term benefits
Share-based payments
Total KMP compensation
2020
$000
3,293
158
606
1,064
5,122
2019
$000
3,251
172
468
771
4,662
Short‑term employee benefits comprise salary, fringe benefits and cash bonuses awarded. Post‑employment benefits consist
of superannuation contributions made during the year. Other long‑term benefits comprise accruals for annual leave and long service
leave. Share-based payments represent the expensing over the period to vesting of the fair value at grant date of share rights granted.
KMP transactions
A key management person (“KMP”), holds positions in other companies that result in them having control or significant influence
over these companies. Some of these companies transacted with the Group during the year. The terms and conditions of these
transactions were no more favourable than those available, or which might reasonably be expected to be available, in similar
transactions with non‑KMP related companies on an arm’s length basis. The aggregate value of transactions and outstanding
balances related to Richard White (CEO) and entities over which he has control or significant influence were as follows:
Director
Transactions
R White
R White
R White
R White
R White
R White
Office leases 1
Staff training facility 2
Office services agreement 3
Company apartments rent 4
US data centre services 5
Plant and equipment 5
Transaction values
for year ended 30 June
Balance outstanding
as at 30 June
2020
$000
1,583
102
(18)
73
1,000
53
2019
$000
2020
$000
1,116
218
(18)
170
802
–
– 1
–
–
–
–
–
2019
$000
(250)
–
–
–
–
–
The above transactions are made at normal market rates and approved by the Related Party Committee.
1 The Group leases two offices and utilised storage space owned by R White. During the year, the Group renewed its lease for an
office property in Chicago, USA which has a term ending September 2024 and finalised a lease for an office property in Alexandria,
Australia which has a term ending April 2025. The annual rents for the two offices are $0.8m and $2.5m respectively, both leases
were determined in accordance with advice from independent property valuers.
2 Staff training courses run by a third-party service provider are held at a facility owned by R White. The charge for usage of the facility
is embedded in the service provider fees.
3 The Group provides office accommodation and related services to a company controlled by R White.
4 The Group had agreements for apartment leases. During the year the Group exited these leases.
5
In preparation to close out certain related party transactions the Group sold new property fit‑out assets in the Alexandria office
at cost for $1.469m to R White and purchased used US data centre equipment for $1.522m from R White and terminated the US data
centre services agreement. The value of the US data centre assets was appraised by a third-party valuation expert.
1 0 4
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 23. Auditor’s remuneration
Audit and assurance related services
KPMG Australia
Audit and review of the financial reports
Total audit and assurance related services KPMG Australia
Audit and assurance related services
KPMG overseas and non-KPMG overseas
Audit of statutory financial reports KPMG overseas
Audit of statutory financial reports by non‑KPMG firms
Total audit and assurance related services KPMG overseas and non‑KPMG overseas
Total audit and assurance related services
Other services
KPMG Australia
Other assurance, advisory and taxation services
Total other services KPMG Australia
Other services
KPMG overseas and non-KPMG
Other assurance, advisory and taxation services ‑ KPMG overseas
Other assurance, advisory and taxation services ‑ non‑KPMG
Total other services KPMG overseas and non‑KPMG
Total other services
Total auditor’s remuneration
2020
$000
2019
$000
863.2
863.2
752.4
752.4
769.6
65.7
835.3
1,698.5
474.3
–
474.3
1,226.7
5.0
5.0
7.5
14.7
22.2
27.2
15.0
15.0
57.9
–
57.9
72.9
1,725.7
1,299.6
1 0 5
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 24. Reconciliation of net cash flows from operating activities
Cash flow reconciliation
Reconciliation of net profit after tax to net cash flows from operating activities:
Profit after tax from continuing operations
Net profit after tax
Adjustments to reconcile profit after tax to net cash flows from operating activities:
Share-based payment expense
Depreciation
Capitalisation of share-based payment expense and depreciation
Amortisation
Doubtful debt expense
Net finance (income)/costs
Exchange differences
Hyperinflation adjustment
Change in assets and liabilities:
Increase in trade receivables
(Increase)/decrease in other current and non-current assets
Increase in trade and other payables
Increase in current tax liabilities
Increase in deferred tax payable
Increase in other liabilities
(Decrease)/increase in deferred revenue
Increase in provisions
Net cash flows from operating activities
2020
$M
2019
$M
160.8
160.8
17.2
19.6
(6.5)
29.1
1.4
(101.3)
1.2
–
(4.6)
(8.4)
11.1
0.7
3.9
0.7
(0.7)
5.7
129.9
54.1
54.1
10.9
8.4
(3.4)
19.4
0.4
3.8
0.7
(0.1)
(11.9)
1.4
1.0
0.1
8.3
14.6
2.7
2.1
112.5
1 0 6
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 25. Segment information
The Group manages its operations as a single business operation and there are no separate parts of the Group that qualify
as operating segments under AASB 8 Operating Segments. The CEO (Chief Operating Decision Maker or “CODM”) assesses
the financial performance of the Group on an integrated basis only and accordingly, the Group is managed on the basis
of a single segment.
Information presented to the CODM on a monthly basis is categorised by type of revenue, recurring and non-recurring.
This analysis is presented below:
Continuing operations
Recurring On-Demand licence revenue
Recurring OTL maintenance revenue
OTL and support services
Total revenue
Segment profit after tax
Fair value gain on contingent consideration 1
Interest unwind on contingent consideration, net of tax 1
Segment profit after tax excluding fair value gain on contingent consideration
2020
$M
309.2
72.8
47.4
429.4
160.8
(111.0) 1
2.9 1
52.6
2019
$M
249.8
57.8
40.7
348.3
54.1
(1.6)
–
52.6
1 Realised upon the close out of earnouts relating to 22 acquisitions as disclosed by the Company in May and July 2020, along with
adjustments in 1H20.
In general, a large amount of revenue is generated by customers that are global, from transactions that cross multiple countries
and where the source of revenue can be unrelated to the location of the users using the software. Accordingly, the Group
is managed as a single segment. The amounts for revenue by region in the following table are based on the invoicing location
of the customer. Customers can change their invoicing location periodically. The CODM does not review or assess financial
performance on a geographical basis.
There were no customers contributing more than 10% of revenue during the current and comparative period.
Geographic information
Revenue generated by location of customer (invoicing location):
Asia Pacific
Americas
Europe, Middle East and Africa (“EMEA”)
Total revenue
Non-current assets by geographic location:
Asia Pacific
Americas
EMEA
Total non-current assets
2020
$M
134.5
128.9
166.1
429.4
2020
$M
458.7
244.8
264.2
967.6
2019
$M
102.3
102.6
143.3
348.3
2019
$M
368.0
220.0
218.8
806.8
1 0 7
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 26. Financial instruments
(i) Recognition and initial measurement
Trade receivables are initially recognised when customers are invoiced. All other financial assets and financial liabilities are
initially recognised when the Group becomes a party to the contractual obligations.
A financial asset (unless it is a trade receivable) or financial liability is initially measured at fair value plus transaction costs
that are directly attributable to its acquisition. Trade receivables are initially measured at the transaction price.
(ii) Derecognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from a financial asset expire, or it
transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards
of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the
risks and rewards of ownership and it does not retain control of the financial asset.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group
also derecognises a financial liability when its terms are modified and the cash flows of the modified financial liability are
substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid
(including any non‑cash assets transferred or liabilities assumed) is recognised in profit or loss.
(iii) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the Consolidated statement of financial
position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either
to settle them on a net basis or to realise the asset and settle the liability simultaneously.
(iv) Derivative financial instruments and hedge accounting
The Group holds derivative financial instruments to hedge some of its foreign currency risk exposures.
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and
changes therein are generally recognised in profit or loss.
The Group designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly
probable forecast transactions arising from changes in foreign exchange rates.
At inception of designated hedging relationships, the Group documents the risk management objective and strategy for
undertaking the hedge. The Group also documents the economic relationship between the hedged item and the hedging
instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset
each other.
Cash flow hedges
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the
derivative is recognised in other comprehensive income (OCI) and accumulated in the cash flow hedge reserve. The effective
portion of changes in the fair value of the derivative that is recognised in OCI is limited to the cumulative change in fair value
of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of changes in the
fair value of the derivative is recognised immediately in profit and loss.
The Group designates only the change in fair value of the spot element of forward exchange contracts as the hedging
instrument in cash flow hedging relationships. The change in fair value of the forward element of forward exchange contracts
(forward points) is separately accounted for as a cost of hedging and recognised in a hedging reserve within equity.
When the hedged forecast transaction subsequently results in the recognition of a non‑financial item, the amount accumulated
in the hedging reserve and the cost of hedging reserve is included directly in the initial cost of the non‑financial item when
it is recognised.
For all other hedged forecast transactions, the amount accumulated in the hedging reserve and the cost of hedging reserve
is reclassified to profit or loss in the same period or periods during which the hedged expected future cash flows affect profit
or loss.
1 0 8
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 26. Financial instruments (continued)
If the hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is
exercised, then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued,
the amount that has been accumulated in the hedging reserve remains in equity until, for a hedge of a transaction resulting
in the recognition of a non‑financial item, it is included in the non‑financial item’s cost on its initial recognition or, for other cash
flow hedges, it is reclassified to profit or loss in the same period or periods as the hedged expected future cash flows affect
profit or loss.
If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging
reserve and the hedging reserve are immediately reclassified to profit or loss.
(v) Credit impaired trade receivables
At each reporting date, the Group assesses whether trade receivables are credit-impaired. A trade receivable is ‘credit-impaired’
when one or more events that have a detrimental impact on the estimated future cash flows have occurred.
Evidence that a trade receivable is credit-impaired includes the following observable data:
– Significant financial difficulty of the debtor;
– A breach of contract such as a default; or
– It is probable that the debtor will enter bankruptcy or other financial reorganisation.
(vi) Measurement of fair values
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly
(i.e. unforced) transaction between independent, knowledgeable and willing market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair
value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair
values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques.
These valuation techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the
market with the greatest volume and level of activity for the asset of liability), or, in the absence of such a market, the most
advantageous market available to the entity at reporting date (i.e. the market that maximises the receipts from the sale of the
asset or minimises the payment made to transfer the liability, after taking into account transaction costs).
For non‑financial assets, the fair value measurement also takes into account a market participant’s ability to use the asset
in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use.
The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment
arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial instrument,
by reference to observable market information where such instruments are held as assets. Where this information is not available,
other valuation techniques are adopted and where significant, are detailed in the respective note to the financial statements.
Fair value hierarchy
Significant valuation issues are reported to the Audit Committee.
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values
are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
– Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
– Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
– Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest
level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the
change has occurred.
1 0 9
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 26. Financial instruments (continued)
The following tables detail the Group’s assets and liabilities, measured or disclosed at fair value, using a three level hierarchy
as detailed above,based on the lowest level of input that is significant to the entire fair value measurement.
Group – 2020
Assets
Forward foreign exchange contracts
Total assets
Liabilities
Contingent consideration
Total liabilities
Group – 2019
Liabilities
Contingent consideration
Total liabilities
Fair value of assets
Level 1
$M
Level 2
$M
Level 3
$M
–
–
–
–
4.6
4.6
–
–
–
–
54.2
54.2
Level 1
$M
Level 2
$M
Level 3
$M
Total
$M
4.6
4.6
54.2
54.2
Total
$M
–
–
–
–
226.9
226.9
226.9
226.9
Hedging instruments
The Group has recognised an asset measured at fair value in relation to derivative financial instrument (i.e., forward foreign
exchange contracts – cash flow hedges). The derivative financial instrument is designated as a financial asset and deemed
to be a Level 2 measurement of fair value. Changes in the fair value of derivative financial instrument are recognised in ‘other
comprehensive income’. A reconciliation of movements in derivative financial assets allocated to Level 2 is provided below.
Opening balance
New contracts entered during the year
Closing balance
Fair value of liabilities
2020
$M
–
4.6
4.6
Contingent consideration
The Group has recognised liabilities measured at fair value in relation to contingent consideration arising out of acquisitions
made by the Group. The contingent consideration is designated as a financial liability and deemed to be a Level 3 measurement
of fair value. It has been discounted accordingly based on estimated time to complete a number of milestones. As part of the
assessment at each reporting date, the Group has considered a range of reasonably possible changes for key assumptions
and has not identified instances that could cause the fair value of contingent consideration to change significantly. Changes
in the fair value of contingent consideration after the acquisition date are recognised in profit or loss, unless the changes are
measurement period adjustments. Refer note 20.
1 1 0
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 26. Financial instruments (continued)
A reconciliation of the movements in recurring fair value measurements allocated to Level 3 and the end of the measurement
period of the hierarchy is provided below.
Opening balance
Change in fair value estimate 1
Equity payments
Cash payments
Additions
Unwinding interest
Foreign exchange differences
Closing balance
2020
$M
226.9
(111.0)
(86.4)
(22.8)
28.1
10.0
9.4
54.2
2019
$M
101.2
(1.6)
(0.7)
(17.2)
130.3
5.9
9.0
226.9
1 The effect on the profit or loss is due to unwinding of earnout interest on acquisitions, change in fair value estimate and a portion
of foreign exchange as indicated in the above reconciliation. The change in fair value estimates includes the renegotiation of 22
acquisitions’ earnouts as previously disclosed in ASX announcements in May and July 2020.
Key accounting estimates and judgements – contingent consideration
Contingent Consideration is measured at fair value which requires management to estimate the amount likely to be paid in the
future and the timing of the payment, to assess the present value using appropriate discount rates. The determination of fair
value involves judgement about the probability of achievement of performance metrics of acquired business, which include
both financial and non‑financial results.
Financial risk management objectives and policies
The Group has exposure to the following risks arising from financial instruments:
– credit risk;
– liquidity risk; and
– market risk.
Risk management framework
(a)
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.
The Board are responsible for developing and monitoring the Group’s risk management policies. The Board has delegated
day-to-day responsibility for implementation of the risk management framework to the risk committee. The risk committee
is a management committee comprising senior executives and is chaired by the CEO. The aim of the risk committee is to
provide our Board with assurance that the major business risks are being identified and consistently assessed and that plans
are in place to address risk.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate
risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed
regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management
standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees
understand their roles and obligations.
The Board oversees how management monitors compliance with the Group’s risk management policies and procedures and
reviews the adequacy of the risk management framework in relation to risks faced by the Group.
The Board has approved the establishment of an internal audit function and an external service provider has been engaged
since 30 June 2020.
1 1 1
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 26. Financial instruments (continued)
Financial risk management objectives and policies (continued)
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer fails to meet its contractual obligations, and arises principally
from the Group’s receivables from customers.
The Group’s standard payment and delivery terms and conditions are that payment is generally due within 30 days on receipt
of any invoice and the preferred payment options are by direct debit from a bank account or credit card. No limits are used
and the Group’s receivables are carefully managed by the credit management team. This role includes establishing customer
deposits (refer to note 16).
Trade receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management
also considers the factors that may influence the credit risk of its customer base including the default risk of the industry and
country in which customers operate.
The maximum exposure to credit risk at balance date to recognised financial assets, is the carrying amount, net of any provision
for impairment of those assets, as disclosed in the Consolidated statement of financial position. These predominantly relate
to trade receivables. Refer to note 12 for further details.
Cash and cash equivalents
The Group held cash and cash equivalents of $223.7m at 30 June 2020 (2019: $260.1m).
Liquidity risk
(c)
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities
that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far
as possible, that it will always have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group manages liquidity risk
by monitoring net cash balances, actual and forecast operating cash flows and unutilised debt facilities.
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts of contractual
cash flows are gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements.
2020
Financial liabilities
Contingent consideration 1
Lease liabilities
Trade payables
Other payables and accrued expenses
Other liabilities
Total
Contractual cash flow
Carrying
amount
$M
Total
$M
Less than
1 year
$M
1–5 years
$M
14.8
45.7
19.9
27.9
30.0
138.4
(15.4)
(46.0)
(19.9)
(27.9)
(30.0)
(139.3)
(7.4)
(12.0)
(19.9)
(27.9)
(28.5)
(95.7)
(8.0)
(34.1)
–
–
(1.5)
(43.6)
1 The total carrying value of contingent consideration is $54.2m which includes $39.4m to be settled for an equivalent value of shares
once the milestone is achieved and becomes payable and $14.8m in the table above, which will be cash settled.
1 1 2
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 26. Financial instruments (continued)
Financial risk management objectives and policies (continued)
2019
Financial liabilities
Contingent consideration 1
Bank loans
Finance lease liabilities
Trade payables
Other payables and accrued expenses
Other liabilities
Total
Contractual cash flow
Carrying
amount
$M
Total
$M
Less than
1 year
$M
1–5 years
$M
209.3
0.7
0.5
7.8
27.4
28.9
274.6
(218.1)
(0.8)
(0.5)
(7.8)
(27.4)
(28.9)
(283.5)
(66.3)
(0.3)
(0.2)
(7.8)
(27.4)
(26.9)
(128.8)
(151.8)
(0.5)
(0.2)
–
–
(2.1)
(154.6)
1 The total carrying value of contingent consideration is $226.9m which includes $17.6m to be settled for an equivalent value of shares
once the milestone is achieved and becomes payable and $209.3m in the table above, which will be cash settled.
Bank debt facilities
An unsecured syndicated facility was executed on 24 December 2018 between Westpac Banking Corporation, The Hongkong
and Shanghai Banking Corporation Limited and Citibank, N.A. The facility has a total syndicated commitment of $190.0m, plus
an additional $200.0m accordion facility, and matures in March 2022. The facility is undrawn as at 30 June 2020.
Finance costs are broken down as follows:
Unwinding interest on contingent consideration
Unwinding interest on lease liabilities
Capitalisation of interest on lease liabilities
Interest expense and facility fees
Other
Total finance costs
2020
$M
10.0
1.8
(0.4)
1.3
0.1
12.9
2019
$M
5.9
–
–
1.4
–
7.3
1 1 3
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 26. Financial instruments (continued)
Financial risk management objectives and policies (continued)
(d) Market risk
Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates and equity prices will
adversely affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk
management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
Currency risk
Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in foreign exchange rates. The source and nature of this risk arise from operations and translation risks.
The Company’s reporting currency is Australian dollars. However, international operations give rise to an exposure to changes
in foreign exchange rates as the majority of revenue from outside Australia is denominated in currencies other than Australian
dollars, most significantly US dollars (“USD”), pounds sterling (“GBP”), and euros (“EUR”).
The Group has exposures surrounding foreign currencies due to non-functional currency transactions within operations
in overseas jurisdictions.
The Group has hedged less than 10% of its estimated foreign currency exposure in respect of forecast sales over the following
12 months. The Group uses forward exchange contracts to hedge its currency risk, most with a maturity of less than one year
from the reporting date. These contracts are generally designated as cash flow hedges.
The Group designates the spot element of forward foreign exchange contracts to hedge its currency risk and applies a hedge
ratio of 1:1. The forward elements of forward exchange contracts are excluded from the designation of the hedging instrument
and are separately accounted for as a cost of hedging, which is recognised in equity in a cash flow hedge reserve. The Group’s
policy is for the critical terms of the forward exchange contracts to align with the hedged item.
The Group determines the existence of an economic relationship between the hedging instrument and hedged item based
on the currency, amount and timing of their respective cash flows. The Group assesses whether the derivative designated
in each hedging relationship is expected to be and has been effective in offsetting changes in cash flows of the hedged item
using the hypothetical derivative method.
In these hedged relationships, the main sources of the ineffectiveness are the effect of the counterparties and the Group’s own
credit risk on the fair value of the forward foreign exchange contracts, which is not reflected in the change in the fair value of the
hedged cash flows attributable to the change in exchange rates; and changes in the timing of the hedged transactions.
Details of total outstanding forward foreign exchange contracts (cash flow hedges) as at 30 June 2020.
Cash flow hedge – outstanding contracts
Average
exchange
rate
Contract
value
LC
(Millions)
Contract
value
AUD
(Millions)
Asset
AUD
(Millions)
Liability
AUD
(Millions)
0.5421
0.5395
0.5950
0.5953
7.0
2.0
9.0
10.3
2.1
12.4
12.9
3.7
16.6
17.4
3.5
20.9
1.4
0.4
1.8
2.3
0.5
2.8
–
–
–
–
–
–
EUR
0–12 months
12–24 months
Total
USD
0–12 months
12–24 months
Total
LC – Local currency.
1 1 4
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 26. Financial instruments (continued)
Financial risk management objectives and policies (continued)
A reasonably possible strengthening (weakening) of the USD or EUR weighted average exchange rate against AUD at 30 June 2020
would have affected the measurement of financial instruments denominated in a foreign currency and affected profit and
equity by the amounts shown below. This analysis assumes hedge designations as at 30 June 2020 remain unchanged and that
all designations are effective.
Equity
(pre-tax)
Profit
(pre-tax)
Foreign currency
forward contracts
Average
exchange
rate
+10%
-10%
Change (+10%)
AUD
(Millions)
Change (-10%)
AUD
(Millions)
Change (+10%)
AUD
(Millions)
Change (-10%)
AUD
(Millions)
AUD/EUR
AUD/USD
0.5415
0.5951
0.5957
0.6546
0.4874
0.5356
0.2
0.3
(0.2)
(0.3)
–
–
–
–
Forward contracts with maturity dates greater than 12 months hedge revenues for April 2020 to June 2020.
A reasonably possible strengthening (weakening) of the USD, GBP or EUR against all other currencies at 30 June 2020 would
have affected the measurement of financial instruments denominated in a foreign currency and affected profit or loss and
equity by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant
and ignores any impact of forecast sales and purchases.
Profit or loss
Equity
30 June 2020
LC
(Millions)
Change (+10%)
LC
(Millions)
Change (-10%)
LC
(Millions)
Change (+10%)
LC
(Millions)
Change (-10%)
LC
(Millions)
USD
Net trade receivables/(payables) exposure
GBP
Net trade receivables/(payables) exposure
EUR
Net trade receivables/(payables) exposure
7.7
0.3
1.9
(0.7)
–
(0.2)
0.9
–
0.2
–
–
–
–
–
–
Profit or loss
Equity
30 June 2019
LC
(Millions)
Change (+10%)
LC
(Millions)
Change (–10%)
LC
(Millions)
Change (+10%)
LC
(Millions)
Change (–10%)
LC
(Millions)
8.6
0.2
1.6
(0.8)
–
(0.1)
1.0
–
0.2
–
–
–
–
–
–
USD
Net trade receivables/(payables) exposure
GBP
Net trade receivables/(payables) exposure
EUR
Net trade receivables/(payables) exposure
LC – Local currency.
Interest rate risk and cash flow sensitivity
At 30 June 2020, the Group held no interest bearing financial liabilities (i.e. bank loans) (2019: $0.7m) and held interest bearing
financial assets (i.e. cash and short‑term deposits) of $223.7m (2019: $260.1m).
A reasonably possible change of 100 basis points in interest rates at the reporting date would increase the profit or loss after
tax by $1.9m (2019: increase by $0.6m). This analysis assumes that all other variables, in particular foreign currency exchange
rates, remain constant.
1 1 5
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 27. Group information
Parent entity
WiseTech Global Limited
Subsidiaries
Candent Australia Pty Ltd
Cargo Community Network Pty Ltd
CMS Transport Systems Pty Ltd
Compdata Technology Services Pty Ltd
Container Chain Pty Ltd
Containerchain Australia Pty Ltd
Containerchain Australia Holdings Pty Ltd
Containerchain Unit Trust
IFS Global Holdings Pty Ltd
IFS Global Pty Ltd
IFS NZ Pty Ltd
Interactive Freight Systems Pty Ltd
Maximas Pty Ltd
Microlistics International Pty Ltd
Microlistics Pty Ltd
Tankstream Systems Pty Ltd
Translogix (Australia) Pty Ltd
WiseTech Academy Pty Ltd
WiseTech Global (Australia) Pty Ltd
WiseTech Global (Europe) Holdings Pty Ltd
WiseTech Global (Financing) Pty Ltd
Wisetech Global (Licensing) Pty Ltd
Wisetech Global (Trading) Pty Ltd
WiseTech Global Holdings Pty Ltd
WiseTech Global (Holdings 2) Pty Ltd
WiseTech Global Limited Employee Share Trust
WiseTech Global (Argentina) S.A.U.
Intris N.V.
Bysoft Solucoes em Sistemas Para Comercio Exterior Ltda
CargoWise Brasil Solucoes em Sistemas Ltda
Fenix Data Systems Inc.
WiseTech Global (CA) Ltd
1 1 6
Country of
incorporation
Australia
Country of
incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Argentina
Belgium
Brazil
Brazil
Canada
Canada
% Equity interest
2020
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
2019
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
–
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 27. Group information (continued)
% Equity interest
Subsidiaries
Softcargo Chile SpA
WiseTech Global (China) Information Technology Ltd
Pierbridge Finland Oy
EasyLog SAS
CargoWise GmbH
Containerchain Germany GmbH
Softship GmbH (formerly Softship AG)
znet group GmbH
Containerchain Hong Kong Ltd
WiseTech Global (HK) Ltd
WiseTech Global (India) Private Limited
ABM Data Systems Ltd
Cargo Community Systems Ltd
CargoWise (Ireland) Ltd
A.C.O. Informatica S.r.l.
WiseTech Global (Japan) K.K.
Containerchain Malaysia Sdn Bhd
Maxframe Technologies Sdn Bhd
Cargoguide International B.V.
Containerchain Netherlands B.V.
LSP Solutions B.V.
Containerchain New Zealand Ltd
WiseTech Global (NZ) Ltd
Systema AS
Softship Inc.
Candent Singapore Pte Ltd
Containerchain Global Holdings Pte Ltd
Containerchain (Singapore) Pte Ltd
Softship Dataprocessing Pte Ltd
WiseTech Global (SG) Pte Ltd
Compu‑Clearing (Pty) Ltd
Compu‑Clearing Drome Road Property (Pty) Ltd
Compu-Clearing Outsourcing Ltd
Core Freight Systems (Pty) Ltd
Country of
incorporation
Chile
China
Finland
France
Germany
Germany
Germany
Germany
Hong Kong
Hong Kong
India
Ireland
Ireland
Ireland
Italy
Japan
Malaysia
Malaysia
Netherlands
Netherlands
Netherlands
New Zealand
New Zealand
Norway
Philippines
Singapore
Singapore
Singapore
Singapore
Singapore
South Africa
South Africa
South Africa
South Africa
2020
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
2019
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
–
100.0
100.0
100.0
100.0
100.0
100.0
100.0
95.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
1 1 7
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 Country of
incorporation
South Africa
South Africa
South Africa
South Africa
South Korea
South Korea
Spain
Spain
Spain
Sweden
Sweden
Switzerland
Taiwan
Thailand
Turkey
UAE
UK
UK
UK
UK
Uruguay
Uruguay
USA
USA
USA
USA
USA
USA
% Equity interest
2020
100.0
100.0
–
–
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
–
100.0
100.0
100.0
100.0
100.0
2019
100.0
100.0
100.0
100.0
–
100.0
100.0
100.0
100.0
100.0
100.0
–
100.0
100.0
100.0
100.0
100.0
100.0
–
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Subsidiaries
Drome Road Share Block (Pty) Ltd
Wisetechglobal (Pty) Ltd
EDI Enterprise (Pty) Ltd
Three DX Property and Investments (Pty) Ltd
Ready Korea Co., Ltd.
WiseTech Global LLC
Taric Canarias S.A.
Taric S.A.U.
Taric Trans S.L.
CargoIT i Skandinavien AB
X Ware Aktiebolag
Sisa Studio Informatica SA
WiseTech Global (Taiwan) Ltd
Containerchain (Thailand) Pte Ltd
Ulukom Bilgisayar Yazılım Donanım Danışmanlık ve Ticaret A.Ş.
WiseTech Global FZ‑LLC
LSI – Sigma Software Limited
Pierbridge Ltd
WiseTech Global (International) Ltd
WiseTech Global (UK) Ltd
Eyalir S.A.
Ilun S.A.
Containerchain USA Inc.
Pierbridge Holdings Inc.
Pierbridge Inc.
Planet Traders Inc.
Softship America Inc.
WiseTech Global (US) Inc.
1 1 8
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 28. Deed of Cross Guarantee
Pursuant to the relief provided under ASIC Corporations (Wholly‑owned Companies) Instrument 2016/785, the nine wholly‑owned
subsidiaries listed below are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement
of financial reports, and Directors’ reports.
In order to receive the benefit of the relief provided under the Instrument, the Company and each subsidiary must be a party
to the Deed of Cross Guarantee. The effect of the Deed of Cross Guarantee is that each party guarantees to each creditor
of each other party, payment in full of any debt in the event of winding up of another party to the Deed of Cross Guarantee
under certain provisions of the Corporations Act 2001. The Company, WiseTech Global (Trading) Pty Ltd and WiseTech Global
(Australia) Pty Ltd entered into the Deed of Cross Guarantee on 20 June 2017. On 15 June 2018, WiseTech Global (Licensing) Pty
Ltd, Microlistics International Pty Ltd and Microlistics Pty Ltd signed an Assumption Deed for each of them to be joined to the
Deed of Cross Guarantee. On 6 June 2019, Translogix (Australia) Pty Ltd, WiseTech Global (Financing) Pty Ltd, WiseTech Global
(Europe) Holdings Pty Ltd and WiseTech Academy Pty Ltd signed an Assumption Deed for each of them to be joined to the Deed
of Cross Guarantee.
The above companies represent a ‘Closed Group’ for the purposes of the Instrument.
The Consolidated statement of profit or loss and other comprehensive income and Consolidated statement of financial position
of the entities that are members of the Closed Group after eliminating all transactions between members of the Closed Group
are as follows:
Profit from continuing operations before income tax
Income tax expense
Profit after tax from continuing operations
Net profit for the period
Retained earnings at the beginning of the period
Dividend declared and paid
Share premium – retained earnings
Vesting of share rights
Tax benefit from equity remuneration
Retained earnings at the end of the period
Closed Group
2020
$M
132.3
(25.3)
106.9
106.9
130.2
(11.6)
–
(17.5)
5.2
213.3
2019
$M
79.8
(21.8)
58.0
58.0
87.7
(9.5)
–
(8.6)
2.6
130.2
1 1 9
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 28. Deed of Cross Guarantee (continued)
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Current tax receivables
Other current assets
Intercompany receivables
Total current assets
Non-current assets
Intangible assets
Property, plant and equipment
Derivative financial instruments
Investments in subsidiaries
Other non-current assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Deferred revenue
Employee benefits
Other current liabilities
Total current liabilities
Non-current liabilities
Lease liabilities
Employee benefits
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Retained earnings
Reserves
Total equity
Closed Group
2020
$M
2019
$M
165.6
29.8
3.7
2.0
12.9
16.6
207.8
22.4
–
2.5
3.5
13.4
230.7
249.6
189.4
27.3
0.9
693.9
1.1
912.5
1,143.2
18.6
3.8
5.3
11.3
25.6
64.6
14.4
1.7
42.6
28.5
87.2
151.8
991.4
779.8
213.3
(1.7)
991.4
184.4
6.0
–
528.5
9.6
728.5
978.1
10.0
–
4.2
8.6
51.2
74.0
–
1.4
33.1
79.1
113.5
187.5
790.6
668.5
130.2
(8.1)
790.6
The Group has initially applied AASB 16 Leases at 1 July 2019, using the modified retrospective approach. Refer note 3. Under
this approach, comparative information is not restated and the cumulative effect is recognised in retained earnings at the date
of initial application.
1 2 0
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 29. Parent entity information
As at, and throughout the financial year ended, 30 June 2020 the parent entity of the Group was WiseTech Global Limited.
Result of parent entity
Net profit for the year
Total comprehensive income for the year
Financial position of parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Total equity of parent entity comprising:
Share capital
Reserves
Retained earnings
Total equity
2020
$M
48.8
48.8
2020
$M
537.7
1,097.3
39.2
103.0
994.3
2020
$M
779.8
(2.7)
217.3
994.3
2019
$M
59.2
59.2
2019
$M
508.8
833.5
16.0
46.2
787.3
2019
$M
668.5
(8.3)
127.2
787.3
(a) Parent entity contingent liabilities
The parent entity has provided guarantees for the future settlement of a portion of deferred consideration (cash and shares)
recognised in subsidiaries of the Group. There are no other contingent liabilities as at 30 June 2020 or 30 June 2019.
(b)
Parent entity capital commitments for acquisition of property,
plant and equipment
The parent entity had no capital commitments as at 30 June 2020 or 30 June 2019.
(c) Parent entity guarantees in respect of the debts of its subsidiaries
The parent entity has entered into a Deed of Cross Guarantee. Refer to note 28 for further details.
1 2 1
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020
30. Other policies and disclosures
(a) Principles of consolidation
The Consolidated financial statements incorporate all of the assets, liabilities and results of WiseTech Global Limited and all
of the subsidiaries. Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the entity.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the
date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control
ceases. When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any
related non‑controlling interest and other components of equity. Any resulting gain or loss is recognised in profit or loss.
Any interest retained in the former subsidiary is measured at fair value when control is lost.
Intercompany transactions, balances and unrealised gains or losses on transactions between Group entities are fully eliminated
on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure
uniformity of the accounting policies adopted by the Group.
(b) Foreign currency transactions and balances
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at the exchange rate at the reporting date. Non-monetary items
measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items
measured at fair value in a foreign currency are translated to the functional currency at the exchange rate when fair values
were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in equity
as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income
to the extent that the underlying gain or loss is recognised in other comprehensive income; otherwise, the exchange difference
is recognised in profit or loss.
Group companies
The financial results and position of foreign operations whose functional currency is different from the Group’s presentation
currency are translated as follows:
– assets and liabilities including goodwill and fair value adjustments arising on acquisition are translated at exchange rates
prevailing at the reporting date;
– income and expenses are translated at average exchange rates for the period; and
– retained earnings are translated at the exchange rates prevailing at the date of the transactions.
Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars
are recognised in other comprehensive income and included in the foreign currency translation reserve in the Consolidated
statement of financial position. The cumulative amount of these differences is reclassified into profit or loss in the period
in which the operation is disposed of.
Currency of hyperinflationary economy
If the functional currency of a foreign operation is the currency of a hyperinflationary economy, then its financial information
is first adjusted to reflect the purchasing power at the current reporting date and then translated into the presentation currency
using the exchange rate at the current reporting date.
(c) Provisions
Provisions are recognised when the Group has a legal or constructive obligation as a result of past events, for which it is probable
that an outflow of economic benefits will result and that outflow can be reliably measured.
Provisions are determined by discounting the expected future cash flows at a pre‑tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised
as a finance cost.
1 2 2
Notes to the financial statementsfor the year ended 30 June 2020FINANCIAL REPORT 30. Other policies and disclosures (continued)
(d) Standards issued but not yet effective
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after
1 July 2020 and have not been applied in preparing these Consolidated financial statements.
The following amended standards and interpretations are not expected to have a significant impact on the Group’s Consolidated
financial statements:
– Amendments to references to conceptual framework in IFRS;
– Definition of a Business (Amendments to IFRS 3); and
– Definition of Material (Amendments to AASB 101 and AASB 108).
(e) Contingent assets and contingent liabilities
There were no contingent assets or liabilities of the Group in relation to FY20 or FY19.
(f) Events after reporting period
Dividend
Since the period end, the Directors have declared a fully franked final dividend of 1.60 cents per share, payable 2 October 2020.
The dividend will be recognised in subsequent financial statements.
1 2 3
Notes to the financial statementsfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020 In accordance with a resolution of the Directors of WiseTech Global Limited, we state that:
1.
In the opinion of the Directors:
(a) the consolidated financial statements and notes that are set out on pages 72 to 123 and the Remuneration Report
on pages 51 to 64 in the report are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its performance
for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
2. There are reasonable grounds to believe that the Company and the Group entities identified in note 28 to the financial
statements will be able to meet any obligations or liabilities to which they are or may become subject to by virtue of the
Deed of Cross Guarantee between the Company and those Group entities pursuant to ASIC Corporations (Wholly owned
Companies) Instrument 2016/785.
3. This declaration has been made after receiving the declarations required to be made to the Directors by the chief executive
officer and chief financial officer in accordance with section 295A of the Corporations Act 2001 for the financial year ended
30 June 2020.
4. The Directors draw attention to note 2 to the financial statements, which includes a statement of compliance with the
International Financial Reporting Standards.
On behalf of the Board
Andrew Harrison
Chair
18 August 2020
Richard White
Executive Director, Founder and CEO
18 August 2020
1 2 4
Directors’ declarationfor the year ended 30 June 2020FINANCIAL REPORT
This is the original version of the audit report over the financial statements signed by the directors on
18 August 2020. Page references in relation to the Remuneration Report should be read as referring to
pages 51 to 64 as opposed to 8 to 20, to reflect the correct references now that the financial
statements have been presented in the context of the annual report in its entirety.
Independent Auditor’s Report
To the shareholders of WiseTech Global Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
WiseTech Global Limited (the Company).
In our opinion, the accompanying
Financial Report of the Company is in
accordance with the Corporations Act
2001, including:
• giving a true and fair view of the
Group's financial position as at 30
June 2020 and of its financial
performance for the year ended on
that date; and
• complying with Australian
Accounting Standards and the
Corporations Regulations 2001.
Basis for opinion
The Financial Report comprises:
• Consolidated statement of financial position as at 30
June 2020
• Consolidated statement of profit or loss and other
comprehensive income, Consolidated statement of
changes in equity, and Consolidated statement of cash
flows for the year then ended
• Notes including a summary of significant accounting
policies
• Directors' Declaration.
The Group consists of the Company and the entities it
controlled at the year end or from time to time during the
financial year.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the 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 fulfilled our other ethical responsibilities in accordance with the
Code.
KPMG, an Australian partnership and a member
firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Liability limited by a scheme approved
under Professional Standards
Legislation.
1 2 5
Independent Auditor’s Reportfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020
Key Audit Matters
The Key Audit Matters we identified are:
• Recognition of revenue;
• Capitalisation of software
development costs;
• Accounting for contingent
consideration; and
• Testing for impairment of goodwill
and intangible assets.
Recognition of revenue ($429.4m)
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.
Refer to Note 4 ‘Revenue,’ and Note 15 ‘Deferred revenue’ of the financial report
The key audit matter
How the matter was addressed in our audit
The recognition of revenue is considered
to be a key audit matter due to:
• The significance of revenue to the
financial statements;
• Recurring CargoWise One revenue
that is earned in relation to customer
usage is determined by the Group
with reference to price lists and
complex discount structures. It
involves high volumes of customer
transaction data recorded using a
highly automated billing system.
Auditing the revenue recognised
based on this transactional data
requires significant effort, including
the use of IT and Data Specialists to
supplement our senior audit team
members; and
• Remaining revenue is recorded across
a large number of different billing
systems as a result of multiple
acquisitions. Auditing this revenue
requires significant audit effort with
extensive sample sizes, and involving
multiple overseas KPMG teams.
Our procedures included:
• We stratified the revenue population into homogenous
revenue streams for the purposes of performing our
testing;
• For key recurring CargoWise One revenue streams,
where revenue is recognised based on customer
usage of the software, with the assistance of our IT
and Data Specialists, we developed an expectation of
the revenue for the year and compared this to the
amount recorded by the Company. The formation of
our expectation involved:
-
-
-
-
-
-
understanding the Group’s process for collection of
transaction data, and the application of price lists
and discount structures to this data;
assessing the completeness, existence and
accuracy of transaction data interfaced with the
billing module;
inspecting transaction data which is not subject to
billing for consistency with our understanding of the
process;
testing controls over access to the billing module,
price lists and discount structures;
testing the interface of the output from the billing
module to the general ledger; and
assessing for a sample of customers the
appropriateness of price list records and discount
structures based on their underlying contract
94
1 2 6
Independent Auditor’s Reportfor the year ended 30 June 2020INDEPENDENT AUDITOR’S REPORT
documentation.
• We tested the Group’s key manual revenue
recognition controls including;
-
-
-
approval of new customer contracts;
review and approval of customers initial billing
invoice, including checking prices to underlying
signed customer contracts;
review of monthly billing data.
• For other revenue, we selected a statistical sample of
revenue across the Group’s subsidiaries. We tested
revenue recognition and related deferred revenue, by
obtaining and inspecting revenue contracts and
invoices, checking against cash receipts recorded in
bank statements, and using the conditions of the
contract to check appropriateness of the timing of
revenue.
Capitalisation of software development costs ($71.5m)
Refer to Note 9 ‘Intangible assets’ of the financial report
The key audit matter
How the matter was addressed in our audit
Capitalisation of software costs is
considered to be a key audit matter due
to:
• The high volume of software
developer hours;
• The Group’s calculation of the amount
of hours capitalised is reliant on data
extracts from the Company’s
automated software workflow tool
(PAVE) used for monitoring and
recording the activities of software
developers;
• The Group develops its software
products using an iterative
development methodology. This
approach requires more judgement in
assessing the Group’s application of
the requirements of the accounting
standards to capitalise the
Our procedures included:
• We inspected the Group’s documentation on the
status of projects and the evaluation of the future
economic return of the software under development.
We assessed the Group’s positions using our
knowledge of the business and projects, and through
discussions with various stakeholders, including:
Project Managers, the Chief Technology Officer, the
Chief Executive Officer and the Chief Financial Officer.
We also inspected price lists and Board of Director’s
papers to evaluate these assertions;
• We obtained an understanding of the Group’s
software development processes and how software
developers use PAVE to record activities;
• We inspected the information recorded in PAVE and
assessed the Group’s identification of activities that
constitute development;
• We tested a statistical sample of developer time
capitalised, to check the activities being performed
95
1 2 7
Independent Auditor’s Reportfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020
development costs. These
assessments include:
- Whether a project can be
completed and produce a viable
software product;
- whether an activity is eligible for
capitalisation;
-
determination of the appropriate
rate per hour for developers’ time
eligible for capitalisation; and
- whether a project is available for its
intended use and, accordingly,
commence amortisation.
We involved IT specialists to supplement
our senior audit team members in
assessing this key audit matter
related to a project in development or an
enhancement to an existing software product as
opposed to research or maintenance;
• Working with our IT specialists we tested the
computer system controls designed to safeguard
information recorded in PAVE;
• We tested the capitalisation of developer hours to
projects on a sample basis;
-
-
-
evaluating task descriptions logged against the
criteria in the accounting standards;
assessing, for the sampled activity, the hours
recorded for coding relates to an employee with a
developer related role; and
investigated task nature with Project Managers.
• We assessed the rate per hour calculations applied to
time eligible for capitalisation by testing a sample of
key inputs to underlying records. We also assessed
the Group’s allocation of directly attributable overhead
costs against the criteria within the accounting
standards.
Accounting for contingent consideration ($54.2m)
Refer to Note 16 ‘Other liabilities’ and Note 26 ‘Financial instruments’ of the financial report.
The key audit matter
How the matter was addressed in our audit
In accordance with the accounting
standards and the Group’s policy,
contingent consideration payable is initially
recognised at fair value in connection with
a business combination, and subsequently
assessed at each reporting period. During
the measurement period (maximum 12
months following the acquisition), if new
information is obtained about facts and
circumstances that existed at the
acquisition date and, if known, would have
affected the measurement of amounts
recognised as of that date, then fair values
are reassessed and adjusted against
goodwill. After the measurement period,
all reassessments, settlements and fair
value adjustments are made through the
profit or loss. There is uncertainty
Our procedures included:
• We assessed the Group’s determination of the
contingent consideration against the contractual terms
of the underlying sale and purchase agreements and
the criteria in the accounting standards;
• We checked the integrity of the Group’s fair value of
contingent consideration models including accuracy of
the underlying calculation formula;
• We evaluated the forward looking assumptions
underpinning the significant judgements used by the
Group including examining the basis for the Group’s
expectation that remaining contingent consideration
will be paid. We did this by considering the
performance assumptions (financial and non-financial)
against the actual performance achieved to date and
96
1 2 8
Independent Auditor’s Reportfor the year ended 30 June 2020INDEPENDENT AUDITOR’S REPORT
regarding the actual contingent
consideration payments that will be made
by the Group, as they are subject to
financial and non-financial metrics and
targets occurring in the future.
The fair value of contingent consideration
is a key audit matter due to the significant
quantum of contingent consideration
arrangements which were renegotiated by
the Group during the current financial year
and the judgement applied by us when
evaluating the Group’s assessment of fair
value of these arrangements. We focused
on:
assessing the feasibility of forward
looking assumptions in relation to the
achievement of financial and non-
financial metrics;
assessing whether for accounting
purposes contingent consideration
obligations that are settled in shares,
are classified as either a liability or
equity; and
assessing whether remeasurement of
the liability is to be accounted for as a
measurement period adjustment to
business combination accounting.
our understanding of the business and economic
environment relevant in the forecast period;
• Where contingent consideration obligations are to be
settled through the issuance of shares, we assessed
the Group’s classification of those obligations as either
a liability or equity for appropriateness. We did this by
inspecting the terms of the sale and purchase
agreement and considering the application of the
criteria in the accounting standards. We evaluated the
amounts recognised in the acquisition reserve and the
profit or loss by assessing contractual terms and
amended agreement terms, and applying relevant
share prices and foreign exchange rates, with
reference to the requirements of the accounting
standards;
• We assessed the remeasurement of contingent
consideration not being treated as a measurement
period adjustment to business combination accounting
(i.e. which would have been adjusted against
goodwill), by evaluating the factors giving rise to the
renegotiations, along with information contained in
Board papers, and the sale and purchase contractual
terms and amendments thereof;
• We assessed the impact of renegotiations to earnouts
against signed contract amendments to the sale and
purchase agreements. Where cash payments were
agreed by the Group to settle the contingent
consideration obligations, we checked the payment to
bank statements. Where issuance of shares was
agreed by the Group to settle contingent consideration
obligations, we checked the calculation of the number
of shares to be issued for consistency with the
formulas contained in the underlying signed
agreements; and
• We assessed the disclosures in the financial report
using our understanding of the issue obtained from
our testing and against the requirements of the
accounting standards.
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Independent Auditor’s Reportfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020
Testing for impairment of goodwill and other intangible assets ($885.0m)
Refer to Note 9 ‘Intangible assets’ of the financial report.
The key audit matter
How the matter was addressed in our audit
The Group’s annual testing of goodwill and
intangible assets for impairment is a key audit
matter, given the size of the balance relative to
total assets and the judgements applied by us
in assessing the Group’s identification of Cash
Generating Units (CGUs), allocation of goodwill
and the forward-looking assumptions the Group
applied in their value in use model.
We focused on:
•
Identification of CGUs – non-financial
assets (other than goodwill) are required to
be assessed for impairment separately, or
as part of a CGU where the assets do not
generate independent cash inflows. As the
Group is pursuing a strategy for the
integration of acquired businesses,
assessing whether an acquired business
generates substantially independent cash
inflows during the process of integration
with the global platform requires
judgement;
• Allocation of goodwill to CGUs – goodwill
is required to be allocated to the CGU or
group of CGUs that is expected to benefit
from the synergies of the business
combination. As the Group is acquiring
businesses for the purposes of integrating
functionality into a global platform,
determining which of the CGUs that these
synergies will be obtained, and the amount
of goodwill to be allocated to them
requires judgement; and
• Forward looking assumptions - forecast
cash flows, growth rates, discount rates
and terminal growth rates used by the
Group given their inherent uncertainty.
We involved valuation specialists to
supplement our senior audit team members in
assessing this key audit matter.
Working with our valuation specialists, our
procedures included:
• We assessed the Group’s determination of the
CGUs used in the impairment model and the
determination that goodwill is tested at the single
group of CGU level, based on our understanding
of the Group’s business, acquisition strategy, and
examination of cash inflows. We assessed these
against the criteria in the accounting standards.
We also considered internal reporting of the
Group’s results to assess how earnings and
goodwill are monitored and reported;
• We assessed the impairment testing
methodology used by the Group against the
requirements of Australian Accounting Standards;
• We tested the mathematical accuracy of the
Group’s value in use model;
• We assessed the Group’s cash flow forecasts
including;
-
-
Consideration of the historical accuracy of
previous estimates
Reconciled the underlying cash flow
projections to Board approved forecasts
• We assessed the cash flows and related growth
rates applied in the model by comparing them to
external analysts’ reports. We checked the
consistency of the growth rates to the Group’s
stated plan and strategy, past performance of the
Group, and our experience regarding the
feasibility of these in the industry in which they
operate;
• We assessed the Group’s assumptions for
terminal growth rates in comparison to economic
and industry forecasts;
• Working with our valuation specialists we
analysed the discount rates against publicly
available data of a group of comparable entities,
adjusted by risk factors specific to the Group;
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Independent Auditor’s Reportfor the year ended 30 June 2020INDEPENDENT AUDITOR’S REPORT
• We performed sensitivity analyses on the key
assumptions used in the model and applied other
values within a range that we assessed as being
reasonably possible, to focus our further work;
and
• We assessed the disclosures in the financial
report using our understanding of the Group’s
testing for impairment obtained from our
procedures and against the requirements of the
accounting standards.
Other Information
Other Information is financial and non-financial information in WiseTech Global Limited’s annual reporting
which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are
responsible for the Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Operating and
Financial Review, Board of Directors, and the Directors’ Report. The Financial Highlights, Delivering on our
Strategy, Five year financial summary, Chair’s Letter, CEO’s message, Our business, Our innovation
pipeline, Our expansion pipeline, Environment, social and governance, Shareholder information, Glossary
and Corporate Directory are expected to be made available to us after the date of the Auditor's Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and
will not express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001
• implementing necessary internal control to enable the preparation of a Financial Report that gives a
true and fair view and is free from material misstatement, whether due to fraud or error
• assessing the Group and Company's ability to continue as a going concern and whether the use of
the going concern basis of accounting is appropriate. This includes disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless they
either intend to liquidate the Group and Company or to cease operations, or have no realistic
alternative but to do so.
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Independent Auditor’s Reportfor the year ended 30 June 2020WISETECH GLOBAL ANNUAL REPORT 2020
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
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. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration
Report of WiseTech Global Limited for
the year ended 30 June 2020,
complies with Section 300A of the
Corporations Act 2001.
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 responsibilities
We have audited the Remuneration Report included in pages 8
to 20 of the Directors’ report for the year ended 30 June 2020.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Caoimhe Toouli
Partner
Sydney
18 August 2020
1 3 2
100
Independent Auditor’s Reportfor the year ended 30 June 2020INDEPENDENT AUDITOR’S REPORT
WiseTech Global Limited ordinary shares
WiseTech Global’s ordinary shares are listed on the Australian Securities Exchange under ASX code: WTC.
At a general meeting, every shareholder present, in person or by proxy, attorney or representative has one vote on a show
of hands and, on a poll, one vote for each share held.
All information below is as at 30 September 2020 unless stated otherwise.
Distribution of shareholdings
Number of shares held
Number of holders
Number of shares
% of issued capital
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
55
220
324
2,505
10,701
13,805
306,778,493
6,023,781
2,265,191
5,485,050
3,197,521
94.76
1.86
0.70
1.69
0.99
323,750,036
100.00
There were no investors holding less than a marketable parcel of 20 shares (based on a share price of $25.79).
Largest 20 shareholders
Name
Number of shares
% of issued capital
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
RealWise Holdings Pty Limited
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Fabemu No 2 Pty Ltd ABN 67 003 954 070
Mr Richard John White
Citicorp Nominees Pty Limited
MSG Holdings Pty Ltd
Mr Michael John Gregg & Mrs Suzanne Jane Gregg
Merrill Lynch (Australia) Nominees Pty Limited
BNP Paribas Noms Pty Ltd
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited - A/C 2
National Nominees Limited
HSBC Custody Nominees (Australia) Limited-GSCO ECA
BNP Paribas Nominees Pty Ltd
Mycroft Investments Pty Ltd
Solium Nominees (Australia) Pty Ltd
Solium Nominees (Australia) Pty Ltd
Mr William Leigh Porter
20
Harbinger Enterprises, LLC
Total
139,000,610
43,666,515
34,722,023
17,127,197
10,712,412
8,870,887
7,628,135
5,836,707
4,887,287
4,046,812
3,984,628
3,509,526
3,321,271
3,143,630
2,938,291
1,607,000
1,147,137
893,876
785,000
572,761
298,401,705
42.93
13.49
10.72
5.29
3.31
2.74
2.36
1.80
1.51
1.25
1.23
1.08
1.03
0.97
0.91
0.50
0.35
0.28
0.24
0.18
92.17
1 3 3
Shareholder informationWISETECH GLOBAL ANNUAL REPORT 2020 Substantial shareholders
The following have disclosed a substantial shareholder notice in the period to 30 September 2020:
Name
Number of shares
% of voting power Date of latest notice
Richard White and RealWise Holdings Pty Ltd
Hyperion Asset Management Limited
Pinnacle Investment Management Group Limited
Charles Gibbon, Fabemu No 2 Pty Ltd and Gibbon Family
Holdings Pty Limited
151,108,362
23,092,499
22,995,393
46.67
3 September 2020
7.13
25 August 2020
7.10 23 September 2020
17,349,014
5.47
6 May 2019
Shares subject to voluntary escrow
Number of shares
2,260
119,356
47,367
12,460
2,046,552
470,357
Unlisted securities
Date period of escrow ends
25 November 2020
3 February 2021
8 April 2021
7 May 2021
27 May 2021
7 July 2021
There were a total of 2,194,768 share rights on issue, held by 1,079 individual holders. Share rights have no voting rights.
On-market buy-back
There is no current on-market buy-back.
1 3 4
Shareholder informationSHAREHOLDER INFORMATION Term
3PL
Meaning
Third party logistics provider
Adjacency acquisitions
Targeted acquisitions of global or multi-regional software providers in key verticals in the supply
chain (e.g. specialist TMS and rates management), to converge with our own innovation pipeline
and build globally capable solutions
Attrition rate
BCO
CargoWise
Annual attrition rate is a customer attrition measurement relating to the CargoWise application
suite (excluding any customer on acquired legacy platforms). A customer’s users are included
in the customer attrition calculation upon leaving i.e. having not used the product for at least
four months
Beneficial Cargo Owner
Our flagship product, a single source, cloud‑based, deeply integrated global platform for the
logistics industry; see page 12
CargoWise Neo
Our global integrated platform for consumers of logistics services; see page 17
EBITDA
Ecosystem
Foothold acquisitions
Earnings before interest, tax, depreciation and amortisation
A complex network or interconnected system of components and participants
Targeted acquisitions of strategically valuable software providers in key regions (in Europe, Asia
and the Americas focusing primarily on customs and cross-border capability) to provide safer,
faster, stronger entry into new geographic markets
FTL
LTL
MUL
NPAT
NPATA
Full Truck Load
Less Than Truckload
Module User Licence; an on-demand licence fee charged per month, per user, per module
Net profit after tax attributable to equity holders of the parent
Net profit after tax attributable to equity holders of the parent before: acquired amortisation net
of tax, contingent consideration interest unwind net of tax, and fair value changes on contingent
consideration. NPATA is a non‑statutory measure and is a primary measure used by the Chief
Operating Decision Maker (CODM) for the purpose of assessing the Group’s performance
On-Demand
On-demand licensing, including MUL and STL
OTL
PAVE
R&D
One-Time Licence, featuring an upfront one-time licence fee plus ongoing maintenance charges
Productivity Acceleration and Visualisation Engine: our self‑developed innovative workflow
management tool
Total investment in product development and innovation, including both expensed and
capitalised amounts each year spent on product development and innovation, patents and
purchased external software licences used in our products
Recurring revenue
Recurring revenue is the sum of On-Demand revenue and OTL maintenance revenue which
is categorised in our statutory financial statements as recurring monthly and recurring annual
software usage revenue
SaaS
Share right
STL
TMS
TSR
WMS
Software as a service
A right to receive an ordinary share in WiseTech Global at a point in the future. Share rights are
issued to employees
Seat Plus Transaction Licensing; an on‑demand usage‑based licence, comprising seat charge
per user plus standard charges for transactions
Transportation Management Solutions
Total Shareholder Return
Warehouse Management Solutions
1 3 5
GlossaryWISETECH GLOBAL ANNUAL REPORT 2020 Shareholder enquiries
Enquiries about shareholdings in WiseTech Global
Please direct all correspondence to WiseTech Global’s share registry:
Link Market Services
Level 12, 680 George Street
Sydney NSW 2000
Telephone: 1300 554 474
Email: registrars@linkmarketservices.com.au
Website: www.linkmarketservices.com.au
Further information about WiseTech Global
Website
www.wisetechglobal.com/investors
Investor relations
Email: investor.relations@wisetechglobal.com
Telephone: +61 (0)2 8001 2200
Registered office
Unit 3a, 72 O’Riordan Street
Alexandria NSW 2015
Telephone: +61 (0)2 8001 2200
Company Secretary
Email: company.secretary@wisetechglobal.com
Telephone: +61 (0)2 8001 2200
Auditor
KPMG
Level 38, Tower Three
International Towers Sydney
300 Barangaroo Avenue
Sydney NSW 2000
Telephone: +61 (0)2 9335 7000
1 3 6
Corporate directoryCORPORATE DIRECTORY wisetechglobal.com/investors
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