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Appendix 4E

Annual Report

For the financial year ended 30 June 2021

Appendix 4E

The following information sets out the requirements of the Appendix 4E of Megaport Limited (‘the Company’) with the stipulated information either provided here or cross referenced to the Annual Report for the financial year ended 30 June 2021.

This Appendix 4E covers the reporting period from 1 July 2020 to 30 June 2021. The previous corresponding period is 1 July 2019 to 30 June 2020.

Results for Announcement to the Market

Summary of Financial Information

	1 July 2020 to	Restated#	Change	Change
	30 June 2021	1 July 2019 to	$	%
		30 June 2020
Revenue from ordinary
activities	78,281,154	58,039,659	20,241,495	35%
Profit/(loss) from ordinary
activities after tax
attributable to members	(55,000,134)	(48,710,974)	(6,289,160)	(13%)
Net profit/(loss) for the
period attributable to
members	(55,000,134)	(48,710,974)	(6,289,160)	(13%)

Refer to Note (c) under Section 1 of the Annual report for details on the prior year restatement.

Dividends

No dividend has been proposed or declared for the year ended 30 June 2021.

Commentary on the Results for the Period

Refer to the ASX Announcement titled “FY21 Full Year Results and Global Update” lodged with ASX on 10 August 2021 and the Director’s Report “Review of Operations” section in the 30 June 2021 Annual Report for commentary on the results for the year and explanations to understand the Group’s revenue and profit/(loss) from ordinary activities.

Financial Statements

Refer to the Financial Report in the 30 June 2021 Annual Report for the following statements and the accompanying notes, including the specific disclosures:

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

Each statement includes references to notes disclosures that have been prepared in accordance with Megaport’s Statement of Compliance (refer to Note (a) under Section 1 in the Financial Report in 30 June 2021 Annual Report).

Net Tangible Asset Backing

	30 June	30 June 2020
	2021	cents
	cents
Net tangible asset backing per ordinary share	104.95	129.95

The number of Megaport shares in issue at 30 June 2021 is 156,598,437 (2020: 153,261,431).

Details of entities where control has been gained or lost during the period

None

Details of Associates and Joint Ventures

There are no associates or joint ventures of the Company.

The information provided in the Appendix 4E is based on the 30 June 2021 Annual Report, which has been prepared in accordance with the Corporations Act 2001, and Australian Accounting Standards and Interpretations issued by the Australian Standards Board.

The 30 June 2021 Annual Report has been audited and is not subject to audit dispute or qualification.

Annual Report 2 0 2 1

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ABOUT

Megaport is a leading provider of Network as a Service (NaaS) solutions. The company’s global Software Defined Network (SDN) helps businesses rapidly connect their network to services via an easy-to-use portal or our open API. Megaport offers agile networking capabilities that reduce operating costs and increase speed to market compared to traditional networking solutions. Megaport partners with the world’s top cloud service providers, including AWS, Microsoft Azure, and Google Cloud, as well as the largest data centre operators, systems integrators and managed service providers in the world. Megaport is an ISO/IEC 27001-certified company.

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Chairman’s Letter 3
Letter from the CEO 7
People and Culture 11
Directors’ Report 15
Remuneration Report 35
Auditor’s Independence Declaration 51
Financial Report 53
Directors’ Declaration 117
Independent Auditor’s Report 118
Shareholder Information 122
Corporate Directory 124
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COMPANY HIGHLIGHTS

$5.7M $7.5M +32% 30 JUNE 2020 30 JUNE 2021 Monthly Recurring Revenue¹

$67.8M $89.8M +32% 30 JUNE 2020 30 JUNE 2021 Annualised Revenue²

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1,842 2,285 +24%
30 JUNE 2020 30 JUNE 2021
Total Number
of Customers
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1. Monthly Recurring Revenue (MRR) is revenue (excluding one-off and non-recurring revenue) for the month of June.

2. Annualised Revenue is MRR for the month of June multiplied by 12.

3. Total Services comprises of Ports, Virtual Cross Connections (VXCs), Megaport Cloud Router (MCR), Megaport Virtual Edge (MVE), and Internet Exchange (IX).

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16,712 21,712 +30%
30 JUNE 2020 30 JUNE 2021
Total Number
of Services3
5,767 7,689 +33%
30 JUNE 2020 30 JUNE 2021
Total Number
of Ports
307 502
+64%
30 JUNE 2019 30 JUNE 2021
Total Number
of MCRs
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Megaport Limited | ABN 46 607 301 959

CHAIRMAN’S LETTER

Dear Valued Shareholders,

I am honoured to present you with the Fiscal Year 2021 Chairman’s Report for Megaport Limited.

From humble beginnings, Megaport is now a global leader in automated connectivity. Our vision was simple – be the world’s leader in software defined connectivity. What started in 2013 as a Software Defined Network in Australia now services over 2,200 customers in over 760 locations in 136 cities across 23 countries.

This year we launched Megaport Virtual Edge (MVE), our service that takes our platform beyond data centres and helps enterprises accelerate their journey into SD-WAN and SASE. Customers are now connecting branch locations like office buildings, corporate campuses, and storefronts to our rich ecosystem of service providers. We have integrated with many of the leading SD-WAN providers to deliver maximum flexibility. And our engineering teams are hard at work integrating new technology partners to further increase the power of choice, in keeping with our neutral model. MVE is an incredibly exciting platform that provides a virtualised environment for hosting additional network functions, on demand, and with no need for additional hardware. SD-WAN support is only the first of many use cases to come.

For our customers and partners, agility is the name of the game. The past year has shown us that the ability to adapt to shifting demands on IT systems makes or breaks businesses.

Our acquisition of InnovoEdge, a service orchestration and automation company, will allow us to integrate the InnovoStudio service with Megaport’s platform. This will give customers the ability to not just use Megaport to provision services “to the cloud” but lets us now “take them through the cloud.” The InnovoEdge team’s expertise in development and automation perfectly complements Megaport’s software defined networking capabilities. Combined, we will empower even greater agility for partners and customers alike.

As the first mover in the thriving Network as a Service (NaaS) space, channel partners have always played a critical role in Megaport’s success. We have learned much since launching services in 2013 and recognise an opportunity to truly align NaaS to play a foundational role in the channel to speed up service adoption. That is why we developed Megaport PartnerVantage, a world-class channel program.

With Megaport PartnerVantage, channel partners will greatly benefit from the ability to rapidly connect their customers to services directly through Megaport. channel partners can accelerate providing solutions for customers and seamlessly boosting cloud service adoption. I am incredibly excited about Megaport PartnerVantage and looking forward to seeing the program provide a greater audience for our capability and scale to our operations.

I am very proud of Megaport’s enduring drive to innovate and deliver value to our customers, partners, and shareholders. I am also incredibly proud of the team, their resilience in the face of adversity, and the culture that has been created under the leadership of CEO, Vincent English. I would like to take this opportunity to thank the Megaport team, and you, our valued shareholders, for your continued support as we transform the way the world does business in the cloud economy.

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Bevan Slattery

Chairman and Executive Director - Megaport Limited 10 August 2021

“ For our customers and partners, agility is the name of the game. The last year has shown us that the ability to adapt to shifting demands on IT systems makes or breaks businesses.

COMPANY HIGHLIGHTS

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Total Number of Customers

1,84230 JUNE 2020 30 JUNE 2021[2,285][+24%]

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Total Number of Services

16,71230 JUNE 2020[21,712] 30 JUNE 2021[+30%]

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Monthly Recurring Revenue $5.7M30 JUNE 2020[$7.5M] 30 JUNE 2021[+32%]

Megaport Limited | ABN 46 607 301 959

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Leading Cloud Partnerships
Leading SD-WAN Partners
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1. Enabled Data Centres is the total of Installed Data Centres plus Extended Data Centres. Extended Data Centres are data centres that can be connected directly to Megaport networking hardware within Installed Data Centres by means of interconnection services offered directly by the data centre campus / facility operator of an Installed Data Centre.

COMPANY HIGHLIGHTS

36 233 NEW TOTAL Cloud Onramps 121 12 Cloud Regions NEW TOTAL

Cloud Onramps

Total Installed Data Centres[1] Total Enabled Data Centres[1]

39 405 NEW TOTAL

92 761 NEW TOTAL

Megaport Limited | ABN 46 607 301 959

LETTER FROM THE CEO

In fiscal year 2021, we were able to deliver record growth and launch innovative new edge services.

Megaport has successfully overcome many challenges brought on by the COVID-19 pandemic. In fiscal year 2021, we were able to deliver record growth and launch innovative new edge services. We continued to expand our global network footprint and connect to more cloud on-ramps. Megaport’s platform now connects to more than 230 cloud on-ramps around the world, the most of any NaaS platform.

Cloud connectivity continues to play a central role in our success, representing 65% of the connections that happen on the Megaport SDN today. According to Gartner, worldwide public cloud services enduser spending will reach $397 billion USD in 2022. Multicloud adoption is a driving factor in these remarkable numbers and 35% of Megaport customers use our platform to connect to multiple cloud providers. That number continues to accelerate as we connect to more cloud on-ramps and innovate our platform to reduce the complexity of getting connected.

A key enabler for this is Megaport Cloud Router (MCR). Since being launched in 2017, MCR has made it extraordinarily easy to connect cloud providers directly together, in a point-and-click fashion – reducing the complexity of implementing multicloud and hybrid cloud architectures. The number of production MCRs grew 64% in fiscal year 2021 with more than 500 of these innovative virtual routers in service.

Using the same technology platform that supports MCR, we were able to develop Megaport Virtual Edge (MVE), which supports connections through leading SD-WAN technologies. With the formal launch of services in March 2021, customers are now connecting their branch locations into the Megaport platform to manage global network services on demand. Initial MVE adoption is similar to that of MCR in its first few months, and we expect to see accelerated growth in the product based on a strong pipeline.

Megaport achieved a Group EBITDA break-even run rate in June 2021. This is a strong validation of our business model, and there is additional operating leverage based on the investments to date. AsiaPacific, for example, is Megaport’s most mature market and generated a profit after direct network cost margin of 73% at June 30, 2021. Europe achieved an EBITDA positive position for the entire fiscal year in 2021, and North America, which represents the largest target addressable market, is growing at the fastest rate with 47% growth year-over-year in monthly recurring revenue.

The Megaport mission for the coming year is to “Scale Up, Scale Out.” This is a commitment by everyone at Megaport to accelerate our growth and our innovation cycle to increase our lead in the NaaS space. With a proven business model, the trust of partners and customers, and a leading platform built for innovation, we are well positioned to achieve this. We will invest in revenue growth by making investments in further market expansion, product and service innovation, and most critically, the people responsible for making Megaport the transformational technology company that is changing the way IT services are built today and tomorrow.

I would like to thank the entire team for another hugely successful year. Without each team member driving our customer and partner solutions and executing the wider global strategy with passion and enthusiasm, Megaport could not report the massive achievements we’re reporting today. On behalf of the team, I sincerely thank you for your investment in Megaport.

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Vincent English

CEO – Megaport Limited 10 August 2021

“ The Megaport mission for the coming year is to “Scale Up, Scale Out.” This is a commitment by everyone at Megaport to accelerate our growth and our innovation cycle to increase our lead in the NaaS space.

GLOBAL REVENUE

FY21 Performance

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$78.3M  20.2M | 35% FY20 $58.0M

Megaport Limited | ABN 46 607 301 959

ANNUALISED REVENUE

Services like MCR and MVE drive greater revenue by making it easier to connect to, and between, services that power IT architectures.

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Total Services1
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 [Total Ports ]  [Total Services]
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1. Total Services comprises of Ports, Virtual Cross Connections (VXCs), Megaport Cloud Router (MCR), Megaport Virtual Edge (MVE) and Internet Exchange (IX) at period end.

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Monthly Recurring Revenue2 (A$M)
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2. Monthly Recurring Revenue (MRR) is revenue (excluding one-off and non-recurring revenue) for the last month of the period.

Megaport Limited | ABN 46 607 301 959

PEOPLE + CULTURE

Without doubt, these past 12 months have brought a new set of challenges to businesses around the world. The COVID-19 pandemic has required many organisations to adjust the way they work and to create innovative ways to inspire and engage their people.

The fabric of our business is our people and their ability to work as teams. With this in mind, People and Culture have focused on our Team Engagement levels, our Culture, Personal Development, and investment in Diversity and Inclusion (D&I) initiatives.

A core guiding principle for Megaport is the belief that our people should reflect every part of society and that we create a culture in which everyone can be themselves. The Megaport Values determine how the Company will pursue its purpose.

Not only do our Core Values guide Megaport’s actions, they serve as our cultural cornerstone and are the source of Megaport’s distinctiveness. How we live and work dictates our culture. Not the other way around.

Engagement

Our overall global engagement rating was 82% with a participation rate of 88%. Our overall 360 leadership score was 4.10 out of a possible 5 across 72 managers surveyed. The key findings have helped set our FY22 strategy which highlights a maintained focus on D&I, career development, and competitive rewards.

We have initiated steps to address recurring trends from the survey which include increased benefits and pay throughout parts of our regions. Specifically, we have increased paid annual leave by 25% for our European Team Members and added Private Health care for those based in the UK and Ireland. Additionally, we also addressed our UK/Irish Company Pension contributions which have doubled.

Megaport introduced 12 weeks’ paid parental leave in 2020 across all regions. This benefit has proven to be hugely attractive and has been utilised by both male and female parents.

This financial year, Megaport extended the parental leave policy to offer 6 weeks’ paid leave to both parents should they experience a stillbirth or 5 days’ additional paid leave in the unfortunate event of a miscarriage.

Megaport Engagement

We recognise that good leadership is vital to our continued success, so we undertook our first Global Engagement and 360 Leadership surveys to help us formulate meaningful development roadmaps. These surveys provided specific insights in five key areas:

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Gain Insight into our Workforce

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Drive Performance

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Target Areas for Improvement

Improve Retention

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Benchmark Engagement

“ Not only do our Core Values guide Megaport’s actions, they serve as our cultural cornerstone and are the source of Megaport’s distinctiveness. How we live and work dictates our culture. Not the other way around.

Melanie Vongswang Chief People Officer

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Megaport Limited | ABN 46 607 301 959
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THE DATA

The attrition rate reduced from 28% in FY2020 to 16.4% in FY2021.
Employees with five years’ tenure increased from 3% in Q1 to 10% in Q4 – 26 employees were eligible for five year service awards in FY21.

Gender Ratio

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29.6
70.4
 [Female]
 [Male]
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Our focus on benefits and talent enrichment led to an increase in our annual retention rate to 84%.

FY21 has also seen significant progress in the financial commitment to improve the transparency of people data across our global business. The introduction of data automation via a global HRIS system, Workday, is due imminently.

Diversity + Inclusion

People are central to our business and we want everyone to be able to be their true selves, and to do this, we are creating an environment where everyone feels they belong, are supported and heard, and are empowered to make valuable personal contributions. Megaport has introduced an employee panel which is made up of 10% of the workforce with each global region fairly represented. Our aim is to develop a more diverse workforce, bringing strong representation of society and a diversity of thought, which will drive success.

On 1 July 2021, Megaport formed a new advisory board to focus on Diversity and Inclusion initiatives, reporting to Chief Executive Officer, Mr Vincent English. The initial members of the advisory board are Ms Seddon, Ms Snowden, and Ms Gordon.

We are focused on all elements of inclusion. Megaport has committed to a female gender target of 31% which is significantly higher than the tech industry benchmark of 19% (source: Tech Nation Report 2021). We are close (29.6%) to achieving our benchmark of 32% female gender target in FY2021. We have fulfilled our commitment to increase the number of females on the Megaport Board which now stands at 50% of the Non-Executive Directors on the Board.

Megaport has put in place various initiatives and policies to support gender inclusion. These include offering parental leave of 12 weeks fully paid for both parents. We have strengthened our recruitment and reward processes to ensure the wording of jobs is objective and removes unconscious bias.

People Development

Offering our people development opportunities is key to our agenda and integral to the talent experience we seek to create. This year, we introduced a Learning & Development function with a key focus to enrich the capability of our people and support our strategy of organic skills development.

So far, we have focused on building a leadership capability framework and a diverse curriculum which reflects the People and Culture roadmap and our core values. Examples include a specific purpose learning offering for our leaders, as well as actively promoting the $5,000 training allowance for all employees on subjects of their choice. To date, we have delivered over 500 training hours across the business.

FY22 is focused upon strengthening our progress on the above topics in addition to partnering with the business to successfully ‘scale up and scale out’ with the appropriate people-related drivers and interventions.

In addition to gender, we have developed networks and sought partners to help us achieve several dimensions of inclusion. This includes supporting ethnic representation and the LGBTIQ community, and the generational variances that come with having a workforce spanning four generations.

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Age Breakdown

Late millennials (30-39 years) make up over a third Megaport employees

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5%
9%
15%
39%
32%
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20-29

30-39

40-49 50-59

60-69

Megaport Limited | ABN 46 607 301 959

DIRECTORS’ REPORT

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The Directors present their report on the consolidated entity consisting of Megaport Limited (referred to as ‘the Company’ or ‘Megaport’) and the entities it controlled (referred to as ‘the Group’ or ‘the consolidated entity’) at the end of, or during the year ended, 30 June 2021.

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DIRECTOR’S REPORT

Directors and company secretary

The following persons were directors of Megaport during the whole or part of the financial year and up to the date of this report:

Bevan Slattery
Vincent English
Jay Adelson
Naomi Seddon
Michael Klayko (Appointed 16 March 2021)
Melinda Snowden (Appointed 1 June 2021)
Glo Gordon (Appointed 1 July 2021)

The Company Secretary is Celia Pheasant.

Principal activities

During the year, the Group engaged in its principal activities, being:

the provisioning of on-demand elastic interconnection services;
the provisioning of internet exchange services;
the addition and integration of new service providers into the Ecosystem; and
continuing to expand the geographic footprint of its Network and Marketplace.

Dividends

Dividends were neither paid nor declared during the year.

Review of operations

Group overview

Megaport’s vision is to revolutionise global connectivity. The Group’s mission is to be the global leading Network as a Service (“NaaS”) provider and enable customers with an agile networking methodology through the Megaport Connected Edge Strategy.

Megaport’s platform uses Software Defined Networking to enable customers to rapidly connect to more than 375 leading service providers in a flexible, on-demand, and cost-effective way. The first of its kind and the leader in the market, the Group’s neutral platform has changed the way businesses consume connectivity services by creating a model that mirrors cloud-buying capabilities and is therefore more intuitive and customer-centric than the offerings from traditional telecommunications companies.

In order to align its services closely with cloud compute and storage consumption models, the Group provides a self-serve environment for interconnection. Megaport enables customers to rapidly and flexibly connect to its partner data centres, cloud service providers, network service providers, and managed service providers, collectively known as the Ecosystem.

Customers connect to the Ecosystem by acquiring ‘Megaports’ (“Ports”) and building Virtual Cross Connects (“VXCs”) to their chosen destinations or services across the Megaport Network. Connectivity services can be directly controlled by customers via mobile devices and desktop environments through Megaport’s portal, and its open Application Programming Interface (“API”).

Megaport Cloud Router (“MCR”) enables customers to instantly provision and control virtual routers through Megaport’s web-based portal. Enterprises and service providers can unlock powerful use cases such as cloud-tocloud networking and deploy Virtual Points of Presence (“VPoPs”) without the need to purchase or maintain

Megaport Limited | ABN 46 607 301 959

maintain physical routing equipment. MCR enables customers to rapidly deploy services, granularly control traffic, and reduce total cost of ownership. Throughout Fiscal Year 2021, the Company expanded MCR service functionality and availability to drive further adoption of cloud connectivity services. Leading cloud service providers advocate MCR as a reference service for enabling connectivity between their cloud solutions and third-party cloud platforms.

Megaport is an Alibaba Cloud Technology Partner, AWS Technology Partner, AWS Networking Competency Partner, Cloudflare Network Interconnect Partner, Google Cloud Interconnect Partner, IBM Direct Link Cloud Exchange provider, Microsoft Azure Express Route Partner, Nutanix Direct Connect Partner, Oracle Cloud Partner, Rackspace RackConnect Partner, Salesforce Express Connect Partner, and SAP PartnerEdge Open Ecosystem Partner.

The Group’s extensive and scalable global footprint across North America, Asia Pacific and Europe offers customers a neutral platform that spans its 761 Enabled Data Centres in key global locations.

Key performance metrics

		Half-Yearly	Performance	Performance	Yearly Performance	Yearly Performance	Yearly Performance
	Dec-19	Jun-20	Dec-20	Jun-21	FY20	FY21	YoY % Change
Enabled Data Centres1 Installed Data Centres2	552 317	669 366	716 386	761 405	669 366	761 405	14% 11%
Cloud Onramps	156	197	220	233	197	233	18%
Customers	1,679	1,842	2,043	2,285	1,842	2,285	24%
Ports	4,863	5,767	6,691	7,689	5,767	7,689	33%
MCR	228	307	382	502	307	502	64%
Megaport Virtual Edge (“MVE”)	n/a	n/a	n/a	21	n/a	21	100%
Total Services3	13,914	16,712	19,278	21,712	16,712	21,712	30%
Monthly Recovering Revenue (“MRR”)	$4.6M	$5.7M	$6.3	$7.5M	$5.7M	$7.5M	32%
Revenue	$25.85M	$32.19M	$36.00M	$42.28M	$58.04M	$78.28M	35%

In June 2021, Megaport reached 2,285 customers across 761 Enabled Data Centres in 136 cities (2020: 128 cities) and generated MRR of $7.5M. Of these Data Centres, 136 were located in Asia Pacific, 417 in North America, and 208 in Europe.

The total Ports on the Group’s Network at 30 June 2021 was 7,689, up 33% compared to a year earlier.

During the year ended 30 June 2021 (“FY21”)

Megaport continued to expand its Network footprint to new cities while deepening its reach within existing metros, reaching a milestone of 405 installed locations and 761 enabled locations globally;

1 Enabled Data Centres is the total of Installed Data Centres plus Extended Data Centres. Extended Data Centres are data centres that can be connected directly to Megaport networking hardware within Installed Data Centres by means of interconnection services offered directly by the data centre campus / facility operator of an Installed Data Centre.

2 Installed Data Centres are data centres in which Megaport has a Point of Presence with physical networking hardware. 3 Total Services comprise Ports, VXCs, MCR, and Internet Exchange (IX)

Megaport established a presence in Spain, bringing the Megaport platform to 23 countries and 136 cities globally.
The Group continued to bolster its ecosystem of leading service providers with the addition of Cloudflare in August 2020 and OVHcloud in October 2020.
Megaport furthered its leadership position in cloud networking by enabling 36 new cloud on-ramps globally.
Megaport announced the launch of MVE on 31 March 2021. As at 30 June 2021 Megaport was integrated with three leading SD-WAN service providers, Cisco, VMWare and Fortinet, and had sold 21 MVEs.
The Group achieved ISO/IEC 27001 certification from the International Organization for Standardization (“ISO”).

Impact of COVID-19

In March 2020, the World Health Organisation declared a global pandemic related to the rapidly growing outbreak of a novel strain of coronavirus known as COVID-19. This led to disruptions in global supply chains, affecting workforces, production and sales across the world and potentially leading to a long term downturn in the major markets in which we operate.

On 16 March 2020, Megaport announced to the ASX the anticipated impact of the COVID-19 on the business, and has continued to monitor the situation throughout FY21. The actual impact on Megaport’s operational and financial performance to date has not been significant, and is outlined below:

Team Wellbeing - Megaport’s people are our greatest assets and their health and wellbeing is our highest priority. In early February 2020, Megaport initiated working from home protocols for all staff, together with the suspension of all domestic and international travel. As the situation has continued to evolve, Megaport has adapted to developments and has continued to provide flexible working arrangements to staff to ensure the safety of our people and compliance to COVID-19 regulations. As Megaport was “born in the cloud” and many of our staff in the US, Europe and Asia have always worked from home, these initiatives have had minimal impact on our business. Travel restrictions resulted in reduced travel expenditure throughout FY21.
Business Operations - Following the lockdowns implemented in many of our global markets, we experienced an increase in data traffic on our network, as well as changes to the daily usage patterns as remote workers increased their utilisation of videoconferencing and other applications used whilst working from home. In the second half of FY20 we saw existing customers take additional services for resiliency and redundancy purposes though we did see a reduction in services and requests for deferred payment from customers in the industries hardest hit by the pandemic, e.g. travel, airlines and entertainment. We also saw a lengthening in the time to sign up new customers, which appeared to be due to a reluctance of customers to commit to new expenditure following the general downturn in the economy. This situation continued for the remainder of the calendar year, except for a bump in Q1 FY21 coinciding with the easing of restrictions globally, and new customers wanting to introduce flexibility to their network in the event of restrictions being reinforced.

We did not suffer any supply chain delays for key components of our electronics consumables or equipment suppliers, although experienced some minor delays when commissioning new third party connectivity for new data centres.

In Q3 FY21, with confidence returning to the market, we saw a significant increase in sales momentum particularly with larger customers as digital transformation projects, previously delayed, were initiated. This afforded the Company a record breaking final quarter to the year with the highest number of new customers onboarded, and the highest number of new ports and services activated.

Megaport Limited | ABN 46 607 301 959

We continue to benefit from the trend of enterprises shifting workloads to the Cloud, and increasingly utilising multiple applications hosted in the cloud, with products such as MCR and MVE, addressing the increasingly complex demands of our customers within and beyond the Data Centre.

Notwithstanding the recurring foreign exchange headwinds experienced throughout FY21 as the Australian dollar strengthened against other currencies, reported monthly recurring revenue grew by 32% to $7.5 million year on year.

Financial Position - Megaport is in a strong financial position, with $136.3 million in cash on hand at 30 June 2021, and no external debt other than an interest free vendor finance facility with an outstanding amount of $7.7 million. The downturn in the global economy has not had a significant impact on outstanding receivables. As at 30 June 2021, debtor balance was $6.6 million compared to $8.7 million as at 30 June 2020, an improvement of 25%. The aging quality has also continued to improve with debtor days improving from an average of 37 days to 25 days year on year.

We will continue to monitor the COVID-19 global pandemic and its impact on our business, and take further steps to protect the safety and wellbeing of our team, and limit and/or mitigate any other adverse impacts, to the extent appropriate and practicable.

Financial Performance

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Restated
2021 2020
Year ended 30 June 2021 $’000 $’000 Change
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Revenue	78,281	58,040	35%
Profit after direct network costs4	42,068	29,518	43%
Normalised EBITDA5	(13,320)	(21,063)	37%
Net loss for the year	(55,000)	(48,711)	(13%)

*Refer to Note (c) under Section 1 of the Financial Report for further details on prior year restatement

Megaport revenues for the year of $78.28m grew 35%, $20.24 million in the year with all regions contributing. North America in particular showed a very strong revenue growth with an increase of 47% year on year. All operational metrics, Customers, Ports, Services, Installed Data Centres and MRR showed significant improvement year on year, with the final quarter of the financial year having record customer acquisition and activation of ports and services.

Profit after direct network costs was $42.1 million, up 43% compared to the corresponding previous year of $29.5 million.

The Group’s net loss for the year amounted to $55.0 million (2020: $48.7 million).

Reported revenue by operating segment for FY21 and the year ended 30 June 2020 (“FY20”) is set out below:

4 Direct network costs comprise data centre power and space costs, physical cross connect fees, bandwidth and dark fibre, network operation and maintenance fees, and channel commissions, which are directly related to generating the service revenue of Megaport Group.

5 Normalised Earnings Before Interest Tax Depreciation and Amortisation (Normalised EBITDA) represents operating results excluding equity-settled employee costs, foreign exchange gains and non-operating expenses. Including these amounts, EBITDA would be ($36,993,000) in FY21 and ($31,742,000) in FY20. Refer Note 1 in the Financial Report for the reconciliation from Normalised EBITDA to the net loss for the year.

FY21

FY20

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----- Start of picture text -----

$25.7M
$20.6M
$38.7M 33%
36%
$26.3M
49%
45%
$11.1M
$13.8M
19%
18%
----- End of picture text -----

[Asia Pacific ] [Europe] [ North][America]

Financial Position

		Restated*
	2021	2020
	$’000	$’000
Net assets	180,412	210,969
Closing cash and bank balances	136,312	166,877

*Refer to Note (c) under Section 1 of the Financial Report for further details on prior year restatement

Megaport continues to maintain a strong financial position with net current assets of $116.9 million (2020: $156.3 million), cash and bank balances of $136.3 million (2020: $166.9 million) and total equity of $180.4 million (2020: $211.0 million).

Strategy and future performance

The Group continues to focus on its key strategic drivers, which are to:

Connect to new locations, partners, and enterprises;
Accelerate partner enablement to maximise sales opportunities; and
Strengthen its position as the leading innovator in global Network as a Service.

Business Risks

The material business risks faced by the Group that could have an adverse impact on the operating and financial performance and prospects of Megaport include:

COVID-19: In addition to the tragic health consequences, the COVID-19 global pandemic has seen major disruption to operations in some businesses and sectors, and resulted in significant volatility in financial markets. The nature and extent of the impacts have varied, with some businesses interrupting or suspending operations for prolonged periods. There is also continued uncertainty as to the impact of a global economic recession of uncertain duration and severity, and the ability of government responses to mitigate the impacts on business.
Breach of information security : Megaport is exposed to the risk of a material breach of information security that could result in disruption of customer services, financial loss, breach of regulatory compliance or damage to brand and reputation. e.g. unauthorised access to Megaport’s IT Assets, change affecting the accuracy and integrity of critical information, or disclosure of confidential information. This could manifest in loss of control (integrity) or availability of Megaport's network service (product) or supporting infrastructure/systems, or inadvertent disclosure of sensitive or personally identifiable information.

Megaport Limited | ABN 46 607 301 959

Competitive landscape and action of others: Megaport operates in a competitive landscape alongside a number of other service providers with competing technologies, network reach and capabilities, product and service offerings, and geographic presence. Megaport currently enjoys an early mover advantage in many of its deployed markets. However, Megaport may face increased competition from existing telcos and data centre operators (“DCOs”), and new entrants to the network-as-a-service and elastic interconnection markets who may have significant advantages including greater name recognition, longer operating history, existing market presence in similar or adjacent markets, lower operating costs, pre-existing relationships with current or potential customers, an ability to bundle with existing products and services, and greater financial, marketing and other resources.
Risk that Megaport’s SDN-driven connectivity solution is disrupted : Risk of the development of new technology, innovation or a connectivity solution that supersedes or disrupts Megaport’s SDN solution or erodes Megaport’s first mover advantage e.g. usage of 5G technology, SD-WAN over Internet or the provision of direct connectivity by CSPs.
Protection of intellectual property: Megaport’s ability to leverage the value of Network as a Service and SDN technology depends on its ability to secure ownership of and protect its intellectual property (“IP”) including any improvements to existing IP. The IP may not be capable of being legally protected or Megaport may incur substantial costs in asserting or defending its IP rights. Megaport’s IP may also be lost, stolen or compromised as a result of an unauthorised electronic security breach.
Reputational damage : The reputation of Megaport could be adversely impacted by a number of factors including failure to provide customers with the quality of service they expect, significant network issues, a significant privacy or information security breach, disputes or litigation with third parties such as customers, employees, or suppliers or adverse media coverage. A significant decline in our reputation could have an adverse effect on Megaport (e.g. on the existing customer base and revenues, ability to sign up new customers, ability to secure reasonable credit terms, etc.) and its future financial performance and position.
Continued access to funding and capital: Whilst Megaport’s business is not capital intensive in nature, the continued growth of the Company relies on the development of new markets, new locations, customer acquisition, retention investment, and ongoing maintenance of existing infrastructure and software platforms. Until revenues and margins are sufficient to fund this expenditure, Megaport will require continued access to capital or prudent use of cash in the bank. Failure to obtain capital on favourable terms or use cash wisely may hinder Megaport’s ability to expand and pursue growth opportunities, which may reduce competitiveness and have an adverse effect on the financial performance, financial position and growth prospects of the Company
Risk of Major Global Economic Downturn : Risk of a major global economic downturn (e.g. as a result of coronavirus) could lead to slower sales of ports and services, pressure on pricing and/or potential increased customer churn resulting in a slowdown in revenue growth and delays in reaching EBITDA / free cash flow breakeven, and downgrades to our earnings outlook. It could also heighten the risk of potential interruption to Data Centre access for service support and the risk that the equipment we need installed may be delayed.
Dependence on key personnel : Megaport depends on the skills and experience of its staff and employees, particularly in certain key positions. With a relatively small number of geographically dispersed employees for a global company, it is essential that appropriately skilled staff be available in sufficient numbers to support the Company’s business. Megaport requires staff to have a variety of skills and expertise, some of which may be considered niche specialties in which there are limited practitioners available for recruitment. While the Company has initiatives to mitigate this risk, the loss of staff in key positions could have a negative impact on Megaport. The loss of key staff to a competitor may amplify this impact.
Short operating record: Megaport was established in 2013 and has a relatively short operational track record and has only been a public company listed on the Australian Securities Exchange (“ASX”) since December 2015. As a result, the execution of Megaport’s business plan may take longer to achieve than planned, and the costs of doing so may be higher than budgeted .
Interruptions to operations, including from infrastructure, and technology failure : Megaport could be exposed to short, medium or long-term interruptions to its operations as it relies on infrastructure and technology, some of which is supplied by third parties, to provide its services. Megaport may be unable to deliver a service as a result of numerous factors, including human error, power loss, improper maintenance by entities not related to Megaport, physical or electronic security breaches, fire, earthquake, hurricane,

flood, pandemic and other natural disasters, water damage, intentional damage to the networks from vandalism, accidental damage to the networks from civil works, war, terrorism and any related conflicts or similar events worldwide, sabotage and vandalism.

Adverse exchange rate movements : Megaport’s global operations, sales in an expanding list of countries and markets, purchases of network equipment from overseas suppliers, and provision of services in international jurisdictions means that it is exposed to potentially adverse movements in exchange rates. This means that movements in exchange rates, particularly the A$/US$ and A$/EUR, may have an adverse impact on Megaport’s financial performance and position.
Doing business outside of Australia: Megaport currently has operations in Australia, Belgium, Bulgaria, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Japan, Luxembourg, Netherlands, New Zealand, Norway, Poland, Singapore, Spain, Sweden, Switzerland, United Arab Emirates, United Kingdom, USA, and has plans to expand to several more countries over the next 12 to 18 months. Accordingly, the Group is exposed to a range of multi-jurisdictional risks such as risks relating to licensing requirements, labour practices, environmental matters, difficulty in enforcing contracts, and changes to or uncertainty in the relevant legal and regulatory regime (including in relation to taxation and foreign investment and practices of government and regulatory authorities) and other issues in foreign jurisdictions in which Megaport operates. Businesses that operate across multiple jurisdictions, such as Megaport, face additional complexities from the unique business requirements in each jurisdiction.
Counterparty obligations : Megaport currently has operations in 23 countries, and has plans to expand to more countries over the next 12-18 months. Megaport relies on third parties, such as customers, suppliers, landlords, contractors, financial institutions, intellectual property licensors, technology alliance partners, resellers (strategic partners), joint venture partners and other counterparties to operate its business. Whilst the Group seeks to deal with reputable and highlight creditworthy counterparties where possible, this may fail to mitigate the risk of damage to Megaport’s business, financial performance and position or reputation from its relationship with one or more of these counterparties.
Ability to attract and retain employees: Megaport’s business is dependent on attracting and retaining quality employees. Megaport’s ability to meet its labour needs while controlling costs associated with hiring and training new employees is subject to external factors such as unemployment rates, market rates for talent, prevailing wage legislation and changing demographics in its operating markets as well as other factors such Megaport’s brand and reputation as an “employer of choice”. Changes that adversely impact Megaport’s ability to attract and retain quality employees could materially adversely affect Megaport’s future financial performance and position.
Regulatory compliance : Megaport is required to comply with the laws governing telecommunications and related sectors in each jurisdiction in which it operates, which may require Megaport to hold certain licences or submit a notification to the relevant regulator. Megaport must comply with a complex range of laws and regulations across each jurisdiction in which it operates. Regulatory areas which are of particular significance to Megaport include laws governing telecommunications and related sectors, information security, data protection, privacy, employment, occupational health and safety, property and environmental, customs and international trade, competition and taxation.
Loss of revenue due to churn related to lack of customer contracts : Megaport’s business model is to offer flexible connectivity arrangements without a requirement for customers to sign up to long-term (or mediumterm) contracts, which could see customers decommission services in large numbers at short notice or disconnect altogether without penalty. This is a particular risk should Megaport suffer a material increase in network outages or impact to its reputation, raising doubt about its reliability as a service provider.
Major Network Hardware or Software Failure : Risk that Megaport suffers a major outage or service interruption resulting from a network hardware or software failure.
Credit risk of customers / counterparties: Risk of a significant credit event / insolvency of one or a group of Megaport’s major customers / counterparties that results in financial losses / unrecoverable debts.
Reliance on renewal of key contracts : There is a risk that Megaport is unable to negotiate / re-negotiate / extend key contracts due to expire in the next 12 to 24 months. Megaport has some data centre operator co-location leases which are due for renewal in the next 12 months. This is normal practice as some contracts are less than 3 years and others are greater than 3 years. Each data centre operator has different terms and conditions in each jurisdiction, and almost all data centres operate a “carrier neutral” policy.

Megaport Limited | ABN 46 607 301 959

Tax investigation and / or adverse tax finding / assessment : Megaport’s growing global presence and the complex nature of the tax environments in which it operates could result in a tax investigation and / or adverse tax finding / assessment that could materially adversely affect Megaport’s future financial performance and position.
Privacy breach : Risk that Megaport’s failure to comply with global privacy regulatory requirements results in reputational damage, lost customers & revenue, fines, other sanctions that could materially adversely affect Megaport’s future financial performance and position and require the business to incur additional compliance costs.

Information Security and Privacy

Megaport is committed to safeguarding its information technology assets and personal data, having invested considerable time and resources addressing privacy and information security.

Megaport’s Information Security Risk Committee (“ISRC”) operates at an executive level, being accountable for key decisions and driving continuous improvements in these areas. During the year, Megaport achieved ISO/IEC 27001 certification from the International Organization for Standardization (“ISO”).

Megaport has qualified and experienced Information Security and Privacy Teams, dedicated to developing processes and procedures to ensure that Megaport’s information and technology assets are kept private and secure. The Information Security Team is responsible for the Megaport Information Security Policy and associated policies, processes, procedures and standards within the policy framework, and regularly reports to the ISRC. The Privacy Team is responsible for Megaport’s Privacy Programme, including internal Personal Data Protection Policy and related processes, similarly advising the Information Security Team and ISRC on security requirements specific to personal data.

Megaport employees are trained in their responsibilities regarding Information Security, Privacy and Legal Compliance upon hire as well as undertaking compulsory annual refresher training.

Significant changes in the state of affairs

There were no significant changes in the state of affairs of the Group during the financial year:

Events since the end of the financial year

On 10 August 2021, The Company announced that it has agreed to acquire 100% of the shares outstanding in InnovoEdge Inc., a Delaware registered company, via its subsidiary Megaport USA Ltd, for a total purchase price of $20.4 million (US$15 million), of which $10.2 million (US$7.5 million) is contingent on the business meeting certain technological and commercial milestones.

Pending completion of all conditions precedent, customary in transactions of this nature, the Company expects this proposed transaction to close in the first quarter of FY22.

InnovoEdge Inc. is a start-up technology company which has developed a platform for orchestrating and managing cloud infrastructure. Megaport see great value to our customers for allying and incorporating the capability of this platform with the existing flexibility and control offered on Megaport’s own platform.

The Group is not aware of any other matters or circumstances that have arisen since the end of the year which have significantly affected or may significantly affect the Group’s operations and results or state of affairs of the consolidated entity.

Likely developments and expected results of operations

The 2021 financial year saw strong uptake in Megaport services, with the total number of services connected at 30 June 2021 reaching 21,712, up 30% compared with 12 months earlier. This was driven by strong demand from enterprises for cloud and interconnection services, and a move by software providers towards delivering services in the cloud, both trends that are expected to see continued demand for services provided by the Group.

Environmental regulation

The Group does not undertake activities that are expected to expose it to significant environmental risks. As a service-based organisation, Megaport’s environmental footprint is relatively small and primarily comprises the energy used by its offices and third-party data centres and the typical consumables of an office-based business.

Rounding off of amounts

The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument 2016/191, dated 24 March 2016 (Corporate Instrument). In accordance with the Corporations Instrument, amounts in the Directors’ Report and the Financial Report are rounded off to the nearest thousand dollars ($’000), unless otherwise indicated.

Megaport Limited | ABN 46 607 301 959

Introducing

PARTNERVANTAGE

Megaport has long been a partner-oriented business. Our success to date has been driven by our major strategic partnerships with the world’s top cloud service providers, including AWS, Microsoft Azure, and Google Cloud, as well as global leading data centre operators, managed services providers, and systems integrators. This year, we announced partnerships with Cisco and Fortinet, two of the top SD-WAN providers, with more announcements to come in FY22. Megaport has always worked with its partners to develop innovative joint solutions that reimagine connectivity and modernise enterprise networks.

Megaport PartnerVantage, our new partner program, will accelerate service adoption on the Megaport platform and make it easier than ever for our partners to sell NaaS connectivity to their customers. Within the program, partners can quickly and easily add the newest, cutting-edge innovations in cloud connectivity, virtual routing, and edge networking to their portfolio of technology offerings to respond to the needs of their customers. Megaport PartnerVantage will provide partners a comprehensive suite of tools and resources designed to reduce sales friction and enable them to deliver strategic value to their customers and grow recurring revenue over time.

Among these resources are VantageHub, a partner relationship management portal that allows partners to manage all of their business with Megaport from a single pane of glass, and VantageTransact, a transaction portal that enables self-provisioning of Megaport services.

As more and more companies embrace the cloud as well as SD-WAN technologies to improve WAN performance at the edge, Megaport PartnerVantage can help providers and agents quickly develop domain expertise in NaaS connectivity that optimises hybrid

cloud, private cloud, multicloud, and edge networking deployments. IDC predicts that by 2023, 40% of partners will become “Edge experts, becoming the largest IT infrastructure repository.”

The Megaport PartnerVantage program includes:

VantageHub is a world-class, integrated platform that provides all the resources partners need to drive and manage their Megaport business through a single pane of glass.
VantageTransact is a powerful, on-demand portal where partners can manage all of their customers’ services from registration, to ordering to provisioning.
VantageFunds helps partners view and manage the impactful financial incentives they’re earning, including front-end discounts, commissions, and marketing development funds (MDF).
VantageLearn helps increase partners’ ability to sell and provide technical expertise for Megaport’s entire portfolio with flexible, on-demand training modules, as well as documentation and how-to’s.
VantageSelling gives partners access to Partner Account Managers and Solutions Architects to help them identify opportunities and close deals. Extensive dashboards and reporting are also available.
VantageMarketing empowers partners to use Megaport co-brand campaigns, toolkits, battlecards, customer-facing assets, and other marketing materials to help drive demand.

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Expand with Ease

Megaport PartnerVantage will empower our partners to expand their integrated solutions and services with Megaport’s portfolio by leveraging a single platform for all resources needed to market, scope, sell, and close more deals more quickly.

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Grow Revenue

Expand your portfolio with Megaport’s NaaS offerings as the foundation for your cloud and networking products and high-margin services. Customers will get improved solutions and outcomes fast, and partners will see new recurring revenue just as quickly.

Drive Customer Success

Customers demand more every day and competition is tougher than ever. Megaport PartnerVantage makes partners the trusted advisors, delivering success to customers year after year by providing reliable, automated, and agile connectivity.

Get Started Immediately

Megaport PartnerVantage makes NaaS easy. Easy to order. Easy to provision. Easy to learn. Easy to get paid. That means less time and expense on administration, and more importantly, faster time to revenue.

Megaport Limited | ABN 46 607 301 959

INFORMATION ON DIRECTORS + COMPANY SECRETARY

The following information is current as at the date of this report.

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Other current ASX directorships: Superloop Limited (ASX:SLC) (director since 2014)

Former ASX directorships in last 3 years:

None

Special responsibilities:

Chairman
Member of the Audit & Risk Committee (appointed 19 August 2020 and resigned 1 June 2021)
Member of the Innovation Committee

Bevan Slattery

Chairman & Non-Executive Director

Bevan Slattery, one of Australia’s leading entrepreneurs, has founded some of the nation’s biggest technology success stories. Starting as a co-founder of PIPE Networks, Australia’s largest Internet Exchange and third-largest metropolitan fibre network provider, Slattery sold the company to TPG in 2010.

Subsequently, he founded NEXTDC, Asia’s most innovative data centre-as-a-service provider; Megaport, the global leading elastic interconnection provider; Cloudscene, the world’s largest platform for searching cloud and connectivity services; Biopixel, Australia’s leading production service provider for natural history and animal behavioural sequences; Superloop, a Pan-Asian infrastructure-based telecommunications provider; SubPartners, a submarine cable operator and Indigo Cable investor; SUB.CO, an independent specialist submarine cable development group with 9,800km of submarine cable infrastructure currently under construction between Perth and Oman as part of the Oman Australia Cable system; and HyperOne, expected to become Australia’s first hyperscale fiber optic network and the largest private, independent digital infrastructure project in Australia’s history.

Slattery’s entrepreneurial success is highlighted in having listed five companies on the Australian Securities Exchange and received many industry awards including EY Champion of Entrepreneurs Award in 2016, National Charles Todd Medal, and the Pearcey Foundations Benson Award as well as being inducted into the Commsday Hall of Fame in 2017.

Interests in shares and options:

12,037,607* fully paid ordinary shares (held directly) and 102,500 fully paid ordinary shares (held indirectly)
100,000 options over ordinary shares (held directly)

*Includes 3,000,000 shares beneficially held by Bevan Slattery that have been pledged as security under a structured option and loan facility

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Other current ASX directorships: None

Former ASX directorships in last 3 years:

None

Special responsibilities:

Member of the Innovation Committee

Interests in shares and options:

1,584,149 fully paid ordinary shares (held directly) and 23,908 fully paid ordinary shares (held indirectly)

Vincent English

Chief Executive Officer & Executive Director

Vincent English is the Chief Executive Officer of Megaport and is also an Executive Director. Vincent joined Megaport in June 2015, in the early growth phase and held roles as Chief Financial Officer and Chief Operating Officer before being appointed as Chief Executive Officer in 2017.

Vincent has a background in telecommunications and manufacturing industries with over 20 years’ combined international expertise in Finance and Operations. His diversified experience deploys best practice on cost-efficient start-ups, growth-focused and profitable operations.

Vincent has been a Chief Financial Officer for 10 years with Digicel Group, a multi-national telecommunications company. In 2005 as Chief Financial Officer, Vincent assumed responsibilities during an aggressive growth time in the Company’s evolution, with nine country mobile phone network launches, integrating operations, establishing cohesive financial processes, rolling out processes companywide and devising synergies and cost savings.

As well as managing the financial operations in multiple markets, Vincent managed several acquisitions in mobile businesses, TV operations and financial services.

Prior to Digicel, Vincent worked in the manufacturing industry for Alcoa and Gillette in financial operations roles.

Vincent is a member of ACMA, CPA Australia, and the Australian Institute of Company Directors.

1,000,000 options over ordinary shares (held directly)

Megaport Limited | ABN 46 607 301 959

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Glo Gordon Non-Executive Director

Glo has more than 20 years of experience as a senior global executive in business operations strategy and sales at large technology companies including Cisco, Oracle, SAP, and Xerox. She is currently CEO and board member of MATRIXX, a leading 5G digital commerce company in Silicon Valley.

In 2014, Glo became the Chief Revenue Officer, responsible for Sales, Marketing and Customer Success for Jasper, a Silicon Valley IoT startup which was acquired in 2016 by Cisco for $1.4B. At Cisco, as Vice President and General Manager, IoT, Sales and Marketing, Ms Gordon held P&L responsibility for growth and margin for Cisco’s Strategic IoT business unit. Prior to Jasper, Glo was with Oracle for 10 years and her last role was Group Vice President, Worldwide BSS/OSS applications sales, contributing double digit growth in recurring revenue for Oracle’s Communications Business Unit for Telcos and Enterprise.

More recently, Glo was Chief Revenue Officer at Uptake, an emerging leader in artificial intelligence, machine learning, and predictive analytics.

Other current ASX directorships:

None

Former ASX directorships in last 3 years:

None

Special responsibilities:

Member of the Remuneration & Nomination Committee (since 1 July 2021)
Member of the Diversity & Inclusion Advisory Board (since 1 July 2021)

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Michael Klayko Non-Executive Director

Michael Klayko has over 40 years of experience in the data storage, computer, technology and telecommunications industries. During his tenure as CEO of Brocade, he grew the company revenues from less than US$500 million to over US$2.2 billion. Additionally, he has held leadership and Executive positions at leading technology companies including Rhapsody Networks, McDATA Corporation, EMC Corporation, Hewlett Packard, and IBM.

Michael brings a comprehensive understanding of the technology and network solutions industry coupled with extensive experience as a director of other publicly listed technology companies. He is Managing Partner of MKA Capital, an investment company focusing on technology investments, and is an Operating Executive at Marlin Equity Partners, a global investment firm. Currently Michael serves as the Chairman of the Board of Allscripts Healthcare (NASDAQ: MDRX), Virgin Pulse and Star Compliance, and is a board member of TIBCO.

Other current ASX directorships:

None

Former ASX directorships in last 3 years:

None

Special responsibilities:

Member of the Innovation Committee (since 1 June 2021)

Interests in shares and options:

25,000 fully paid ordinary shares (held directly)

Interests in shares and options:

None

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Naomi Seddon Non-Executive Director

Naomi Seddon is an Australian, US, and NZ qualified lawyer and is a partner with the global law firm, Littler Mendelson.

With a focus on providing international legal solutions to companies that are looking at market entry, Naomi has extensive experience assisting companies to enter and grow in new markets including advising on global migration, local employment, data protection and privacy, pay equity, and equal employment opportunity issues.

In 2016 Naomi was named one of the top 500 attorneys in the United States for legal advice by Legal 500.

Naomi is also an author and presenter on issues that impact women in the workplace and is frequently called upon to assist companies to implement innovative programs in this space. In addition to her professional legal work, Naomi is a passionate advocate for international surrogacy rights and is on the board of Surrogacy Australia. She is also the board chair of United Stages and on the advisory board of Global Villages.

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Melinda Snowden Non-Executive Director

Melinda has 27 years of experience in finance and has been a professional non executive director since 2010 in a broad range of industries. Melinda is currently a Non-Executive Director and Chair of the Audit and Risk Committee of ASX listed companies WAM Leaders, Sandon Capital Investments and Best & Less Group Holdings. Melinda is also currently a Non-Executive Director of Newmark REIT Management, Our Ark Mutual and an advisory board member of Yarno, a SaaS compliance and education provider.

Melinda has held previous non-executive director roles at MLC, Vita Group, Mercer Investments (Australia), and Kennards Self Storage. Prior to her non-executive career, she held investment banking roles with Grant Samuel, Merrill Lynch, and Goldman Sachs and was a solicitor in the corporate division of Herbert Smith Freehills.

Melinda holds a Bachelor of Economics and Laws from the University of Sydney and is a graduate member of the Australian Institute of Company Directors.

Other current ASX directorships:

None

Former ASX directorships in last 3 years:

None

Special responsibilities:

Lead Independent Director
Chair of the Remuneration & Nomination Committee
Member of the Audit & Risk Committee
Member of the Diversity & Inclusion Advisory Board (since 1 July 2021)

Interests in shares and options:

100,000 options over ordinary shares (held directly)

Sandon Capital Investments Limited (ASX:SNC)
WAM Leaders Limited (ASX:WLE)
Best & Less Group Holdings Ltd (ASX:BST)

Former ASX directorships in last 3 years:

None

Special responsibilities:

Chair of the Audit & Risk Committee (since 1 June 2021)
Member of the Diversity & Inclusion Advisory Board (since 1 July 2021)

Interests in shares and options:

None

Megaport Limited | ABN 46 607 301 959

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Jay Adelson Non-Executive Director

Jay Adelson has over 25 years of experience in technology and internet businesses globally. Jay co-founded Equinix (NASDAQ:EQIX) in 1998, and was responsible for the original and sustaining business model that grew it into one of the largest data centre companies in the world.

Jay also was instrumental in the establishment and operation of the original Palo Alto Internet Exchange for Digital Equipment Corporation in 1996.

In 2005, he founded the first internet television network, Revision3, which was acquired by Discovery Communications in 2012.

As CEO of Digg, Jay launched and grew the internet media company to tens of millions of users, and billions of impressions, a month. Jay has also founded and served as CEO for other successful companies across the technology and internet infrastructure spaces.

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Celia Pheasant Company Secretary

Celia Pheasant is an experienced in-house information and communications technology lawyer with more than 25 years of legal experience. Celia has served in her current capacity as company secretary for Megaport since 2015 and is responsible for the corporate governance of its subsidiaries in 24 countries globally. Celia is also General Counsel for Capital B, an origination and execution service provider for diverse technology and digital infrastructure businesses.

Celia commenced her career as a solicitor in the telecommunications division at Herbert Smith Freehills before continuing with in-house counsel roles with Hutchison Whampoa and AAPT.

Celia holds a Bachelor of Laws and Bachelor of Arts (Jurisprudence) from the University of Adelaide and a Master of Law and Management from the University of New South Wales.

Other current ASX directorships:

None

Former ASX directorships in last 3 years:

None

Special responsibilities:

Chair of the Innovation Committee
Chair of the Audit & Risk Committee (until 1 June 2021)
Member of the Audit & Risk Committee (since 1 June 2021)
Member of the Remuneration & Nomination Committee

Interests in shares and options:

10,000 fully paid ordinary shares (held directly) and 50,000 options over ordinary shares (held directly)

Meetings of Directors

The number of meetings of the Company’s board of directors and each board committee held during the year ended 30 June 2021, and the numbers of meetings attended by each director were:

	Directors’ meeting	Directors’ meeting		Meetings of	Meetings of	Committees	Committees
			Audit	& Risk	Remuneration		Innovation
					& Nomination
	A	B	A	B	A	B	A	B
Bevan Slattery	10	10	2	2	*	*	4	4
Vincent English	10	10	*	*	*	*	4	4
Jay Adelson	10	10	4	4	6	6	4	4
Naomi Seddon	10	10	4	4	6	6	*	*
Michael Klayko	2	3	*	*	*	*	0	0
Melinda Snowden	1	1	1	1	*	*	*	*

A = Number of meetings attended

B = Number of meetings held during the time the director held office or was a member of the committee during the period

= Not a member of the relevant committee

Megaport Limited | ABN 46 607 301 959

CUSTOMER COHORT TRENDS

Customer spend increases over time as a result of service uptake and adoption.

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Year 8 25.7
Year 7 21.0 20.9
Year 6 18.9 20.1 14.8
Year 5 15.9 16.3 17.8 11.1
Year 4 11.5 12.9 13.2 13.1 8.6
Year 3 8.5 11.0 10.2 10.0 8.5 6.7
Year 2 7.6 6.6 7.8 7.6 7.3 6.3 5.0
Year 1 4.0 4.6 4.4 4.0 4.0 4.0 3.3 2.3
FY21 FY20 FY19 FY18 FY17 FY16 FY15 FY14
Customer Cohort Year
CAGR¹ - 66% 39% 42% 41% 36% 36% 41%
Cohort Age
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Average Services Per Customer2

9.5 +5%

Note: Yearly cohorts are customers acquired in a given reporting year.

1. Compound average growth rate for each customer cohort is calculated for the period from end of Year 1 to 30 June 2021.

2. At 30 June 2021; percentage represents growth compared to 12 months earlier.

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Year 8 3,767
Year 7 6,417 3,155
Year 6 4,772 5,785 2,637
Year 5 4,914 4,437 3,723 2,303
Year 4 4,067 4,055 3,288 2,689 1,696
Year 3 3,274 3,598 2,847 2,454 1,695 1,324
Year 2 3,260 2,759 2,528 2,027 1,624 1,274 1,240
Year 1 1,765 2,008 1,257 1,249 1,131 672 666 433
FY21 FY20 FY19 FY18 FY17 FY16 FY15 FY14
Customer Cohort Year
CAGR¹ - 62% 61% 48% 44% 48% 46% 36%
Cohort Age
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Average Monthly Revenue Per Customer 3 ($)

$3.3K

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Note: Yearly cohorts are customers acquired in a given reporting year

1. Compound average growth rate for each customer cohort is calculated for the period from end of Year 1 to 30 June 2021.

3. Represents June 2021 MRR divided by total customers at 30 June 2021; percentage represents movement compared to 12 months earlier.

Megaport Limited | ABN 46 607 301 959

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REMUNERATION REPORT

Remuneration Report

This Remuneration Report, which forms part of the Directors Report, sets out information about the remuneration of Megaport Limited’s key management personnel for the financial year ended 30 June 2021 and is prepared in accordance with section 300A of the Corporations Act 2001 (“Corporations Act”).

The term ‘key management personnel’ refers to those persons having authority and responsibility for planning, directing and controlling the activities of the consolidated entity, directly or indirectly, including any director (whether executive or otherwise) of the consolidated entity.

The information in this report has been audited as required by section 308(3C) of the Corporations Act.

Key management personnel (“KMP”)

The directors and other key management personnel of the consolidated entity during or since the end of the financial year were:

Non-Executive and Executive Directors[6]

Name	Position
Bevan Slattery	Chairman and Non-Executive Director
Vincent English	Executive Director and Chief Executive Officer
Jay Adelson	Non-Executive Director
Naomi Seddon	Non-Executive Director
Michael Klayko	Non-Executive Director (Appointed 16 March 2021)
Melinda Snowden	Non-Executive Director (Appointed 1 June 2021)
Glo Gordon	Non-Executive Director (Appointed 1 July 2021)

Other key management personnel

Name	Position
Sean Cassidy	Chief Financial Officer
Rodney Foreman	Chief Revenue Officer (Appointed 1 February 2021)
Joshua Munro	Interim Chief Commercial Officer (Appointed 13 July 2020, stepped down 1 February 2021)
Peter Hase	Chief Commercial Officer (Resigned 13 July 2020)

Except as noted, the named persons held their current position for the whole of the financial year and since the end of the financial year.

6 See the section “Information on directors and company secretary” for details about each director

Megaport Limited | ABN 46 607 301 959

Overview of Remuneration Governance Framework

Role of the Remuneration and Nomination Committee

The Remuneration and Nomination Committee is a Committee of the Board. The purpose of this committee is to assist the Board and make recommendations to it about the appointment of new Directors (both Executive and Non-Executive), senior management and on remuneration and related policies and practices (including remuneration of senior management and Non-Executive Directors) as well as recommendations regarding employee benefits and other people and team management issues within the organisation.

The committee’s functions include:

developing suitable criteria (about experience, expertise, skills, qualifications, contacts or other qualities) for Board candidates;
identifying suitable candidates for appointment to the Board or any management position;
reviewing processes for succession planning for the Board, CEO and other senior executives;
recommending to the Chair procedures for the proper supervision of the Board and senior management;
ensuring appropriate induction and continuing professional development programs are implemented for Directors;
ensuring that the performance of each Director, and of senior management, is reviewed and assessed each year in accordance with procedures adopted by the Board;
ensuring that any diversity profile identified by the Board is a factor that is taken into account in the selection and appointment of qualified employees, senior executives and Board candidates;
reporting to the Board annually on the diversity profile of employees of the Company;
regularly formally assessing the appropriate balance of skills, experience and diversity required on the Board and the extent to which they are represented on the Board;
reviewing and evaluating of market practices and trends on remuneration matters relevant to the Company;
● reviewing and making recommendations to the Board about the Company’s remuneration policies and procedures;
overseeing the performance of senior executives and non-executive Directors;
reviewing and making recommendations to the Board about remuneration of senior executives and nonexecutive Directors;
reviewing the Company’s reporting and disclosure practices in relation to the remuneration of Directors and senior executives;
analysing market trends in employee benefits and compensation;
reviewing employee benefits and workplace policies and practices and making recommendations to the Board on policy and benefits changes;
reviewing and making recommendations to the Board on remuneration against gender, ethnicity, disability and other diversity benchmarks and assessing whether there is any inappropriate bias in remuneration for Directors, senior executives or other employees; and
reviewing and reporting to the Board, at least annually, on the proportion of women and men in the workforce at all levels of the Group, and their relative levels of remuneration.

Meetings are held at least five times a year and more often as required.

A copy of the Committee’s charter, which forms part of the Corporate Governance Charter, is available on - Megaport’s website at megaport.com/investor/leadership governance. The Committee’s charter incorporates the Corporate Governance Principles and Recommendations (Fourth Edition) published by the ASX Corporate Governance Council.

Megaport’s Corporate Governance Statement provides further information on the role of this Committee.

Securities Trading Policy

A securities trading policy (“Trading Policy”) has been adopted by the Board to provide guidance to Directors, employees of Megaport, and other parties who may have access to price sensitive information, where they are contemplating dealing in Megaport’s securities or the securities of entities with whom Megaport may have dealings. The Trading Policy is designed to ensure that any trading in Megaport’s securities is in accordance with the law. Any non-compliance with the Trading Policy will be regarded as an act of serious misconduct. The Securities Trading Policy is available on Megaport’s website at megaport.com/investor/leadership-governance.

Director remuneration

Non-Executive Director remuneration policy

Megaport’s Director remuneration policy is to provide fair remuneration that is sufficient to attract and retain NonExecutive Directors with experience, knowledge, skills and judgment.

Each Director is entitled to remuneration for their services as decided by the Directors. Under the ASX Listing Rules, the total amount provided to all Non-Executive Directors for their services must not exceed in aggregate in any financial year the amount fixed by Megaport which was approved by shareholders at the 2016 AGM. This amount is currently $1,000,000. Actual remuneration to Non-Executive Directors for the financial year 2021 totaled $575,166 (2020: $340,031).

To preserve independence and impartiality, Non-Executive Directors do not receive incentive or performance based remuneration. Nor are there any retirement benefit schemes other than statutory superannuation contributions.

The Non-Executive Directors fall under the same long-term incentive (“LTI”) policy as the Executive team. Refer below for details of the Megaport LTI policy and procedure.

Non-Executive Directors may be paid additional remuneration where they perform extra work or services beyond that expected of a Non-Executive Director or outside the scope of their role as a Non-Executive Director.

Non-Executive Directors are entitled to be reimbursed for travel and other expenses incurred while carrying out their duties as a Director.

Non-executive Director arrangements

Non-executive Directors receive a board fee and fees for chairing board committees, see table below. Actual amounts received by Non-Executive Directors are provided later in this report.

	2021 $ 2020 $

*Base fees*
Chairman 200,000 80,000
Other non-executive directors 125,000 80,000
*Additional fees*
Audit & Risk Committee – Chair 15,000 10,000
Remuneration & Nomination Committee – Chair 15,000 10,000
Innovation Committee – Chair 15,000 60,000
Audit & Risk Committee – Member 10,000 -
Remuneration & Nomination Committee – Member 10,000 -
Innovation Committee – Member 10,000 -

All Non-executive Directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the board policies and terms, including remuneration, relevant to the office of Director.

Megaport Limited | ABN 46 607 301 959

Executive remuneration

Senior executive remuneration policy

The senior executive remuneration policy is designed to strengthen the alignment between performance related remuneration and shareholder returns, ensuring that remuneration outcomes for senior executives are directly linked to performance (both Company and individual) in a manner that is ultimately aligned to shareholder interest. Megaport's remuneration framework aims to be transparent, competitive and reasonable, and consists of three key components:

fixed remuneration;
short term incentives; and
long term incentives.

Regular reviews are conducted by the Committee (and recommendations made to the Board) to assess global company performance, team performance, individual contribution as well as market remuneration based on the executive’s position within the organisation.

Fixed remuneration and benefits

Base remuneration and benefits are structured as a total employment cost package, which may be delivered as a combination of cash and prescribed non-financial benefits at the executives’ reasonable discretion.

Executives are offered a competitive base remuneration package that comprises the fixed component of remuneration and rewards. Base remuneration for executives is reviewed annually, to ensure the executive’s remuneration is competitive with the market and appropriate based on the executive’s position and responsibilities within the organisation. An executive’s remuneration is also reviewed on promotion in the same manner.

There is no guaranteed base remuneration increase included in any executive’s contract. Executives may receive benefits, including health insurance benefits as part of the fixed remuneration package. Company benefits programs are also reviewed by the Committee throughout the year with recommendations made to the Board and updates to policy, practice and employee benefits as appropriate.

Superannuation contributions are paid in accordance with relevant Government legislation, to employee nominated defined contribution superannuation funds.

Short term incentive policy and procedure

Senior executives may be eligible for a short-term incentive (“STI”), subject to targets set by the Remuneration and Nomination Committee. The targets are set with the objective of ensuring variable reward is only available when value has been created for shareholders.

An executive's targets typically relate to the individual accountabilities of the role, and the financial performance of the Group and relevant business unit.

Each year, the Remuneration and Nomination Committee considers the appropriate targets, and sets minimum levels of performance to trigger the payment of an STI. The Remuneration and Nomination Committee is responsible for assessing whether the STI targets are met. For the year ended 30 June 2021, the STI targets were based on Group financial performance targets (being Total Revenue, Normalised EBITDA) as well as individual performances.

Long term incentive policy and procedure

The objectives of the long-term incentive plans are to:

establish a method by which eligible participants can participate in the future growth and profitability of the Company;
provide an incentive and reward to recognise eligible participants for their contributions to the Company; and
attract and retain a high standard of managerial and technical personnel for the benefit of the Company.

The Group currently has one long term incentive plan: the Megaport Limited Employee Share Option Plan (“ESOP” or “ESOP General”). The following terms apply to the ESOP General:

the ESOP is open to eligible participants (including full-time and part-time employees, executives, Directors and consultants) of Megaport or any of its subsidiaries who the Board designates as being eligible;
all options must be offered to participants for no consideration under the ESOP. The offer must be in writing and specify, amongst other things, the number of options for which the participants must apply, the period within which the options may be exercised and any conditions to be satisfied before exercise, the option expiry date (as determined by the Board) and the exercise period for the options;
the options may be exercised, subject to any exercise conditions, by the participant giving a notice to Megaport and paying the exercise price in full;
the options lapse upon the earlier of the date specified by the Board or events contained in the ESOP rules, including termination of employment or resignation, redundancy, death or disablement; and
once Shares are allotted upon exercise of the options, the participant will hold the shares free of restrictions. The shares will rank for dividends declared on or after the date of issue but will carry no right to receive any dividend before the date of issue.

The ESOP is administered by the Board which has an absolute discretion to determine appropriate procedures for its administration and resolve questions of fact or interpretation and formulate special terms and conditions (subject to the Listing Rules) in addition to those set out in the plan.

At 30 June 2021, Megaport had 3,226,668 options on issue to eligible employees, including Directors and other KMP under the ESOP. At 10 August 2021, the number of options on issue under the ESOP had decreased to 3,026,668.

The Company’s Securities Trading Policy prohibits executives from entering into transactions which limit the economic risk related to equity-based remuneration schemes without written clearance.

Chief Executive Officer Remuneration

Vincent English is an Executive Director of the Board of Megaport and Chief Executive Officer (“CEO”) of the Megaport Group. Vincent commenced the role of CEO in the Group on 1 April 2017. The detail below outlines the CEO’s remuneration package.

The CEO's remuneration package seeks to align the CEO’s performance with the Group’s strategic objectives. The CEO's remuneration is structured to include a mix of fixed base salary, short term incentive and long term incentive.

The CEO’s fixed base salary of $547,950 was determined by the Board with reference to market data based on other similar global companies. The Remuneration and Nomination Committee considered the following factors in arriving at this outcome:

the need to ensure remuneration is competitive with the Group’s relative peer group;
the responsibilities of the CEO relative to the breadth of the Group's global operations;
the CEO’s individual performance and the Group’s performance; and
the need to ensure remuneration is reflective of the size and scale of the business.

The CEO may be eligible for a STI of up to $273,975, subject to targets set by the Remuneration and Nomination Committee at the commencement of the financial year. The targets for the year ended 30 June 2021 relate directly to Megaport’s financial performance and position. Details of the STI payable to the CEO in respect of 2021 financial year are outlined later in this report.

The CEO was issued 1,000,000 options during the year ended 30 June 2021 (2020: Nil). The amounts listed for the CEO's LTI for the financial year consists of options issued in previous years under Megaport’s ESOP, details

Megaport Limited | ABN 46 607 301 959

of which appear later in this report. As at 30 June 2021, Vincent holds 1,000,000 outstanding options (2020: 1,000,000 options).

Other key management personnel remuneration

Variable remuneration for KMPs (other than the CEO) is structured on similar principles to those adopted for the CEO. Although the mix of fixed and variable remuneration varies between senior executives, and is determined based on the extent to which they are in a position to directly influence Group’s performance, the remuneration philosophy is to allocate a material part of executive remuneration to be derived from an “at risk” element in the form of an STI and an LTI based on length of service, to ensure longevity in the Group’s KMP.

Service agreements

Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of the key terms of these agreements are as follows:

Key term	CEO CRO CFO

Duration of agreement: No fixed term No fixed term No fixed term
Period of notice required to terminate agreement (by the relevant KMP): Twelve weeks’ notice No notice Four weeks’ notice
Period of notice required to terminate agreement (by Company): Twelve weeks’ notice, or immediately without notice for serious misconduct or other specific circumstances warranting summary dismissal No notice Four weeks’ notice, or immediately without notice for serious misconduct or other specific circumstances warranting summary dismissal
Potential Termination benefits: Termination by Megaport without cause entitles the CEO to a severance payment equal to six months Base Salary. No severance benefits are payable if the CEO’s employment is terminated by Megaport for serious misconduct or other specific circumstances warranting summary dismissal or if the CEO resigns. Payment to the extent of any accrued but untaken or annual leave. Payment in lieu of notice period
Remuneration: As disclosed in the relevant section

Remuneration of KMP

The following tables show details of the remuneration expense recognised for the Group’s KMP for the current and previous financial years measured in accordance with the requirements of the accounting standards. The amounts reflect remuneration for the period the person is recognised as a KMP, as outlined at the start of this Remuneration Report.

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Short-term benefits Post- Long-term Equity-settled
employment benefits benefits benefit and rights
Non- Super-
Short- monetar annuation / Terminat Long
Salary term y Pension ion service
and fees [7] incentive benefits contribution benefits leave Shares Options [8] Total
2021 $ $ $ $ $ $ $ $ $
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Short-term benefits 2021 Salary and fees7 $ Short- term incentive $ Non- monetar y benefits $	Post- employment benefits Long-term benefits Equity-settled benefit and rights Super- annuation / Pension contribution $ Terminat ion benefits $ Long service leave $ Shares $ Options8 $ Total $
*Non-Executive Directors*
Bevan Slattery 200,152 - - 19,014 - - - 114,793 333,959
Jay Adelson 164,583 - - - - - - 152,984 317,567
Naomi Seddon 150,000 - - - - - - 152,984 302,984
Michael Klayko* 28,847 - - - - - - - 28,847
Melinda Snowden** 11,479 - - 1,091 - - - - 12,570
555,061 - - 20,105 - - - 420,761 995,927
*Executive Director*
Vincent English 561,817 273,975 6,306 21,694 - 12,264 - 2,671,180 3,547,236

*Other KMP*
Sean Cassidy^ 362,976 110,129 - 31,918 - - 1,000 348,727 854,750
Rodney Foreman^^ 175,957 130,910 - 4,865 - - 1,000 232,468 545,200
Joshua Munro# 378,546 - - 19,349 - 22,714 - 43,031 463,640
Peter Hase## 43,815 - - 33,310 179,453 - - - 256,578
961,294 241,039 - 89,442 179,453 22,714 2,000 624,226 2,120,168
Total Remuneration 2,078,172 515,014 6,306 131,241 179,453 34,978 2,000 3,716,167 6,663,331

Appointed 16 March 2021

**Appointed 1 June 2021

^ Appointed 1 July 2020 ^^Appointed 1 February 2021

Appointed on an interim basis on 13 July 2020 with role concluding on 1 February 2021

Resigned 13 July 2020

7 Annual leave, included under “Salary and fees” and Long service leave represents the movement in the leave provision balances. The accounting value may be negative, for example, when an Executive’s leave balance decreases as a result of taking more than the entitlement accrued during the year

8 The value of options is calculated using a Black-Scholes valuation model at grant date. This value is allocated to remuneration of KMP on a straight-line basis to profit or loss over the period from grant date to vesting date. This value represents the share-based payment accounting expense for the options for the financial year or the period that person was a KMP within the year

Megaport Limited | ABN 46 607 301 959

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Short-term benefits Post- Long-term Equity-settled benefit
employment benefits and rights
benefits
Super-
Short- Non- annuation / Long
Salary and term monetary Pension service
fees [9] incentive benefits contribution leave Shares Options [10] Total
2020 $ $ $ $ $ $ $ $
----- End of picture text -----

Short-term benefits 2020 Salary and fees9 $ Short- term incentive $ Non- monetary benefits $	Post- employment benefits Long-term benefits Equity-settled benefit and rights Super- annuation / Pension contribution $ Long service leave $ Shares $ Options10 $ Total $
*Non-Executive Directors*
Bevan Slattery 73,060 - - 6,940 - - 97,771 177,771
Simon Moore^ 20,547 - - 1,953 - - - 22,500
Jay Adelson 147,531 - - - - - 149,345 296,876
Naomi Seddon 90,000 - - - - - 149,345 239,345
331,138 - - 8,893 - - 396,461 736,492
*Executive Director*
Vincent English 604,932 82,193 6,132 21,003 15,879 - 664,314 1,394,453

*Other KMP*
Peter Hase 481,570 - - 13,206 - 1,000 71,173 566,949
Steve Loxton* 195,127 - - 15,093 759 - 30,758 241,737
676,697 - - 28,299 759 1,000 101,931 808,686
Total Remuneration 1,612,767 82,193 6,132 58,195 16,638 1,000 1,162,706 2,939,631

^ Resigned on 23 September 2019

Stepped down as CFO effective 1 March 2020. The remuneration included in the table represents eight months ending 28 February 2020

Directors and KMP of the Group are included in this disclosure for the period they held the applicable roles.

No KMP appointed during the year received a payment as part of his or her consideration for agreeing to hold the position.

9 Annual leave, included under “Salary and fees” and Long service leave represents the movement in the leave provision balances. The accounting value may be negative, for example, when an Executive’s leave balance decreases as a result of taking more than the entitlement accrued during the year

10 The value of options is calculated using a Black-Scholes valuation model at grant date. This value is allocated to remuneration of KMP on a straight-line basis to profit or loss over the period from grant date to vesting date. This value represents the share-based payment accounting expense for the options for the financial year or the period that person was a KMP within the year

The relative proportions of remuneration of KMP that are linked to performance are as follows:

	Fixed salary and/or fees Short term incentive - at risk Long term incentive11	Fixed salary and/or fees Short term incentive - at risk Long term incentive11	Fixed salary and/or fees Short term incentive - at risk Long term incentive11	Fixed salary and/or fees Short term incentive - at risk Long term incentive11

	2021 2020 2021 2020 2021 2020

Non-Executive Directors
Bevan Slattery 66% 45% - - 34% 55%
Simon Moore - 100% - - - -
Jay Adelson 52% 50% - - 48% 50%
Naomi Seddon 50% 38% - - 50% 62%
Michael Klayko 100% - - - -
Melinda Snowden 100% - - - -
Executive Directors
Vincent English 17% 45% 8% 6% 75% 49%
Other KMP
Sean Cassidy 46% - 13% - 41% -
Rodney Foreman 33% - 24% - 43% -

11 The LTI above refers to share-based payments not at risk and subject to service conditions

Megaport Limited | ABN 46 607 301 959

The proportion of the STI cash bonus paid/payable is as follows:

	Cash bonus paid/payable Cash bonus forfeited	Cash bonus paid/payable Cash bonus forfeited

	2021 2020 2021 2020

*Executive Directors*
Vincent English 100% 41% - 59%
Other KMP
Sean Cassidy 100% - - -
Rodney Foreman* 100% - - -

*Bonus paid/payable has been prorated to align with the period of service and includes an additional discretionary bonus of $16,667.

The STI amounts that were paid or are payable were determined by the Remuneration and Nomination Committee following an assessment of performance against targets. These include targets related to Megaport’s strategic business objectives and Group financial targets including Total Revenue, Normalised EBITDA and personal performances.

Equity-Based Compensation

Employee share option plan

Currently, the Group has an equity-based compensation plan via Employee Share Option Plan (“ESOP”). Refer to the Long Term Incentive Policy and Procedure section above for details on the ESOP.

The plan is designed to focus executives on delivering long-term shareholder returns and attracting and retaining key employees for the long-term. For some employees, the options will vest if they meet specific performance targets within the employee’s business unit; for all other employees, the options will vest if the employee meets a length of service requirement.

Participation in the plan is at the Board’s absolute discretion and no individual has a contractual right to participate in the plan. Once vested, a participant will have a set period of time to exercise the options. The options are granted for no consideration, however there is consideration payable by the participant upon exercising vested options. Upon exercising the options, the options convert into fully paid ordinary shares.

Employee share option plan (Continued)

Terms and conditions of outstanding share options affecting remuneration of KMP in the current financial year or future financial years:

Options series	Outstanding	Grant	Grant date	Exercise	Vesting date	Expiry date
	options	date	fair value	price
			$	$
					22-Nov-20 to	22-Nov-21 to
ESOP – series 2020 – 7	100,000	22-Nov-19	2.330-3.291	8.43	22-Nov-22	22-Nov-23
					23-Nov-20 to	23-Nov-21 to
ESOP – series 2020 – 8	150,000	23-Nov-19	3.168-3.596	6.96	23-Nov-21	23-Nov-22
					1-Jul-21 to	1-Jul-22 to
ESOP – series 2021 – 1	200,000	1-Jul-20	3.212-4.670	12.08	1-Jul-23	1-Jul-24
					1-Jul-21 to	1-Jul-22 to
ESOP – series 2021 – 3	1,000,000	23-Oct-20	3.162-4.073	14.50	1-Jul-22	1-Jul-23
					1-Feb-22 to	1-Feb-23 to
ESOP – series 2021 – 5	400,000	1-Feb-21	2.633-4.195	13.48	1-Feb-24	1-Feb-25

There has been no alteration of the terms and conditions of the above share options since the grant date.

The total fair value of outstanding share options granted as compensation to KMP at reporting date includes:

	Opening balance 1 July 2020	Granted during the year12 Exercised/settled during the year	Forfeited/cessation as KMP during the year	Closing balance 30 June 2021

Name	Number $	Number $ Number $	Number $	Number $

Bevan Slattery 100,000 282,472 - - - - - - 100,000 282,472
Jay Adelson 100,000 338,245 - - (50,000) (158,422) - - 50,000 179,823
Naomi Seddon 100,000 338,245 - - - - - - 100,000 338,245
Vincent English 1,000,000 1,299,331 1,000,000 3,617,204 (1,000,000) (1,299,331) - - 1,000,000 3,617,204
Sean Cassidy^ - - 200,000 648,542 - - - - 200,000 648,542
Rodney Foreman* - - 400,000 1,101,748 - - - - 400,000 1,101,748
Joshua Munro** 100,000 111,572 75,000 130,505 (100,000) (111,572) (75,000) (130,505) - -
Peter# Hase 200,000 120,994 - - - - (200,000) (120,994) - -

^ Appointed 1 July 2020

Appointed 1 February 2021

**Appointed on an interim basis on 13 July 2020 with role concluding on 1 February 2021, balance at 1 July 2020 were held prior to appointment

Resigned 13 July 2020

12 The value of options is calculated as at the grant date using a Black-Scholes valuation model. This grant date value is allocated to remuneration of KMP on a straight-line basis over the period from grant date to vesting date

Megaport Limited | ABN 46 607 301 959

Employee share option plan (Continued)

All share options issued to KMP were made in accordance with the provisions of the employee share option plan.

Further details of the employee share option plan and of share options granted during the 2021 financial year are contained in Note 21 to the Annual report.

Additional disclosures relating to KMP

KMP equity holdings

The movement in number of ordinary shares of Megaport Limited[13] to KMP is as follow:

Name	Balance at 01 July 2020	Purchased Disposed Net other changes during the year	Cessation as KMP
				Balance at 30 June 2021 Balance held nominally

*Non-Executive Directors*
Bevan Slattery 13,152,607 - (1,000,000) (12,500) - 12,140,107 12,037,607~
Jay Adelson - 50,000 (40,000) 10,000 10,000
Michael Klayko - 25,000 - - - 25,000 25,000
*Executive Director*
Vincent English 1,127,689 1,000,000 (500,000) (19,632) - 1,608,057 1,584,149
*Other KMP*
Sean Cassidy^ - - - - - - -
Rodney Foreman* - - - - - - -
Joshua Munro** 80,000 100,000 (74,203) 73 (105,870) - -
Peter Hase# 11,168 - - - (11,168) - -

~ Includes 3,000,000 shares beneficially held by Bevan Slattery that have been pledged as security under a structured option and loan facility

^ Appointed 1 July 2020

Appointed 1 February 2021

**Appointed on an interim basis on 13 July 2020 with role concluding on 1 February 2021, balance at 1 July 2020 were held prior to appointment

Resigned 13 July 2020

13 The table above includes all ordinary shares held directly, indirectly and beneficially by (a) key management personnel, (b) a close member of the family of (a), and (c) an entity over which (a) or (b) has, either directly or indirectly, control, joint control or significant influence.

Other supplementary information The table below set out summary information about the consolidated entity’s earnings and movements in shareholder wealth for the five years to 30 June 2021:

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Restated [#]
30 June 21 30 June 20 30 June 19 30 June 18 30 June 17
$’000 $’000 $’000 $’000 $’000
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Revenue 78,281	58,040 35,065 19,753 10,668
Net loss before tax 61,645	49,194 33,555 25,326 29,980
Net loss after tax 55,000	48,711 33,564 24,463 29,935
30 June 21
	Restated# 30 June 20 30 June 19 30 June 18 30 June 17
Share price at start of year $12.08	$6.53 $3.95 $2.28 $1.90
Share price at end of year $18.43	$12.08 $6.53 $3.95 $2.28
Basic / diluted loss per share 0.35	0.34 0.27 0.23 0.35

Refer to Note (c) under Section 1 of the Financial Report for further details on FY20 restatement

Megaport Limited | ABN 46 607 301 959

Loans to KMP

No loans were made to Directors of Megaport Limited and other KMP of the Group, including their close family members and entities related to them, for the financial year ended 30 June 2021 (2020: Nil).

Other transactions and balances with KMP of the Group

Information on other transactions and balances with Directors, other KMP and parties related to directors and other KMP are set out in Note 23 of the Annual report.

Directors of the Group hold other directorships in public corporations, as detailed in the Directors’ Report. Where any of these related entities are customers or suppliers of the Group, these arrangements are on arm’s length terms i.e. similar terms to other customers or suppliers.

Voting of shareholders at last year’s annual general meeting (“AGM”)

Megaport Limited received more than 90% of “yes” votes on its Remuneration Report for the 2020 financial year. The Company did not receive any specific feedback from shareholders at the AGM or throughout the year on its remuneration practices.

Indemnification and Insurance of Directors and Officers

The Group has entered into standard deeds of indemnity and insurance with each of the Directors. Pursuant to those deeds, the Group has undertaken, consistent with the Corporations Act, to indemnify each Director in certain circumstances and to maintain Directors and Officers insurance cover in favour of the Director for seven years after the Director has ceased to be a Director. During the financial year, the Group paid a premium for such insurance coverage. The contract of insurance prohibits disclosure of the nature of the liability or of the amount of the premium.

The Group has further undertaken with each Director to maintain a complete set of the Group’s board papers and to make them available to the Director for seven years after the Director has ceased to be a Director.

The Group has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Group against a liability incurred as such an officer or auditor.

Proceedings on behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the purpose of taking responsibility on behalf of the Group for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Group with leave of the Court under section 237 of the Corporations Act 2001 .

Non-audit services

The Group may decide to employ the auditor on assignments in addition to its statutory audit duties, where the auditor’s expertise and experience with the Company and/or Group are important.

No non-audit services were provided by Deloitte Touche Tohmatsu Australia and its network firms during the year.

As there was no provision of non-audit services by the auditor, the Directors are of the opinion that the independence requirements of the Corporations Act 2001 were not compromised.

Auditor’s independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on the next page.

The Directors’ Report is signed in accordance with a resolution of Directors made pursuant to s298(2) of the Corporations Act 2001.

Corporate Governance Statement

Megaport Limited and the Board are committed to achieving and demonstrating the highest standards of corporate governance. Megaport Limited has reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations (Fourth Edition) published by the ASX Corporate Governance Council.

A description of the Group’s current corporate governance practices is set out in the Group’s Investor Centre, which can be viewed at https://www.megaport.com/investor/.

On behalf of the Board of Directors

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Vincent English Executive Director and Chief Executive Officer Brisbane 10 August 2021

Megaport Limited | ABN 46 607 301 959

Deloitte Touche Tohmatsu ABN 74 490 121 060 Level 23, Riverside Centre 123 Eagle Street Brisbane, QLD, 4000 Australia

Phone: +61 7 3308 7000 www.deloitte.com.au

The Board of Directors Megaport Limited Level 3, 825 Ann Street Fortitude Valley QLD 4006

10 August 2021

Dear Board Members

Auditor’s Independence Declaration to Megaport Limited

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Megaport Limited.

As lead audit partner for the audit of the financial report of Megaport Limited for the year ended 30 June 2021, I declare that to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.

Yours faithfully

DELOITTE TOUCHE TOHMATSU

Richard Wanstall Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation Member of Deloitte Asia Pacific Limited and the Deloitte Organisation

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Megaport Limited | ABN 46 607 301 959

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FINANCIAL REPORT

Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2021

			Restated#
	Notes	2021	2020
		$’000	$’000
Continuing operations
Revenue	2	78,281	58,040
Direct network costs	3	(36,213)	(28,522)
Profit after direct network costs		42,068	29,518

Other income		300	1,070
Employee expenses	5	(41,369)	(36,164)
Professional fees		(4,626)	(4,897)
Marketingexpenses		(1,539)	(1,760)
Travel expenses		(185)	(2,179)
IT costs		(2,252)	(2,315)
Equity-settled employee costs and related tax costs	21	(9,828)	(6,911)
Depreciation and amortisation expense	5	(23,464)	(17,289)
Finance costs	5	(1,488)	(1,233)
Foreign exchange losses	5	(13,478)	(3,768)
Other expenses		(5,784)	(3,266)
Loss before income tax		(61,645)	(49,194)
Income tax benefit	4(a)	6,645	483
Net loss for theyear		(55,000)	(48,711)
Other comprehensive income /(loss), net of tax
Items that may be reclassified subsequent toprofit or loss:
Exchange differences arisingon the translation of foreign operations		6,527	378
Total other comprehensive income, net of income tax		6,527	378
Total comprehensive loss for theyear		(48,473)	(48,333)

Loss per share		$	$
Basic and diluted loss per share	6	0.35	0.34#

Refer to Note (c) under Section 1 for details on the prior year restatement.

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

Megaport Limited | ABN 46 607 301 959

Consolidated Statement of Financial Position As at 30 June 2021

			Restated#
		2021	2020
	Notes	$’000	$’000
Assets
Current assets
Cash and cash equivalents	7	136,312	166,877
Trade and other receivables	8	10,272	11,476
Current tax assets	4(b)	28	107
Other assets	9	3,737	1,875
Total current assets		150,349	180,335
Non-current assets
Property, plant and equipment	10	42,726	49,822
Intangible assets	11	16,058	11,802
Deferred tax assets	4(c)	10,989	4,226
Other assets	9	441	910
Total non-current assets		70,214	66,760
Total assets		220,563	247,095
Liabilities
Current liabilities
Trade and other payables	14	20,716	11,611
Borrowings	18	9,443	9,485
Provisions	15	3,123	2,500
Current tax liabilities	4(b)	83	206
Other liabilities		130	231
Total current liabilities		33,495	24,033
Non-current liabilities
Borrowings	18	6,314	11,758
Provisions	15	277	163
Deferred tax liabilities	4(c)	65	172
Total non-current liabilities		6,656	12,093
Total liabilities		40,151	36,126
Net assets		180,412	210,969
Equity
Issued capital	16	395,935	371,524
Reserves	17	9,409	9,377
Other equity		(11,914)	(11,914)
Accumulated losses	19	(213,018)	(158,018)
Total equity		180,412	210,969

Refer to Note (c) under Section 1 for details on the prior year restatement.

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

Consolidated Statement of Changes in Equity For the year ended 30 June 2021

		Issued		Other	Accumulated
	Notes	capital	Reserves	equity^	losses	Total equity
		$’000	$’000	$’000	$’000	$’000
Balance at 1 July 2019		229,521	2,290	(11,914)	(109,307)	110,590
Loss for the year as previously
reported		-	-	-	(47,650)	(47,650)
Expensed SaaS implementation
costs previously capitalised#		-	-	-	(1,061)	(1,061)
Loss for the year (restated#)					(48,711)	(48,711)
Other comprehensive income		-	378	-	-	378
Total comprehensive loss for
the year		-	378	-	(48,711)	(48,333)
Transactions with owners in their
capacity as owners:
Issue of ordinary share capital	16	144,965	-	-	-	144,965
Employee share option expense	17, 21	-	6,709	-	-	6,709
Share issue costs, net of tax	16	(2,962)	-	-	-	(2,962)
Balance at 30 June 2020		371,524	9,377	(11,914)	(158,018)	210,969

Balance at 1 July 2020		371,524	9,377	(11,914)	(158,018)	210,969
Loss for the year		-	-	-	(55,000)	(55,000)
Other comprehensive income		-	6,527	-	-	6,527
Total comprehensive loss for
the year		-	6,527	-	(55,000)	(48,473)
Transactions with owners in their
capacity as owners:
Issue of ordinary share capital	16	11,752	-	-	-	11,752
Transfer from equity-settled
employee benefits reserves	16, 21	12,659	(12,659)	-	-	-
Employee share option expense	17, 21	-	6,164	-	-	6,164
Balance at 30 June 2021		395,935	9,409	(11,914)	(213,018)	180,412

^ Represents adjustment arising from common-control transactions, refer to Note (f)(v) of Section 1 in the financial statements.

Refer to Note (c) under Section 1 for details on the prior year restatement

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes

Megaport Limited | ABN 46 607 301 959

Consolidated Statement of Cash Flows

For the year ended 30 June 2021

				Restated#
		Notes	2021	2020
			$’000	$’000
	Cash flows from operating activities
	Receipts from customers		87,451	59,203
	Payments to suppliers and employees		(94,367)	(79,786)
	Income taxes (paid) / received		(206)	109
	Finance costs		(1,498)	(1,233)
	Net cash flows used in operating activities	7	(8,620)	(21,707)

	Cash flows from investing activities
	Interest received		333	1,345
	Payment for property, plant and equipment		(14,080)	(24,723)
	Payment for intangible assets		(8,418)	(3,466)
	Receipts of government grants		-	612
	Proceeds from disposal of property, plant and equipment		60	5
	Net cash flows used in investing activities		(22,105)	(26,227)

	Cash flows from financing activities
	Proceeds from issue of new shares	16	11,550	144,823
	Share issue transaction costs		-	(4,232)
	Proceeds from borrowings	18	3,024	9,243
	Repayment of borrowings	18	(3,877)	(2,227)
	Payment of lease liabilities	18	(5,830)	(4,773)
	Net cash flows from financing activities		4,867	142,834

	Net (decrease)/increase in cash and cash equivalents held		(25,858)	94,900
	Effects of exchange rate changes on cash and cash equivalents		(4,707)	(2,902)
	Cash and cash equivalents at beginning of the year		166,877	74,879
Cash and cash equivalents at end of the year # Refer to Note (c) under Section 1 for details on the prior year restatement		7	136,312	166,877

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes

Notes to the consolidated financial statements

Notes to the consolidated financial statements	Notes to the consolidated financial statements
Overview .......................................................................................................................................... 59
Section 1: Basis of preparation ......................................................................................................... 60
Section 2: Business performance ..................................................................................................... 69
1.	Segment reporting................................................................................................................. 69
2.	Revenue ................................................................................................................................ 72
3.	Direct network costs ............................................................................................................. 73
4.	Income tax benefit / (expense) .............................................................................................. 73
5.	Significant profit or loss items.............................................................................................. 77
6.	Loss per share ....................................................................................................................... 78
Section 3: Core assets, liabilities and working capital ..................................................................... 79
7.	Cash and cash equivalents .................................................................................................... 79
8.	Trade and other receivables .................................................................................................. 80
9.	Other assets ........................................................................................................................... 82
10.	Property, plant and equipment .............................................................................................. 83
11.	Intangible assets .................................................................................................................... 86
12.	Impairment assessment ......................................................................................................... 90
13.	Leases ................................................................................................................................... 92
14.	Trade and other payables ...................................................................................................... 94
15.	Provisions ............................................................................................................................. 95
Section 4: Capital and financial risk management ........................................................................... 96
16.	Issued capital ........................................................................................................................ 96
17.	Reserves ................................................................................................................................ 97
18.	Borrowings ........................................................................................................................... 98
19.	Accumulated losses ............................................................................................................ 100
20.	Financial risk management ................................................................................................. 100
Section 5: Employee related benefits ............................................................................................. 105
21.	Equity-settled employee benefits and related expenses ..................................................... 105
Section 6: Group structure and related party transactions .............................................................. 109
22.	Interest in other entities ...................................................................................................... 109
23.	Related party transactions ................................................................................................... 111
24.	Parent entity financial information ..................................................................................... 114
Section 7: Other information .......................................................................................................... 115
25.	Auditors’ remuneration ....................................................................................................... 115
26.	Contingent liabilities........................................................................................................... 115
27.	Commitments...................................................................................................................... 115
28.	Events occurring after the financial year ............................................................................ 116

Megaport Limited | ABN 46 607 301 959

Overview

a) General information

Megaport Limited (“parent entity” or “the Company”) is a listed public company, incorporated and domiciled in Australia. Megaport Limited shares are listed on the Australian Securities Exchange (ASX).

Megaport’s registered office and principal place of business is:

Level 3

825 Ann Street Fortitude Valley QLD 4006

The principal activities of the Company and its subsidiaries (together referred to as “the Group”, “Megaport” or “consolidated entity”) are described in the Director’s Report.

All press releases, financial reports and other information are available at Megaport’s Investor Centre at the following website address: www.megaport.com/investor.

Significant accounting policies adopted in the preparation of these consolidated financial statements are included in the relevant notes to the financial statements. These policies have been consistently applied to all the periods presented, unless otherwise stated. The consolidated financial statements are for the Group for the financial year ended 30 June 2021.

The consolidated financial statements were authorised for issue by the Directors on the date of the Directors’ Declaration. The Directors have the power to amend and reissue the consolidated financial statements.

Certain reclassifications have been made to the prior year’s financial statements to enhance comparability with the current year’s financial statements. Comparative figures have been adjusted to conform to the current year’s presentation. Reclassifications are mainly in relation to breaking down of notes and have been done within Other expenses and IT costs in the Consolidated Statement of Profit or Loss and other Comprehensive Income, and Trade and other payables and Provisions in the Consolidated Statement of Financial Position.

A prior year restatement as a result of a retrospective change in accounting policy has also been made. IT costs, Depreciation and amortisation within the Consolidated Statement of Profit or Loss and Other Comprehensive Income, and intangible assets and accumulated losses within the Statement of Financial Position have been restated to comply with the IFRIC guidance on accounting for Software-as-a-Service (SaaS) arrangements. Refer to Note (c) under Section 1 for further details.

b) Reading the financial statements

To enhance user readability, the Group has changed the structure of the financial statements, the notes to the financial statements have been grouped into sections. Each section includes an introduction to outline the focus and content of the section. The related notes are grouped under that section. The accounting policies as well as key accounting estimates and judgements applied in the preparation of the financial report which are relevant to the note are also included.

The notes grouping has been done under the following sections:

Section 1: Basis of preparation
Section 2: Business performance
Section 3: Core assets, liabilities and working capital
Section 4: Capital and financial risk management
Section 5: Employee related benefits
Section 6: Group structure and related party transactions
Section 7: Other information

Section 1: Basis of preparation

This section explains the basis of preparation of the financial report and provides a summary of the key accounting estimates and judgements applied in the preparation of the financial report.

a) Basis of preparation of the financial report

These consolidated financial statements are general purpose financial statements which have been prepared in accordance with the Corporations Act 2001 , Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB), and comply with other requirements of the law.

The financial statements comprise the consolidated financial statements of the Group. For the purposes of preparing the consolidated financial statements, the Company is a for-profit entity.

The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 , dated 24 March 2016, and in accordance with that Corporations Instrument amounts in the financial report are rounded off to the nearest thousand dollars ($’000), unless otherwise indicated.

All amounts are presented in Australian dollars ($), unless otherwise noted.

Compliance with IFRS

The consolidated financial statements and the accompanying notes of the Group also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Going concern

Determining whether the Group is a going concern has been evaluated through detailed budgets and cash flow forecasts which include key assumptions around future cash flows including consideration of Coronavirus (COVID19), and forecast results and margins from operations. The Group has sufficient cash reserves and monitors the reserves through these detailed budgets and cash flow forecasts to ensure there are sufficient available funds for its operations and any planned expansion. As a result, the Directors are satisfied that the Group is able to maintain sufficient resources to continue in operation for the foreseeable future. Accordingly, they have adopted the going concern basis in preparing the financial statements.

Historical cost and fair value conventions

The consolidated financial statements have been prepared on the basis of historical cost, except for certain financial instruments that are measured at fair value at the end of each reporting date, as explained in accounting policies in the relevant notes.

Historical cost is generally based on the fair values of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or liability, the Group takes into account the characteristics of the asset or liability at the measurement date.

b) Critical accounting estimates and judgements

The preparation of the financial statements requires the use of certain accounting estimates. It also requires management to exercise judgement in the process of applying the Group’s accounting policies, make estimates and assumptions in determining carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

Megaport Limited | ABN 46 607 301 959

b) Critical accounting estimates and judgements (continued)

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgement has been exercised in considering the impacts that the COVID-19 pandemic has had, or may have, on the Group as a whole based on known information. This consideration extends to the nature of the products and services offered, customers, and geographic regions of the Group. Other than as addressed in specific notes, there does not currently appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the Group as at the reporting date or subsequently as a result of the COVID-19 pandemic.

Other specific significant management judgements and estimates used are set out in the relevant notes. These are summarised below.

Key accounting estimate andjudgement	Note
Estimating provision for income taxes	4
Recognition of deferred tax relatingto unused tax losses	4
Estimatingthe allowance for credit losses	8
Determiningthe useful lives of PPE and intangible assets	10 & 11
Accountingfor internally generated intangible assets	11
Indefeasible rights to use and long-term agreements(IRUs)	11
Impairment of assets	12
Determininglease term	13
Determiningthe incremental borrowingrates for leases	13 21
Fair value measurements of equity-settled employee benefits

c) New and amended standards and interpretations adopted by the Group

The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”) that are relevant to its operations and effective for the year ended 30 June 2021.

New and revised Standards and Amendments thereof and Interpretations effective for the current year that are relevant to the Group include:

AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a Business
AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material
AASB 2019-1 Amendments to Australian Accounting Standards – References to the Conceptual Framework
AASB 2019-5 Amendments to Australian Accounting Standards – Disclosure of the Effect of New IFRS Standards Not Yet Issued in Australia
IFRIC agenda decisions of March-2019 and April-2021 - Software-as-a-Service (SaaS) arrangements

c) New and amended standards and interpretations adopted by the Group (continued)

Impact of the initial application of new and amended standards and interpretations that are effective for the current year

In the current year, the Group has applied a number of amendments to Australian Accounting Standards and Interpretations issued by the AASB that are effective for an annual period that begins on or after 1 July 2020. The adoption of the IFRIC guidance on SaaS arrangements has resulted in change of accounting policy as noted below. The adoption of all other standards has not had any material impact on the disclosures or on the amounts reported in these financial statements.

Amending Standard Description	Amending Standard Description
*AASB 2018-6 -Amendments* to Australian Accounting Standards – Definition of a Business AASB 2018-7-Amendments to Australian Accounting Standards – Definition of Material AASB 2019-1 Amendments to Australian Accounting Standards – References to the Conceptual Framework**	The Group has adopted the amendments for the first time in the current year. The amendments clarify that while businesses usually have outputs, outputs are not required for an integrated set of activities and assets to qualify as a business. To be considered a business an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. The amendments remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs. The amendments also introduce additional guidance that helps to determine whether a substantive process has been acquired. The amendments introduce an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business. Under the optional concentration test, the acquired set of activities and assets is not a business if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar assets. The amendments are applied prospectively to all business combinations and asset acquisitions for which the acquisition date is on or after 1 January 2020. The amendments make the definition of material in AASB 101 easier to understand and are not intended to alter the underlying concept of materiality in Australian Accounting Standards. The concept of 'obscuring' material information with immaterial information has been included as part of the new definition. The threshold for materiality influencing users has been changed from 'could influence' to 'could reasonably be expected to influence'. The definition of material in AASB 108 has been replaced by a reference to the definition of material in AASB 101. In addition, the Standard also amends other Australian Accounting Standards and the Conceptual Framework that contain a definition of 'material' or refer to the term ‘material’ to ensure consistency The Group has adopted the amendments included in AASB 2019-1 for the first time in the current year. The amendments include consequential amendments to affected Australian Accounting Standards, Interpretations and other pronouncements to reflect the issuance of the Conceptual Framework for Financial Reporting (Conceptual Framework) by the AASB. The amendments include: Update numerous pronouncements to refer to the new Conceptual Framework for Financial Reporting or to clarify which version of the Framework is being referenced. These amendments apply to for-profit private sector entities that have public accountability and are required by legislation to comply with Australian Accounting Standards and other for- profit entities that voluntarily elect to apply the new Conceptual

Amending Standard
Description

AASB 2018-6 -Amendments
to Australian Accounting
Standards – Definition of a
Business
AASB 2018-7-Amendments
to Australian Accounting
Standards – Definition of
Material
AASB 2019-1 Amendments
to Australian Accounting
Standards – References to
the Conceptual Framework

The Group has adopted the amendments for the first time in the current year.
The amendments clarify that while businesses usually have outputs, outputs
are not required for an integrated set of activities and assets to qualify as a
business. To be considered a business an acquired set of activities and assets
must include, at a minimum, an input and a substantive process that together
significantly contribute to the ability to create outputs.
The amendments remove the assessment of whether market participants are
capable of replacing any missing inputs or processes and continuing to
produce outputs.
The amendments also introduce additional guidance that helps to determine
whether a substantive process has been acquired. The amendments introduce
an optional concentration test that permits a simplified assessment of whether
an acquired set of activities and assets is not a business. Under the optional
concentration test, the acquired set of activities and assets is not a business if
substantially all of the fair value of the gross assets acquired is concentrated
in a single identifiable asset or group of similar assets. The amendments are
applied prospectively to all business combinations and asset acquisitions for
which the acquisition date is on or after 1 January 2020.
The amendments make the definition of material in AASB 101 easier to
understand and are not intended to alter the underlying concept of materiality
in Australian Accounting Standards.
The concept of 'obscuring' material information with immaterial information has
been included as part of the new definition.
The threshold for materiality influencing users has been changed from 'could
influence' to 'could reasonably be expected to influence'.
The definition of material in AASB 108 has been replaced by a reference to the
definition of material in AASB 101. In addition, the Standard also amends other
Australian Accounting Standards and the Conceptual Framework that contain
a definition of 'material' or refer to the term ‘material’ to ensure consistency
The Group has adopted the amendments included in AASB 2019-1 for the first
time in the current year. The amendments include consequential amendments
to affected Australian Accounting Standards, Interpretations and other
pronouncements to reflect the issuance of the Conceptual Framework for
Financial Reporting (Conceptual Framework) by the AASB. The amendments
include:
Update numerous pronouncements to refer to the new Conceptual
Framework for Financial Reporting or to clarify which version of the
Framework is being referenced. These amendments apply to for-profit
private sector entities that have public accountability and are required by
legislation to comply with Australian Accounting Standards and other for-
profit entities that voluntarily elect to apply the new Conceptual

Megaport Limited | ABN 46 607 301 959

Amending Standard	Description
	Framework
	Permit other entities to continue using the Framework for the Preparation
	and Presentation of Financial Statements adopted by the AASB in 2004.
*AASB 2019-5 Amendments*	This Standard makes amendments to AASB 1054 Additional Australian
*to Australian Accounting*	Disclosures by adding a disclosure requirement for an entity intending to
*Standards – Disclosure of* *the Effect of New IFRS* *Standards Not Yet Issued in* *Australia*	comply with IFRS Standards to disclose the information specified in paragraphs 30 and 31 of AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors on the potential effect of an IFRS Standard
	that has not yet been issued by the AASB.
*IFRIC agenda decisions of*	SaaS arrangements are service contracts providing the Group with the right to
*March-2019 and April-2021 -*	access cloud provider’s application software over a period of time. The IFRS
*Change in accounting policy*	Interpretations Committee (IFRIC) has issued two agenda decisions related to
*in accounting for Software-*	accounting for Software-as-a-Service (SaaS) arrangements:
*as-a-Service arrangements*	In March 2019, the IFRIC considered the accounting for SaaS
	arrangements and concluded that for many such arrangements the
	substance is that the entity has contracted to receive services rather than
	the acquisition (or lease) of software assets. This is because, in a cloud
	based environment, the SaaS contract generally only gives the customer
	the right to receive access to the cloud provider’s application software,
	rather than a license over the IP i.e. control over the software code itself.
	In April 2021, the IFRIC specifically considered how an entity should
	account for configuration and customisation costs incurred in
	implementing these (SaaS) service arrangements. The IFRIC concluded
	that these costs should be expensed, unless the criteria for recognising a
	separate asset are met.
	The Group has implemented this guidance retrospectively as a change in
	accounting policy. The Group has performed an initial assessment to identify
	costs previously capitalised that do not meet the criteria based on the IFRIC’s
	guidance and expensed those costs. Qualifying costs incurred in relation to the
	development of software code that enhances, modifies or creates additional
	capability to existing on-premise systems and meets the definition criteria of an
	intangible assets, continue to be capitalised as intangible assets and amortised
	over the useful life of the software on a straight-line basis. The useful lives of
	these assets are reviewed at least at the end of each financial year, and any
	change accounted for prospectively as a change in accounting estimate.
	Comparative financial information has been restated to account for the impact
	of the change in accounting policy, as follows:

c) New and amended standards and interpretations adopted by the Group (continued)

Financial statement item	Financial statement item	30 June 2020 DR/(CR)
Consolidated Statement of Financial Position
Intangible assets		(1,061)
*Total assets/net assets*		*(1,061)*
Retained earnings		1,061
*Total equity*		*1,061*

Consolidated Statement of Profit and Loss and Other Comprehensive Income
IT costs		1,137
Depreciation and amortisation		(76)
*Loss before tax*		*1,061*

Consolidated Statement of Cash Flows
Payment to suppliers and employees		(1,137)
*Net cash used in operating activities*		*(1,137)*
Payment for intangible assets		1,137
*Net cash used in investing activities*		*1,137*

Restatement of the prior year information has resulted to a change in basic and diluted loss per share from $0.33 as previously reported to $0.34.

d) New standards and interpretations not yet adopted

There are other Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective, and have not been early adopted by the Group for the annual reporting period ended 30 June 2021. The Group has not applied the following new and revised Australian Accounting Standards, Interpretations and amendments that have been issued but are not yet effective:

Effective for annual reporting periods beginning on or after Standard/amendment	Effective for annual reporting periods beginning on or after Standard/amendment
1 January 2023 1 January 2022	AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-Current and AASB 2020-6 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current – Deferral of Effective Date AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018-2020 and Other Amendments
1 January 2023 AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and Definition of Accounting Estimates

Megaport Limited | ABN 46 607 301 959

d) New standards and interpretations not yet adopted (continued)

AASB 2020-1 amends AASB 101 and affects only the presentation of liabilities as current or non-current in the statement of financial position and not the amount or timing of recognition of any asset, liability, income or expenses, or the information disclosed about those items. The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of ‘settlement’ to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services. This may result in some reclassification of some liabilities between current and non-current categories.

AASB 2020-3 amends AASB 1, AASB 9, AASB 15, AASB 141, AASB 3, AASB 116 and AASB 137. Relevant to the group are the amendments to AASB 9 Financial Instruments . AASB 9 amendment is to clarify the fees an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. The new amendment clarifies that only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other’s behalf are included.

AASB 2021-2 amends AASB Standards to improve accounting policy disclosures so that they provide more useful information to investors users of the financial statements and clarify the distinction between accounting policies and accounting estimates. This may change the disclosure of accounting policies included in the financial statements.

Except to the extent noted above, the directors do not expect that the adoption of the recently issued accounting standards or amendments will have a material impact on our financial results upon their adoption in the future periods.

e) Pronouncements issued by the IASB or IFRS Interpretations Committee where an equivalent pronouncement has not been issued by the AASB

Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to IAS 12 Amends IAS 12 Income Taxes to specify how companies should account for deferred tax on transactions such as leases and decommissioning obligations. In specified circumstances, companies are exempt from recognising deferred tax when they recognise assets or liabilities for the first time (the ‘initial recognition exception’). The amendments clarify that the initial recognition exception does not apply to transactions where both an asset and a liability are recognised in a single transaction. Accordingly, deferred tax is required to be recognised on such transactions. The standard is effective for annual periods beginning on or after 1 January 2023 and has not been early adopted.

f) Other accounting policies not included anywhere else in the report

(i) Foreign currencies

The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the financial statements, the results and financial position of each group entity are expressed in Australian dollars (‘$’), which is the functional currency of the Company and the presentation currency for the financial statements.

In preparing the financial statements of each individual entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Nonmonetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

(i) Foreign currencies (continued)

Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for:

Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings;
Exchange differences on transactions entered into in order to hedge certain foreign currency risks; and
Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.

For the purpose of presenting these consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into Australian dollars using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a foreign exchange translation reserve.

Goodwill and fair value adjustments to identifiable assets acquired and liabilities assumed through acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences arising are recognised in other comprehensive income.

(ii) Derecognition of financial assets and liabilities

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

(iii) Other taxes

Revenues, expenses and assets are recognised net of the amount of associated other taxes, including goods & services tax (GST), value-added tax (VAT), and sales tax, except:

Where the amount of other taxes incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or
For receivables and payables which are recognised inclusive of other taxes.

The net amount of other taxes recoverable from, or payable to, the taxation authority is included as part of receivables or payables.

Cash flows are included in the Consolidated Statement of Cash Flows on a gross basis. The other taxes component of cash flows arising from investing or financing activities which are recoverable from, or payable to, the taxation authority is classified within operating cash flows.

Commitments and contingencies are disclosed net of the amount of other taxes recoverable from, or payable to, the taxation authority.

Megaport Limited | ABN 46 607 301 959

(iv) Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred is measured as the fair value of the assets acquired, shares issued or liabilities incurred or assumed at the date of exchange. Acquisition-related costs are expensed in the period the costs are incurred.

Where equity instruments are issued in a business combination, the fair value of the instruments is their published market price as at the date of exchange. Transaction costs arising on the issue of equity instruments are recognised directly in equity. The consideration transferred also includes the fair value of any asset or liability resulting from a contingent consideration arrangement.

At the acquisition date, identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values, except that

Deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with AASB 112 Income Taxes and AASB 119 Employee Benefits respectively;
Liabilities or equity instruments related to share-based payment arrangements of the acquiree or sharebased payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with AASB 2 Share-based Payment at the acquisition date; and
Assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

The excess of the consideration transferred over the net fair value of the Group’s share of the identifiable net assets acquired, is recognised as goodwill. If the consideration transferred for the acquisition is less than the Group’s share of the net fair value of the identifiable net assets of the subsidiary, the difference is recognised as a gain in the profit and loss in the Consolidated Statement of Profit or Loss and Other Comprehensive Income, but only after a reassessment of the identification and measurement of the net assets acquired.

Where settlement of any part of the cash consideration is deferred, the amounts payable in the future are discounted to their present value, as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not re-measured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or liability is remeasured at subsequent reporting dates in accordance with AASB 9 Financial Instruments , or AASB 137 Provisions, Contingent Liabilities and Contingent Assets , as appropriate, with the corresponding gain or loss being recognised in profit or loss.

The Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.

(iv) Business combinations (continued)

Non-controlling interests in the results and equity of subsidiaries are shown separately in the Consolidated Statement of Profit or Loss and Other Comprehensive Income, Consolidated Statement of Financial Position and Consolidated Statement of Changes in Equity.

When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is measured to its acquisition-date fair value and the resulting gain or loss, if any, is recognised in profit or loss.

Amounts arising from interests in the acquiree prior to the acquisition date that had previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as at the acquisition date that, if known, would have affected the amounts recognised as of that date.

(v) Common-control transactions

A business combination involving entities or businesses under common-control is a business combination in which all of the combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination, and that the control is not transitory. Where an entity within the Group acquires an entity under common-control, the acquirer consolidates the book value of the acquired entity’s assets and liabilities from the date of acquisition. The consolidated financial statements of the Group include the acquired entity’s income and expenses from the date of acquisition onwards. Any difference between the fair value of the consideration paid/transferred by the acquirer and the net assets/(liabilities) of the acquired entity are taken to the common control reserve within other equity.

Megaport Limited | ABN 46 607 301 959

Section 2: Business performance

This section provides information about our results, performance of our segments, information on revenue and Direct network costs, details of income tax expenses, details of significant expense lines and our earnings per share for the period.

1. Segment reporting

(a) Description of segments

AASB 8 Operating Segments requires a ‘management approach’, under which segment information is presented on the same basis as that used for internal reporting purposes. Operating segments are reported in a manner that is consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The CODM has been identified as the Board of Directors, who make strategic decisions on behalf of the Group.

The Group’s Board of Directors examines the performance of the Group from a geographic perspective and has identified three operating segments. Head office and Group services costs whose function is to support the operating segments are presented under “other” in this note. All operating segments are currently reportable. All operating segments generate revenue from the Group’s principal activities. These segments are:

Asia-Pacific, including Australia, New Zealand, Hong Kong, Singapore and Japan. As of 30 June 2021, 105 installed data centres operate across Asia-Pacific (2020: 87).
North America, established in April 2016, there are now 198 installed data centres across the United States of America and Canada (2020: 174).
Europe, established in 2016 and subsequently acquired Megaport (Bulgaria) EAD (formerly OMNIX Group AD) and Megaport (Deutschland) GmbH (formerly Peering GmbH) respectively. There are now 102 installed data centers across Europe (2020: 105).
Other, includes head office and group services, whose function is to support the operating segments and growth of the global business.

(b) Segment information provided to the Chief Operating Decision Maker

The CODM monitors the operating results of operating segments separately for the purpose of making decisions about resources to be allocated and assessing performance. Segment performance is evaluated based on Revenue, Profit after direct network costs and Normalised EBITDA, each of which is measured the same way as these items in the consolidated financial statements.

The accounting policies of the reportable segments are the same as the Group’s policies.

Segment assets are measured in the same way as in the consolidated financial statements. These assets are allocated based on the operations of the segment and in the case of PPE, the physical location of the assets.

1. Segment reporting (continued)

(c) Segment performance and position

The segment information provided to the CODM for the reportable segments for the year ended 30 June 2021 and 30 June 2020 is as follows:

				Total
	Asia-	North		operating
	Pacific	America	Europe	segments	Other3	Total
2021	$’000	$’000	$’000	$’000	$’000	$’000
For the year ended 30 June 2021
Revenue1	25,711	38,732	13,838	78,281	-	78,281
Profit after direct network costs	18,097	15,784	8,187	42,068	-	42,068
Normalised EBITDA2	10,326	1,490	1,588	13,404	(26,724)	(13,320)
Interest income	21	-	-	21	279	300
Depreciation and amortisation
expense	(4,475)	(6,093)	(3,566)	(14,134)	(9,330)	(23,464)
Equity-settled employee costs and
related tax costs	-	-	-	-	(9,828)	(9,828)
Finance costs	(578)	(200)	(81)	(859)	(629)	(1,488)
Foreign exchange(losses)/gains	(1,527)	(7,550)	(487)	(9,564)	(3,914)	(13,478)
Non-operatingexpenses	(189)	(95)	(49)	(333)	(34)	(367)
Income tax benefit /(expense)	1,394	4,816	250	6,460	185	6,645
Netprofit /(loss) for theyear	4,972	(7,632)	(2,345)	(5,005)	(49,995)	(55,000)

Additions to PPE and intangible
assets4	4,660	10,195	2,353	17,208	7,455	24,663

As at 30 June 2021
Segment assets	33,725	41,212	38,052	112,989	107,574	220,563

Segment revenue reported above represents revenue generated from external customers. There were no inter-segment sales in current year
Normalised Earnings Before Interest Tax Depreciation and Amortisation (Normalised EBITDA) represents operating results excluding the equity-settled employee costs and related tax costs, foreign exchange gains and non-operating expenses
“Other” represents head office and group services costs, whose function is to support the operating segments and growth of the global business 4. Additions to PPE and intangible assets includes right-of-use assets

Megaport Limited | ABN 46 607 301 959

1. Segment reporting (continued)

(c) Segment performance and position (Continued)

				Total
	Asia-	North		operating
	Pacific	America	Europe	segments	Other3	Total5
2020	$’000	$’000	$’000	$’000	$’000	$’000
For the year ended 30 June 2020
Revenue1	20,575	26,334	11,131	58,040	-	58,040
Profit after direct network costs	14,327	8,650	6,541	29,518	-	29,518
Normalised EBITDA2	6,525	(4,413)	409	2,521	(23,584)	(21,063)
Interest income	83	1	-	84	986	1,070
Depreciation and amortisation
expense	(2,978)	(6,819)	(3,070)	(12,867)	(4,422)	(17,289)
Equity-settled employee costs	-	-	-	-	(6,911)	(6,911)
Finance costs	(469)	(259)	(101)	(829)	(404)	(1,233)
Foreign exchange(losses)/gains	(759)	574	(246)	(431)	(3,337)	(3,768)
Non-operatingexpenses	1	(5)	(3)	(7)	7	-
Income tax benefit /(expense)	(146)	(8)	431	277	206	483
Netprofit /(loss) for theyear	2,257	(10,929)	(2,580)	(11,252)	(37,459)	(48,711)

Additions to PPE and intangible
assets4	10,917	18,577	7,771	37,265	4,327	41,592

As at 30 June 2020
Segment assets	34,166	34,029	20,257	88,452	158,643	247,095

Segment revenue reported above represents revenue generated from external customers. There were no inter-segment sales in current year
Normalised Earnings Before Interest Tax Depreciation and Amortisation (Normalised EBITDA) represents operating results excluding the equity-settled employee costs, foreign exchange gains and non-operating expenses
“Other” represents head office and group services costs, whose function is to support the operating segments and growth of the global business
Additions to PPE and intangible assets include an amount of $7.4m relating to initial recognition of right-of-use assets
FY20 has been restated, refer to Note (c) under Section 1 for details on the prior year restatement.

The amount of the Group’s revenue from external customers broken down by major countries is as follows:

	2021	2021	2020	2020
Location	$’000	%	$’000	%
United States of America	37,580	48.0	25,534	44.0
Australia	17,446	22.3	13,978	24.1
Germany	6,972	8.9	6,328	10.9
United Kingdom	4,649	5.9	3,482	6.0
Other countries	11,634	14.9	8,718	15.0
Total	78,281	100.0	58,040	100.0

1. Segment reporting (continued)

(c) Segment performance and position (Continued)

No single customer contributed 10% or more to the Group’s revenue for both the financial years ending 30 June 2021 and 30 June 2020.

The PPE and intangible assets broken down by major countries is as follows:

	2021	2021	2020	2020
Location	$’000	%	$’000	%

Australia	18,225	31.0	20,821	33.8
United States of America	19,328	32.9	21,094	34.2
Germany	4,909	8.3	6,462	10.5
United Kingdom	2,046	3.5	1,762	2.9
Other countries	14,276	24.3	11,485	18.6
Total	58,784	100.0	61,624	100.0

2. Revenue

The Group derives the following type of revenue for the year from contracts with customers.

	2021	2020
	$’000	$’000
Revenue from the rendering of services	78,281	58,040
Total revenue from contracts with customers	78,281	58,040

Revenue recognition and measurement

AASB 15 establishes principles for reporting the nature, amount, timing, and uncertainty of revenue and cash flows arising from an entity’s contracts with customers and requires application of a five-step process to identify the contract with the customer, identify performance obligations in the contract, determine transaction price, allocate the transaction price to the performance obligations and recognise revenue when performance obligations are satisfied.

The following specific recognition criteria must also be met before revenue is recognised:

Rendering of services

Megaport derives income primarily through short and medium term contracts for the sale and provisioning of ondemand high-speed data services including network interconnectivity, facilitated through the Group’s service delivery and connectivity platform. Revenue for data services is recognised when the performance obligation is satisfied such as “the completion of provision of service”. Revenue from services provided but unbilled is accrued at the end of each period and unearned revenue for services to be provided in future periods is deferred and recognised in the period that the performance obligation is satisfied. Revenue from rendering of services is largely billed monthly on a usage basis over time consistent with the individual performance obligations, with standard payment terms of 30 days.

Megaport Limited | ABN 46 607 301 959

3. Direct network costs

Direct network costs comprise of data centre power and space, physical cross connect fees, bandwidth and dark fibre, network operation and maintenance, and channel commissions which are directly related to generating the service revenue of the Group.

4. Income tax benefit / (expense)

(a) Income tax benefit / (expense) recognised in profit or loss

(i) Major components of income tax expense

2021	2020
$’000	$’000
Current income tax benefit /(expense) (167)	187
Deferred income tax benefit 6,812	296
Income tax benefit reported in the Consolidated Statement of Profit or Loss and Other Comprehensive Income 6,645	483

(ii) Numerical reconciliation of income tax benefit / (expense) benefit to prima facie tax payable or receivable.

	2021	2020
	$’000	$’000
Accountingloss before income tax	(61,645)	(49,194)
Tax at the Australian tax rate of 30%(2020: 30%)	18,494	14,758

Non-deductible or non-taxable amounts	8,151	(2,116)
Recognition of temporarydifferencespreviouslynot brought to account	1,714	12
Deductible amounts recognised in equity	(82)	628
Difference in overseas tax rates	(7,943)	(2,714)
Unused tax losses not recognised	(13,689)	(10,085)
Income tax benefit /(expense)	6,645	483

Income tax expense/(benefit) represents the sum of the tax currently payable or receivable and deferred tax. Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred tax are also recognised in other comprehensive income or directly in equity, respectively.

Tax consolidation - Relevance of tax consolidation to the Group

The parent entity and its wholly-owned Australian resident entities have formed a tax-consolidated group with effect from 2 August 2015 and are therefore taxed as a single entity from that date. The head entity within the taxconsolidated group is Megaport Limited. The members of the tax-consolidated group are identified in Note 22. Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated group are recognised in the separate financial statements of the members of the taxconsolidated group using the ‘stand-alone separate taxpayer’ approach by reference to the carrying amounts in the separate financial statements of each entity and the tax values applying under tax consolidation. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and relevant tax credits of the members of the tax-consolidated group are recognised by the company (as head entity in the tax-consolidated group).

(a) Income tax benefit / (expense) recognised in profit or loss (continued)

Tax funding arrangements and tax sharing agreements

The entities within the tax-consolidated group have entered into a tax funding arrangement and a tax sharing agreement.

(b) Current tax assets and liabilities

2021	2020
$’000	$’000
Current tax assets: Tax refund receivable 28	107
Current tax liabilities: Income taxpayable (83)	(206)
Net current taxpayable (55)	(99)

(c) Deferred tax

Deferred tax balances comprise of:

2021	2020
$’000	$’000
Deferred tax assets 10,989	4,226
Deferred tax liabilities (65)	(172)
Net deferred tax balances 10,924	4,054

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax liabilities are generally recognised for all taxable temporary differences except to the extent that the deferred tax liability arises from:

the initial recognition of assets and liabilities in a transaction (other than in a business combination) that affects neither the taxable profit nor the accounting profit.
the initial recognition of goodwill.
taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, where the Group is able to control the reversal of the temporary difference and it is not probable that the temporary difference will reverse in the foreseeable future.

Deferred tax assets are only recognised for all deductible temporary differences, unused tax losses and any unused tax credits to the extent that it is probable that taxable profits will be available against which those temporary differences can be utilised. Deferred tax assets arising from deductible temporary differences associated with investments in subsidiaries and associates are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

Megaport Limited | ABN 46 607 301 959

(c) Deferred tax (continued)

The carrying amount of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

(i) The following is the analysis of net deferred tax asset/ (liabilities) presented in the Consolidated Statement of Financial Position:

		Recognise	Recognise
	Opening	d in profit	d directly in	Exchange	Closing
	balance	or loss	equity	differences	balance
30 June 2021	$’000	$’000	$’000	$’000	$’000
Deferred tax assets and liabilities in relation
to:
Intangible assets	237	185	-	-	422
Share issue costs and options	1,793	873	-	-	2,666
Accruals and other payables	593	1,272	-	-	1,865
Unrealised foreign exchange and others	1,431	2,780	-	58	4,269
Tax losses (non-capital)	0	1,702	-	-	1,702
Total	4,054	6,812	-	58	10,924

		Recognised	Recognised
	Opening	in profit or	directly in	Exchange	Closing
	balance	loss	equity	differences	balance
30 June 2020	$’000	$’000	$’000	$’000	$’000
Deferred tax assets and liabilities in relation
to:
Intangible assets	523	(286)	-	-	237
Share issue costs and options	1,151	(628)	1,270	-	1,793
Accruals and other payables	919	(326)	-	-	593
Unrealised foreign exchange and others	(110)	1,536	-	5	1,431
Total	2,483	296	1,270	5	4,054

A deferred tax asset in relation to unused tax losses of $1.7m (2020: nil) has been recorded by the Group across Australia ($0.4m), the United States of America ($0.8m) and New Zealand ($0.5m). Projections of taxable profits from various sources and tax planning were used to support the recognition of these losses and they have been recognised on the basis that it is considered probable that the Group will generate future taxable profits against which these losses can be utilised. The future projected taxable profit is underpinned by the Group’s forecasts of customer and revenue growth and the anticipated timing of the increase in demand for the Group’s services. The deferred income tax asset relating to the unused tax losses will be reassessed in future periods based on the level of taxable income generated by the Group.

(ii) Unrecognised deductible temporary differences, unused tax losses and unused tax credits

2021	2020
$’000	$’000
Deductible temporary differences, unused tax losses and unused
tax credits for which no deferred tax assets have been recognised
are attributable to the following:
Tax losses carried forward 44,672	34,736
Total deferred tax assets not recognised 44,672	34,736

The deferred tax asset not recognised above is the result of unused tax losses in Australia of $48.3 million (2020: $52.8 million), in United States of America of $90.8 million (2020: $60.6 million), in the United Kingdom of $8.9 million (2020: $6.4 million), in Germany of $7.9 million (2020: $0.8 million), in Singapore of $6.6 million (2020: $3.7 million), in Hong Kong of $6.5 million (2020: $3.8 million) and in other countries totaling $26.6 million (2020: $14.9 million).

These losses should be available to offset against future taxable profits of the companies in which the losses arose, subject to satisfying the relevant income tax loss carry forward rules and recognition criteria.

(d) Significant areas of judgement

The Group is subject to income taxes in each jurisdiction that it operates. Estimation is required in determining the provision for income taxes. There are certain transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group estimates its tax liabilities based on the Group’s understanding of the tax law. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

In assessing the probability of realising income tax assets recognised, management makes estimates related to expectations of future taxable income, applicable tax planning opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified. Estimates of future taxable income are based on forecasted cash flows from operating activities and the application of existing tax laws in each jurisdiction. The Company considers relevant tax planning opportunities that are within the Group's control, are feasible, and within management's ability to implement. Examination by applicable tax authorities is supported based on individual facts and circumstances of the relevant tax position examined in light of all available evidence. Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur that materially affect the amounts of income tax assets recognised. Also, future changes in tax laws could limit the Company from realising the tax benefits from the deferred tax assets. The Company reassesses unrecognised income tax assets at each reporting period.

Megaport Limited | ABN 46 607 301 959

5. Significant profit or loss items

The Group has identified a number of specific expenses and gains included in profit or loss before income tax which are significant due to their nature and/or amount. These are listed separately here to provide a better understanding of the financial performance of the Group.

		2021	Restated#
		$’000	2020
	Notes		$’000
Income and expenses
Depreciation and amortisation:
Depreciation of non-current assets – property, plant and
equipment	10	13,676	10,271
Depreciation of right-of-use-asset	10, 13	5,919	5,042
Amortisation of non-current assets – intangible assets	11	3,869	1,976
		23,464	17,289
Equity-settled employee costs and related tax costs:
Employee share optionplans	21	6,514	6,709
Employee shareplan	21	245	202
Other employee shareplan tax related costs	21	3,069	-
		9,828	6,911
Other expense disclosures:
Employees’ superannuation expense		2,140	1,650
Foreign exchange losses	(a)	13,478	3,768
Interest expense on lease liabilities		621	639
Interest expense on other borrowings		489	363
Expense relatingto short-term leases		1,691	1,348

Refer to Note (c) under Section 1 for details on the prior year restatement

Notes:

(a) The Group provides funding support to subsidiaries to invest in network equipment and fund operating losses until they become established and self-funding. As a result, the Group may be subject to foreign currency gains or losses on intercompany receivables and payables, and cash balances held in foreign currencies. Refer to Note 20 for further details.

6. Loss per share

The loss and weighted average number of ordinary shares used in the calculation of basic and diluted loss per share are as follows:

			Restated#
		2021	2020
		$’000	$’000
	Net loss for the year attributable to owners of the Company	(55,000)	(48,711)
	Loss used in the calculation of basic and diluted loss per share	(55,000)	(48,711)
		2021	2020
		No. of Shares	No. of Shares
	Weighted average number of ordinary shares for the purpose of
	basic and diluted lossper share	155,021,100	142,268,464
		2021	2020
		$	$
	Basic and diluted loss per share	(0.35)	(0.34)
#	Refer to Note (c) under Section 1 for details on the prior year restatement.

Basic EPS is calculated by dividing the profit attributable to owners of the company, excluding any costs of servicing equity other than ordinary shares by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares.

Diluted EPS adjusts the figures used in the determination of basic EPS taking into account:

The after-tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and
The weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

Basic and diluted loss per share excludes the effect of 3,226,668 (2020: 5,344,001) outstanding employee share options as they are anti-dilutive given the Group made a loss for the current and previous years.

Megaport Limited | ABN 46 607 301 959

Section 3: Core assets, liabilities and working capital

This section provides information about our long-term tangible and intangible assets as well as our impairment assessment. This section also includes information about our short-term assets and liabilities, and cash balances in support of our working capital and liquidity position.

Assets and liabilities are presented in the Consolidated Statement of Financial Position based on current and noncurrent classification.

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

7. Cash and cash equivalents

		2021	2020
	Notes	$’000	$’000
Cash at bank	(a)	136,312	166,877
Total cash and cash equivalents		136,312	166,877

Notes:

(a) Included in cash at bank and on hand is an amount of $6,517,733 (2020: $6,545,000) that is held under lien by the bank as security for company’s borrowings, rental security and credit cards and is therefore not available for use by the Group.

Cash at bank earns interest at floating rates based on daily bank deposit rates ranging 0% - 0.75% (2020: 0% - 1.8%). The weighted average interest rate for the year was 0.38% (2020: 1.26%).

Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Cash and cash equivalents at the end of the reporting period as shown in the Consolidated Statement of Cash Flows can be reconciled to the related items in the Consolidated Statement of Financial Position as follows:

Reconciliation of loss for the year to net cash flows used in operating activities

			Restated#
		2021	2020
Cash flows used in operating activities	Notes	$’000	$’000
Loss for theyear		(55,000)	(48,711)
Adjustments for:
Interest income		(300)	(1,070)
Depreciation and amortisation	5	23,464	17,289
Loss/(gain)on disposal or write-off of non-current assets		329	(6)
Net foreign exchange differences		12,905	3,089
Equity-settled employee costs	21(d)	6,409	6,911
Deferred income tax benefit		(6,812)	(483)
		(19,005)	(22,981)
Movements in working capital:
Decrease /(increase)in trade and other receivables		1,171	(3,566)
Increase in other assets		(517)	869
Increase in operatingtrade and otherpayables		9,139	2,945
Decrease /(increase)in tax assets and liabilities		(44)	23
Increase in other liabilities		636	1,003
Net cash used in operating activities		(8,620)	(21,707)

Refer to Note (c) under Section 1 for details on the prior year restatement.

8. Trade and other receivables

(a) Trade and other receivables and contract assets balances

		2021	2020
	Notes	$’000	$’000
Trade receivables	(a)	6,571	8,726
Contract assets	(b)	3,940	2,982
Less: Allowance for expected credit losses	(c)	(380)	(467)
		10,131	11,241
Interest receivable		7	40
Other receivables		134	195
Total		10,272	11,476

Notes:

(a) Trade receivables are non-interest bearing and are generally payable within 30 days.

(b) Contract assets relate to the Group’s right to consideration for services provided to customers but for which the Group has no unconditional rights to payment at the reporting date. The contract assets are transferred to receivables when the rights become unconditional. This usually occurs when the Group issues an invoice to the customer.

(c) Allowances for expected credit losses (“ECL”) on trade receivables are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions (including the COVID-19 pandemic) and an assessment of both the current as well as the forecast direction of conditions at the reporting date.

Megaport Limited | ABN 46 607 301 959

(b) Recognition and measurement

Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for ECL. Trade receivables are generally due for settlement within 30 days.

The Group recognises a loss allowance for ECL on financial assets (Trade and other receivables including contract assets) which are measured at amortised cost. The loss allowance is recognised in profit or loss.

The Group has applied the simplified approach to measuring ECL, which uses a lifetime expected loss allowance. To measure the ECL, trade receivables and contract assets have been grouped based on days overdue. The ECL on trade receivables and contract assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.

For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12 ‑ month ECL.

Lifetime ECL represents the expected credit losses that will result from all possible default events over the ‑ expected life of a financial instrument. In contrast, 12 month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

Due to the short-term nature of the current receivables, their carrying amount is assumed to be the same as their fair value.

Trade receivables disclosed above include amounts (see below for aged analysis) that are past due but not impaired at the end of the reporting period.

	2021	2020
Age of receivables that arepast due but not impaired	$’000	$’000
1 – 30 dayspast due	498	1,082
31 – 60 dayspast due	98	760
61+ dayspast due	703	2,135
Total	1,299	3,977

The ageing of the trade receivables for which the ECL provided are as follows:

	2021	2020
Allocation of ECL	$’000	$’000
0 – 30 current notyet due	88	78
1 – 30 dayspast due	16	34
31 – 60 dayspast due	15	106
61+ dayspast due	261	249
Total	380	467

(c) Allowance for ECL

Movements in the allowance for ECL are as follows:

	2021	2020
	$’000	$’000
Balance at beginningof theyear	467	260
Additional allowances recognised	365	405
Amounts written off duringtheyear as uncollectable	(467)	(196)
Exchange differences	15	(2)
Balance at end of theyear	380	467

The allowance for ECL assessment requires a degree of estimation and judgement. It is based on the lifetime ECL grouped based on days overdue, and makes assumptions to allocate an overall ECL rate for each group. These assumptions include recent sales experience, historical collection rates, the impact of the COVID-19 pandemic and forward-looking information that is available. The allowance for ECL is calculated based on the information available at the time of preparation and takes into account any change in the credit quality of the trade receivable from the date credit was initially granted up to the end of the reporting period. The actual credit losses in future years may be higher or lower.

The concentration of credit risk is limited due to the fact that the customer base is large and unrelated and no individual customers account for more than 10% of total revenue. Further details regarding risk exposure related to credit, market and interest rate risk have been disclosed in Note 20.

9. Other assets

	2021	2020
	$’000	$’000
Current
Prepayments	3,311	1,542
Deposits and bonds	426	333
	3,737	1,875
Non-current
Prepayments	441	910
	441	910
Total other assets	4,178	2,785

Prepayments consist of expenditure paid for in advance, and in relation to which the economic benefits will be realised in the future. Prepayments are initially recorded as assets in the Consolidated Statement of Financial Position and subsequently expensed to the Consolidated Statement of Profit or Loss and Other Comprehensive Income or reclassed in the Consolidated Statement of Financial Position, at the time when the benefits are realised. The future economic benefit is the receipt of goods or services, rather than the right to receive cash or another financial asset.

Deposits are monies paid to various service providers as initial payments for future service or goods delivery. Deposits are usually offset against future payments.

Bonds consist of monies paid to various service providers as security for contractual obligations of the Company. Bonds are refundable in certain circumstances, upon the discharge of contractual obligations to which they relate.

Megaport Limited | ABN 46 607 301 959

10. Property, Plant and Equipment 10. Property, plant and equipment

		Furniture &
	Network	office	Computer	Leasehold	Right-of-use*	Assets under
	equipment	equipment	equipment	Improvements	assets	construction	Total
	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Year ended 30 June 2021
Openingnet book amount	25,183	60	447	412	12,187	11,533	49,822
Additions	28	129	176	206	3,084	13,585	17,208
Transfers within property, plant and
equipment	21,096	4	230	-	-	(21,330)	-
Transfers to intangible assets	-	-	-	-	-	(1,042)	(1,042)
Disposals	(305)	(1)	-	-	(1,761)	(68)	(2,135)
Depreciation charge	(13,049)	(75)	(317)	(234)	(5,918)	-	(19,593)
Exchange differences	(1,470)	(2)	(4)	(2)	93	(149)	(1,534)
Net book value as at 30 June 2021	31,483	115	532	382	7,685	2,529	42,726

At 30 June 2021
Cost	64,427	259	1,613	684	17,539	2,529	87,051
Accumulated depreciation	(32,944)	(144)	(1,081)	(302)	(9,854)	-	(44,325)
Net book value as at 30 June 2021	31,483	115	532	382	7,685	2,529	42,726

10. Property, Plant and Equipment (continued) 10. Property, Plant and Equipment (continued)

		Furniture &
	Network	office	Computer	Leasehold	Right-of-use*	Assets under
	equipment	equipment	equipment	Improvements	assets	construction	Total
	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Year ended 30 June 2020
Openingnet book amount	17,702	45	321	-	-	8,742	26,810
Initial recognition of right-of-use-asset	-	-	-	-	7,435	-	7,435
Additions	-	9	298	481	9,679	20,218	30,685
Transfers	17,403	40	61	-	-	(17,504)	-
Disposals	(13)	(1)	(5)	-	-	-	(19)
Depreciation charge	(9,937)	(34)	(231)	(69)	(5,042)	-	(15,313)
Exchange differences	28	1	3	-	115	77	224
Net book value as at 30 June 2020	25,183	60	447	412	12,187	11,533	49,822

At 30 June 2020					-
Cost	50,381	134	1,225	481	17,113	11,533	80,867
Accumulated depreciation	(25,198)	(74)	(778)	(69)	(4,926)	-	(31,045)
Net book value as at 30 June 2020	25,183	60	447	412	12,187	11,533	49,822

*Refer to Note 13 for further details on Right-of-use assets

Megaport Limited | ABN 46 607 301 959

10. Property, Plant and Equipment (continued)

(a) Recognition and measurement

Each class of property, plant and equipment (“PPE”) is carried at cost less, where applicable, any accumulated depreciation or impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets (other than freehold land and assets under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Right-of-use assets are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.

Depreciation is calculated over PPE using the following estimated useful lives and methods:

PPE Category	Expected Useful Life	Method
Network equipment	4years	Straight line
Furniture & office equipment	3 - 5years	Straight line
Computer equipment	2 - 3years	Straight line
Leasehold assets and improvements	Over the life of the lease	Straight line

An item of PPE is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

Assets under construction

Assets under construction are shown at historical cost. Historical cost includes directly attributable expenditures on network infrastructure and data centres which at reporting date, have not yet been finalised and/or are ready for use. Assets under construction are not depreciated. Assets under construction are transferred to the relevant class of PPE upon successful testing and commissioning.

(b) Critical accounting estimates and judgement

Useful lives of PPE

The economic life of PPE which includes network infrastructure is a critical accounting estimate. The useful economic life is the Board’s and Management’s best estimate based on historical experiences and industry knowledge. The Group reviews the estimated useful lives of PPE at the end of each annual reporting period. Should the actual lives of these component parts be significantly different this would impact the depreciation and expense in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

11. Intangible assets 11. Intangible assets

					Brand
					names,
		Customer			patents &		Software
		contracts &	Network		other		under
	Software	relationships	rights	IRU assets	intangibles	Goodwill	development	Total
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Year ended 30 June 2021
Openingnet book amount	3,852	304	-	2,902	547	1,546	2,651	11,802
Additions	-	-	-	-	89	-	7,366	7,455
Transfers from property, plant and
equipment	-	-	-	-	-	-	1,042	1,042
Transfers	8,458	-	-	-	-	-	(8,458)	-
Disposal	(10)	-	-	-	(180)	-	-	(190)
Amortisation charge	(3,304)	(104)	-	(397)	(64)	-	-	(3,869)
Exchange differences	(38)	4	-	(168)	-	20	-	(182)
Net book value as at 30 June 2021	8,958	204	-	2,337	392	1,566	2,601	16,058

At 30 June 2021
Cost	15,821	681	854	3,950	574	1,566	2,601	26,047
Accumulated amortisation	(6,863)	(477)	(854)	(1,613)	(182)	-	-	(9,989)
Net book value as at 30 June 2021	8,958	204	-	2,337	392	1,566	2,601	16,058

Megaport Limited | ABN 46 607 301 959

11. Intangible assets (continued)11. Intangible assets (continued)

					Brand
					names,
		Customer			patents &		Software
	Restated#	contracts &	Network		other		under
	Software	relationships	rights	IRU assets	intangibles	Goodwill	development	Total
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Year ended 30 June 2020
Openingnet book amount	2,435	410	16	3,267	427	1,554	2,770	10,879
Additions	108	-	-	-	134	-	3,230	3,472
R&D refund received*	(611)	-	-	-	-	-	-	(611)
Transfers	3,363	-	-	-	-	-	(3,363)	-
Amortisation charge	(1,427)	(108)	(17)	(410)	(14)	-	-	(1,976)
Exchange differences	(16)	2	1	45	-	(8)	14	38
Net book value as at 30 June 2020	3,852	304	-	2,902	547	1,546	2,651	11,802

At 30 June 2020
Cost	7,471	670	830	4,197	664	1,546	2,651	18,029
Accumulated amortisation	(3,619)	(366)	(830)	(1,295)	(117)	-	-	(6,227)
Net book value as at 30 June 2020	3,852	304	-	2,902	547	1,546	2,651	11,802

*Research and development (R&D) refund relates to government grants received from the Australian Tax Office (ATO) for the costs incurred in eligible technological development programmes which were previously capitalised.

Refer to Note (c) under Section 1 for details on the prior year restatement.

Additional information relating to intangible assets

Qualifying cost relating to the development team’s time spent developing software is capitalised. Costs incurred in relation to the development of software code that enhances, modifies or creates additional capability to existing on-premise systems and meets the definition criteria of an intangible are capitalised. The portion of their time spent on researching new development opportunities and maintaining existing software is expensed. The total cost incurred for this time for the year ended 30 June 2021 was $1,014,000 (2020: $538,000), which is included in the employee expenses in the Consolidated Statement of Profit or Loss and Other Comprehensive Income .

11. Intangible assets (continued)

(a) Recognition and measurement

Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

Indefeasible rights to use assets

Indefeasible rights to use (‘IRUs’) and long-term agreements of capacity are recognised at cost, being the present value of future cash flows payable for the right. Costs are deferred and amortised on a straight line basis over the life of the contract.

In 2017 Megaport entered into long term IRUs agreements for dark fibre services with a lump-sum payment arrangement. Management has classified the IRUs as intangible assets in the form of IRU capacity assets under AASB 138 Intangible Assets as the provider has the right to substitute, modify or replace the fibre cores and pathways used by Megaport.

Internally-generated intangible assets – research and development expenditure

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:

The technical feasibility of completing the intangible asset so that it will be available for use or sale;
The intention to complete the intangible asset and use or sell it;
The ability to use or sell the intangible asset;
How the intangible asset will generate probable future economic benefits;
The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
The ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

Megaport Limited | ABN 46 607 301 959

(a) Recognition and measurement (continued)

A summary of the amortisation policies applied to the Group’s intangible assets is as follows:

Category	Method	Internally generated /
		acquired
Patents and trademarks	Straight line – the length of the
	approved application	Acquired
Software	Straight line – 3years	Acquired / internally generated
Brand names	Straight line – 2 - 10years	Acquired
Customer contracts &
relationships	Straight line – 5 - 10years	Acquired
Network rights	Straight line – 3years	Acquired
	Straight line – 10 years (the life of the
IRU assets	contract)	Acquired

Derecognition of intangible assets

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognised in profit or loss when the asset is derecognised.

(b) Critical accounting estimates and judgements

(i) Useful lives of intangible assets

The economic life of intangible assets, which includes internally generated software, is a critical accounting estimate. The useful economic life is the Board’s and Management’s best estimate based on historical experiences and industry knowledge. The Group reviews the estimated useful lives of intangible assets at the end of each annual reporting period. Should the actual lives of these component parts be significantly different this would impact the amortisation expense in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

(ii) Value of internally generated intangible assets

The Group develops network software internally. To put a value to these assets, the Group estimates the reasonable time spent by key employees on the development of the software, then capitalises the labour cost of the estimated time spent developing the asset.

12. Impairment assessment

(a) Impairment of Goodwill

(i) Recognition and measurement

Goodwill acquired on a business combination is initially measured at cost, being the excess of the consideration transferred for the business combination over the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses, if any.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination. This allocation is consistent with the lowest level within the Group at which the goodwill is monitored for internal management purposes.

A cash-generating unit (“CGU”) to which goodwill has been allocated is reviewed for impairment, annually, or more frequently, if events or changes in circumstances indicate that the carrying value may be impaired. Impairment is determined by assessing the recoverable amount of the CGU to which the goodwill relates. If the recoverable amount of the CGU is less than the carrying amount, an impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to the other assets of the CGU pro rata based on the carrying amount of each asset in the CGU. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.

Where goodwill forms part of a CGU and part of the operation within that unit is disposed, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Disposed goodwill in this circumstance is measured on the basis of the relative values of the disposed operation and the portion of the CGU retained.

(ii) Impairment testing

An impairment test is required to be performed for CGUs with indefinite life intangible assets, goodwill or where there is an indication of impairment. The Europe CGU was tested for impairment as it was allocated goodwill on acquisition of Megaport (Deutschland) GmbH (formerly, Peering Gmbh). No impairment indicators were identified for other CGUs.

The carrying amount of goodwill is as follows:

		2021	2020
CGU	Note	$’000	$’000
Europe		1,566	1,546
Total	11	1,566	1,546

Goodwill is tested for impairment annually. The Group performed its annual impairment test using the carrying value as at 30 June 2021 (2020: carrying value as at 30 June 2020).

The recoverable amount of Europe has been determined using the value-in-use calculation, which includes the financial budgets set for the next financial year and management’s earnings and cash flow projections for subsequent years.

Megaport Limited | ABN 46 607 301 959

(a) Impairment of Goodwill (continued)

Key assumptions used for value-in-use calculation

The following key assumptions were applied to the cash flow projections when determining the valuein-use calculation for Europe:

	2021	2020
Pre-tax discount rate	14.20%	13.50%
Terminalgrowth rate	1.7%	3%
Cash flows beyond the next financial year are
extrapolated usingagrowth rate of:
Revenuegrowth(years 2 – 5)	39%	33%
Cost of Goods Soldgrowth(years 2 – 5)	30%	15%
General and administration expenses growth (years 2
– 5)	10%	15%
Labour expensesgrowth(years 2 – 5)	14%	15%
Travel and marketingexpensesgrowth(years 2 – 5)	16%	15%

Revenue – using the budgeted revenue for the year ended 30 June 2022 and projections for a further four years.
Expenses – using the budgeted expenses for the year ended 30 June 2022 and projections for a further four years. Cash outflow projections relating to expenses have been disaggregated into labour, travel and general and administration expenses as the projected spend for these expenses is not uniform. Effects of COVID-19 have been taken into account in applying the projections.
Terminal value – calculated based on a multiple of estimated cash flows in year five.

The Group has conducted an analysis of the sensitivity of the impairment test to changes in the key assumptions used to determine the recoverable amount for Europe considering the impacts that the COVID-19 pandemic has had to-date. The directors have determined that any reasonable change in the key assumptions on which the recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of Europe.

(b) Impairment of tangible and intangible assets other than goodwill

At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such an indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the CGU to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual CGUs, or otherwise they are allocated to the smallest group of CGUs for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, or whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

(b) Impairment of tangible and intangible assets other than goodwill (continued)

If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

When an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or CGU) in prior years.

A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

(c) Critical accounting estimates and judgements – impairment assessment

The impairment assessment and value-in-use model requires management to make a number of assumptions, judgements and estimates throughout the process. Details of these key areas include the following:

Management judgement is applied to establish the CGUs. The CGUs are smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
The value-in-use model utilises a discounted cash flow analysis of five-year cashflows plus a terminal value. The five-year cash flows are based on the budget for the 12 months ending 30 June 2022 and a further four-year projection based on management estimates of revenue, expenses, capital expenditure and cash flows for each CGU. The Budget is management’s best estimate of the future business performance and outlook. It is based on projected key performance indicators that include number of services, number of products sold, customer numbers, achievement of monthly recurring revenue (MRR), installed data centres, product mix, sales mix between direct and indirect channels as well as foreign currency exposure.
Corporate expenses and corporate assets whose function is to support the operations of the CGUs (including other CGUs to which goodwill has not been allocated) were allocated to the CGUs on the basis of their carrying value. The relative carrying amounts of the CGUs are a reasonable indication of the proportion of the corporate support provided to each CGU.
Other key assumptions include the variables used to estimate the weighted average cost of capital and assumptions around factors such as credit margins, equity risk-premiums and terminal growth rates.

13. Leases

The Consolidated Statement of Financial Position includes the following amounts relating to leases:

(a) Right-of-use assets*

	2021	2020
	$’000	$’000
Network equipment	5,931	9,210
Properties	1,754	2,977
Total	7,685	12,187

*included in the line item ‘Property, plant and equipment’ in the Consolidated Statement of Financial Position, refer to Note 10.

Megaport Limited | ABN 46 607 301 959

(b) Lease liabilities

	2021	2020
	$’000	$’000
Current	4,734	5,867
Non-current	3,345	6,584
Total	8,079	12,451

(c) Recognition and measurement

The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases and leases of low value assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss. The lease liability is presented within Borrowings in the Consolidated Statement of Financial Position.

The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the right-ofuse asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease. The right-of-use assets are presented within Property, plant and equipment in the Consolidated Statement of Financial Position.

(d) Critical accounting estimates and judgements

The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods to be included in the lease term. In determining the lease term, all facts and circumstances that create an economic incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease commencement date. Factors considered may include the importance of the asset to the Group’s operations; comparison of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of significant leasehold improvements; and the costs and disruption to replace the asset. The Group reassesses whether it is reasonably certain to exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in circumstances.

Judgment is also exercised in determining the incremental borrowing rate when the interest rate implicit in a lease cannot be readily determined. Such a rate is based on what the consolidated entity estimates it would have to pay a third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment

14. Trade and other payables

		2021	2020
	Notes	$’000	$’000
Current
Tradepayables	(a),(c)	4,055	2,912
Employee entitlements	(b)	8,188	3,170
Accrued expenses		5,660	4,871
Goods and services taxpayable		2,357	585
Otherpayables	(c)	456	73

		20,716	11,611

Notes:

(a) Trade payables are non-interest bearing and are normally settled on terms ranging from 7 to 30 days.
(b) Employee entitlements includes employee benefits payable. The entire balance is presented as a current liability as the Group does not have an unconditional right to defer settlement for any of these obligations.
(c) Includes amounts due to related parties (Note 23(e)) and an amount of $245,000 accrued for employee share plan (2020: $202,000) (Note 21(e)).

Recognition and measurement

Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

Included in Trade and Other payables are the following employee entitlements ;

(i) Retirement employment obligations

Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions. Prepaid contributions are recognised as an asset to the extent that a cash refund or reduction in the future payments is applicable.

(ii) Bonus plans

The Group recognises a provision for future bonus payments where it is contractually obliged or where there is a past practice that has created a constructive obligation.

Due to the short-term nature of Trade and other payables, their carrying value is assumed to approximate the fair value.

Interest rate risk and liquidity risk

The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms. Information regarding interest rate risk and liquidity risk exposure is set out in Note 20.

Megaport Limited | ABN 46 607 301 959

15. Provisions

	2021	2020
	$’000	$’000
Current
Annual leaveprovision	3,123	2,500
	3,123	2,500
Non-current
Longservice leaveprovision	277	163
	277	163
Total provisions	3,400	2,663

Recognition and measurement

Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Short-term employee obligations

Liabilities for annual leave and any accumulating sick leave accrued up until the reporting date that are expected to be settled within 12 months are measured at the amounts expected to be paid when the liabilities are settled. The obligation for non-accumulated sick leave is recognised when the leave is taken and is measured at the rates paid or payable. Liabilities for unpaid wages and salaries including non-monetary benefits are recognised as employee entitlements under trade and other payables.

Long-term employee obligations

Liabilities in respect of long-term employee benefits are recognised in the provision for employee benefits and measured at the present value of expected future payments to be made in respect of services provided by the employees up to the reporting date, using the projected unit credit method. Consideration is given to the expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using high quality corporate bond rates at the reporting date with terms to maturity and currencies that match, as closely as possible, the estimated future cash flows.

Section 4: Capital and financial risk management

This section outlines our capital structure that includes equity and debt, policies and procedures that management applies in capital management as well as financial risks that we are exposed to and how we manage those risks.

16. Issued capital


Ordinary shares Number of shares	$’000
2021 2020 2021 2020
Fully paid 156,598,437 153,261,431 395,935 371,524
Total issued capital 156,598,437 153,261,431 395,935 371,524

Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Group, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.

Ordinary shares entitle the holder to one vote, either in person or by proxy, at a meeting of the Company.

Changes to the then Corporations Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998. Therefore, ordinary shares have no par value and the Company does not have a limited amount of authorised capital.

The movement in fully paid ordinary shares is summarised below:

	Number of	Total
	shares	$’000

Balance at 1 July2019	134,703,635	229,521
Shares issued - Private Placements	12,363,158	111,770
Shares issued - Share Purchase Plan	2,367,948	22,496
Shares issued – Employee Share Plan	24,024	142
Shares issued – Employee share options exercised	3,802,666	10,557
Less: Transaction costs arisingon share issues, net of tax	-	(2,962)
Balance at 30 June 2020	153,261,431	371,524

Shares issued – Employee Share Plan	14,673	202
Shares issued – Employee share options exercised	3,322,333	11,550
Transfer from equity-settled employee benefits reserve	-	12,659
Balance at 30 June 2021	156,598,437	395,935

Megaport Limited | ABN 46 607 301 959

17. Reserves

The components of our Reserves balance is as below.

	2021	2020
	$’000	$’000
Foreign currencytranslation reserve	2,469	(4,058)
Employee share option reserve	6,940	13,435
	9,409	9,377

The following table shows a breakdown of the ‘reserves’ line item as per the Consolidated Statement of Financial Position, and the movements in these reserves during the year. A description of the nature and purpose of each reserve is provided below.

	Foreign	Employee
	currency	share
	translation	option
	reserve	reserve	Total
	$’000	$’000	$’000
Balance at 1 July2019	(4,436)	6,726	2,290
Exchange differences arising on translation of foreign
operations	378	-	378
Share options expense	-	6,709	6,709
Balance at 30 June 2020	(4,058)	13,435	9,377
Exchange differences arising on translation of foreign
operations	6,527	-	6,527
Share options reserve release to share capital -		(12,659)	(12,659)
Share options expense	-	6,164	6,164
Balance at 30 June 2021	2,469	6,940	9,409

Notes:

(i) Foreign currency translation reserve

Exchange differences relating to the translation of the results and net assets of the Group’s foreign operations from their functional currencies to the Group’s presentation currency (i.e. Australian dollars) are recognised directly in other comprehensive income and accumulated in the foreign currency translation reserve. Exchange differences previously accumulated in the foreign currency translation reserve (in respect of translating the net assets of foreign operations) are reclassified to profit or loss on the disposal or discontinuation of foreign operations.

(ii) Employee share option reserve

The employee share option reserve relates to share options granted by the Company to its employees under ESOP General. Amounts are transferred out of the reserve into issued capital when the options are exercised. The current year transfer out of the employee share options reserve represents the fair value of the exercised options from the inception of the plans to date. Further information about employee share option plans is set out in Note 21.

18. Borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as when the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

		2021	2020
	Notes	$’000	$’000
*At amortised cost*
Current
Lease liabilities	(a)	4,734	5,867
Other borrowings	(b)	4,709	3,618
		9,443	9,485
Non-current
Lease liabilities	(a)	3,345	6,584
Other borrowings	(b)	2,969	5,174
		6,314	11,758
		15,757	21,243

Notes:

(a) Lease liabilities are recognised at fair value and subsequently at amortised cost using the effective interest method.

(b) During the year, the Group increased the vendor financing facility limit to $15.8 million (2020: $12 million). The facility is for the purposes of funding the purchase of network equipment and payment of software licenses and was fully drawn as at 30 June 2021. The facility is governed by an Instalment Purchase Agreement. The facility does not carry interest and is repayable via equal instalments over 36 months from the drawdown date. The borrowing is secured by a bank guarantee charged over $5.7 million in cash and cash equivalents. At inception the fair value of the loan is recognised using an estimate of a market borrowing rate.

Megaport Limited | ABN 46 607 301 959

18. Borrowings (continued)

The following table presents the changes in liabilities arising from financing activities:

	Lease	Other	Other
	liabilities	borrowings	Total
	$’000	$’000	$’000
Balance at 1 July2019	-	2,580	2,580
Initial recognition of lease liabilities	7,435	-	7,435
Additions(cash)	-	9,243	9,243
Additions(non-cash)	9,679	-	9,679
Fair value adjustments	-	(804)	(804)
Repayment(cash)	(4,773)	(2,227)	(7,000)
Exchange differences	110	-	110
Balance at 30 June 2020	12,451	8,792	21,243
Additions(cash)	-	3,024	3,024
Additions(non-cash)	3,084	-	3,084
Fair value adjustments	-	(261)	(261)
Repayment(cash)	(5,830)	(3,877)	(9,707)
Terminations(non-cash)	(966)	-	(966)
Exchange differences	(660)	-	(660)
Balance at 30 June 2021	8,079	7,678	15,757

Capital management

The Group maintains a conservative funding structure that allows it to meet its operational and regulatory requirements, while providing the capital to fund the future strategic growth plan.

When determining dividend returns to shareholders the Board considers a number of factors, including the Group’s anticipated cash requirements to fund its growth, operational plan, and current and future economic conditions. The Group is not bound by externally imposed capital requirements. Based on the current strategic plan being executed and anticipated cash focus, the Board’s current policy is to not issue dividends.

	2021	Restated#
	$’000	2020
		$’000
Total borrowings*	15,757	21,243
Total equity	180,412	210,969
Gearing ratio	8.7%	10.1%

Refer to Note (c) under Section 1 for details on the prior year restatement.

*Total borrowings include lease liabilities accounted for under AASB 16. At 30 June 2021, external borrowings comprised the $7.7 million vendor financing facility (2020: $8.8 million).

19. Accumulated losses

Movement in accumulated losses is as follows:

	Restated#
2021	2020
$’000	$’000
Balance at beginningofyear (158,018)	(109,307)
Net loss attributable to owners of the Company (55,000) Balance at end of year (213,018)	(48,711) (158,018)

Refer to Note (c) under Section 1 for details on the prior year restatement.

20. Financial risk management

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Board reviews and agrees policies for managing any risks that are considered significant to the Group, which are summarised in this note.

The Group holds the following financial instruments:

		2021	2020
	Notes	$’000	$’000
Financial assets – at amortised cost
Cash and cash equivalents	7	136,312	166,877
Trade and other receivables	8	10,272	11,476
Deposits and bonds	9	426	333
Total financial assets		147,010	178,686

Financial liabilities – at amortised cost
Trade and otherpayables	14	20,716	11,611
Borrowings	18	15,757	21,243
Total financial liabilities		36,473	32,854

(a) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: foreign exchange risk, price risk and interest rate risk.

(i) Foreign exchange risk

The Group operates internationally and is subject to foreign exchange risk arising from exposure to foreign currencies. The Group’s earnings and cash flows are influenced by a wide variety of currencies due to the geographic diversity of the Group’s sales and the countries in which it operates. The Australian dollar (AUD), US Dollar (USD), Euro and GBP are the currencies in which the majority of the Group’s sales are denominated. Operating costs and capital expenditure are influenced by the currencies of those countries where the Group’s data centres and fibre and

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Megaport Limited | ABN 46 607 301 959

(i) Foreign exchange risk (continued)

connectivity links are located. In the current year, the USD, the Euro and the GBP were the most important currencies (apart from the AUD) influencing costs. In any particular year, currency fluctuations may have a significant impact on the Group’s financial results. A strengthening of the AUD against the currencies in which the Group’s revenue, costs and capital expenditure are partly determined has a positive effect on the Group’s net profit or loss and a weakening of the AUD has a negative effect on the Group’s net profit or loss. However, a strengthening of the AUD does reduce the value of non-AUD denominated net assets and therefore total equity.

The AUD is the currency in which financial results are presented both internally and externally. It is also the most appropriate currency for financing the Group’s operations. Cash is predominantly denominated in AUD and USD.

Certain AUD cash reserves and other financial assets and liabilities, including intercompany balances, are held in currencies other than the functional currency of the relevant subsidiary. This results in an accounting exposure to exchange gains and losses as the financial assets and liabilities are translated into the functional currency of the subsidiary that holds those assets and liabilities. These exchange gains or losses are recorded on the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

The majority of Group’s cash and cash equivalents are denominated in AUD and USD. The table below summarises the Group’s cash and cash equivalents by currency:

	2021	2020
Currency funds held in	$’000	$’000
Australian Dollar(AUD)	87,771	106,799
American Dollar(USD)	25,071	55,014
British Pound(GBP)	9,228	587
European union Euro(EUR)	8,448	1,864
New Zealand Dollar(NZD)	1,490	674
Swiss Franc(CHF)	907	923
HongKongDollar(HKD)	844	302
Singapore Dollar(SGD)	619	132
Canadian Dollar(CAD)	188	279
Others	1,746	303
Total cash and cash equivalents	136,312	166,877

The Group manages foreign currency risk by:

Forecasting of future cash flows; and
Monitoring natural hedges arising from trading operations.

The forecasting process ensures that three months of operating costs and specified capital expenditure amounts are held in currencies significant to the Group.

101

(i) Foreign exchange risk (continued)

Sensitivity

The table below estimates the impact of a 10% change in the closing exchange rate of the AUD against significant currencies, on financial assets and financial liabilities. The impact is expressed in terms of the effect on net profit or loss. The sensitivities are based on financial assets and liabilities held at 30 June 2021, where balances are not denominated in the functional currency of the subsidiary.

	Effect on net	profit /(loss)
	2021	2020
10% weakening/ strengthening of AUD	$’000	$’000
USD	1,175 /(1,175)	3,588 /(3,588)
Euro	96 /(96)	23 /(23)

The Group’s exposure to movement in other foreign currencies is not material.

(ii) Price risk

The Group is not exposed to any equity securities price risk or commodity price risk.

(iii) Cash flow and fair value interest rate risk

Interest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to changes in market interest rates.

The Group’s main interest rate risk arises from the interest earned on various short-term deposits and cash at bank accounts (refer Note 7).

Sensitivity

At 30 June 2021, if interest rates had increased/decreased by 100 basis points from the year end and rates with all other variables held constant, post-tax loss for the year would have been $555,000 higher / $555,000 lower (2020: $594,000 higher / $594,000 lower), mainly as a result of higher/lower interest income from cash and cash equivalents.

(b) Credit risk

Credit risk mainly arises from cash and cash equivalents and trade receivables.

(i) Cash and cash equivalents

With respect to cash and cash equivalents, the Group’s exposure to credit risk arises from a potential default of the deposit counter party, with a maximum exposure equal to the carrying amount of these instruments.

102

Megaport Limited | ABN 46 607 301 959

(i) Cash and cash equivalents (continued)

The Group’s cash (refer to Note 7), is held at financial institutions with the following credit ratings:

	2021	2021	2020	2020
	$’000	Credit Rating1	$’000	Credit Rating*

Australia	65,418	AA-	75,121	AA-
Australia	36,516	A+	-	A+
Australia	-	A-	82,377	A-
North America	7,223	A+	-	A+
North America	1,330	A-	4,092	A-
Asia	2,611	AA-	-	AA-
Asia	406	A	-	A
Asia	-	A-	1,011	A-
Europe	875	AAA	922	AAA
Europe	797	AA-	176	AA-
Europe	20,849	A+	1,019	A+
Europe	-	A-	2,009	A-
Europe	287	BBB	150	BBB
Total	136,312		166,877

In determining the credit quality of these financial assets, Megaport Limited has used the long-term rating from Standard & Poor’s as of June 2021 (2020: June 2020).

(ii) Trade receivables

Customer credit risk is managed subject to the Group’s established policy, procedures and control relating to customer credit risk management. Credit evaluations are performed for major customers. The Group does not require collateral in respect of financial assets. Outstanding customer receivables are monitored regularly.

The Group’s credit risk is low due to the large volume of customers with individual transactions typically being small in value. To illustrate this, at 30 June 2021, 80% of the trade receivable balance was due from 379 customers (2020: 393). Also, no one customer accounts for more than 5% of total revenue. Receivable balances are monitored on an ongoing basis with the intention that the Group’s exposure to allowances for credit loss is minimised.

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due.

At the end of the year, the Group held cash and cash equivalents of $136.3 million (2020: $166.9 million).

The Group manages liquidity risk by monitoring cash flows and estimating future operational draws on cash reserves.

103

(c) Liquidity risk (continued)

At 30 June 2021, the Group had external debt of $7.7 million (2020: $8.8 million) excluding lease liabilities (refer to Note 18). There were no other debt facilities at 30 June 2021.

Maturities of financial liabilities

The Group’s financial liabilities comprise trade and other payables, borrowings and other financial liabilities, and no derivative financial instruments are held. The undiscounted cash flows for the respective future periods are included in the following table. Cash flows for financial liabilities without fixed amount or timing are based on the conditions existing at 30 June 2021.

The table below details the Group’s remaining contractual maturity for its non-derivative financial liabilities within agreed repayment periods. The table sets out undiscounted cash flows of financial liabilities based on the earliest estimated date on which the Group can be required to pay. The table includes both interest and principal cash flows for interest bearing liabilities.

	Weighted
	average	Less
	effective	than 1	1-3	3 months to	1-5		Carrying
	interest rate	month	months	1 year	years	Total	amount
	%	$’000	$’000	$’000	$’000	$’000	$’000
Trade and otherpayables	-	15,951	4,765	-	-	20,716	20,716
Lease liabilities	6.0%	495	1,420	3,327	3,302	8,544	8,079
Other borrowings	6.0%	421	843	3,671	3,201	8,136	7,678
Total at 30 June 2021		16,867	7,028	6,998	6,503	37,396	36,473
Trade and otherpayables	-	4,194	7,417	-	-	11,611	11,611
Lease liabilities	6.0%	584	1,702	4,162	6,899	13,347	12,451
Other borrowings	6.0%	337	675	3,036	5,417	9,465	8,792
Total at 30 June 2020		5,115	9,794	7,198	12,316	34,423	32,854

104

Megaport Limited | ABN 46 607 301 959

Section 5: Employee related benefits

This section provides information about our employee benefits.

21. Equity-settled employee benefits and related expenses

(a) Recognition and measurement

Equity-settled employee benefit transactions and others providing similar services are measured at the fair value of the equity instruments at the grant date.

The fair value determined at the grant date of the equity-settled employee benefit transactions is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.

In estimating the fair value of the equity-settled employee benefit, the Group uses market-observable data to the extent it is available. The expected life used in the fair value measurement has been adjusted based on management’s best estimate for the effects of non-transferability and exercise restrictions (including the probability of meeting the vesting conditions attached to the option). Expected volatility is an estimate based on the historical share price volatility of similar companies within the industry.

Equity-settled employee benefit transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably. In such cases they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

For cash-settled equity instruments, a liability is recognised for the goods or services acquired, measured initially at the fair value of the liability. At the end of each reporting period until the liability is settled, and at the date of settlement, the fair value of the liability is re-measured, with any changes in fair value recognised in profit or loss for the year.

(b) Share options granted under Megaport’s employee share option plan (ESOP General)

(i) Details of the ESOP General of the Company

The parent entity has a share option scheme for executives and employees of the Company and its subsidiaries. In accordance with the terms of the plan, as approved by the Directors on 2 November 2015, executives and employees of the Group may be granted options to purchase ordinary shares at the Board’s discretion.

Each employee share option converts into one ordinary share of the Company on exercise. Amounts are paid or payable by the recipient on exercising the options,and are individual to that employee’s option plan agreement. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. The number of options granted is individual to that employee’s option plan agreement and again at the Board’s discretion. The options reward executives and employees to the extent of meeting service conditions or performance conditions specific to the individual’s agreement.

105

(i) Details of the ESOP General of the Company (Continued)

The following arrangements under the ESOP General were in existence as of 30 June 2021:

Options series	Number of outstanding options	Grant date	Vesting date	Expiry date	Exercise price $	Fair value at grant date $
Series 2018-7	100,000	3/04/2018	19/02/2021	19/02/2022	2.93	1.63
Series 2019-1	300,000	2/07/2018	2/07/2021-2/07/2022	2/07/2022-2/07/2023	3.22	1.49-1.87
Series 2019-2	3,334	2/07/2018	31/10/2020	31/10/2021	3.22	1.49
Series 2019-3	200,000	3/09/2018	3/09/2020-15/06/2021	3/09/2021-15/06/2022	3.26	1.55-1.75
Series 2019-4	50,000	16/10/2018	30/06/2021	30/06/2022	2.74	1.38
Series 2019-6	25,000	29/11/2018	31/10/2021	31/10/2022	2.72	1.91
Series 2020-2	6,667	4/03/2019	4/03/2021-4/03/2022	4/03/2022-4/03/2023	3.24	1.58-1.75
Series 2020-3	150,000	15/07/2019	1/07/2021	1/07/2022	4.66	2.86-2.87
Series 2020-5	66,667	20/08/2019	20/08/2021-20/08/2022	20/08/2022-20/08/2023	5.90	2.90-3.20
Series 2020-6	250,000	22/08/2019	1/07/2021	1/07/2022	4.00	4.59
Series 2020-7	100,000	22/11/2019	22/11/2020-22/11/2022	22/11/2021-22/11/2023	8.43	2.33-3.29
Series 2020-8	150,000	23/11/2019	23/11/2020-23/11/2021	23/11/2021-23/11/2022	6.96	3.17-3.60
Series 2020-10	200,000	20/01/2020	20/01/2021-20/01/2023	20/01/2022-20/01/2024	8.49	3.85-4.85
Series 2021-1	200,000	1/07/2020	1/07/2021-1/07/2023	1/07/2022-1/07/2024	12.08	3.21-4.67
Series 2021-3	1,000,000	23/10/2020	1/07/2021-1/07/2022	1/07/2022-1/07/2023	14.50	3.16-4.07
Series 2021-4	25,000	7/12/2020	7/12/2021-7/12/2022	7/12/2022-7/12/2023	13.32	3.05 - 3.89
Series 2021-5	400,000	1/02/2021	1/02/2022-1/02/2024	1/02/2023-31/01/2025	13.48	2.63-4.2
Total	3,226,668

All options are exercisable from their vesting date to their expiry date, or 60 days after the resignation of the executive or employee, or 30 days on termination for a serious breach, whichever is the earlier.

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Megaport Limited | ABN 46 607 301 959

(ii) Fair value of share options granted in the year

The weighted average fair value of the share options granted during the financial year is $3.20 (2020: $3.28). Options were priced using a Black-Scholes pricing model. Where relevant, the expected life used in the model has been adjusted based on management’s best estimate for the effects of non-transferability, exercise restrictions (including the probability of meeting service and/or performance conditions attached to the option), and behavioral considerations. Expected volatility is based on either the historical share price volatility of the life of the Company or comparative company volatility. The key assumptions of share options granted during the year are:

Number of	Grant date	Exercise	Expected	Expected	Dividend	Risk-free interest
options	share price	price	volatility	option life	yield	rate*
	$	$	%	Years	%	%
200,000	12.97	12.08	45%	1.5-3.5	-	0.61-1.03
75,000	16.36	14.50	45%	1.5-3.5	-	0.27-0.65
1,000,000	14.53	14.50	45%	1.5-2.5	-	0.27-0.44
25,000	13.58	13.32	45%	1.5-2.5	-	0.27-0.44
400,000	12.98	13.48	45%	1.5-3.5	-	0.40-1.06

*Based on The Group of 100 commissioned Milliman discount rates

(iii) Movements in share options during the year

The following reconciles the share options outstanding at the beginning and end of the year:

	2021	2021	2020	2020
		Weighted		Weighted
		average		average
	Number of	exercise	Number of	exercise
	options	price	options	price
		$		$
Balance at beginning of the year	5,344,001	4.11	6,876,676	3.14
Granted during the year	1,700,000	14.04	2,213,324	5.33
Forfeited during the year	(495,000)	7.63	(400,000)	2.95
Expired during the year	-	-	(143,333)	3.04
Exercised during the year^	(3,322,333)	3.48	(3,202,666)	3.07
Balance at end of the year	3,226,668	9.48	5,344,001	4.11

^ The weighted average share price at the date of grant of these options was $4.93 (2020: $3.77).

The number of options that have vested and become exercisable in the current reporting year was 2,851,667 (2020: 3,468,337). The number of options expired during the current year was Nil (2020: 143,333).

(iv) Share options outstanding at the end of the year The share options outstanding at the end of the year had a weighted average exercise price of $9.48 (2020: $4.11), and a weighted average remaining contractual life of 524 days (2020: 477 days).

107

(c) Share options granted under Megaport’s 2015 employee share option plan (2015 ESOP)

(i) Details of the 2015 ESOP of the Company

The establishment of the Megaport Limited 2015 Employee Share Option Plan was approved by the shareholders at the 2 November 2015 shareholders’ meeting. The 2015 ESOP was designed to provide long-term incentives for senior managers and above (including Directors) to deliver long-term shareholder returns. Under the plan, participants were granted options which only vested when a pre-determined length of service was met.

Once vested, the options remained exercisable for periods ranging from 12 to 24 months, depending on the individual agreement. Options were granted under the plan for no consideration and carried no dividend or voting rights. When exercisable, each option was convertible into one ordinary share.

As at 30 June 2020 and 30 June 2021, all options under the 2015 ESOP had been exercised.

(ii) Movements in share options during the year

The following reconciles the share options outstanding at the beginning and end of the year:

2021	2021	2020	2020
	Weighted		Weighted
	average		average
Number of	exercise	Number of	exercise
options	price	options	price
	$		$
Balance at beginningof theyear -	-	600,000	1.25
Exercised duringtheyear -	-	(600,000)	1.25
Balance at end of theyear -	-	-	-

(d) Employee Share Plan (ESP)

The Company has a share scheme for employees of the Company and its subsidiaries. Under the ESP eligible employees on 1 June 2021, were granted $1,000 in Megaport shares for no consideration. Shares will be issued subsequent to year end to the eligible employees who are still employed and have not rendered their resignation on the issuance date. This follows a similar grant of shares on 31 July 2020 to eligible employees at 1 June 2020.

Shares are issued under the ESP carry the same dividend and voting rights as existing shares. However, the ESP shares are subject to a holding lock until the earlier of three years from the date of issue and the date on which the participant ceases to be employed by the Group.

(e) Expenses arising from equity-settled employee benefit transactions

Total expenses arising from equity-settled employee benefit transactions recognised during the year as part of employee expenses were as follows:

	2021	2020
	$’000	$’000
Options issued under ESOP General	6,164	6,709
Employee Share Plan(ESP)	245	202
Share issue costs	351	-
Other employee shareplan tax related costs	3,068	-
Total expense	9,828	6,911

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Megaport Limited | ABN 46 607 301 959

Section 6: Group structure and related party transactions

This section provides information on our Group structure, controlled entities, ownership interest of the Group subsidiaries and the parent entity information. It outlines the accounting policies applied in accounting for the Group transactions including the basis of consolidation. Other information detailed here include disclosures on related party transactions in the year and balances outstanding at the reporting date.

22. Interest in other entities

(a) Group subsidiaries

The Group’s subsidiaries at 30 June 2021 are set out in the following table. Unless otherwise stated, they have share capital consisting solely of ordinary shares that are held directly by the Group, and the proportion of ownership interests held equals the voting rights held by the Group. The country of incorporation or registration is also their principal place of business.

			Ownership interest held	Ownership interest held
				by the Group
		Place of business/ country of
Name of entity	Notes	incorporation	2021	2020
			%	%
Megaport(Australia)PtyLtd	(a)	Australia	100	100
Megaport(Services)PtyLtd	(a)	Australia	100	100
Megaport(New Zealand)Limited		New Zealand	100	100
Megaport(Singapore)Pte Ltd		Singapore	100	100
Megaport(HongKong)Limited		HongKong	100	100
Megaport Japan K.K		Japan	100	100
Megaport(USA)Inc.		United States of America	100	100
Megaport(Canada)Inc.		Canada	100	100
Megaport(UK)Limited		United Kingdom	100	100
Megaport(Europe)Limited		United Kingdom	100	100
European Voice Link Limited		United Kingdom	100	100
Megaport (Deutschland) Gmbh
(FormerlyPeeringGmbH)		Germany	100	100
Megaport(Netherlands)B.V.		The Netherlands	100	100
Megaport(Ireland)Limited		Republic of Ireland	100	100
Megaport(Schweiz)AG		Switzerland	100	100
Megaport(Sweden)AB		Sweden	100	100
Megaport Bulgaria EAD (Formerly
OMNIX GroupEAD)		Republic of Bulgaria	100	100
Eastern Voice Link EOOD	(b)	Republic of Bulgaria	100	100
Megaport(France)SaS		France	100	100

(a) These entities are a part of the Australia tax-consolidated group with the head entity, Megaport Limited.

(b) The company was under de-registration process as at 30 June 2021.

109

(b) Basis of consolidation

The consolidated financial statements incorporate the financial statements of Megaport Limited (‘the Company’) and entities controlled by the Company and its subsidiaries. Control is achieved when the Company:

Has power over the investee;
Is exposed, or has rights, to variable returns from its involvement with the investee; and
Has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

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Megaport Limited | ABN 46 607 301 959

23. Related party transactions

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.

(a) Parent entity

The ultimate parent entity within the Group is Megaport Limited.

(b) Subsidiaries

Interest in subsidiaries are set out in Note 22.

(c) Compensation of key management personnel

The remuneration of directors and other members of key management personnel during the year was as follows:

	2021	2020
	$	$
Short-term benefits	2,599,492	1,701,092
Post-employment benefits	131,241	58,195
Long-term benefits	34,978	16,638
Termination benefits	179,453	-
Equity-settled employee costs	3,718,167	1,163,706
Total	6,663,331	2,939,631

The remuneration of directors and key executives is determined by the Remuneration & Nomination Committee.

Detailed remuneration disclosures are provided in the Remuneration Report in the Director’s Report.

(d) Transactions with other related parties

During the year, group entities entered into the following transactions with related parties that are not members of the Group:

		2021	2020
	Notes	$	$
Sales andpurchases ofgoods and services
Purchase of shared services from entities controlled by key
managementpersonnel	(i)	143,506	126,635
Purchase of direct network costs from entities related to key
managementpersonnel	(ii)	870,287	559,538
Legal services from entities controlled by key management
personnel		4,373	-
Sale of network related services to entities related to key
managementpersonnel	(ii)	85,604	92,813

Other transactions
Employee compensation of associates to key management personnel		30,716	54,156

111

(d) Transactions with other related parties (Continued)

(i) Shared services agreement

The Company entered into a shared services agreement with Capital B Pty Ltd CAN 162 622 282 (Capital B), a company controlled by the Chairman, Bevan Slattery. Under the agreement, Capital B provides certain services to the Company. The services are charged on the basis of the actual cost to Capital B, allocated on the time Capital B employees spend providing services to the Company. The obligations on Capital B under the agreement are typical for a service agreement, and require that Capital B provide the services with due care, skill and judgment, comply with the law in providing the services and effect appropriate insurance. Capital B may seek reimbursement for certain expenses incurred in connection with the provision of services under the agreement. Either party may terminate the agreement for convenience on 60 days’ written notice.

(ii) Supplier agreement with Superloop

Megaport Australia and Megaport Singapore have entered into agreements to acquire dark fibre services from Superloop (Australia) Pty Ltd (Superloop Australia) and Superloop (Singapore) Pte. Ltd (Superloop Singapore), respectively, which are both companies related to the Chairman through the ASX-listed Company Superloop Limited. Under the agreements, Megaport Australia and Megaport Singapore issued a service order form to Superloop Australia and Superloop Singapore (as applicable) which sets out the nature of the services requested and confirms the applicable monthly fee. The terms of the master services agreements with Superloop Australia and Superloop Singapore are consistent with the supply agreements that Megaport Australia and Megaport Singapore have entered into with third-party suppliers for similar services in the same region.

In April 2017, Megaport Australia and Megaport Hong Kong entered into an “Indefeasible Rights of Use” (IRU) Agreement with Superloop Australia and Superloop (Hong Kong) Limited (Superloop Hong Kong) and Megaport Singapore entered into a long term agreement with Superloop Singapore for exclusive right to use dark fibre. Under these agreements, Superloop would provide fibre to Megaport for the term of the agreements, which is 10 years. The initial amounts payable in relation to these agreements are payable upon execution of the related fibre order and at the end of the first year of the term, with monthly amounts payable over the term of the agreement. The IRU agreement includes the option to extend the fibre term for a further period subject to the agreement of both parties, and by Megaport Hong Kong giving written notice to Superloop Hong Kong no later than 3 months prior to the expiry of the term. These agreements also include a maintenance fee payable monthly.

The total commitments for minimum payments in relation to Superloop supplier agreements payable in future as follows:

	2021	2020
	$	$
Lease commitments including leases recognised as
liabilities
Within oneyear	100,141	83,943
After oneyear but not more than fiveyears	77,410	10,575
	177,551	94,518
Other contractual service commitments
Within oneyear	135,433	65,325
After oneyear but not more than fiveyears	261,301	261,301
More than fiveyears	54,438	119,763
	451,172	446,389
Total	628,723	540,907

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Megaport Limited | ABN 46 607 301 959

(e) Outstanding balances arising from other related parties

The following balances were outstanding at the end of the year:

	2021	2020
	$	$
Amounts owed by relatedparties
Entities related to keymanagementpersonnel	16,413	4,325
	16,413	4,325
Amounts owed to relatedparties
Entities related to keymanagementpersonnel	221,567	102,746
	221,567	102,746

(f) Terms and conditions

Directors for the Group hold other directorships as detailed in the Directors’ Report. Where any of these related entities are customers or suppliers of the Group, the arrangements are on similar terms to third party customers or suppliers respectively.

All transactions were made on normal commercial terms and conditions and at market rates.

Outstanding balances are unsecured and are repayable in cash.

113

24. Parent entity financial information

(a) Summary financial information

The individual financial statements of the parent entity show the following aggregate amounts:

	2021	2020
	$’000	$’000
Statement of Financial Position
Current assets	104,420	148,862
Non-current assets	290,411	212,499
Total assets	394,831	361,361
Current liabilities	610	428
Non-current liabilities	-	291
Total liabilities	610	719
Net assets	394,221	360,642

Shareholders’ equity
Issued capital	395,935	371,524
Reserves	6,940	13,434
Accumulated losses	(8,654)	(24,316)
Shareholders’ equity	394,221	360,642

Net loss for theyear	(15,662)	(9,021)

Total comprehensive loss for theyear	(15,662)	(9,021)

(b) Contingent liabilities of the parent entity

The parent entity did not have any contingent liabilities as at 30 June 2021 (2020: nil).

(c) Contractual commitments

The parent did not have any contractual commitments at 30 June 2021 (2020: nil).

The financial information for the parent entity, Megaport Limited, has been prepared on the same basis as the consolidated financial statements.

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Megaport Limited | ABN 46 607 301 959

Section 7: Other information

This section provides information on other required or voluntary disclosures not included in other sections.

25. Auditors’ remuneration

During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms:

	2021	2020
	$	$
Audit services: Deloitte Touche Tohmatsu Australia
Audits and review of the financial reports - Group	194,775	176,625
Audits and review of the financial reports – Subsidiaryentities	48,300	13,650
New accountingstandards transition review	-	15,000
Total remuneration of Deloitte Touche Tohmatsu Australia	243,075	205,275
Other Deloitte network firms:
Audits of the subsidiaryentities’ financial reports	47,946	24,956
Total remuneration of Deloitte network firms	47,946	24,956

26. Contingent liabilities

The Group has no contingent liabilities at reporting date (2020: nil).

27. Commitments

(a) Capital commitments

The Group had no commitments to purchase property, plant and equipment and intangible assets at 30 June 2021 (2020: nil)

(b) Expenditure commitments

Commitments for future rental payments in relation to non-cancellable operating or short term leases as at 30 June are as follows:

	2021	2020
	$’000	$’000
Within oneyear	488	346
After oneyear but not more than fiveyears	-	-
Total	488	346

115

28. Events occurring after the financial year

Pending completion of all conditions precedent, customary in transactions of this nature, the Company expects this proposed transaction to close in the first quarter of FY22.

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Megaport Limited | ABN 46 607 301 959

DIRECTORS’ DECLARATION

In the Directors’ opinion:

a. The financial statements and notes set out on pages 51 to 110 of Megaport Limited (“the Company” or 54 to 116 “consolidated entity”) are in accordance with the Corporations Act 2001 , including:
i. Complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and
ii. Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2021 and of its performance for the year ended on that date,
b. At the date of this declaration, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Note (a) of Section 1 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the Directors made pursuant to s295(5) of the Corporations Act 2001 .

On behalf of the Board of Directors

==> picture [48 x 43] intentionally omitted <==

Vincent English

Executive Director and Chief Executive Officer

Brisbane 10 August 2021

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Deloitte Touche Tohmatsu ABN 74 490 121 060 Level 23, Riverside Centre 123 Eagle Street Brisbane, QLD, 4000 Australia

Phone: +61 7 3308 7000 www.deloitte.com.au

Independent Auditor’s Report to the Members of Megaport Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Megaport Limited (the “Company”) and its subsidiaries (the “Group”) which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001 , including:

(i) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including independence standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for 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.

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte Organisation

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Megaport Limited | ABN 46 607 301 959

Key Audit Matter

How the scope of our audit responded to the Key Audit
Matter

Carrying value of cash generating units
Refer to Note 11 – Intangible assets and Note 12
– Impairment of goodwill.
An impairment assessment has been undertaken
as at 30 June 2021 for cash generating units with
indefinite life intangible assets (goodwill) and
those for which indicators of impairment have
been identified. As at year-end, the Group had
goodwill of $1.5 million held within the Europe
cash generating unit (“CGU”). No impairment
indicators were identified in relation to the
Group’s other CGU’s.
Where required, management conducts annual
impairment tests using a discounted cash flow
model, to assess the recoverability of the carrying
value of the Group’s CGU’s
There are a number of key judgements made in
determining the inputs into these models
including:
-
Identification of CGU’s
-
Future cash flows for the CGUs
-
Discount rates, and
-
Future and Terminal value growth rates.

In conjunction with our valuation specialists, our
procedures included, but were not limited to:
-
Evaluating
the
appropriateness
of
management’s identification of the Group’s
CGU’s and management’s processes for the
development of the ‘value in use’ discounted
cash flow model
-
Challenging
the
key
assumptions
and
methodology used by management in the
impairment model
-
Evaluating the future projected cash flows used
in the impairment model to determine whether
they are reasonable and supportable given the
current macroeconomic climate including the
impact of COVID-19 and expected future
performance of each CGU tested
-
Testing the mathematical accuracy of the cash
flow model, and
-
Assessing the recoverable amount against the
carrying value of CGU.
We also assessed the appropriateness of the disclosures
in Note 12 to the financial statements.

Recoverability of deferred tax assets
Refer to Note 4 – Income tax benefit / (expense)
The Group has recognised $10.9 million of net
deferred tax assets as at 30 June 2021, which
includes the recognition of certain available tax
losses in a number of jurisdictions as disclosed in
Note 4.
AASB 112_Income taxes_requires deferred tax
assets resulting from deductible temporary
differences and unused tax losses to be
recognised to the extent that it is probable that
future taxable profit will be available in the
relevant
jurisdictions
against
which
the
deductible temporary differences and unused tax
losses can be utilised. Significant judgement is
required to:
-
Evaluate the availability of tax losses
-
Evaluate projections of future taxable
profit for relevant jurisdictions, and
-
Consider the impact of tax structuring on
taxable profit.

Our procedures included, but were not limited to:
-
Evaluating the availability of tax losses with
reference to relevant tax legislation
-
Evaluating the scope of work undertaken by
management’s expert and the ability to use it as
audit evidence
-
Challenging
the
appropriateness
of
management’s estimation of future taxable
profit and assessing whether these estimates
were consistent with the forecasts used as part
of the impairment assessment, and
-
Assessing
the
appropriateness
and
mathematical accuracy of the deferred tax
calculation prepared by management in terms
of relevant accounting standards and tax
legislation.
We also assessed the appropriateness of the disclosure
in Note 4 to the financial statements.

119

Other Information

The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2021, but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

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Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group’s audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 36 to 49 of the Directors’ Report for the year ended 30 June 2021.

In our opinion, the Remuneration Report of Megaport Limited for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001 .

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

DELOITTE TOUCHE TOHMATSU

Richard Wanstall Partner Chartered Accountants Brisbane, 10 August 2021

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SHAREHOLDER INFORMATION

The shareholder information set out below was applicable at 30 July 2021.

(a) Ordinary share capital

156,279,774 fully paid ordinary shares are held by 16,522 individual shareholders. All issued ordinary shares carry one vote per share.

(b) Options

3,026,668 options are held by 17 individual options holders. Options do not carry a right to vote.

(c) Distribution of holders of equity securities

Analysis of numbers of equity security holders by size of holding:

	Number of investors	Number of investors
	Fully paid
Holding	ordinary shares	Options
1 – 1,000	11,153	-
1,001 – 5,000	3,916	-
5,001 – 10,000	886	1
10,001 – 100,000	522	9
100,001 and over	45	7
Total	16,522	17

The number of shareholders holding less than the marketable parcel of fully paid ordinary shares is 577.

(d) Substantial shareholders

Substantial shareholders of 5% or more of the fully paid ordinary shares in the Company are set out as follows:

		Percentage of
		issued
Name	Number held	shares
Ordinary shares
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED	46,279,867	29.61
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED	21,917,506	14.02
CITICORP NOMINEES PTY LIMITED	17,023,168	10.89
MR BEVAN ANDREW SLATTERY	9,037,607	5.78
NATIONAL NOMINEES LIMITED	8,841,418	5.66

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(e) Equity security holders

Twenty largest quoted equity security holders

The names of the twenty largest holders of equity securities are listed as follows:

	Fully paid ordinary shares
Name Number held Percentage of issued shares
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 46,279,867 29.61
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED 21,917,506 14.02
CITICORP NOMINEES PTY LIMITED 17,023,168 10.89
MR BEVAN ANDREW SLATTERY 9,037,607 5.78
NATIONAL NOMINEES LIMITED 8,841,418 5.66
BNP PARIBAS NOMINEES PTY LTD DRP> 6,208,092 3.97
BNP PARIBAS NOMS PTY LTD 3,059,787 1.96
BNP PARIBAS NOMINEES PTY LTD 3,031,991 1.94
VINCENT ENGLISH 1,517,482 0.97
CITICORP NOMINEES PTY LIMITED A/C> 1,083,073 0.69
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED SUPER CORP A/C> 798,715 0.51
INTERCONTINENTAL PTY LIMITED 550,000 0.35
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM 413,290 0.26
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD 400,077 0.26
NATIONAL NOMINEES LIMITED 366,528 0.23
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 330,025 0.21
TALSTON PTY LTD 325,000 0.21
CS THIRD NOMINEES PTY LIMITED A/C> 304,386 0.19
BEEBEE HOLDINGS PTY LTD 300,000 0.19
MS CELIA MARGARET PHEASANT 271,603 0.17
122,059,615 78.07
Unquoted equity securities Number on issue Number of holders Options issued under Employee Share Option Plan (ESOP General) to take upordinaryshares 3,026,668 17

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CORPORATE DIRECTORY

Current directors	Bevan Slattery Vincent English Jay Adelson Naomi Seddon Michael Klayko Melinda Snowden Glo Gordon
Company Secretary	Celia Pheasant
Principal Registered Office in Australia	Level 3 825 Ann Street Fortitude Valley, QLD 4006
Share Register	Computershare Investor Services Pty Limited Level 1 200 Mary Street Brisbane, QLD 4000 Phone: 1300 850 505
Auditor	Deloitte Touche Tohmatsu Level 23 123 Eagle Street Brisbane, QLD 4000
Stock Exchange Listing	Megaport Limited shares are listed on the Australian Securities Exchange(ASX).
Website Address	www.megaport.com
ABN	46 607 301 959

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ASX: MP1 @megaportnetwork @megaport

megaport.com Phone +61 7 3088 5999 [email protected] Fax +61 7 3088 5998

Level 3, 825 Ann St, Fortitude Valley, 4006 – Australia

Megaport, Virtual Cross Connect, VXC, Megaport Cloud Router, Megaport Virtual Edge, and MegaIX are registered trademarks of Megaport (Services) Pty Ltd ABN 46 607 301 959 ACN 607 432 646

AI assistant

MEGAPORT LIMITED — Annual Report 2021

65363_rns_2021-08-09_499d3886-f7f9-4fbc-bf1a-784202a93aaa.pdf

Appendix 4E

Appendix 4E

Results for Announcement to the Market

Summary of Financial Information

Refer to Note (c) under Section 1 of the Annual report for details on the prior year restatement.

Dividends

Commentary on the Results for the Period

Financial Statements

Net Tangible Asset Backing

Details of entities where control has been gained or lost during the period

Details of Associates and Joint Ventures

ABOUT

CONTENTS

COMPANY HIGHLIGHTS

CHAIRMAN’S LETTER

Dear Valued Shareholders,

I am honoured to present you with the Fiscal Year 2021 Chairman’s Report for Megaport Limited.

Bevan Slattery

COMPANY HIGHLIGHTS

COMPANY HIGHLIGHTS

LETTER FROM THE CEO

Vincent English

GLOBAL REVENUE

ANNUALISED REVENUE

PEOPLE + CULTURE

Engagement

Megaport Engagement

THE DATA

Gender Ratio

Diversity + Inclusion

People Development

DIRECTORS’ REPORT

DIRECTOR’S REPORT

Directors and company secretary

Principal activities

Dividends

Review of operations

Group overview

Key performance metrics

Impact of COVID-19

Financial Performance

[Asia Pacific ] [Europe] [ North][America]

Financial Position

Strategy and future performance

Business Risks

Information Security and Privacy

Significant changes in the state of affairs

Events since the end of the financial year

Likely developments and expected results of operations

Environmental regulation

Rounding off of amounts

Introducing

PARTNERVANTAGE

The Megaport PartnerVantage program includes:

Expand with Ease

Grow Revenue

Drive Customer Success

Get Started Immediately

INFORMATION ON DIRECTORS + COMPANY SECRETARY

None

Bevan Slattery

Chairman & Non-Executive Director

Vincent English

Chief Executive Officer & Executive Director

Other current ASX directorships:

Former ASX directorships in last 3 years:

None

Special responsibilities:

Other current ASX directorships:

None

Former ASX directorships in last 3 years:

None

Interests in shares and options:

Interests in shares and options:

Other current ASX directorships:

Other current ASX directorships:

None

MEGAPORT LIMITED Annual Report 2021