Bendigo Telco : 2021 Full Financial Statement

BENDIGO TELCO LIMITED

A.B.N. 88 089 782 203

2021 FINANCIAL REPORT

Bendigo Telco Limited and Controlled Entities

ABN 88 089 782 203

Financial Report for the Year Ended 30 June 2021

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OPERATING AND FINANCIAL REVIEW

PRINCIPAL ACTIVITIES

The principal activities of the Group during the course of the financial year were telecommunications services.

OPERATING RESULTS AND REVIEW OF OPERATIONS

About Bendigo Telco

Bendigo Telco, formed in year 2000, was established by a group of prominent Bendigo based businesses who wanted improved access to competitive pricing telecommunication and technology across our local market. These businesses identified the disadvantages (market failure) that they as regional businesses faced when compared with their metropolitan competitors. Early analysis identified the need to create a locally owned and focused organisation to improve the telecommunication and technology solutions, in terms of price, priority, competition, and access to essential infrastructure.

Bendigo Telco has played a major role in addressing many of these shortcomings as well as promoting a more competitive and responsive telco market across all of the communities that we now support. The company continues to provide of a broad range of telecommunications services to enterprise, business, and consumer customers across these Australian regional markets.

Operational Review

Over the past 12 months, the Group has continued to produce sound results in a challenging and competitive market. The Groups results reflect reduced revenues and margins from a number of our legacy voice and data services, whilst revenues from NBN and a number of our other services have remained stable. The decline in these legacy revenues is in line with our expectations and industry trends. We expect further declines in FY22.

The Group has also seen a decrease in mobile revenues primarily attributable to a reduction in the number of services offered across our consumer customer base. The Group is currently in the final stages of recontracting the supply of mobile services which we expect will provide competitive pricing and a more aligned product set to our customer base. We expect our mobile service revenues to grow during FY22.

The Group has been able to increase revenues across other product sets including Voice over Internet and Cloud product offerings. We are convinced that by focusing on improving the accessibility, support and delivery of technology outcomes for our customers and communities, it will be able to position itself for future sustainable growth and continued creation of shareholder value.

During the year, the Group refined its priorities, strategic approach and core operating model to ensure that we could continue to produce quality customer and community outcomes in an evolving and challenging technology market place. This important work included redefining management and operational priorities incorporating a balanced approach across our key focus areas, to ensure the appropriate level of attention and growth opportunities can be achieved and maintained. The five key focus areas are:

• People - promoting a positive culture where people feel valued and supported.
• Customer - through understanding Customer needs we will deliver to support their success.
• Community - committed to the success of our Community.
• Operations - deliver services in an efficient and cost-effective manner.
• Financial - a sustainable business model with a focus on long term prosperity for all stakeholders.

By focusing on the delivery of quality customer outcomes across existing capabilities and introducing new product and service initiatives, the Group will be able to achieve theses strategic priorities.

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Bendigo Telco Limited and Controlled Entities

ABN 88 089 782 203

Financial Report for the Year Ended 30 June 2021

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Impact of COVID-19

Over the past 12 months, the COVID-19 pandemic has continued to impact people, businesses and communities. The Group continues to follow government guidelines and have been able to maintain remote working arrangements for staff with minimal impact to efficiency or productivity.

Over this period, we have focused on ensuring that our customers and communities requirements have been met as the reliance on our services, support and infrastructure became even more critical as they too adjusted their own working arrangements.

The events relating to COVID-19 have not had an adverse impact on either the operations or financial performance of the company during this period. Given the uncertainty, the longer-term impacts of COVID-19 are difficult to fully assess at this stage. The company continues to monitor the situation and engage with customers to ensure we meet or exceed their service and support requirements.

The business received $50,000 from the 2nd ATO cash flow boost during FY21 and was not entitled to any other Government related payments.

Financial and Operating Results

	Summary financial results			FY21		FY20		Change
			$'000		$'000		(%)
Revenue	29,718	33,368	(10.94%)
Gross margin	15,557	16,715	(6.93%)
EBITDA	4,188	4,647	(9.88%)
Net profit/(loss) after tax	1,037	1,065	(2.63%)
Underlying net profit/(loss) after tax*	1,433	1,788	(19.85%)
Earnings per share (cents)	13.36	13.73

• Underlying net profit/(loss) after tax represents results excluding non-cash impairments to goodwill and other non-current assets and restructuring costs

Total Group revenue decreased by 10.94% from the prior year delivering a total turnover of $29,718,095 (FY20: $33,367,674) in line with our expectations.

The NPAT result for the year, on a reported basis, was a profit of $1,036,754 (FY20: $1,064,822). The Group incurred restructuring and repositioning costs of $535,861 attributable to redefining management and operational priorities which directly impacted this year's profit.

The net assets of the Group decreased by $173,852 from the prior year to $7,982,109 (FY20: $8,155,961). The Group

was able to maintain a strong equity ratio of 46.70% (FY20: 42.18%).

The Directors resolved to pay a fully franked final dividend of 7.5 cents per share which will be paid to shareholders on 30 September 2021. This brings the total dividend for FY21 to 13.5 cents fully franked. This represents a 73% payout ratio on FY21 underlying earnings (NPAT excluding restructuring costs).

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Bendigo Telco Limited and Controlled Entities

ABN 88 089 782 203

Financial Report for the Year Ended 30 June 2021

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Year Ahead

FY22 will continue to present both challenges and opportunities for the Group. The Group will maintain its investment in its people, processes, and products and is confident that by remaining focused on its strategic priorities and delivering on its stated objectives it will continue to produce a solid result for shareholders.

The Board is pleased with the progress and performance of the Group and continues to look for investment or business enhancement opportunities which will improve the Groups prospects of continued success.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

In the opinion of the directors there were no significant changes in the state of affairs of the group that occurred during the financial year under review not otherwise disclosed in this report or the financial report.

The events relating to COVID-19 have not had an adverse impact on either the operations or financial performance of the Group during this period. The Group continues to monitor the situation.

Since the end of the financial year a fully franked final dividend in the amount of 7.5 cents per share was declared by the Board of Directors on 25 August 2021 which will be distributed to shareholders on 30 September 2021.

EVENTS AFTER THE REPORTING PERIOD

No matters or circumstances have arisen since the end of the financial year, which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial years.

FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES

Disclosure of information relating to major developments in the operations of the Group and the expected results of those operations in future financial years, which, in the opinion of the directors, will not unreasonably prejudice the interests of the Group, is contained in the Report by the Chairman and Managing Director in the Concise Annual Report.

ENVIRONMENTAL ISSUES

The group is not subject to any significant environmental regulation.

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Bendigo Telco Limited and Controlled Entities

ABN 88 089 782 203

Financial Report for the Year Ended 30 June 2021

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CORPORATE GOVERNANCE STATEMENT

Bendigo Telco Limited is committed to high standards of Corporate Governance. This commitment applies to the conduct of its business dealings with its customers and its dealings with its shareholders, employees, suppliers and the Community.

The Board of Bendigo Telco Limited have adopted the following principles of Corporate Governance. The policies may be viewed on the group website www.bendigotelco.com.au.

1. A Board Charter which outlines the responsibilities of the Board by formalising and disclosing functions reserved to the Board and those delegated to management.
2. An Audit and Risk Committee Charter and the appointment of the Audit and Risk Committee as a sub-committee of the Board. The members of the Audit and Risk Committee were Directors Rob Hunt, Graham Bastian, Rod Payne, Don Erskine and Greg Gillett.
3. A Share Trading policy which outlines directors and employees obligations in trading in its securities. The policy restricts directors and employees from acting on material information until it has been released to the market and adequate time has been given for this to be reflected in the Group's security price.
4. A Remuneration policy which sets out the terms and conditions for the Managing Director and other senior managers. The members of the Remuneration Committee were Directors Rob Hunt and Don Erskine.
5. A Continuous Disclosure policy which complies with the obligations imposed by National Stock Exchange (NSX) Listing Rules and the Corporations Act 2001 . This policy requires immediate notification to the NSX of any information concerning the group, of which it is aware or becomes aware, which is not generally available and which a reasonable person would expect to have a material effect on the price or value of the group shares.

BOARD COMPOSITION

The skills, experience and expertise relevant to the position of each director who is in office at the date of the annual report are detailed in the director's report.

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