ASX Announcement
23 August 2023
APPENDIX 4E: FINAL REPORT
FOR THE YEAR ENDED 30 JUNE 2023
The following sets out the requirements of Appendix 4E with the stipulated information:
1. Reporting Period
Report for the financial year ended
Previous corresponding period is the financial year ended
: 30 June 2023
: 30 June 2022
2. Results for announcement to the market (Item 2)
Revenues from ordinary activities
Loss from ordinary activities after tax attributable to
members
Net loss for the period attributable to members
up
37.3%
to
$
6,367,123
down 12.8%
to
(8,237,955)
down 12.8%
to
(8,237,955)
Dividends
Record date for determining entitlements to a dividend
n/a
n/a
Brief explanation of any of the figures reported above necessary to enable the figures to be
understood (Item 2.6)
Refer to the audited financial statements in the attached 2023 Annual Report.
3. Statement of Comprehensive Income (Item 3)
Refer to page 30.
4. Statement of Financial Position (Item 4)
Refer to page 31.
5. Statement of Cash Flows (Item 5)
Refer to page 33.
6. Statement of Changes in Equity (Item 6)
Refer to page 32.
7. Dividends (Item 7)
No dividends were paid or declared during the year.
8. Dividend Reinvestment Plan (Item 8)
There was no dividend reinvestment plan in operation which occurred during the financial year.
9. Net Tangible Assets per Security (Item 9)
Net tangible asset backing per ordinary security
2023
$0.003
2022
$0.017
10. Details of Entities over which Control has been Gained or Lost during the Period (Item 10)
Name of entities for which AR9 gained control
none
Name of entities for which AR9 lost control
none
Date of gain of control
Date of loss of control
11. Details of Associates and Joint Venture Entities (Item 11)
Not applicable
12. Details of Significant Information Relating to the Entity’s Financial Performance and Financial
Position (Item 12)
Refer to the audited financial statements in the attached 2023 Annual Report.
13. For Foreign Entities, which set of Accounting Standards is Used in Compiling the Report (Item 13)
Not applicable
14. Commentary on Results for the Period (Item 14)
Refer to the audited 2023 Annual Report attached for further information.
15. Audit of the Financial Report (Items 15 to 17)
The attached 2023 Annual Report has been audited.
All documents comprise the information required by listing rule 4.3A.
2023 ANNUAL REPORT
ARCHTIS LIMITED | AR9 | ACN 123 098 671
ANNUAL REPORT 2023
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ARCHTIS LIMITED TRUSTED TO SAFEGUARD THE WORLD’S
MOST SENSITIVE INFORMATION
archTIS’ products apply and enforce dynamic,
policy-driven access, usage and sharing controls that
leverage both user and data attributes to ensure your
users and partners access, share and collaborate on
sensitive, classified and top secret information, securely.
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CONTENTS
CORPORATE DIRECTORY
LETTER FROM THE CHAIRMAN & MANAGING DIRECTOR
HIGHLIGHTS
EXECUTIVE LEADERSHIP
OVERVIEW OF FY23
DIRECTOR’S REPORT
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S DECLARATION
INDEPENDENT AUDITOR’S REPORT TO
THE MEMBERS OF ARCHTIS LIMITED
SHAREHOLDER INFORMATION
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29
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ARCHTIS LIMITED
CORPORATE
DIRECTORY
DIRECTORS
Miles Jakeman AM
Daniel Lai
Leanne Graham
JOINT COMPANY SECRETARIES
Erlyn Dawson
Winton Willesee
REGISTERED OFFICE
Level 3, archTIS House
10 National Circuit
Barton ACT 2600
(02) 6162 2783
PRINCIPAL PLACE OF BUSINESS
Level 3, archTIS House
10 National Circuit
Barton ACT 2600
SHARE REGISTRIES
Automic
Level 5, 191 St Georges Terrace
Perth, WA 6000
(08) 9324 2099
Link Market Services
(Employee Incentive Plan Register)
10 Eagle Street
Brisbane, QLD 4000
1300 554 474
AUDITOR
RSM Australia Partners
Equinox Building 4, Level 2
70 Kent Street
Deakin, ACT 2600
STOCK EXCHANGE LISTING
archTIS Limited shares are listed on the:
ASX: AR9
OTCQB: ARHLF
WEBSITE
www.archtis.com
INVESTOR PORTAL
www.investors.archtis.com
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LETTER FROM
THE CHAIRMAN & MANAGING DIRECTOR
DR. MILES JAKEMAN AM & DANIEL LAI
Dear fellow shareholders,
On behalf of the Board of Directors, Executive
Management team and staff of archTIS, we are
pleased to present our 2023 Annual Report and to
thank you for your ongoing trust.
Throughout the 2023 financial year archTIS continued
to execute and build on a strong platform of work.
We set a goal at the beginning of the year to drive
revenue growth and reduce our cash outgoings. We
are pleased to announce that we accomplished a
37% year-over-year revenue growth and reduced
operating cash outflows by more than 50% through
capital efficiencies and streamlined operating costs.
The Company delivered on strategic initiatives around
product innovation, development of key strategic
partnerships and the continued expansion of
contracts with key customers.
The Company has now won over $17M of contracts
with the Australian Department of Defence to provide
secure collaboration and sharing of sensitive and
classified information. We are working closely with
members of Defence and its key channel partners to
improve data maturity and security. In June 2023, this
resulted in the awarding of a $4M proof of concept
contract to assist in modernising the workforce.
Most of this revenue will be recognised in the coming
financial year.
Our success with the Australian Department
of Defence is driving new and exciting pipeline
opportunities with other coalition forces, including
AUKUS and other traditional “Five Eye” countries.
Additionally, through partnerships with Microsoft,
Thales, Leidos and others we were able to secure
new global contracts with top-tier enterprises in
the defence industry, manufacturing and financial
services sectors.
Yours sincerely,
Strong market tailwinds continue in the overall
cyber-security space. Over the past year, not only
have some of Australia’s largest and most important
institutions been susceptible to cyber-breaches,
but our military allies suffered devastating internal
security breaches, organisations experienced
increased levels of supply chain espionage and
we returned to geo-political tensions including the
escalation of the war in the Ukraine. We believe
strongly that the data-centric approach of archTIS
solutions with Kojensi and NC Protect could have
played a significant role in either limiting or deterring
some of these cyber incidences. We are trusted to
safeguard the world’s most sensitive information on
the battlefield, in a research lab, a manufacturing
plant or office; whether on-site or remote. We make
sure that sensitive and classified information is shared
securely.
Heading into FY24, we are encouraged by the
foundation the team has built and look forward to a
number of key initiatives that were commenced in
FY23. We are particularly looking to scale and be the
global thought leader in data-centric architecture; the
preferred platform of choice for sharing of information
across Government, Defence and Defence industry;
and be the premium provider of policy enforced
access control to the global defence market.
In closing, and on behalf of the wider Board and
Executives, we would like to thank the entire team
for their commitment and continued execution of our
strategic initiatives. As we continue to build a global
company, we would also like to thank our customers,
partners and shareholders for their ongoing support
and of course trust.
Dr Miles Jakeman AM
Chairman of the Board
Daniel Lai
Managing Director & CEO
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ARCHTIS LIMITED
2023 HIGHLIGHTS
STRONG FINANCIAL RESULTS DELIVERS ON ADJUSTED ANNUAL
OUTLOOK OBJECTIVES & ESTABLISHES FOUNDATION FOR FY24
Achieved Adjusted Annual
Outlook Targets
• 37% revenue growth
• $9.5M cash collections
• 53% reduction in cash outflows
Continued Strong
Customer Adoption
Customer traction focusing on
Data Sovereignty with low churn:
• DHL, The Bank of Finland,
Babcock Australia
Quarterly Financial Performance
Product Innovation
•
Increased Annual Recurring
Revenue (ARR)
• Decreased operating expenses
• Strong cash collections and
customer invoicing
$4.1M 6-month POC
Provides a strong start to FY24 with
additional purchasing ability
Integration into leading partner
technologies:
• Microsoft PowerBI, Janusseal, Titus,
NetApp and Thales CipherTrust
Manager
Kojensi International Launch
Mid-September timeframe
ACCELERATING REVENUE GROWTH
2018 - 2023 REVENUE (,000's)
2018 - 2023 LICENSING REVENUE (,000's)
7000
6000
5000
4000
3000
2000
1000
0
2018
2019
2020
2021
2022
2023
3500
3000
2500
2000
1500
1000
500
0
2018
2019
2020
2021
2022
2023
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2023 HIGHLIGHTS
GLOBAL CUSTOMER & PARTNER GROWTH
“With NC Protect we can increase our collaboration
by automatically controlling access to classified
information. Before NC Protect, we had to lock
everything down so very few users could access
content to the extent that it inhibited our ability to
collaborate with our coalition partners in theatre.”
Brigadier General Warren Gould
Director General Systems and Integration,
Australian Department of Defence
“Our Aerospace and Defense Industrial Base customers and
partners are actively seeking a product that can help meet
zero-trust requirements, especially in respect to demonstrating
compliance with the new CMMC standards for the secure
handling of Controlled Unclassified Information. The innovative
content watermarking capability from NC Protect makes it
painless to add the required CUI Designator Label to meet
compliance.
More importantly, NC Protect works in concert with Microsoft
Purview Information Protection to secure and encrypt the content
leveraging a data-centric, zero-trust methodology ensuring
recommended practices for information security and data
handling.”
Richard Wakeman
Chief Architect Aerospace & Commercial Defense, Microsoft
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ARCHTIS LIMITED
EXECUTIVE LEADERSHIP
DANIEL LAI
CEO AND MANAGING DIRECTOR
KURT MUEFFELMANN
GLOBAL COO & US PRESIDENT
KYLIE SHEATHER
CHIEF FINANCIAL OFFICER
THOMAS MYERSCOUGH
CHIEF TECHNOLOGY OFFICER
Kylie Sheather is the Chief
Financial Officer of archTIS.
With extensive knowledge
of software as a service
companies, Sheather has
held senior financial roles
for medium and large listed
companies. Sheather’s
strong project management,
associated process re-
engineering and change
management skills support
the Company’s expansion
goals.
Sheather most recently
served as TechnologyOne
Director of Finance and
Business Partnering. Her
prior roles include Group
Financial Controller at ASX-
listed engineering services
company LogiCamms and
held a number of senior
roles at Boom Logistics.
As CTO Thomas
Myerscough is responsible
for managing archTIS’
technical strategy,
service management,
and relationships with
key technology partners.
He brings more than 30
years of experience in the
IT industry, with 20 years
in Federal Government
technology. In this time,
he successfully delivered
projects from design
to implementation and
support for the Australian
Department of Defence,
Australian Taxation Office
and the Department of
Finance and Deregulation.
His government and
subsequent private
industry experience gives
Myerscough a deep breadth
of expertise from which
to call upon to innovate
archTIS technology
platforms and ensure
seamless client delivery.
Daniel Lai is the CEO
and Managing Director of
archTIS. He has extensive
industry experience in
successfully delivering
outcomes as part of a
senior executive team
to both government and
commercial organisations.
Most importantly Lai
has direct experience in
implementing organisational
change to address the real
challenges businesses
confront today in a rapidly
evolving environment.
Over his career, he has had
many successes including
leading the Security
Enterprise Architecture
for the Single Information
Environment for the
Department of Defence,
leading enterprise change
as the National Manager
for Service Delivery for the
Australian Customs and
Border Protection Service,
and restructuring and
implementing enterprise ITIL
services for the Australian
Customs and Border
Protection Service. Lai is a
regular speaker at industry
events and has been
featured in the Financial
Review and CIO magazine.
As Global Chief Operating
Officer (COO) and US
President of archTIS, Kurt
Mueffelmann brings over
25 years of technology
leadership to the
companies. He brings his
passion for start-ups, and
proven strategies for scaling
go to market efforts and
achieving hyper revenue
growth to the role.
Mueffelmann has overseen
the growth and sale of four
technology companies and
earned two Deloitte Fast
500 company awards at
previous companies.
He has served as CEO
of Cryptzone, HiSoftware
(acquired by Cryptzone),
Create!form International
(acquired by Bottomline
Technologies), and
RealWord (acquired by
Microsoft Great Plains).
Mueffelmann was Vice
President and General
Manager of both the
Document Output Solutions
and Business Process
Solutions divisions of
Bottomline Technologies
where he was responsible
for over $40M in profitable
revenue while broadening
the product lines and
expanding the distribution
model.
Mueffelmann has served
on the advisory boards of
numerous companies and
professional organisations
within the technology
industry.
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EXECUTIVE LEADERSHIP
LEIGH ROWLAND
CHIEF SOFTWARE ENGINEER
TONY HOWELL
GLOBAL CHIEF ARCHITECT,
DEFENCE & INTELLIEGENCE
IRENA MROZ
CHIEF MARKETING OFFICER
MATTHEW KLUKEN
VICE PRESIDENT &
GENERAL MANAGER ASIA PACIFIC
Matt Kluken has 27
years experience
in the Information
and Communication
Technologies Industry in
Sales, Marketing, Technical
and Customer Experience
in Australian ICT and large
multinational technology
and advisory companies
such as Gartner, NetApp,
CA Technologies and
Oracle.
As Vice President & General
Manager Asia Pacific,
Kluken’s primary focus is
building archTIS’ presence
with global Defence,
Intelligence, Federal
and State Governments
and Defence Industry
companies, as well as
building and growing
our partner eco-system
supporting these markets,
both within the Asia Pacific
region.
Tony Howell brings
extensive domain expertise
in information management,
security and architecture to
the role of archTIS’ Global
Chief Architect, Defence
and Intelligence. Howell
specializes in data-centric
capabilities and emergent
technologies including
ABAC, Cloud, AI, ML and
analytics platforms.
In his career, he has
delivered successful
technology outcomes to
Australian Government
organisations in the
Defence, Law Enforcement
and Intelligence sectors.
His previous roles include
Director, Consulting
Data Practice and
Director, Consulting Data
Modernisation Practice at
Deloitte, Senior Information
System Architect at Hewlett
Packard Enterprise,
Information Systems
Architect at Hewlett
Packard Australia, and
independent consulting
engagements with
Australian government
agencies.
As the Chief Software
Engineer of archTIS, Leigh
Rowland is responsible for
driving the evolution of the
company’s technology to
provide secure collaboration
and seamless integration
into supported platforms.
Under his leadership, NC
Protect has expanded
from its core strength of
protecting documents in
SharePoint on-premises, to
extend the same protection
to cloud collaboration
and storage repositories
including SharePoint Online,
Microsoft 365, Microsoft
Teams, and Nutanix, as
well as the protection of
Exchange emails.
He began his career
at Xerox and has been
involved in a series of
successful startups as a
consultant and development
leader including Cyxtera,
Cryptzone (acquire by
Cyxtera), and Create!form
International. He helped
build and on-sell the
businesses through a
strong focus on innovative
software solutions. His
involvement with Security
Sheriff began back in 2011
and he has continued to
be involved in the design
and development of the
industry leading security
solution. Rowland earned
Bachelor of Science (Hons)
in Mathematics from
University of York.
Irena Mroz is CMO
of archTIS. She is
responsible for defining
the company’s branding,
demand generation
and public relations. An
innovative strategist with
impeccable attention to
detail, Mroz leverages
more than 20 years of
B2B marketing expertise
to direct the company’s
marketing strategy and
communications programs.
She served as VP of
Marketing at several
cybersecurity start-ups
including data-centric
security company Nucleus
Cyber (acquired by archTIS)
and Infocyte, a malware
and threat hunting solution.
As the SVP of Marketing
for Cryptzone’s network
and application security
solutions and the VP of
Marketing for HiSoftware, a
provider of compliance and
security solutions acquired
by Cryptzone, she led the
integration of the two global
marketing organizations,
while managing
development of all strategic
marketing programs and
communications for the joint
entity. Her previous roles
include senior marketing
positions at Bottomline
Technologies and
Create!form International.
Mroz holds a Bachelor
of Science in Mass
Communications from
Boston University’s College
of Communication.
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ARCHTIS LIMITED OVERVIEW OF
FY23
ANNUAL REPORT 2023
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OVERVIEW OF FY23
FOR THE YEAR ENDED 30 JUNE 2023
OPERATING AND FINANCIAL REVIEW
contracts. Licencing margins however remain strong at
76%.
Trusted to safeguard the world’s most sensitive
information, archTIS Limited (Company) is a global
provider of data-centric technology that provide a zero-
trust environment for the secure collaboration of sensitive
information. The Company’s award-wining cybersecurity
solutions protect information across government,
defence, supply chain and commercial enterprises for
regulated industries through our innovative attribute-
based access and control (ABAC) Policies. We are
focused on unlocking the potential of an information-
driven world by enabling Architected Trusted Information
Sharing (archTIS).
During FY23, archTIS delivered upon its previously
market communicated adjusted outlook statements.
• Annual revenue growth of 30-40%: Annual
revenue was up 37% from FY22 with licensing
revenue accounting for 50% of the total.
• $9.5M of cash receipts: The objective was
achieved with customer cash receipts increasing
over 200% from the prior comparative period (PCP).
• 53% reduction in operating cash outflows: The
Company lowered its net operating cash outflow or
cash burn by 53%. Cash outflow decreased from
$10.6M to $5.0M from the PCP.
archTIS delivered $6.4M of revenue which was a 37%
increase from $4.6M in the PCP. Licensing revenue was
$3.2M which was a 22% increase from the prior year.
Licensing revenue represents recurring revenue from
archTIS solutions developed, customised and maintained
for customers including Kojensi SaaS, NC Protect,
cp.Protect and cp.Discover which are delivered to
Australian and international customers. Annual recurring
revenue or ARR was $3.6M an increase of 11% from the
PCP with net customer churn under 1% per quarter.
Service revenue was up 37% from the PCP to
$2.8M. With the higher level of services, gross margin
percentage decreased to 51% from 71%. The lower
gross margin percentage was associated with increased
third-party service resources and hardware procurements
to deliver the various Australian Department of Defence
Cash receipts were $9.5M which was broken out by a
223% increase in receipts from customers (inclusive
of GST) and $1.8M receipts from R&D tax incentives.
The Company ended the year with $3.2M of available
cash and $4.3M in trade receivables, thus improving
the Company’s future cash position. Subsequent to
the close of the financial year, the Company collected
approximately $3.7M of open receivables. Operating
expenses were $7.1M, a reduction of 22% from the PCP
reflecting the Company’s drive to reduce the overall cost
structure (further discussed below).
FY23 GLOBAL CUSTOMER ADOPTION
SUPPORTS GO TO MARKET IN
VERTICAL INDUSTRIES
archTIS continued to demonstrate referenceable
customer traction across its key markets of global
defence, defence industrials and regulated industries. As
a sampling:
The Australian Department of Defence “AUS Defence”
has now procured over $17M of contracts over the past
4 years. The Company delivered $4M in revenue across
licensing, services, support and minimal hardware for
secure collaboration of Kojensi on-premises. In FY23,
AUS Defence also procured a $4.06M contract to
conduct a proof of concept to modernise their workplace
environment using NC Protect. An Australian university
extended NC Protect’s data-centric access controls from
unstructured data (Microsoft documents) in SharePoint
to also include structured data (data held in databases)
managed by Power BI; which carried a contract value of
$270,000.
In support of global defence industrials, Babcock
Australia signed a total contract value of $241,200 for
Kojensi SaaS, of which $78,000 is for ARR across an
initial 100 users. A US Defense supplier that develops
spacecraft and situational awareness software to protect
space assets selected NC Protect in Microsoft’s GCC-
High Cloud environment for CMMC and CUI to meet US
Department of Defense compliance requirements.
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ARCHTIS LIMITED OVERVIEW OF FY23
FOR THE YEAR ENDED 30 JUNE 2023
Expanding into regulated commercial enterprises,
global logistics company DHL and the Bank of Finland
upgraded their on-premises instances of cp.Protect
with six-figure contracts to deploy NC Protect and
NC Encrypt in Microsoft 365. The solutions assist
companies in ensuring policy-based orchestration
around encrypted key management and data sovereignty
as they migrate into the Cloud.
PRODUCT INNOVATION AND KEY
ALLIANCE DEVELOPMENT
Kojensi Innovations
archTIS has developed new functionality for companies
to meet export controls for Kojensi. This has been an
important part of preparing Kojensi for international
launch off the back of the AUKUS announcement.
Kojensi has also undergone a security compliance review
to meet the international accreditation frameworks
required to operate in multiple jurisdictions.
NC Encrypt Released to Market
archTIS launched NC Encrypt, a new product offering
that evolved from the prior year purchase of the
technology assets from CipherPoint (cp.Protect).
NC Encrypt provides independent encryption key
management and Bring Your Own Key (BYOK)
technology for Microsoft 365 applications and
SharePoint Server environments. NC Encrypt ties in
directly into Microsoft Purview Information Protection
(MPIP) and RMS encryption capabilities while providing
policy-based encryption around data sovereignty.
Microsoft Partnership and IP Co-Sell
The Company had a number of Microsoft co-sell
opportunities during the year including global logistics
provider DHL for NC Protect and NC Encrypt and a
number of key global defence pipeline opportunities.
archTIS continues to build a strong Microsoft alliance
and pipeline across product technologies, field sales and
go to market activities through its membership in the
invitation-only Microsoft Intelligent Security Association
(MISA). Additionally, the Company has delivered several
go to market activities with Microsoft at the world’s
largest security exhibition, RSA, including a leadership
position on an invite-only Data Security Executive
Roundtable and a demonstration in the Microsoft Partner
Showcase on the show floor to showcase NC Protect’s
integrations with MPIP and Microsoft Sentinel.
archTIS’ NC Protect was named a Compliance & Privacy
Trailblazer Award Finalist in the annual Microsoft Security
Excellence Awards. NC Protect was nominated for its
unique capabilities for solving Defence requirements for
the safe handling of and application of visual markings
for sensitive, Controlled Unclassified Information (CUI)
and classified data.
KPMG Consortium
archTIS participated in a KPMG-led systems integration
consortium for AUS Defence. The Company is working
closely with KPMG and the other members of the
OneDefence consortium to improve the data maturity
and security of AUS Defence.
Thales
NetApp Technology Alliance Program
The Company announced the integration of NC Encrypt
with strategic alliance partner Thales’ CipherTrust
Manager to offer a viable solution for customers using
Microsoft 365 that are determined to keep their keys
separated from their data in the cloud. In addition,
customers already using Thales hardware security
modules that want the additional value of dynamic,
policy-driven encryption can easily integrate with NC
Protect. This opens new market distribution opportunities
with existing Thales partners and customers.
Subsequent to the close of the financial year, archTIS
announced its membership in the NetApp Technology
Alliance Program as a Preferred Partner with field
validation of NC Protect’s integration with NetApp
ONTAP. NC Protect paired with ONTAP addresses the
protection of information, dynamically at the data layer
at the time of access. The combined solution provides a
multi-faceted 360-degree layered approach to protecting
a customer’s most important asset, data, that is
accessed on Windows File Shares in ONTAP.
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OVERVIEW OF FY23
FOR THE YEAR ENDED 30 JUNE 2023
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CORPORATE INITIATIVES
OUTLOOK
Capital Finance Package
As announced on 2 December 2022, archTIS
successfully completed a comprehensive capital finance
program to support the Company’s continued revenue
growth outlook and product innovation. The $3.5M
capital finance program was comprised of:
(a) the completion of a share placement through the
support of key US and Australian long-term institutional
investors, new domestic and international institutions, as
well as sophisticated investors and participation by key
Company executives and all Board Members,
(b) a Share Purchase Plan (SPP) to existing Shareholders;
and,
(c) a market rate facility through Commonwealth Bank of
Australia (CBA).
Launched New Interactive Investor Hub
The Company launched a new interactive investor hub
for communicating the latest Company announcements,
reports and presentations. It also provides an
interactive online experience allowing the archTIS
investor community to comment on and ask the archTIS
management team questions regarding company news
and information via the portal.
Reduction in Overall Cost Structure
As announced on 17 November 2022, archTIS reduced
its overall cost structure to further align with macro-
market demands in striving for cash flow neutrality. The
Company reduced its operating expenses by $2.0M
per annum; which included the reduction of staff and
contractors and taking several steps to become more
efficient by cutting discretionary spend.
archTIS is positioned to continue to execute and deliver
on strong customer adoption to revenue growth that
will increase cash collections while maintaining capital
efficiencies and expenses, thus further reducing cash
outflows.
In FY24 the Company will focus on:
• Continuing the push toward becoming cash flow
positive.
• Delivering revenue growth through licensing
software that drives high margins and predictability
associated with ARR.
• Drive product innovation to maintain our market
leading position for securing the world’s most
sensitive information - including the launch of
Kojensi into international markets.
•
Invest in strong staff development, training and
advancement.
• Maintain capital efficiency through management of
operating costs.
• Deliver core strategic objectives of being the:
• Preferred platform for sharing information across
Government, Defence and Defence Industry.
• Premium provider of Policy Enforced Access
Management products to the global defence
market.
• Global thought leader in data-centric
architecture.
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OVERVIEW OF FY23
FOR THE YEAR ENDED 30 JUNE 2023
MATERIAL BUSINESS RISKS
Cyber and Security Risks
A cyber-attack has the potential to disrupt the
Company’s information technology platform which is
integral to the efficient operation of its business. The
threat of cyber-attacks on security companies is real. A
successful cyber-attack on the Company would cause
significant damage to the Company’s reputation and
brand as well as have a material adverse impact on the
financial position and performance of the Company.
Regulatory Risk
archTIS has been eligible for the federal government
R&D tax incentive. If the regulation regarding the R&D
tax incentives changed and the Company was no longer
eligible, this would impact on archTIS’ anticipated costs
for development and materially impact on the Company’s
financial and operating performance.
Uncertainty of Future Profitability
The success of the Company’s sales and operations
relies on the ability to attract more commercial users of
the relevant technology and its products. An inability
to attract new clients and users in a timely manner
will affect the Company’s earning ability. While the
Company has been successful in attracting clients
in the government sector in Australia, this will not
necessarily translate into successful utilisation in other
verticals and countries. Furthermore, the Company’s
profitability will be impacted by its ability to successfully
execute its commercialisation and growth strategies,
economic conditions in the markets in which it operates,
competitive factors and regulatory developments.
Accordingly, the extent of any future profits are uncertain.
Moreover, the level of profitability cannot be predicted.
The Company’s risk management approach involves the
ongoing assessment, monitoring and reporting of risks
that could impede the Company’s progress in delivering
the Company’s strategic priorities. As the Company
continues to grow and evolve, the material risk profile
may change.
Below is a list material business risks that the Company
considers may affect the success of its strategy and
financial prospects for future years, including some
which are not directly within the Company’s control. The
Company may face a range of other risks in conducting
its business activities in addition to those set out below.
Technology and Competition Risks
Technology markets, by their very nature, are a
continually evolving marketplace. To succeed, the
Company will need to research, develop, design, build
and bring to market new enhancements to its existing
products as well as to new markets that might not
yet exist. The Company may not be able to engage in
research or develop its existing (and new) products to
meet the changing needs of its markets and the new
and emerging technologies. At the same time, products
and technologies developed by others may render the
Company’s products and systems obsolete or non-
competitive. If any of these scenarios were to occur,
it would adversely impact the operating results and
potential of the Company.
Ability to Attract and Retain Appropriately
Skilled Employees
The responsibility of overseeing the day-to-day
operations and the strategic management of the
Company depends substantially on its senior
management and key personnel. Company performance
also depends on its ability to attract and retain skilled
resources with relevant industry and technical expertise.
The loss of several key personnel or the inability to
attract additional resources may have an adverse impact
on the financial and operating performance of the
Company.
ANNUAL REPORT 2023
14
DYNAMIC ACCESS & DATA
PROTECTION FOR MICROSOFT
365 APPS & FILE SHARES
SENSITIVE & CLASSIFIED
INFORMATION - SHARED
SECURELY
Discover, classify
and secure sensitive
information
Prevent data
loss, misuse and
human error
Audit and report
for compliance
Share sensitive
and classified
files securely
Accredited
secure document
collaboration
Enforce zero trust with
attribute-based access
control (ABAC)
ANNUAL REPORT 2023
15
ARCHTIS LIMITED DIRECTORS’
REPORT
ANNUAL REPORT 2023
16
DIREC T ORS’ REPOR T
The directors present their report, together with the financial statements, on the consolidated entity consisting of
archTIS Limited (referred to hereafter as the ‘company’ or ‘parent entity’) and the entities it controlled at the end of, or
during, the year ended 30 June 2023 (‘Reporting Period’ or ‘FY2023’).
DIRECTORS
The following persons were directors of archTIS Limited during the whole of the financial year and up to the
date of this report, unless otherwise stated:
• Miles Jakeman
• Daniel Lai
• Leanne Graham
DIRECTORS AND MEETINGS OF DIRECTORS
The qualifications and experience of directors, including current and recent directorships, are detailed below:
DR. MILES JAKEMAN AM
Chairman of the Board
Dr. Miles Jakeman is a specialist in business
strategy, leadership, high performance team
development, and risk management. As a
company director, former CEO and technology
business founder, he brings deep domain
expertise in these areas and has successfully
guided companies across global markets to
deliver outstanding year-on-year results. After
30 years of industry experience, with the last 20
years as a director, he has also built an excellent
network in the government, enterprise, and
healthcare sectors.
Jakeman co-founded and was the Managing
Director of Australian software and technology
success story, The Citadel Group Limited
(“Citadel”). During his time as Managing Director,
he grew Citadel from a start-up to an ASX-listed
company with over 300 staff and a market
capitalisation of more than $400M. The company
was subsequently sold to Pacific Equity Partners
for $503M.
Jakeman has a Bachelor of Science (Hons), a
Graduate Diploma in Asian Studies, a Doctorate
of Philosophy (PhD) in Asian Studies and a
second PhD in Business Leadership. He is
conversant in Bahasa Indonesia, Malay and Tok
Pisin. Professionally, Jakeman is a Fellow of the
Australian Institute of Company Directors (AICD)
and has successfully completed both the AICD
Diploma of International Company Directors
and the Mastering the Boardroom Advanced
Diploma. Jakeman was appointed as a Member
of the Order of Australia (AM) for significant
service to business, national security, and to the
community.
Interest in Shares and Options: 2,586,925
ordinary shares and 1,476,190 unlisted options
Other current public listed company
directorships: GetBusy plc (AIM:GetB)
(appointed 3 July 2017)
Former public listed company directorships
(last 3 years): None
ANNUAL REPORT 2023
17
ARCHTIS LIMITED
DIREC T ORS’ REPOR T
DANIEL LAI
CEO & Managing Director
Daniel Lai is the CEO and Managing Director of
archTIS. He has extensive industry experience
in successfully delivering outcomes as part of a
senior executive team to both government and
commercial organisations. Most importantly,
Lai has direct experience in implementing
organisational change to address the real
challenges businesses confront today in a
rapidly evolving environment.
Over his career, he has had many successes
including leading the Security Enterprise
Architecture for the Single Information
Environment for the AUS Department of
Defence, leading enterprise change as the
National Manager for Service Delivery for the
Australian Customs and Border Protection
Service, and restructuring and implementing
enterprise ITIL services for the Australian
Customs and Border Protection Service. Lai is
a regular speaker at industry events and has
been featured in the Financial Review and CIO
magazine.
Interest in Shares and Options: 9,834,086
ordinary shares, 7,246 AR9O listed options,
329,131 unlisted options and 1,157,012
performance rights
Other current public listed company
directorships: None
Former public listed company directorships
(last 3 years): None
LEANNE GRAHAM
Non-Executive Director
With over 30 years in the software sector,
Leanne Graham has assisted technology
companies with her broad experience and SaaS
expertise. In 2018, Leanne was awarded the
New Zealand Order of Merit for her services to
the software industry.
Graham is also a director of Energy One Limited
and Bridge SaaS Limited and other private
businesses in New Zealand.
Interest in Shares and Options: 1,011,569
ordinary shares, 6,612 AR9O listed options and
869,047 unlisted options
Other current public listed company
directorships: Non-Executive Director of Energy
One Ltd (ASX:EOL) (appointed 10 December
2022) and Bridge SaaS Limited (ASX:BGE)
(appointed 24 May 2022)
Former public listed company directorships
(last 3 years): Non-Executive Director of
Douugh Limited (ASX:DOU) (1 May 2021 to 29
July 2022) and Optima Technology Group Ltd
(ASX:OPA) (formerly Bill Identity Limited) (28 July
2016 to 2 March 2023), and Executive Chairman
of Health House International Limited (ASX:HHI)
(formerly Velpic Limited) (22 October 2015 to 19
March 2021).
ANNUAL REPORT 2023
18
DIREC T ORS’ REPOR T
The number of meetings of the company’s Board of Directors (‘the Board’) held during the year ended
30 June 2023, and the number of meetings attended by each director were:
Miles Jakeman
Daniel Lai
Leanne Graham
Number of Meetings Held
Number Attended
12
12
12
11
12
12
The Directors have determined that the consolidated entity’s operations continue not to be of a sufficient magnitude
to require the Board Committees outlined in the Corporate Governance Plan. The Board is carrying out the duties that
would ordinarily be assigned to each committee under the written terms of reference for that committee.
COMPANY SECRETARY
As at the date of this report, the role of company secretary is held jointly by Erlyn Dawson and Winton Willesee.
ERLYN DAWSON
Joint-Company Secretary
WINTON WILLESEE
Joint-Company Secretary
Erlyn Dawson is an experienced corporate
professional with a broad range of corporate
governance and capital markets experience,
having been involved with several public company
listings, merger and acquisition transactions and
capital raisings for ASX-listed companies across a
diverse range of industries.
Dawson holds a Bachelor of Commerce
(Accounting and Finance) and a Graduate
Diploma in Applied Corporate Governance.
She is a member of the Governance Institute of
Australia/Chartered Secretary.
Winton Willesee is an experienced company
director and secretary with over 20 years’
experience in various roles within the Australian
and international capital markets. Willesee has
considerable experience with ASX listed and other
companies over a broad range of industries having
been involved with many successful ventures from
early stage through to large capital development
projects.
Willesee holds a Master of Commerce, a Post-
Graduate Diploma in Business (Economics and
Finance), a Graduate Diploma in Applied Finance
and Investment, a Graduate Diploma in Applied
Corporate Governance, a Graduate Diploma in
Education and a Bachelor of Business. He is
a Fellow of the Financial Services Institute of
Australasia, a Graduate of the Australian Institute
of Company Directors, a Member of CPA Australia
and a Fellow of the Governance Institute of
Australia and the Institute of Chartered Secretaries
and Administrators/Chartered Secretary.
PRINCIPAL ACTIVITIES
During the financial year the principal continuing activities of the Group consisted of:
• Sales of a secure information management and collaboration software: Kojensi either in-cloud or on-premise and
NC Protect for users of the Microsoft software suite;
•
Integration of certain Cipherpoint Limited technologies into NC Protect and M365 solutions; and
• Consulting and solutions services for secure information sharing and inter-organisational collaboration related to
the above software sales.
ANNUAL REPORT 2023
19
ARCHTIS LIMITED DIREC T ORS’ REPOR T
DIVIDENDS
No dividends were paid during the financial year.
REVIEW OF OPERATIONS
Refer to pages 10 – 14 of the annual report for an overview of the FY23 operations, which forms part of this Directors’
report.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the consolidated entity during the financial year.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
No matter or circumstance has arisen since 30 June 2023 which has significantly affected, or may significantly affect:
a) the Company’s operations in future financial years, or
b) the results of those operations in future financial years, or
c) the Company’s state of affairs in future financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
Other than as set out in the Outlook section on page 13, information on likely developments in the operations of the
consolidated entity and the expected results of operations have not been included in this report because the directors
believe it would be likely to result in unreasonable prejudice to the consolidated entity.
ENVIRONMENTAL REGULATION
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or
State law.
INDEMNITY AND INSURANCE OF OFFICERS
The company has indemnified the directors and executives of the company for osts incurred, in their capacity as a
director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives
of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance
prohibits disclosure of the nature of the liability and the amount of the premium.
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 consolidated entity, or to intervene in any proceedings to which the company is a party for the purpose
of taking responsibility on behalf of the consolidated entity for all or part of those proceedings.
SHARES UNDER OPTION
Unissued ordinary shares of archTIS Limited under option at the date of this report are as follows:
Class Code
Grant Date
Expiry Date
Exercise Price
AR9O12
AR9O13
AR9O14
AR9O15
24 Nov 2021
24 Nov 2025
23 Dec 2022
23 Dec 2025
13 Dec 2022
13 Dec 2025
6 Mar 2023
6 Mar 2026
AR9O (Listed)
23 Dec 2021
23 Dec 2023
Total options on issue
$0.316
$0.200
$0.2000
$0.1428
$.0.350
Number under
Option
1,750,000
3,337,102
8,642,851
2,089,402
10,044,257
25,863,612
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue
of the company or of any other body corporate.
ANNUAL REPORT 2023
20
DIREC T ORS’ REPOR T
REMUNERATION REPORT (AUDITED)
The remuneration report details the key management personnel remuneration arrangements for the consolidated
entity, in accordance with the requirements of section 300A of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the entity, directly or indirectly, including all directors.
Overview of remuneration approach and framework
The performance of the consolidated entity depends on the quality of its directors and executives. The remuneration
philosophy is to attract, motivate and retain high performance and high-quality personnel.
The remuneration of Directors and other key management personnel is fixed annually. Incentives are structured to
reward outstanding performance against agreed Key Performance Indicators (KPI’s) including financial and non-
financial metrics.
The consolidated entity did not engage a remuneration consultant to provide recommendations in respect of the
remuneration of key management personnel.
In accordance with best practice corporate governance, the structure of non-executive director and executive
director remuneration is separate.
Non-executive directors’ remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive
directors’ fees and payments are reviewed annually by the Board.
The ASX Listing Rules and the Company’s Constitution provide that the aggregate annual non-executive directors’
fees paid shall not exceed that determined by shareholders in a general meeting. On 24 November 2021,
shareholders approved a maximum annual aggregate remuneration of $500,000 per annum.
Executive remuneration
The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of
remuneration which has both fixed and variable components.
The executive remuneration and reward framework has four components:
• base pay and non-monetary benefits
•
•
short-term performance incentives
share-based payments
• other remuneration such as superannuation and long service leave
The combination of these comprises the executive’s total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by
the Board based on individual and business unit performance, the overall performance of the consolidated entity and
comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the consolidated entity and provides additional value to the
executive.
The short-term incentives (‘STI’) program is designed to align the targets of the business units with the performance
hurdles of executives. STI payments are granted to executives based on specific annual targets and key performance
indicators (‘KPI’s’) being achieved.
The long-term incentives (‘LTI’) include long service leave and share-based payments. Securities are awarded to
executives which vest over periods of approximately two to three years based on LTI measures.
ANNUAL REPORT 2023
21
ARCHTIS LIMITED DIREC T ORS’ REPOR T
REMUNERATION REPORT (AUDITED) (CONTINUED)
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following
tables.
During the Reporting Period, the key management personnel of the consolidated entity consisted of the following
personnel of archTIS Limited. The following persons were key management personnel of the consolidated entity
during the whole of the Reporting Period and up to the date of this report, unless otherwise stated:
2023
Directors
Miles Jakeman AM
Chairman
Daniel Lai
Managing Director & Chief Executive Officer
Leanne Graham
Non-executive Director
Key Management Personnel
Kurt Mueffelmann
Global Chief Operations Officer
Kylie Sheather
Chief Financial Officer
During the prior comparative period, the key management personnel of the Group consisted of the following
personnel of archTIS Limited.
2022
Directors
Miles Jakeman AM
Chairman
Daniel Lai
Managing Director & Chief Executive
Officer
Leanne Graham
Non-executive Director
Key Management Personnel
Kurt Mueffelmann
Global Chief Operations Officer
Kylie Sheather
Chief Financial Officer
ANNUAL REPORT 2023
22
DIREC T ORS’ REPOR T
REMUNERATION REPORT (AUDITED) (CONTINUED)
Details of remuneration (continued)
Short-term benefits
Salary &
Fees
Cash
bonus
$
$
Other
$
Share-
based
pay-
ments
Post
employ-
ment
super
Long
service
leave
$
$
$
Total
$
% of
salary
assoc.
with
perfor-
mance
Share-
based
pay-
ments
as a %
of total
%
%
75,000
54,756
-
-
-
-
40,056
7,875
- 122,931
30,042
-
-
84,798
-
-
33%
35%
2023
Non-Executive Directors
Miles Jakeman AM
Leanne Graham
Executive Directors
Daniel Lai
300,000
23,797
47,169
26,641
44,352
5,000 446,959
40%
6%
Key Management Personnel
Kurt Mueffelmann*
372,587
23,041
35,735
29,150
-
- 460,513
30%
Kylie Sheather
280,000
35,535
21,975
23,027
36,308
5,219 402,064
30%
6%
6%
2022
Non-Executive Directors
Miles Jakeman AM
Leanne Graham
Executive Directors
75,000
54,756
-
-
Daniel Lai
319,800
19,113
Key Management Personnel
Kurt Mueffelmann**
344,250
18,777
-
-
-
-
37,654
7,156
- 119,810
26,613
-
-
81,369
-
-
31%
33%
14,711
33,987
5,000 392,611
40%
4%
16,709
-
- 379,736
30%
4%
4%
Kylie Sheather
252,526
25,520
825
12,562
27,933
4,776 324,142
30%
*Estimated AUD remuneration based on USD to AUD 2022/23 average exchange rate of 1.4903
**Estimated AUD remuneration based on USD to AUD 2021/22 average exchange rate of 1.377
ANNUAL REPORT 2023
23
ARCHTIS LIMITED DIREC T ORS’ REPOR T
REMUNERATION REPORT (AUDITED) (CONTINUED)
Services Agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements
with the company or its subsidiaries. Details of these agreements are as follows:
Name: Daniel Lai
Title: Chief Executive Officer
Agreement commenced: 29 June 2018
Term of agreement: No fixed term. Six-month termination period.
Details: The remuneration of Lai is $331,500 per year including statutory superannuation, plus variable compensation
of an additional 90% of base salary, comprising of an annual cash bonus and long-term equity incentives, based on
financial KPIs set by the Board.
Name: Kylie Sheather
Title: Chief Financial Officer
Agreement commenced: 24 May 2021
Term of agreement: No fixed term. Four-week termination period.
Details: The remuneration of Sheather is $309,400 per year including statutory superannuation, plus variable
compensation of an additional 80% of base salary, comprising of an annual cash bonus and long-term equity
incentives, based on KPIs set by the Board.
Name: Kurt Mueffelmann
Title: Global Chief Operating Officer of archTIS and President of US Operations
Agreement commenced: 23 December 2020
Term of agreement: Annual term, renewed automatically unless either party gives notice not to extend at least 30
days prior to the renewal date. In the event of termination without cause or resignation for good reason (unremedied
cause), in addition to accrued amounts, Mueffelmann will receive salary and bonus continuation equal to 12 months
base salary plus bonus and performance-based securities, and up to 12 months continued insurance benefits.
Details: The remuneration of Mueffelmann is US$250,000 per year, plus variable compensation of an additional 80%
of base salary, comprising of an annual cash bonus and long-term equity incentives, based on KPIs set by the Board.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
ANNUAL REPORT 2023
24
DIREC T ORS’ REPOR T
REMUNERATION REPORT (AUDITED) (CONTINUED)
Share-based compensation
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors
and other key management personnel in this financial year or future reporting years are as follows:
Grant
Date
Vesting
Date
Expiry
Date
Exercise
Price
Value
Per Option
Number
Under Option
AR9012 Class
Non-Executive Directors
Miles Jakeman AM
24 Nov 21
24 Nov 22
24 Nov 25
$0.316
$0.097
333,333
24 Nov 21
24 Nov 23
24 Nov 25
$0.316
$0.097
333,333
24 Nov 21
24 Nov 24
24 Nov 25
$0.316
$0.097
333,334
Leanne Graham
24 Nov 21
24 Nov 22
24 Nov 25
$0.316
$0.097
250,000
24 Nov 21
24 Nov 23
24 Nov 25
$0.316
$0.097
250,000
24 Nov 21
24 Nov 24
24 Nov 25
$0.316
$0.097
250,000
* Subject to continued engagement as a director of the Company on the date of vesting.
AR9012 options were granted to the non-executive directors as part of their remuneration packages. The options are
exercisable by the holder from the vesting date. If the holder ceases to be a director of the Company, vested options
will lapse six months after cessation of engagement. Unvested options will lapse immediately upon cessation of
engagement.
There are no amounts paid or payable by the recipient in relation to the granting of such options other than on their
potential exercise. Options granted carry no dividend or voting rights.
Grant
Date
Vesting
Date
Expiry
Date
Exercise
Price
Value
Per Option
Number
Under Option
AR9O15 Class
Executive Directors
Daniel Lai
6 Mar 23
30 Jun 23
6 Mar 26
$0.1428
$0.0385
70,028
6 Mar 23
30 Jun 24
6 Mar 26
$0.1428
$0.0385
70,028
6 Mar 23
30 Jun 25
6 Mar 26
$0.1428
$0.0385
70,028
Key Management Personnel
Kurt Mueffelmann
21 Apr 23
30 Jun 23
6 Mar 26
$0.1428
$0.0385
83,011
21 Apr 23
30 Jun 24
6 Mar 26
$0.1428
$0.0385
83,011
21 Apr 23
30 Jun 25
6 Mar 26
$0.1428
$0.0385
83,011
Kylie Sheather
6 Mar 23
30 Jun 23
6 Mar 26
$0.1428
$0.0385
65,359
6 Mar 23
30 Jun 24
6 Mar 26
$0.1428
$0.0385
65,359
6 Mar 23
30 Jun 25
6 Mar 26
$0.1428
$0.0385
65,360
* Subject to continued employment with the Company on the date of vesting.
ANNUAL REPORT 2023
25
ARCHTIS LIMITED DIREC T ORS’ REPOR T
REMUNERATION REPORT (AUDITED) (CONTINUED)
Share-based compensation (continued)
AR9O15 options were granted to the executive directors and key management personnel as part of their
remuneration packages. The options are exercisable by the holder from the vesting date. If the holder ceases to be an
employee of the Company, vested options will lapse six months after cessation of engagement. Unvested options will
lapse immediately upon cessation of engagement.
There are no amounts paid or payable by the recipient in relation to the granting of such options other than on their
potential exercise. Options granted carry no dividend or voting rights.
Share holding
The number of shares in the company held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Opening
Balance
Received
as part of
remuneration
Additions
Disposals
Closing
Balance
Non-Executive Directors
Miles Jakeman AM
Leanne Graham
Executive Directors
1,634,545
773,474
Daniel Lai
9,595,991
Key Management Personnel
-
-
-
952,380
238,095
-
-
2,586,925
1,011,569
238,095
-
9,834,086
Kurt Mueffelmann
17,903,294
121,067
238,095
Kylie Sheather
-
91,018
-
-
-
18,262,456
91,018
ANNUAL REPORT 2023
26
DIREC T ORS’ REPOR T
REMUNERATION REPORT (AUDITED) (CONTINUED)
Share-based compensation (continued)
Option & performance rights holding
The number of options and performance rights over ordinary shares in the company held during the financial year by
each director and other members of key management personnel of the consolidated entity, including their personally
related parties, is set out below:
Opening
Balance
Granted
Exercised/
Vested
Expired/
Forfeited
Closing
Balance
Non-Executive Directors
Miles Jakeman AM
1,360,000
476,190
Leanne Graham
756,612
119,047
Executive Directors
Daniel Lai
619,491
1,379,5511,2
-
-
-
360,000
1,476,190
-
875,659
505,653
1,493,389
Key Management Personnel
Kurt Mueffelmann
Kylie Sheather
738,867
1,613,2442
121,067
574,322
1,656,722
522,794
1,176,4702
91,018
431,776
1,176,470
1 1,050,420 Performance Rights and 210,084 Tenure Options were issued to Daniel Lai under the Company’s Employee Incentive Plan (adopted at the
Company’s Annual General Meeting held on 24 November 2021). The Company obtained shareholder approval under ASX Listing Rule 10.14 for the issue to Lai
at the Company’s Annual General Meeting held on 5 October 2022.
2 A summary of the vesting conditions attached to these securities is set out in note 24.
This concludes the remuneration report, which has been audited.
ANNUAL REPORT 2023
27
ARCHTIS LIMITED DIREC T ORS’ REPOR T
AUDITOR
RSM Australia Partners (“RSM”) continues in office in accordance with section 327 of the Corporations Act 2001.
Non-audit services
Details of the amounts paid or payable to RSM for non-audit services provided during the financial year by the auditor
are outlined in note 29 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by
another person or firm on RSM’s behalf), is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 29 to the financial statements do not
compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following
reasons:
•
•
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of RSM; and
none of the services undermine the general principles relating to auditor independence as issued by the
Accounting Professional and Ethical Standards (APES) Board set out in APES 110 Code of Ethics for Professional
Accountants, including reviewing or auditing RSM’s own work, acting in a management or decision-making
capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of
the company or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the
company or any related entity.
Rounding of amounts
The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with
that Corporations Instrument to the nearest dollar.
Corporate Governance
The Company’s 2023 Corporate Governance Statement is contained in the ‘Corporate Governance’ section of the
Company’s website at https://www.archtis.com/archtis-asx-ar9-investor-relations/.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is
included on page 67.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act
2001.
On behalf of the directors,
Miles Jakeman AM
Chairman
23 August 2023
Canberra, ACT
ANNUAL REPORT 2023
28
FINANCIAL
STATEMENTS
ANNUAL REPORT 2023
29
ARCHTIS LIMITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
Revenue
Cost of sales
Gross profit
Other income
Sales and marketing
General administration
Loss before income tax
Income tax (expense) / benefit
Other comprehensive income
Total comprehensive loss for the year
Basic earnings per share
Diluted earnings per share
Note
3(a)
3(b)
5
5
6
35
35
2023
$
6,367,123
(3,102,642)
3,264,481
2,455,468
(3,824,276)
(10,439,180)
(8,543,507)
2022
$
4,638,696
(1,367,411)
3,271,285
1,226,002
(4,916,772)
(9,218,746)
(9,638,231)
305,552
192,943
-
-
(8,237,955)
(9,445,288)
(2.99)
(2.76)
(3.76)
(3.58)
The above consolidated statement of profit and loss and other comprehensive income should be read in conjunction with
the accompanying notes.
ANNUAL REPORT 2023
30
24
2
Note
3(a)
3(b)
5
5
6
35
35
2023
$
6,367,123
(3,102,642)
3,264,481
2,455,468
(3,824,276)
(10,439,180)
(8,543,507)
2022
$
4,638,696
(1,367,411)
3,271,285
1,226,002
(4,916,772)
(9,218,746)
(9,638,231)
305,552
192,943
-
-
(2.99)
(2.76)
(3.76)
(3.58)
Total comprehensive loss for the year
(8,237,955)
(9,445,288)
The above consolidated statement of profit and loss and other comprehensive income should be read in conjunction with
Revenue
Cost of sales
Gross profit
Other income
Sales and marketing
General administration
Loss before income tax
Income tax (expense) / benefit
Other comprehensive income
Basic earnings per share
Diluted earnings per share
the accompanying notes.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Note
2023
$
2022
$
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Provision for income tax
Total current assets
Non-current assets
Other non-current assets
Property, plant and equipment
Intangible assets
Right-of-use asset
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Employee benefits
Provisions
Other current liabilities
Lease liabilities
Borrowings
Total current liabilities
Non-current liabilities
Employee benefits
Provisions
Other non-current liabilities
Deferred tax liabilities
Lease liabilities
Total non-current liabilities
Total liabilities
NET ASSETS
EQUITY
Issued capital
Reserves
Retained profits / (accumulated losses)
TOTAL EQUITY ATTRIBUTABLE TO THE OWNERS OF ARCHTIS
LIMITED
7
8
9
10
11
12
13
14
15
16
17
18
19
15
16
20
21
18
22
23
25
3,245,108
4,289,228
3,688,316
16,145
11,238,797
67,501
152,773
12,701,443
714,675
13,636,392
6,520,536
2,481,598
2,061,626
-
11,063,760
92,789
91,035
14,695,423
951,729
15,830,976
24,875,189
26,894,736
2,264,880
346,490
339,314
5,784,915
181,616
1,000
8,918,215
176,231
78,309
705,305
963,627
597,742
2,521,214
743,928
533,296
277,845
2,289,530
214,603
-
4,059,202
104,987
76,990
1,454,368
1,224,722
771,160
3,632,227
11,439,429
7,691,429
13,435,760
19,203,307
43,276,195
1,542,027
(31,382,462)
41,099,800
1,248,014
(23,144,507)
13,435,760
19,203,307
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
24
2
ANNUAL REPORT 2023
31
25
2
ARCHTIS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Consolidated
Note
Issued capital
Reserves
Retained profits
Total equity
Balance at 1 July 2022
Total comprehensive
income for the year
$
$
$
$
41,099,800
1,248,014
(23,144,507)
19,203,307
-
-
(8,237,955)
(8,237,955)
Transactions with owners in their capacity as owners:
Issue of share capital
Exercise of options
Vesting of performance
rights
Capital raise fees
Foreign exchange reserve
Share-based payments
22
23
23
22
22
22
2,300,802
61,740
73,472
(259,619)
-
-
-
(19,740)
(73,472)
-
174,832
212,393
-
-
-
-
2,300,802
42,000
-
(259,619)
174,832
212,393
Balance at 30 June 2023
22,23,25
43,276,195
1,542,027
(31,382,462)
13,435,760
Balance at 1 July 2021
Total comprehensive
income for the year
32,636,977
707,660
(13,699,219)
19,645,418
-
-
(9,445,288)
(9,445,288)
Transactions with owners in their capacity as owners:
Issue of share capital
Capital raise fees
Foreign exchange reserve
Share-based payments
22
22
23
23
9,127,753
(664,930)
-
-
-
-
402,844
137,510
-
-
-
-
9,127,753
(664,930)
402,844
137,510
Balance at 30 June 2022
22,23,25
41,099,800
1,248,014
(23,144,507)
19,203,307
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2023
32
26
2
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
Consolidated
Note
Issued capital
Reserves
Retained profits
Total equity
Transactions with owners in their capacity as owners:
Balance at 1 July 2022
Total comprehensive
income for the year
Issue of share capital
Exercise of options
Vesting of performance
rights
Capital raise fees
Foreign exchange reserve
Share-based payments
Balance at 1 July 2021
Total comprehensive
income for the year
Issue of share capital
Capital raise fees
Foreign exchange reserve
Share-based payments
$
$
$
41,099,800
1,248,014
(23,144,507)
19,203,307
(8,237,955)
(8,237,955)
2,300,802
61,740
(19,740)
73,472
(73,472)
(259,619)
174,832
212,393
2,300,802
42,000
-
(259,619)
174,832
212,393
32,636,977
707,660
(13,699,219)
19,645,418
(9,445,288)
(9,445,288)
9,127,753
(664,930)
402,844
137,510
9,127,753
(664,930)
402,844
137,510
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22
22
22
22
23
23
22
22
23
23
Balance at 30 June 2023
22,23,25
43,276,195
1,542,027
(31,382,462)
13,435,760
Transactions with owners in their capacity as owners:
Balance at 30 June 2022
22,23,25
41,099,800
1,248,014
(23,144,507)
19,203,307
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Note
Consolidated
2023
$
2022
$
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Receipts from R&D tax incentive
Government grants & incentives
Interest received
Interest paid
Income tax paid
7,648,865
(14,486,307)
1,785,442
72,600
48,102
(7,229)
(17,380)
Net cash provided by / (used in) operating activities
34
(4,955,907)
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment
Purchase of property, plant and equipment
Payment for purchase of business, net of cash acquired
Net cash provided by / (used in) investing activities
11
Cash flows from financing activities
Proceeds from borrowings
Proceeds from issue of shares
Costs of capital raise
Repayments under leases
Net cash provided by / (used in) financing activities
Net increase / (decrease) in cash held
Cash and cash equivalents at beginning of period
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of period
7
72,426
(112,503)
-
(40,077)
1,000
2,242,802
(249,157)
(263,289)
1,731,356
(3,264,628)
6,520,536
(10,800)
3,245,108
2,369,862
(14,597,445)
1,487,476
174,937
1,775
(4,227)
(1,896)
(10,569,518)
-
(26,649)
(1,757,711)
(1,784,360)
-
7,018,953
(664,930)
(210,593)
6,143,430
(6,210,448)
12,739,159
(8,175)
6,520,536
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
26
2
ANNUAL REPORT 2023
33
27
2
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Note 1. Significant Accounting Policies
The principal accounting policies adopted in
the preparation of the financial statements
are set out below. These policies have been
consistently applied
the years
presented, unless otherwise stated.
to all
(a) Going concern
The
financial statements have been
prepared on the going concern basis, which
contemplates continuity of normal business
activities and the realisation of assets and
discharge of liabilities in the normal course
of business.
The consolidated entity incurred a loss after
tax of $8,237,955 (2022 $9,445,288) and had
net operating cash outflows of $4,955,907
(2022: $10,569,518). The entity has prepared
a cash flow forecast which indicates that the
entity has sufficient cash to meet its debts
as and when they fall due and payable.
The Directors believe that it is reasonably
foreseeable that the consolidated entity will
continue as a going concern and that it is
appropriate to adopt the going concern basis
in the preparation of the financial report after
consideration of the following factors:
•
•
•
The consolidated entity is currently
exploring sales opportunities with
various potential customers across the
Government and Private sectors;
Following a successful capital raising in
December 2022 of $2.2 million and the
short-term debt
arrangement of
facilities
the
consolidated entity has available cash
as at 30 June 2023 of $3.2 million. A
further $2 million cash has been
collected during July 2023.
If necessary, the Company will consider
additional capital
raising activities
through the issue of new share capital.
$1.5 million,
of
(b) New
or
Accounting
amended
Standards and Interpretations adopted
The consolidated entity has adopted all of
the new or amended Accounting Standards
and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that
are mandatory for the current reporting
period.
Any new or amended Accounting Standards
or Interpretations that are not yet
mandatory have not been early adopted.
(c) Basis of preparation
These general purpose financial statements
have been prepared in accordance with
Australian Accounting Standards and
issued by the Australian
Interpretations
Accounting Standards Board ('AASB') and
the Corporations Act 2001, as appropriate
for
for-profit oriented entities. These
financial statements also comply with
International Financial Reporting Standards
as issued by the International Accounting
Standards Board ('IASB').
Historical cost convention
under
historical
financial statements have been
The
prepared
cost
the
convention, except for, where applicable, the
revaluation of financial assets and liabilities
at fair value through profit or loss, financial
through other
value
assets at
comprehensive
investment
income,
properties, certain classes of property, plant
and equipment and derivative financial
instruments.
fair
Critical accounting estimates
It also
The preparation of the financial statements
the use of certain critical
requires
requires
accounting estimates.
management to exercise its judgement in the
process of applying the consolidated entity's
accounting policies. The areas involving a
higher degree of judgement or complexity, or
areas where assumptions and estimates are
significant to the financial statements, are
disclosed in note 2.
(d) Parent company information
In accordance with the Corporations Act
2001, these financial statements present the
results of the consolidated entity only.
Supplementary information about the parent
entity is disclosed in note 32.
(e) Principles of consolidation
The consolidated
financial statements
incorporate the assets and liabilities of all
subsidiaries of archTIS Limited ('company'
or 'parent entity') as at 30 June 2023 and the
results of all subsidiaries for the year then
ended. archTIS Limited and its subsidiaries
together are referred to in these financial
statements the 'consolidated entity'.
Subsidiaries are all those entities over which
the consolidated entity has control. The
consolidated entity controls an entity when
the consolidated entity is exposed to, or has
to,
from
returns
variable
its
rights
involvement with the entity and has the
ability to affect those returns through its
power to direct the activities of the entity.
Subsidiaries are fully consolidated from the
date on which control is transferred to the
consolidated
de-
consolidated from the date that control
ceases.
entity.
They
are
in
Intercompany transactions, balances and
unrealised gains on transactions between
the consolidated entity are
entities
eliminated. Unrealised
losses are also
eliminated unless the transaction provides
evidence of the impairment of the asset
transferred.
of
Accounting
subsidiaries have been changed where
necessary to ensure consistency with the
policies adopted by the consolidated entity.
policies
The acquisition of subsidiaries is accounted
for using
the acquisition method of
accounting. A change in ownership interest,
without the loss of control, is accounted for
as an equity
the
difference between
the consideration
transferred and the book value of the share
of the non-controlling interest acquired is
recognised directly in equity attributable to
the parent.
transaction, where
Non-controlling interest in the results and
equity of subsidiaries are shown separately
in the statement of profit or loss and other
comprehensive
statement of
income,
financial position and statement of changes
in equity of the consolidated entity. Losses
incurred by the consolidated entity are
attributed to the non-controlling interest in
full, even if that results in a deficit balance.
Where the consolidated entity loses control
over a subsidiary, it derecognises the assets
including goodwill,
liabilities and non-
controlling interest in the subsidiary together
with any cumulative translation differences
recognised in equity. The consolidated entity
recognises the fair value of the consideration
received and the fair value of any investment
retained together with any gain or loss in
profit or loss.
(f) Foreign currency translation
The financial statements are presented in
Australian dollars, which is archTIS Limited's
functional and presentation currency.
ANNUAL REPORT 2023
34
28
2
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Note 1. Significant Accounting Policies
The principal accounting policies adopted in
(c) Basis of preparation
the preparation of the financial statements
are set out below. These policies have been
consistently applied
to all
the years
presented, unless otherwise stated.
(a) Going concern
The
financial statements have been
prepared on the going concern basis, which
contemplates continuity of normal business
activities and the realisation of assets and
discharge of liabilities in the normal course
of business.
The consolidated entity incurred a loss after
tax of $8,237,955 (2022 $9,445,288) and had
net operating cash outflows of $4,955,907
(2022: $10,569,518). The entity has prepared
a cash flow forecast which indicates that the
entity has sufficient cash to meet its debts
as and when they fall due and payable.
The Directors believe that it is reasonably
foreseeable that the consolidated entity will
continue as a going concern and that it is
appropriate to adopt the going concern basis
in the preparation of the financial report after
consideration of the following factors:
These general purpose financial statements
have been prepared in accordance with
Australian Accounting Standards and
Interpretations
issued by the Australian
Accounting Standards Board ('AASB') and
the Corporations Act 2001, as appropriate
for
for-profit oriented entities. These
financial statements also comply with
rights
to,
variable
returns
from
its
involvement with the entity and has the
ability to affect those returns through its
power to direct the activities of the entity.
Subsidiaries are fully consolidated from the
date on which control is transferred to the
consolidated
entity.
They
are
de-
consolidated from the date that control
ceases.
International Financial Reporting Standards
Intercompany transactions, balances and
as issued by the International Accounting
unrealised gains on transactions between
Standards Board ('IASB').
Historical cost convention
entities
in
the consolidated entity are
eliminated. Unrealised
losses are also
eliminated unless the transaction provides
The
financial statements have been
evidence of the impairment of the asset
prepared
under
the
historical
cost
transferred.
Accounting
policies
of
convention, except for, where applicable, the
subsidiaries have been changed where
revaluation of financial assets and liabilities
necessary to ensure consistency with the
at fair value through profit or loss, financial
policies adopted by the consolidated entity.
assets at
fair
value
through other
comprehensive
income,
investment
properties, certain classes of property, plant
and equipment and derivative financial
instruments.
Critical accounting estimates
The preparation of the financial statements
requires
the use of certain critical
•
•
The consolidated entity is currently
accounting estimates.
It also
requires
exploring sales opportunities with
management to exercise its judgement in the
various potential customers across the
process of applying the consolidated entity's
Government and Private sectors;
accounting policies. The areas involving a
Following a successful capital raising in
higher degree of judgement or complexity, or
December 2022 of $2.2 million and the
areas where assumptions and estimates are
arrangement of
short-term debt
significant to the financial statements, are
facilities
of
$1.5 million,
the
disclosed in note 2.
(b) New
or
amended
Accounting
Standards and Interpretations adopted
(e) Principles of consolidation
consolidated entity has available cash
as at 30 June 2023 of $3.2 million. A
further $2 million cash has been
collected during July 2023.
•
If necessary, the Company will consider
additional capital
raising activities
through the issue of new share capital.
The consolidated entity has adopted all of
the new or amended Accounting Standards
and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that
are mandatory for the current reporting
period.
Any new or amended Accounting Standards
or Interpretations that are not yet
mandatory have not been early adopted.
results of the consolidated entity only.
Supplementary information about the parent
entity is disclosed in note 32.
The consolidated
financial statements
incorporate the assets and liabilities of all
subsidiaries of archTIS Limited ('company'
or 'parent entity') as at 30 June 2023 and the
results of all subsidiaries for the year then
ended. archTIS Limited and its subsidiaries
together are referred to in these financial
statements the 'consolidated entity'.
Subsidiaries are all those entities over which
the consolidated entity has control. The
consolidated entity controls an entity when
the consolidated entity is exposed to, or has
The acquisition of subsidiaries is accounted
for using
the acquisition method of
accounting. A change in ownership interest,
without the loss of control, is accounted for
as an equity
transaction, where
the
difference between
the consideration
transferred and the book value of the share
of the non-controlling interest acquired is
recognised directly in equity attributable to
the parent.
Non-controlling interest in the results and
equity of subsidiaries are shown separately
in the statement of profit or loss and other
comprehensive
income,
statement of
financial position and statement of changes
in equity of the consolidated entity. Losses
incurred by the consolidated entity are
Where the consolidated entity loses control
over a subsidiary, it derecognises the assets
including goodwill,
liabilities and non-
controlling interest in the subsidiary together
with any cumulative translation differences
recognised in equity. The consolidated entity
recognises the fair value of the consideration
received and the fair value of any investment
retained together with any gain or loss in
profit or loss.
(f) Foreign currency translation
The financial statements are presented in
Australian dollars, which is archTIS Limited's
functional and presentation currency.
(d) Parent company information
In accordance with the Corporations Act
attributed to the non-controlling interest in
2001, these financial statements present the
full, even if that results in a deficit balance.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Note 1. Significant Accounting Policies
Foreign currency transactions
the dates of
Foreign currency transactions are translated
into Australian dollars using the exchange
rates prevailing at
the
transactions. Foreign exchange gains and
losses resulting from the settlement of such
transactions and from the translation at
financial year-end exchange
rates of
monetary assets and liabilities denominated
in foreign currencies are recognised in profit
or loss.
Foreign operations
liabilities of
The assets and
foreign
operations are translated into Australian
dollars using the exchange rates at the
reporting date. The revenues and expenses
of foreign operations are translated into
Australian dollars using
the average
exchange rates, which approximate the rates
at the dates of the transactions, for the
foreign exchange
period. All
differences are
in other
comprehensive income through the foreign
currency reserve in equity.
recognised
resulting
The foreign currency reserve is recognised in
profit or loss when the foreign operation or
net investment is disposed of.
(g) Revenue recognition
The consolidated entity recognises revenue
as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that
reflects the consideration to which the
consolidated entity is expected to be entitled
in exchange for transferring goods or
services to a customer. For each contract
with a customer, the consolidated entity:
identifies the contract with a customer;
identifies the performance obligations in the
contract; determines the transaction price
which takes
into account estimates of
variable consideration and the time value of
money; allocates the transaction price to the
separate performance obligations on the
basis of the relative stand-alone selling price
of each distinct good or service to be
delivered; and recognises revenue when or
as each performance obligation is satisfied
in a manner that depicts the transfer to the
customer of the goods or services promised.
Variable consideration within the transaction
price, if any, reflects concessions provided to
the customer such as discounts, rebates and
refunds, any potential bonuses receivable
from the customer and any other contingent
is subject
events. Such estimates are determined
using either the 'expected value' or 'most
likely amount' method. The measurement of
variable consideration
to a
constraining principle whereby revenue will
only be recognised to the extent that it is
highly probable that a significant reversal in
revenue
the
recognised will not occur. The measurement
constraint continues until the uncertainty
associated with the variable consideration is
subsequently resolved. Amounts received
that are subject to the constraining principle
are recognised as a refund liability.
amount of
cumulative
Sale of goods
from
the sale of goods
is
Revenue
recognised at the point in time when the
customer obtains control of the goods,
which is generally at the time of delivery.
Rendering of services
Revenue from a contract to provide services
is recognised over time as the services are
rendered based on either a fixed price or an
hourly rate.
Interest
Interest revenue is recognised as interest
accrues using the effective interest method.
This is a method of calculating the amortised
cost of a financial asset and allocating the
interest income over the relevant period
using the effective interest rate, which is the
rate that exactly discounts estimated future
cash receipts through the expected life of the
financial asset to the net carrying amount of
the financial asset.
Other revenue
Other revenue is recognised when it is
received or when the right to receive
payment is established.
(h) Government grants
Government grants relating to costs are
deferred and recognised in profit or loss over
the period necessary to match them with the
costs that they are intended to compensate.
(i)
Income tax
The income tax expense or benefit for the
period is the tax payable on that period's
taxable income based on the applicable
income
jurisdiction,
rate for each
adjusted by the changes in deferred tax
assets and
to
temporary differences, unused tax losses
liabilities attributable
tax
and the adjustment recognised for prior
periods, where applicable.
Deferred tax assets and
liabilities are
recognised for temporary differences at the
tax rates expected to be applied when the
assets are recovered or liabilities are settled,
based on those tax rates that are enacted or
substantively enacted, except for:
the
from
arises
• When the deferred income tax asset or
liability
initial
recognition of goodwill or an asset or
liability in a transaction that is not a
business combination and that, at the
time of the transaction, affects neither
the accounting nor taxable profits; or
interests
• When the taxable temporary difference
in
is associated with
subsidiaries,
joint
ventures, and the timing of the reversal
can be controlled and it is probable that
temporary difference will not
the
reverse in the foreseeable future.
associates or
Deferred tax assets are recognised for
deductible
temporary differences and
unused tax losses only if it is probable that
future taxable amounts will be available to
utilise those temporary differences and
losses.
The carrying amount of recognised and
unrecognised deferred
tax assets are
reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent
that it is no longer probable that future
taxable profits will be available for the
carrying amount to be recovered. Previously
unrecognised deferred
tax assets are
recognised to the extent that it is probable
that there are future taxable profits available
to recover the asset.
Deferred tax assets and liabilities are offset
only where there is a legally enforceable right
to offset current tax assets against current
tax liabilities and deferred tax assets against
deferred tax liabilities; and they relate to the
same taxable authority on either the same
taxable entity or different taxable entities
which intend to settle simultaneously.
archTIS Limited (the 'head entity') and its
wholly-owned Australian subsidiaries have
formed an income tax consolidated group
under the tax consolidation regime. The
head entity and each subsidiary in the tax
consolidated group continue to account for
their own current and deferred tax amounts.
The tax consolidated group has applied the
'separate taxpayer within group' approach in
determining the appropriate amount of taxes
28
2
ANNUAL REPORT 2023
35
29
2
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Note 1. Significant Accounting Policies
to allocate
consolidated group.
to members of
the
tax
(l) Trade and other receivables
In addition to its own current and deferred
tax amounts, the head entity also recognises
the current tax liabilities (or assets) and the
deferred tax assets arising from unused tax
losses and unused tax credits assumed from
each subsidiary in the tax consolidated
group.
(j) Current and non-current classification
Assets and liabilities are presented in the
statement of financial position based on
current and non-current 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.
(k) Cash and cash equivalents
Cash and cash equivalents includes cash on
hand, deposits held at call with financial
institutions, other short-term, highly liquid
investments with original maturities of three
months or less that are readily convertible to
known amounts of cash and which are
subject to an insignificant risk of changes in
value. For the statement of cash flows
presentation purposes, cash and cash
equivalents also includes bank overdrafts,
which are shown within borrowings
in
current
the statement of
financial position.
liabilities on
Trade receivables are initially recognised at
fair value and subsequently measured at
amortised cost using the effective interest
method, less any allowance for expected
credit
receivables are
generally due for settlement within 30 days.
losses. Trade
The consolidated entity has applied the
simplified approach to measuring expected
credit losses, which uses a lifetime expected
loss allowance. To measure the expected
credit losses, trade receivables have been
grouped based on days overdue.
receivables are
Other
amortised cost,
expected credit losses.
recognised at
less any allowance for
Where there has not been a significant
increase in exposure to credit risk since
initial recognition, a 12-month expected
credit loss allowance is estimated. This
represents a portion of the asset's lifetime
expected credit losses that is attributable to
a default event that is possible within the
next 12 months. Where a financial asset has
become credit
is
determined that credit risk has increased
significantly, the loss allowance is based on
the asset's lifetime expected credit losses.
The amount of expected credit
loss
recognised is measured on the basis of the
probability weighted present value of
anticipated cash shortfalls over the life of the
the original
instrument discounted at
effective interest rate.
impaired or where
it
(m) Investments and other financial assets
Investments and other financial assets are
initially measured at fair value. Transaction
costs are included as part of the initial
measurement, except for financial assets at
fair value through profit or loss. Such assets
are subsequently measured at either
amortised cost or fair value depending on
their
is
determined based on both the business
model within which such assets are held and
the contractual cash flow characteristics of
the financial asset unless an accounting
mismatch is being avoided.
classification. Classification
Financial assets are derecognised when the
rights to receive cash flows have expired or
have been transferred and the consolidated
entity has transferred substantially all the
risks and rewards of ownership. When there
is no reasonable expectation of recovering
part or all of a financial asset, it's carrying
value is written off.
Impairment of financial assets
The consolidated entity recognises a loss
allowance for expected credit losses on
financial assets which are either measured
at amortised cost or fair value through other
comprehensive income. The measurement
of the loss allowance depends upon the
consolidated entity's assessment at the end
of each reporting period as to whether the
risk has
instrument's credit
financial
increased
initial
significantly
recognition, based on
reasonable and
supportable information that is available,
without undue cost or effort to obtain.
since
(n) Property, plant and equipment
Plant and equipment is stated at historical
cost less accumulated depreciation and
impairment. Historical
includes
expenditure that is directly attributable to the
acquisition of the items.
cost
Depreciation is calculated on a straight-line
basis to write off the net cost of each item of
property, plant and equipment over their
expected useful lives as follows:
Leasehold
improvements
Office furniture &
equipment
Computer equipment
Term of lease
2-5 years
2-4 years
residual values, useful
The
lives and
depreciation methods are reviewed, and
adjusted if appropriate, at each reporting
date.
Leasehold improvements are depreciated
over the unexpired period of the lease or the
estimated useful
the assets,
whichever is shorter.
life of
future economic benefit
An item of property, plant and equipment is
derecognised upon disposal or when there is
the
no
consolidated entity. Gains and
losses
between the carrying amount and the
disposal proceeds are taken to profit or loss.
Any revaluation surplus reserve relating to
the item disposed of is transferred directly to
retained profits.
to
(o) Right-of-use assets
A right-of-use asset is recognised at the
commencement date of a lease. The right-of-
is measured at cost, which
use asset
comprises the initial amount of the lease
ANNUAL REPORT 2023
36
30
2
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Note 1. Significant Accounting Policies
to allocate
to members of
the
tax
(l) Trade and other receivables
consolidated group.
Trade receivables are initially recognised at
In addition to its own current and deferred
fair value and subsequently measured at
tax amounts, the head entity also recognises
amortised cost using the effective interest
the current tax liabilities (or assets) and the
method, less any allowance for expected
deferred tax assets arising from unused tax
credit
losses. Trade
receivables are
losses and unused tax credits assumed from
generally due for settlement within 30 days.
each subsidiary in the tax consolidated
group.
(j) Current and non-current classification
credit losses, which uses a lifetime expected
Assets and liabilities are presented in the
statement of financial position based on
current and non-current 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
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.
The consolidated entity has applied the
simplified approach to measuring expected
loss allowance. To measure the expected
credit losses, trade receivables have been
grouped based on days overdue.
Other
receivables are
recognised at
amortised cost,
less any allowance for
expected credit losses.
Investments and other financial assets are
initially measured at fair value. Transaction
costs are included as part of the initial
measurement, except for financial assets at
fair value through profit or loss. Such assets
are subsequently measured at either
amortised cost or fair value depending on
primarily for the purpose of trading; it is
(m) Investments and other financial assets
Where there has not been a significant
increase in exposure to credit risk since
initial recognition, a 12-month expected
credit loss allowance is estimated. This
represents a portion of the asset's lifetime
expected credit losses that is attributable to
a default event that is possible within the
next 12 months. Where a financial asset has
become credit
impaired or where
it
is
determined that credit risk has increased
significantly, the loss allowance is based on
the asset's lifetime expected credit losses.
The amount of expected credit
loss
recognised is measured on the basis of the
probability weighted present value of
anticipated cash shortfalls over the life of the
instrument discounted at
the original
effective interest rate.
(n) Property, plant and equipment
Plant and equipment is stated at historical
cost less accumulated depreciation and
impairment. Historical
cost
includes
expenditure that is directly attributable to the
acquisition of the items.
Depreciation is calculated on a straight-line
basis to write off the net cost of each item of
property, plant and equipment over their
expected useful lives as follows:
Term of lease
Leasehold
improvements
equipment
cycle;
trading;
•
•
•
•
A liability is classified as current when:
their
classification. Classification
is
it is either expected to be settled in the
determined based on both the business
consolidated entity's normal operating
model within which such assets are held and
the contractual cash flow characteristics of
it is held primarily for the purpose of
the financial asset unless an accounting
Office furniture &
2-5 years
mismatch is being avoided.
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.
Financial assets are derecognised when the
rights to receive cash flows have expired or
have been transferred and the consolidated
Computer equipment
2-4 years
The
residual values, useful
lives and
depreciation methods are reviewed, and
entity has transferred substantially all the
adjusted if appropriate, at each reporting
risks and rewards of ownership. When there
date.
All other liabilities are classified as non-
is no reasonable expectation of recovering
current.
Deferred tax assets and liabilities are always
classified as non-current.
(k) Cash and cash equivalents
Cash and cash equivalents includes cash on
hand, deposits held at call with financial
institutions, other short-term, highly liquid
investments with original maturities of three
months or less that are readily convertible to
known amounts of cash and which are
subject to an insignificant risk of changes in
value. For the statement of cash flows
presentation purposes, cash and cash
equivalents also includes bank overdrafts,
which are shown within borrowings
in
current
liabilities on
the statement of
financial position.
part or all of a financial asset, it's carrying
value is written off.
Impairment of financial assets
The consolidated entity recognises a loss
allowance for expected credit losses on
financial assets which are either measured
at amortised cost or fair value through other
comprehensive income. The measurement
of the loss allowance depends upon the
consolidated entity's assessment at the end
of each reporting period as to whether the
financial
instrument's credit
risk has
increased
significantly
since
initial
recognition, based on
reasonable and
supportable information that is available,
without undue cost or effort to obtain.
Leasehold improvements are depreciated
over the unexpired period of the lease or the
estimated useful
life of
the assets,
whichever is shorter.
An item of property, plant and equipment is
derecognised upon disposal or when there is
no
future economic benefit
to
the
consolidated entity. Gains and
losses
between the carrying amount and the
disposal proceeds are taken to profit or loss.
Any revaluation surplus reserve relating to
the item disposed of is transferred directly to
retained profits.
(o) Right-of-use assets
A right-of-use asset is recognised at the
commencement date of a lease. The right-of-
use asset
is measured at cost, which
comprises the initial amount of the lease
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Note 1. Significant Accounting Policies
liability, adjusted for, as applicable, any lease
payments made at or before
the
lease
commencement date net of any
incentives received, any initial direct costs
incurred, and, except where included in the
cost of inventories, an estimate of costs
expected to be incurred for dismantling and
removing the underlying asset, and restoring
the site or asset.
Right-of-use assets are depreciated on a
straight-line basis over the unexpired period
of the lease or the estimated useful life of the
asset, whichever is the shorter. Where the
consolidated entity expects
to obtain
ownership of the leased asset at the end of
the lease term, the depreciation is over its
estimated useful life. Right-of use assets are
subject to impairment or adjusted for any
remeasurement of lease liabilities.
a
asset
The consolidated entity has elected not to
and
right-of-use
recognise
corresponding lease liability for short-term
leases with terms of 12 months or less and
leases of low-value assets. Lease payments
on these assets are expensed to profit or
loss as incurred.
(p)
Intangible assets
Intangible assets acquired as part of a
business combination, other than goodwill,
are initially measured at their fair value at the
date of the acquisition. Intangible assets
acquired separately are initially recognised
at cost. Indefinite life intangible assets are
not amortised and are subsequently
measured at cost less any impairment. Finite
life
intangible assets are subsequently
measured at cost less amortisation and any
impairment. The gains or losses recognised
in profit or
the
derecognition of
intangible assets are
measured as the difference between net
disposal proceeds and the carrying amount
of the intangible asset. The method and
useful lives of finite life intangible assets are
reviewed annually. Changes in the expected
pattern of consumption or useful life are
accounted for prospectively by changing the
amortisation method or period.
loss arising
from
Goodwill
Goodwill arises on the acquisition of a
business. Goodwill is not amortised. Instead,
goodwill is tested annually for impairment, or
more frequently if events or changes in
circumstances indicate that it might be
less
impaired, and
losses.
accumulated
Impairment losses on goodwill are taken to
is carried at cost
impairment
profit or loss and are not subsequently
reversed.
Research and development
basis over the period of their expected
benefit, being their finite life of between 3 to
5 years.
Research costs are expensed in the period in
which they are incurred. Development costs
are capitalised when it is probable that the
project will be a success considering its
commercial and technical feasibility; the
consolidated entity is able to use or sell the
asset; the consolidated entity has sufficient
the
resources and
development; and its costs can be measured
reliably. Capitalised development costs are
amortised on a straight-line basis over the
period of their expected benefit, being their
finite life of 5 years.
to complete
intent
Research and development tax incentive
The Research and Development Tax
Incentive (RDTI) is a refundable tax offset
that is calculated as 43.5% of the eligible
research and development expenditure that
has been incurred by the consolidated entity.
The Directors consider any payment arising
from the RDTI to be a form of government
assistance and are of the view that it is
appropriate to recognise RDTI receipts as
in accordance with
Government Grants
AASB120 Accounting
for Government
Grants and Disclosure of Government
Assistance.
As such, RTDI refunds are recognised when
there is a sufficient degree of certainty that
the consolidated entity will comply with the
conditions attaching to RDTI and that the
payment will be received. Such refunds are
recognised in the Statement of profit and
loss and other comprehensive income on a
systematic basis over the periods in which
the consolidated entity
the
related costs for which the assistance is
intended to compensate. The proportion of
to capitalised
the
development
the
carrying amount of the related non-current
assets.
is deducted against
recognises
relates
refund
that
Patents and trademarks
Significant costs associated with patents
and trademarks are deferred and amortised
on a straight-line basis over the period of
their expected benefit, being their finite life of
10 years.
Customer contracts
Customer contracts acquired in a business
combination are amortised on a straight-line
Software
Significant costs associated with software
are deferred and amortised on a straight-line
basis over the period of their expected
benefit, being their finite life of between 3 to
5 years.
(q)
Impairment of non-financial assets
Goodwill and other intangible assets that
have an indefinite useful life are not subject
to amortisation and are tested annually for
impairment, or more frequently if events or
changes in circumstances indicate that they
impaired. Other non-financial
might be
impairment
assets are
for
whenever
in
circumstances indicate that the carrying
recoverable. An
amount may not be
impairment
is recognised for the
amount by which the asset's carrying
amount exceeds its recoverable amount.
reviewed
changes
events
loss
or
Recoverable amount is the higher of an
asset's fair value less costs of disposal and
value-in-use. The value-in-use is the present
value of the estimated future cash flows
relating to the asset using a pre-tax discount
rate specific to the asset or cash-generating
unit to which the asset belongs. Assets that
do not have independent cash flows are
grouped together to form a cash-generating
unit.
(r) Trade and other payables
liabilities for
These amounts represent
the
to
goods and services provided
consolidated entity prior to the end of the
financial year and which are unpaid. Due to
their short-term nature they are measured at
amortised cost and are not discounted. The
amounts are unsecured and are usually paid
within 30 days of recognition.
(s) Lease liabilities
is
lease
liability
recognised at
the
A
commencement date of a lease. The lease
liability is initially recognised at the present
value of the lease payments to be made over
the term of the lease, discounted using the
interest rate implicit in the lease or, if that
rate cannot be readily determined, the
consolidated entity's incremental borrowing
rate. Lease payments comprise of fixed
payments
incentives
receivable, variable lease payments that
less any
lease
30
2
ANNUAL REPORT 2023
37
31
2
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Note 1. Significant Accounting Policies
depend on an index or a rate, amounts
expected to be paid under residual value
guarantees, exercise price of a purchase
option when the exercise of the option is
reasonably certain
to occur, and any
anticipated
termination penalties. The
variable lease payments that do not depend
on an index or a rate are expensed in the
period in which they are incurred.
Lease liabilities are measured at amortised
cost using the effective interest method. The
carrying amounts are remeasured if there is
a change in the following: future lease
payments arising from a change in an index
or a rate used; residual guarantee; lease
term; certainty of a purchase option and
termination penalties. When a lease liability
is remeasured, an adjustment is made to the
corresponding right-of use asset, or to profit
or loss if the carrying amount of the right-of-
use asset is fully written down.
(t) Borrowings
the
are
and
borrowings
fair value of
initially
Loans
the
recognised at
consideration received, net of transaction
costs. They are subsequently measured at
amortised cost using the effective interest
method.
(u) Finance costs
(w) Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including
non-monetary benefits, annual leave and
long service leave expected to be settled
wholly within 12 months of the reporting date
are measured at the amounts expected to be
paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service
leave not expected to be settled within 12
months of the reporting date are measured
at the present value of expected future
payments to be made in respect of services
provided by employees up to the reporting
date using the projected unit credit method.
Consideration is given to expected future
wage and salary
levels, experience of
employee departures and periods of service.
Expected future payments are discounted
using market yields at the reporting date on
corporate bonds with terms to maturity and
currency that match, as closely as possible,
the estimated future cash outflows.
Defined contribution superannuation
expense
Contributions
contribution
to defined
superannuation plans are expensed in the
period in which they are incurred.
Finance costs attributable to qualifying
assets are capitalised as part of the asset.
All other finance costs are expensed in the
period in which they are incurred.
Share-based payments
Equity-settled and cash-settled share-based
compensation benefits are provided to
employees.
(v) Provisions
recognised when
the
Provisions are
consolidated entity has a present (legal or
constructive) obligation as a result of a past
event, it is probable the consolidated entity
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
risks and uncertainties
surrounding the obligation. If the time value
of money
is material, provisions are
discounted using a current pre-tax rate
specific to the liability. The increase in the
provision resulting from the passage of time
is recognised as a finance cost.
the
Equity-settled transactions are awards of
shares, or options over shares, that are
provided to employees in exchange for the
rendering
Cash-settled
transactions are awards of cash for the
exchange of services, where the amount of
cash is determined by reference to the share
price.
services.
of
The cost of equity-settled transactions are
measured at fair value on grant date. Fair
value is independently determined using
either the Binomial or Black-Scholes option
pricing model that takes into account the
exercise price, the term of the option, the
impact of dilution, the share price at grant
date and expected price volatility of the
underlying share, the expected dividend yield
and the risk free interest rate for the term of
the option,
together with non-vesting
conditions that do not determine whether the
consolidated entity receives the services
that entitle
receive
the employees
payment. No account is taken of any other
vesting conditions.
to
The cost of equity-settled transactions are
recognised as an expense with a
corresponding increase in equity over the
vesting period. The cumulative charge to
profit or loss is calculated based on the grant
date fair value of the award, the best
estimate of the number of awards that are
likely to vest and the expired portion of the
vesting period. The amount recognised in
profit or loss for the period is the cumulative
amount calculated at each reporting date
less amounts already recognised in previous
periods.
pricing model,
The cost of cash-settled transactions is
initially, and at each reporting date until
vested, determined by applying the Binomial
option
into
consideration the terms and conditions on
which
the award was granted. The
cumulative charge to profit or loss until
settlement of the liability is calculated as
follows:
taking
•
•
during the vesting period, the liability at
each reporting date is the fair value of
the award at that date multiplied by the
expired portion of the vesting period.
from the end of the vesting period until
settlement of the award, the liability is
the full fair value of the liability at the
reporting date.
All changes in the liability are recognised in
profit or loss. The ultimate cost of cash-
settled transactions is the cash paid to settle
the liability.
are
taken
conditions
into
Market
consideration
in determining fair value.
Therefore, any awards subject to market
vest
conditions
irrespective of whether or not that market
condition has been met, provided all other
conditions are satisfied.
considered
are
to
If equity-settled awards are modified, as a
minimum an expense is recognised as if the
modification has not been made. An
additional expense is recognised, over the
remaining
any
modification that increases the total fair
value of the share-based compensation
benefit as at the date of modification.
vesting
period,
for
If the non-vesting condition is within the
the consolidated entity or
control of
employee, the failure to satisfy the condition
ANNUAL REPORT 2023
38
32
2
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Note 1. Significant Accounting Policies
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Note 1. Significant Accounting Policies
depend on an index or a rate, amounts
(w) Employee benefits
expected to be paid under residual value
guarantees, exercise price of a purchase
option when the exercise of the option is
reasonably certain
to occur, and any
anticipated
termination penalties. The
variable lease payments that do not depend
on an index or a rate are expensed in the
period in which they are incurred.
Lease liabilities are measured at amortised
cost using the effective interest method. The
carrying amounts are remeasured if there is
a change in the following: future lease
payments arising from a change in an index
or a rate used; residual guarantee; lease
term; certainty of a purchase option and
termination penalties. When a lease liability
is remeasured, an adjustment is made to the
corresponding right-of use asset, or to profit
or loss if the carrying amount of the right-of-
use asset is fully written down.
(t) Borrowings
that entitle
the employees
to
receive
payment. No account is taken of any other
Short-term employee benefits
vesting conditions.
Liabilities for wages and salaries, including
non-monetary benefits, annual leave and
long service leave expected to be settled
wholly within 12 months of the reporting date
are measured at the amounts expected to be
paid when the liabilities are settled.
Other long-term employee benefits
The cost of equity-settled transactions are
recognised as an expense with a
corresponding increase in equity over the
vesting period. The cumulative charge to
profit or loss is calculated based on the grant
date fair value of the award, the best
estimate of the number of awards that are
likely to vest and the expired portion of the
The liability for annual leave and long service
vesting period. The amount recognised in
leave not expected to be settled within 12
profit or loss for the period is the cumulative
months of the reporting date are measured
amount calculated at each reporting date
at the present value of expected future
less amounts already recognised in previous
payments to be made in respect of services
periods.
provided by employees up to the reporting
date using the projected unit credit method.
Consideration is given to expected future
wage and salary
levels, experience of
employee departures and periods of service.
Expected future payments are discounted
using market yields at the reporting date on
corporate bonds with terms to maturity and
The cost of cash-settled transactions is
initially, and at each reporting date until
vested, determined by applying the Binomial
option
pricing model,
taking
into
consideration the terms and conditions on
which
the award was granted. The
cumulative charge to profit or loss until
settlement of the liability is calculated as
Defined contribution superannuation
•
during the vesting period, the liability at
Loans
and
borrowings
are
initially
currency that match, as closely as possible,
recognised at
the
fair value of
the
the estimated future cash outflows.
follows:
consideration received, net of transaction
costs. They are subsequently measured at
amortised cost using the effective interest
expense
method.
Contributions
to defined
contribution
superannuation plans are expensed in the
period in which they are incurred.
(u) Finance costs
Finance costs attributable to qualifying
assets are capitalised as part of the asset.
All other finance costs are expensed in the
period in which they are incurred.
Share-based payments
Equity-settled and cash-settled share-based
compensation benefits are provided to
employees.
each reporting date is the fair value of
the award at that date multiplied by the
expired portion of the vesting period.
•
from the end of the vesting period until
settlement of the award, the liability is
the full fair value of the liability at the
reporting date.
All changes in the liability are recognised in
profit or loss. The ultimate cost of cash-
(v) Provisions
Provisions are
recognised when
the
consolidated entity has a present (legal or
constructive) obligation as a result of a past
event, it is probable the consolidated entity
will be required to settle the obligation, and a
reliable estimate can be made of the amount
of the obligation. The amount recognised as
a provision is the best estimate of the
consideration required to settle the present
obligation at the reporting date, taking into
account
the
risks and uncertainties
surrounding the obligation. If the time value
of money
is material, provisions are
discounted using a current pre-tax rate
specific to the liability. The increase in the
provision resulting from the passage of time
is recognised as a finance cost.
Equity-settled transactions are awards of
settled transactions is the cash paid to settle
shares, or options over shares, that are
the liability.
provided to employees in exchange for the
rendering
of
services.
Cash-settled
transactions are awards of cash for the
exchange of services, where the amount of
cash is determined by reference to the share
price.
Market
conditions
are
taken
into
consideration
in determining fair value.
Therefore, any awards subject to market
conditions
are
considered
to
vest
irrespective of whether or not that market
condition has been met, provided all other
The cost of equity-settled transactions are
conditions are satisfied.
measured at fair value on grant date. Fair
value is independently determined using
either the Binomial or Black-Scholes option
pricing model that takes into account the
exercise price, the term of the option, the
impact of dilution, the share price at grant
date and expected price volatility of the
underlying share, the expected dividend yield
and the risk free interest rate for the term of
the option,
together with non-vesting
conditions that do not determine whether the
consolidated entity receives the services
If equity-settled awards are modified, as a
minimum an expense is recognised as if the
modification has not been made. An
additional expense is recognised, over the
remaining
vesting
period,
for
any
modification that increases the total fair
value of the share-based compensation
benefit as at the date of modification.
If the non-vesting condition is within the
control of
the consolidated entity or
employee, the failure to satisfy the condition
is treated as a cancellation. If the condition
is not within the control of the consolidated
entity or employee and is not satisfied during
the vesting period, any remaining expense
for the award
is recognised over the
remaining vesting period, unless the award is
forfeited.
If equity-settled awards are cancelled, it is
treated as if it has vested on the date of
cancellation, and any remaining expense is
recognised
new
replacement award is substituted for the
cancelled award, the cancelled and new
award
they were a
modification.
immediately.
treated as
is
If
if
a
(x) Fair value measurement
When an asset or liability, financial or non-
financial,
is measured at fair value for
recognition or disclosure purposes, the fair
value is based on 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; and assumes that the transaction will
take place either: in the principal market; or
in the absence of a principal market, in the
most advantageous market.
value
is measured using
Fair
the
assumptions that market participants would
use when pricing the asset or
liability,
assuming they act in their economic best
interests. For non-financial assets, the fair
value measurement is based on its highest
and best use. Valuation techniques that are
appropriate in the circumstances and for
which sufficient data are available
to
measure fair value, are used, maximising the
inputs and
use of relevant observable
minimising the use of unobservable inputs.
the
inputs used
Assets and liabilities measured at fair value
are classified into three levels, using a fair
value hierarchy that reflects the significance
of
the
measurements. Classifications are reviewed
at each reporting date and transfers between
levels are determined based on a
reassessment of the lowest level of input
that
fair value
measurement.
is significant
in making
the
to
For recurring and non-recurring fair value
measurements, external valuers may be
used when internal expertise is either not
available or when the valuation is deemed to
be significant. External valuers are selected
based on market knowledge and reputation.
Where there is a significant change in fair
value of an asset or liability from one period
to another, an analysis is undertaken, which
includes a verification of the major inputs
latest valuation and a
applied
comparison, where applicable, with external
sources of data.
the
in
(y)
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the
issue of new shares or options are shown in
equity as a deduction, net of tax, from the
proceeds.
(z) Dividends
Dividends are recognised when declared
during the financial year and no longer at the
discretion of the company.
(aa) Business combinations
The acquisition method of accounting is
used to account for business combinations
regardless of whether equity instruments or
other assets are acquired.
The consideration transferred is the sum of
the acquisition-date fair values of the assets
transferred, equity instruments issued or
liabilities incurred by the acquirer to former
owners of the acquiree and the amount of
any non-controlling interest in the acquiree.
For each business combination, the non-
controlling
is
measured at either fair value or at the
the acquiree's
proportionate share of
identifiable net assets. All acquisition costs
are expensed as incurred to profit or loss.
the acquiree
interest
in
On the acquisition of a business, the
consolidated entity assesses the financial
assets acquired and liabilities assumed for
appropriate classification and designation in
accordance with the contractual terms,
economic conditions,
the consolidated
entity's operating or accounting policies and
other pertinent conditions in existence at the
acquisition-date.
the
Where the business combination is achieved
entity
stages,
in
consolidated
remeasures
its previously held equity
interest in the acquiree at the acquisition-
date fair value and the difference between
the fair value and the previous carrying
amount is recognised in profit or loss.
the acquirer
Contingent consideration to be transferred
by
the
recognised at
acquisition-date
fair value. Subsequent
changes in the fair value of the contingent
consideration classified as an asset or
is
in profit or
is recognised
liability
loss.
Contingent consideration classified as
equity is not remeasured and its subsequent
settlement is accounted for within equity.
in
investment
transferred and
The difference between the acquisition-date
fair value of assets acquired,
liabilities
assumed and any non-controlling interest in
the acquiree and the fair value of the
consideration transferred and the fair value
of any pre-existing
the
acquiree is recognised as goodwill. If the
the pre-
consideration
existing fair value is less than the fair value
of the identifiable net assets acquired, being
a bargain purchase to the acquirer, the
difference is recognised as a gain directly in
loss by the acquirer on the
profit or
acquisition-date,
a
but
reassessment of the
identification and
measurement of the net assets acquired, the
non-controlling interest in the acquiree, if
any, the consideration transferred and the
acquirer's previously held equity interest in
the acquirer.
after
only
(bb) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by
dividing the profit attributable to the owners
of archTIS Limited, 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 financial year.
Diluted earnings per share
Diluted earnings per share adjusts the
figures used in the determination of basic
earnings per share to take into account the
after income tax effect of interest and other
financing costs associated with dilutive
potential ordinary shares and the weighted
average number of shares assumed to have
been issued for no consideration in relation
to dilutive potential ordinary shares.
(cc) Goods and Services Tax ('GST') and
other similar taxes
the GST
Revenues, expenses and assets are
recognised net of the amount of associated
GST, unless
is not
recoverable from the tax authority. In this
case it is recognised as part of the cost of
the acquisition of the asset or as part of the
expense.
incurred
32
2
ANNUAL REPORT 2023
39
33
2
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Note 1. Significant Accounting Policies
Receivables and payables are stated
inclusive of the amount of GST receivable or
payable. The net amount of GST recoverable
from, or payable to, the tax authority is
in other receivables or other
included
payables
in the statement of financial
position.
Cash flows are presented on a gross basis.
The GST components of cash flows arising
from investing or financing activities which
are recoverable from, or payable to the tax
authority, are presented as operating cash
flows.
contingencies are
Commitments and
disclosed net of
the amount of GST
recoverable from, or payable to, the tax
authority.
(dd) New Accounting Standards
and
Interpretations not yet mandatory or
early adopted
Australian Accounting Standards and
Interpretations that have recently been
issued or amended but are not yet
mandatory, have not been early adopted by
the consolidated entity for the annual
reporting period ended 30 June 2023. The
consolidated entity has not yet assessed the
impact of these new or amended Accounting
Standards and Interpretations
(ee) Rounding of amounts
The company is of a kind referred to in
Corporations Instrument 2016/191, issued
by the Australian Securities and Investments
Commission,
'rounding-off'.
Amounts in this report have been rounded
off in accordance with that Corporations
Instrument to the nearest dollar.
relating
to
ANNUAL REPORT 2023
40
34
2
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Note 1. Significant Accounting Policies
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Note 2: Critical Accounting Judgements, Estimates and Assumptions
Receivables
and payables
are
stated
inclusive of the amount of GST receivable or
payable. The net amount of GST recoverable
from, or payable to, the tax authority is
included
in other
receivables or other
payables
in the statement of financial
position.
Cash flows are presented on a gross basis.
The GST components of cash flows arising
from investing or financing activities which
are recoverable from, or payable to the tax
authority, are presented as operating cash
flows.
Commitments
and
contingencies
are
disclosed net of
the amount of GST
recoverable from, or payable to, the tax
authority.
(dd) New Accounting
Standards
and
Interpretations not yet mandatory or
early adopted
Australian Accounting Standards and
Interpretations that have recently been
issued or amended but are not yet
mandatory, have not been early adopted by
the consolidated entity for the annual
reporting period ended 30 June 2023. The
consolidated entity has not yet assessed the
impact of these new or amended Accounting
Standards and Interpretations
(ee) Rounding of amounts
The company is of a kind referred to in
Corporations Instrument 2016/191,
issued
by the Australian Securities and Investments
Commission,
relating
to
'rounding-off'.
Amounts in this report have been rounded
off in accordance with that Corporations
Instrument to the nearest dollar.
The preparation of the financial statements requires management to
make judgements, estimates and assumptions that affect the
in the financial statements. Management
reported amounts
continually evaluates its judgements and estimates in relation to
assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements, estimates and assumptions on
historical experience and on other various factors,
including
expectations of future events, management believes to be
reasonable under the circumstances. The resulting accounting
judgements and estimates will seldom equal the related actual
results. The judgements, estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities (refer to the respective notes)
within the next financial year are discussed below.
Revenue from contracts with customers involving sale of goods
When recognising revenue in relation to the sale of goods to
customers, the key performance obligation of the consolidated entity
is considered to be the point of delivery of the goods to the customer,
as this is deemed to be the time that the customer obtains control of
the promised goods and therefore the benefits of unimpeded
access.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled
transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair
value is determined by using either the Binomial model taking into
account the terms and conditions upon which the instruments were
granted. The accounting estimates and assumptions relating to
equity-settled share-based payments would have no impact on the
carrying amounts of assets and liabilities within the next annual
reporting period but may impact profit or loss and equity. Refer to
note 24 for further information.
Estimation of useful lives of assets
The consolidated entity determines the estimated useful lives and
related depreciation and amortisation charges for its property, plant
and equipment and finite life intangible assets. The useful lives could
change significantly as a result of technical innovations or some
other event. The depreciation and amortisation charge will increase
where the useful lives are less than previously estimated lives, or
technically obsolete or non-strategic assets that have been
abandoned or sold will be written off or written down.
Goodwill and other indefinite life intangible assets
The consolidated entity tests annually, or more frequently if events
or changes in circumstances indicate impairment, whether goodwill
and other indefinite life intangible assets have suffered any
impairment, in accordance with the accounting policy stated in note
1. The recoverable amounts of cash-generating units have been
determined based on value-in-use calculations. These calculations
require the use of assumptions, including estimated discount rates
based on the current cost of capital and growth rates of the
estimated future cash flows. Refer to note 12 for further information.
Income tax
The consolidated entity is subject to income taxes in the jurisdictions
in which it operates. Significant judgement is required in determining
the provision for income tax. There are many transactions and
calculations undertaken during the ordinary course of business for
which the ultimate tax determination is uncertain. The consolidated
entity recognises liabilities for anticipated tax audit issues based on
the consolidated entity's current understanding of the tax law. Where
the final tax outcome of these matters is different from the carrying
amounts, such differences will impact the current and deferred tax
provisions in the period in which such determination is made.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary
differences only if the consolidated entity considers it is probable
that future taxable amounts will be available to utilise those
temporary differences and losses.
lease
liability. Judgement
Lease term
The lease term is a significant component in the measurement of
both the right-of-use asset and
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 economical incentive to exercise an extension option, or not to
exercise a termination option, are considered at the
lease
the
commencement date. Factors considered may
importance of the asset to the consolidated entity'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 consolidated entity 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.
include
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily
determined, an incremental borrowing rate is estimated to discount
future lease payments to measure the present value of the lease
liability at the lease commencement date. 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.
Employee benefits provision
As discussed in note 1, the liability for employee benefits expected
to be settled more than 12 months from the reporting date are
recognised and measured at the present value of the estimated
future cash flows to be made in respect of all employees at the
reporting date. In determining the present value of the liability,
estimates of attrition rates and pay increases through promotion and
inflation have been taken into account.
Lease make good provision
A provision has been made for the present value of anticipated costs
for future restoration of leased premises. The provision includes
future cost estimates associated with closure of the premises. The
calculation of this provision requires assumptions such as
application of closure dates and cost estimates. The provision
recognised for each site is periodically reviewed and updated based
on the facts and circumstances available at the time. Changes to the
estimated future costs for sites are recognised in the statement of
financial position by adjusting the asset and the provision.
Reductions in the provision that exceed the carrying amount of the
asset will be recognised in profit or loss.
34
2
ANNUAL REPORT 2023
41
35
2
ARCHTIS LIMITED NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 3. Revenue
(a) Revenue from contracts with customers
Licensing
Services
Equipment
(b) Other income
Government grants (i)
Interest income
Other income (ii)
Consolidated
2023
$
2022
$
3,171,060
2,777,174
418,889
6,367,123
2,336,272
48,102
71,094
2,455,468
2,609,554
2,029,142
-
4,638,696
1,224,227
1,775
-
1,226,002
(i) Government grants mainly comprise research & development tax incentives and also include an amount
for export market development grant.
(ii) Other income relates to insurance proceeds relating to a property damage claim at the Canberra head
office net of the written down value of property, plant & equipment disposed.
LLiicceennssiinngg
Licensing revenue represents recurring revenue from archTIS solutions developed, customised and
maintained for customers including Kojensi SaaS, NC Protect, cp.Protect and cp.Discover delivered to
Australian and international customers.
SSeerrvviicceess
Services revenue includes archTIS services relating to systems integration and security consulting.
Note 4: Operating segments
IIddeennttiiffiiccaattiioonn ooff rreeppoorrttaabbllee ooppeerraattiinngg sseeggmmeennttss
The consolidated entity operates under a single operating segment selling software and services relating
to information management, sharing and collaboration. The internal report for the segment is reviewed
and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in
assessing performance and in determining the allocation of resources.
The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in
the financial statements.
The information reported to the CODM is on a monthly basis.
MMaajjoorr ccuussttoommeerrss
During the year ended 30 June 2023 approximately $3,760,000 (2022: $3,087,000) of the consolidated
entity’s external revenue was derived from sales to the Australian government.
GGeeooggrraapphhiiccaall iinnffoorrmmaattiioonn
Segment information by geographical regions is not available, and the cost to develop this information
would be excessive.
ANNUAL REPORT 2023
42
36
2
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 5. Expenses
(a) Employee benefits
Salaries and wages
Superannuation
Other employee benefits
Share-based payments
less: capitalised to software development
(b) Depreciation and amortisation
Depreciation - property, plant and equipment
Amortisation - intangibles
(i) Government grants mainly comprise research & development tax incentives and also include an amount
for export market development grant.
(ii) Other income relates to insurance proceeds relating to a property damage claim at the Canberra head
office net of the written down value of property, plant & equipment disposed.
(c) Finance costs
Interest and finance charges paid
(d) Contractors
Payments to contractors
(e) Hosting charges
Hosting charges
(a) Revenue from contracts with customers
Note 3. Revenue
Licensing
Services
Equipment
(b) Other income
Government grants (i)
Interest income
Other income (ii)
Consolidated
2023
$
2022
$
3,171,060
2,777,174
418,889
6,367,123
2,609,554
2,029,142
-
4,638,696
2,336,272
1,224,227
48,102
71,094
1,775
-
2,455,468
1,226,002
LLiicceennssiinngg
SSeerrvviicceess
Licensing revenue represents recurring revenue from archTIS solutions developed, customised and
maintained for customers including Kojensi SaaS, NC Protect, cp.Protect and cp.Discover delivered to
Australian and international customers.
Services revenue includes archTIS services relating to systems integration and security consulting.
Note 4: Operating segments
IIddeennttiiffiiccaattiioonn ooff rreeppoorrttaabbllee ooppeerraattiinngg sseeggmmeennttss
The consolidated entity operates under a single operating segment selling software and services relating
to information management, sharing and collaboration. The internal report for the segment is reviewed
and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in
assessing performance and in determining the allocation of resources.
The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in
the financial statements.
The information reported to the CODM is on a monthly basis.
MMaajjoorr ccuussttoommeerrss
During the year ended 30 June 2023 approximately $3,760,000 (2022: $3,087,000) of the consolidated
entity’s external revenue was derived from sales to the Australian government.
GGeeooggrraapphhiiccaall iinnffoorrmmaattiioonn
would be excessive.
Segment information by geographical regions is not available, and the cost to develop this information
Consolidated
2023
$
6,401,127
541,439
722,514
212,393
(2,164,120)
5,713,353
282,927
4,423,865
4,706,792
2022
$
6,032,364
427,219
931,866
137,509
(2,781,318)
4,747,640
234,881
3,544,499
3,779,380
64,112
64,112
68,810
68,810
1,550,615
1,550,615
2,597,076
2,597,076
408,502
408,502
198,255
198,255
36
2
ANNUAL REPORT 2023
43
37
2
ARCHTIS LIMITED NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 6. Income tax expense
Income tax expense
Deferred tax
Foreign exchange movement
Current tax
Income tax expense / (income)
Note
Consolidated
2023
$
(313,859)
7,401
906
(305,552)
2022
$
(169,009)
(23,934)
-
(192,943)
Loss before income tax
(8,543,507)
(9,638,231)
Tax at the statutory rate of 25% - Australia
Tax at the statutory rate of 21% (22.83% prior year) – USA
Tax at the statutory rate of 19% – UK
Tax at the statutory rate of 15.8% – Germany
Total tax at the statutory rate
(1,669,712)
(317,019)
(62,924)
906
(2,048,749)
(1,989,828)
(257,690)
(82,613)
-
(2,330,131)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Entertainment expenses
Share-based payments
Research & development expenditure
Intangible amortisation - internally generated
Income from Covid-19 economic incentives
Income from research & development incentives
Other
Sub-total
Current year deferred tax not recognised
Deferred tax asset derecognised
2,376
53,098
708,068
514,584
-
(565,918)
234
712,442
1,030,755
-
1,030,755
2,508
34,377
225,826
354,274
(7,500)
(253,573)
588
356,500
1,532,311
248,377
1,780,688
Income tax expense / (income)
(305,552)
(192,943)
A net deferred tax asset of $4,982,999 ($4,060,782 relating to tax losses) has not been recognised on the
basis it is not probable that taxable profit will be available against which the temporary differences may be
utilised while the company is claiming the refundable research and development tax offset.
ANNUAL REPORT 2023
44
38
2
-
-
2,508
34,377
225,826
354,274
(7,500)
(253,573)
588
356,500
1,532,311
248,377
1,780,688
2,376
53,098
708,068
514,584
-
-
(565,918)
234
712,442
1,030,755
1,030,755
Entertainment expenses
Share-based payments
Research & development expenditure
Intangible amortisation - internally generated
Income from Covid-19 economic incentives
Income from research & development incentives
Other
Sub-total
Current year deferred tax not recognised
Deferred tax asset derecognised
Income tax expense / (income)
(305,552)
(192,943)
A net deferred tax asset of $4,982,999 ($4,060,782 relating to tax losses) has not been recognised on the
basis it is not probable that taxable profit will be available against which the temporary differences may be
utilised while the company is claiming the refundable research and development tax offset.
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 6. Income tax expense
Income tax expense
Deferred tax
Foreign exchange movement
Current tax
Income tax expense / (income)
Consolidated
Note 7. Cash and cash equivalents
Note
2023
$
(313,859)
7,401
906
2022
$
(169,009)
(23,934)
(305,552)
(192,943)
Cash and cash equivalents
Cash at bank
Cash on deposit
Loss before income tax
(8,543,507)
(9,638,231)
Note 8. Trade and other receivables
Tax at the statutory rate of 25% - Australia
Tax at the statutory rate of 21% (22.83% prior year) – USA
Tax at the statutory rate of 19% – UK
Tax at the statutory rate of 15.8% – Germany
Total tax at the statutory rate
(1,669,712)
(317,019)
(62,924)
906
(1,989,828)
(257,690)
(82,613)
(2,048,749)
(2,330,131)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Trade receivables
less: Allowance for expected credit losses
Other receivables
Consolidated
2023
$
2,927,378
317,730
3,245,108
Consolidated
2023
$
4,249,660
-
4,249,660
39,568
4,289,228
2022
$
6,467,310
53,226
6,520,536
2022
$
2,472,815
-
2,472,815
8,783
2,481,598
Allowance for expected credit losses
The consolidated entity has made no allowance for expected credit losses for the current financial year (2022:
nil).
The ageing of the trade receivables and allowance for expected credit losses provided for above are as follows :
Not yet due
0 - 3 months overdue
3 - 6 months overdue
6+ months overdue
Note 9. Other current assets
Prepayments & deposits
Accrued income
Research & development tax incentive
Capitalised commissions
2023
Carrying
amount
$
4,098,443
144,626
6,591
-
4,249,660
2023
Allowance for
expected credit
losses
$
-
-
-
-
-
Consolidated
2023
$
1,187,304
302,075
2,080,725
118,212
3,688,316
2022
$
247,453
143,778
1,602,810
67,585
2,061,626
38
2
ANNUAL REPORT 2023
45
39
2
ARCHTIS LIMITED NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 10. Other non-current assets
Capitalised commissions
Note 11. Property, plant & equipment
Leasehold improvements - at cost
less: accumulated depreciation
Computer equipment - at cost
less: accumulated depreciation
Office equipment - at cost
less: accumulated depreciation
Consolidated
2023
$
67,501
67,501
2022
$
92,789
92,789
Consolidated
2023
$
85,512
(2,041)
83,471
259,037
(212,035)
47,002
56,670
(34,370)
22,300
2022
$
-
-
-
374,057
(305,334)
68,723
136,307
(113,995)
22,312
152,773
91,035
RReeccoonncciilliiaattiioonnss
Reconciliations of the written down values at the beginning and end of the current and previous year are set out
below:
Balance at 1 July 2021
Additions
Disposals
Depreciation
Balance at 30 June 2022
Balance at 1 July 2022
Additions
Disposals
Depreciation
Balance at 30 June 2023
Leasehold
improvements
$
-
-
-
-
-
-
85,512
-
(2,041)
83,471
Computer
equipment
$
91,772
14,834
-
(37,883)
68,723
68,723
20,708
(4,220)
(38,209)
47,002
Office
equipment
$
16,137
11,815
-
(5,640)
22,312
22,312
6,283
(672)
(5,623)
22,300
Total
$
107,909
26,649
-
(43,523)
91,035
91,035
112,503
(4,892)
(45,873)
152,773
ANNUAL REPORT 2023
46
40
2
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 10. Other non-current assets
Capitalised commissions
Note 11. Property, plant & equipment
Leasehold improvements - at cost
less: accumulated depreciation
Computer equipment - at cost
less: accumulated depreciation
Office equipment - at cost
less: accumulated depreciation
Consolidated
2023
$
67,501
67,501
2022
$
92,789
92,789
2023
$
85,512
(2,041)
83,471
259,037
(212,035)
47,002
56,670
(34,370)
22,300
152,773
91,035
2022
$
-
-
-
374,057
(305,334)
68,723
136,307
(113,995)
22,312
Total
$
107,909
26,649
-
(43,523)
91,035
91,035
112,503
(4,892)
(45,873)
152,773
Reconciliations of the written down values at the beginning and end of the current and previous year are set out
RReeccoonncciilliiaattiioonnss
below:
Balance at 1 July 2021
Additions
Disposals
Depreciation
Balance at 30 June 2022
Balance at 1 July 2022
Additions
Disposals
Depreciation
Balance at 30 June 2023
Leasehold
improvements
Computer
equipment
Office
equipment
$
-
-
-
-
-
-
-
85,512
(2,041)
83,471
91,772
14,834
$
-
(37,883)
68,723
68,723
20,708
(4,220)
(38,209)
47,002
16,137
11,815
$
-
(5,640)
22,312
22,312
6,283
(672)
(5,623)
22,300
Note 12. Intangible assets
The proportion of product design and development expenses, less any tax incentive applicable, that create
a benefit in future years, and meet certain requirements are capitalised as an intangible asset. These
capitalised costs (intangibles) are then amortised to the Profit and Loss Statement over the estimated life
of the asset created. The carrying value of intangibles is reviewed for impairment whenever events indicate
that the carrying value may not be recoverable.
Intangible assets recognised
The main intangible assets recognised during the financial period were for internally generated computer
software and technology/ in-progress development.
Consolidated
Internally-generated software
Internally-generated software development costs qualify for capitalisation when the consolidated entity can
demonstrate all of the following:
•
•
•
•
•
•
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
its intention to complete the intangible asset and use or sell it;
its ability to use or sell the intangible asset;
that 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 expenditure attributable to the intangible asset can be reliably measured during development.
Internally-generated software development costs have a finite useful life and are amortised on a straight-
line basis over their estimated useful life. 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.
The internally-generated software development assets have a useful life of five years and are amortised on
a straight-line basis commencing from the time the assets are held ready for use. Costs are incurred after
the general release of internally generated software or costs which are incurred to enhance existing products
are expensed in the period in which they are incurred and included within research and development expense
in the financial statements.
Development in progress
Research and development expenditure during the research phase of a project is recognised as an expense
when incurred.
Development costs are capitalised only when technical feasibility studies identify that the project is
expected to deliver future economic benefits and these benefits can be measured reliably. The consolidated
entity assesses the eligibility of development costs for capitalisation on a project-by-project basis.
Development costs capitalised are assessed annually for impairment. Costs capitalised to a project that is
unlikely to deliver future economic benefits are recognised as an expense at the date of impairment.
40
2
ANNUAL REPORT 2023
47
41
2
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 12. Intangible assets (continued)
Customer contracts
Customer contracts represents those acquired as part of the acquisition of Nucleus Cyber Inc and the
software division of Cipherpoint Limited in prior periods. Customer contracts are amortised over 3-5 years.
Software
Software acquired represents those acquired as part of the acquisition of Nucleus Cyber Inc and the
software division of Cipherpoint Limited. Software is amortised over the useful lives of 3-5 years.
Goodwill
Goodwill on acquisition is derived as the difference between the fair value of the purchase consideration
and the fair value of the net assets acquired. This amount is not amortised but rather is subject to an
annual impairment test.
2023
Cost
Balance at 1 July 2022
Commercialisation of development
to software
Additions
Effect of foreign exchange
translation
Balance at 30 June 2023
Accumulated amortisation
Balance at 1 July 2022
Amortisation
Impairment
Effect of foreign exchange
translation
Balance at 30 June 2023
Deferred research & development
tax incentive
Balance at 1 July 2022
Additions
Re-classification
Recognised in income
Balance at 30 June 2023
Net book value at 30 June 2023
Internally
generated
software
$
Development
in progress
Customer
contracts
Software
Goodwill
Total
$
$
$
$
$
8,245,624
3,732,736
2,044,823
8,514,291
2,789,524
25,326,998
2,214,477
(2,214,477)
2,164,121
-
-
-
-
-
-
-
72,856
268,697
-
-
-
-
2,164,121
341,553
10,460,101
3,682,380
2,117,679
8,782,988
2,789,524
27,832,672
(3,944,967)
(2,058,335)
-
-
(6,003,302)
(1,959,318)
-
(963,297)
990,463
(1,932,152)
2,524,647
-
-
-
-
-
(706,414)
(338,697)
-
(2,397,136)
(2,026,833)
-
(27,720)
(97,138)
(1,072,831)
(4,521,107)
-
-
-
-
-
(7,048,517)
(4,423,865)
-
(124,858)
(11,597,240)
(1,623,740)
(941,394)
963,297
-
(1,601,837)
2,080,543
-
-
-
-
-
1,044,848
-
-
-
-
-
4,261,881
-
-
-
-
-
2,789,524
(3,583,058)
(941,394)
-
990,463
(3,533,989)
12,701,443
ANNUAL REPORT 2023
48
42
2
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 12. Intangible assets (continued)
Balance at 1 July 2022
8,245,624
3,732,736
2,044,823
8,514,291
2,789,524
25,326,998
Balance at 30 June 2022
Deferred research & development
(3,944,967)
Internally
generated
software
$
Development
in progress
Customer
contracts
Software
Goodwill
Total
$
$
$
$
$
5,925,324
3,271,719
1,719,475
6,373,926
2,789,524
20,079,968
2,320,300
(2,320,300)
2,781,317
-
-
-
3,035
8,245,624
3,732,736
2,044,823
8,514,291
2,789,524
25,326,998
-
-
-
(2,527,873)
(1,417,094)
-
-
-
-
167,904
1,555,359
157,444
581,971
-
-
-
-
-
(171,947)
(494,007)
-
(637,393)
(1,633,398)
-
(40,460)
(126,345)
(706,414)
(2,397,136)
(1,344,303)
-
(1,236,368)
621,353
(1,959,318)
(1,650,235)
(1,209,873)
1,236,368
-
(1,623,740)
-
-
-
-
-
-
-
-
-
-
2,341,339
2,108,996
1,338,409
6,117,155
2,789,524
14,695,423
-
-
-
-
-
2,784,352
1,723,263
739,415
-
-
-
-
-
-
-
-
-
-
(3,337,213)
(3,544,499)
-
(166,805)
(7,048,517)
(2,994,538)
(1,209,873)
-
621,353
(3,583,058)
2022
Cost
Balance at 1 July 2021
Commercialisation of
development to software
Additions
Recognised in business
combinations
Effect of foreign exchange
translation
Balance at 30 June 2022
Accumulated amortisation
Balance at 1 July 2021
Amortisation
Impairment
Effect of foreign exchange
translation
tax incentive
Balance at 1 July 2021
Additions
Re-classification
Recognised in income
Balance at 30 June 2022
Net book value at 30 June
2022
Note 12. Intangible assets (continued)
Customer contracts
Customer contracts represents those acquired as part of the acquisition of Nucleus Cyber Inc and the
software division of Cipherpoint Limited in prior periods. Customer contracts are amortised over 3-5 years.
Software acquired represents those acquired as part of the acquisition of Nucleus Cyber Inc and the
software division of Cipherpoint Limited. Software is amortised over the useful lives of 3-5 years.
Software
Goodwill
Goodwill on acquisition is derived as the difference between the fair value of the purchase consideration
and the fair value of the net assets acquired. This amount is not amortised but rather is subject to an
annual impairment test.
Development
in progress
Customer
contracts
Software
Goodwill
Total
Internally
generated
software
$
(3,944,967)
(2,058,335)
-
-
-
-
-
2023
Cost
Commercialisation of development
to software
Additions
translation
Effect of foreign exchange
Balance at 30 June 2023
Accumulated amortisation
Balance at 1 July 2022
Amortisation
Impairment
Effect of foreign exchange
translation
Deferred research & development
tax incentive
Balance at 1 July 2022
Additions
Re-classification
Recognised in income
Balance at 30 June 2023
2,214,477
(2,214,477)
2,164,121
(1,959,318)
(1,623,740)
(963,297)
990,463
(1,932,152)
(941,394)
963,297
(1,601,837)
2,080,543
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
72,856
268,697
(706,414)
(338,697)
-
(2,397,136)
(2,026,833)
-
(27,720)
(97,138)
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
2,164,121
341,553
(7,048,517)
(4,423,865)
(124,858)
(11,597,240)
(3,583,058)
(941,394)
990,463
(3,533,989)
12,701,443
Net book value at 30 June 2023
2,524,647
1,044,848
4,261,881
2,789,524
Balance at 30 June 2023
(6,003,302)
(1,072,831)
(4,521,107)
10,460,101
3,682,380
2,117,679
8,782,988
2,789,524
27,832,672
42
2
ANNUAL REPORT 2023
49
43
2
ARCHTIS LIMITED NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 12. Intangible assets (continued)
The table below sets out the carrying amount of goodwill and intangible assets allocated to the consolidated
entity’s two Cash Generating Units (CGUs): Kojensi and NC Protect:
Development in progress
NC Protect
$
521,154
Kojensi
$
1,559,389
TOTAL
$
2,080,543
Internally generated software
192,207
2,332,440
2,524,647
Customer contracts
Software
Goodwill
1,044,848
4,261,881
2,789,524
-
-
-
1,044,848
4,261,881
2,789,524
8,809,614
3,891,829
12,701,443
The recoverable amount of the consolidated entity’s Intangible Assets has been determined by a value-in-use
calculation using a discounted cash flow model, based on a 5-year projection period approved by
management. The key assumptions are those to which the recoverable amount of an asset or cash-generating
units is most sensitive.
The following key assumptions were used in the discounted cash flow model for the new products:
•
•
14.6% post-tax discount rate. This discount rate reflects management’s estimate of the time value of
money and the entity’s weighted average cost of capital adjusted for the product, the risk-free rate and
the volatility of the share price relative to market movements;
Projected revenue growth rate based on current sales pipeline, projected sales through current reseller
partners, sales through new partnerships with resellers and increased users with existing customers;
• Management has performed a thorough line-by-line review of the current sales pipeline and then taken
a conservative estimate of sales, projected sales through current and new reseller partners, and
estimated increase in users with existing customers;
Annual retention (renewals) rate of 90% for licensing and 100% for services;
4-20% per annum increase in operating costs and overheads; and,
A terminal value arrived at using a long-term company cash growth rate of 3.25% - in line with the
long-term inflation rate.
•
•
•
These assumptions were applied consistently to the consolidated entity’s two CGUs, Kojensi and NC Protect.
Based on the above, no impairment charge has been applied to the internally generated software and
development in progress or the Nucleus Cyber Inc cash generating unit as the discounted recoverable amount
for the cash generating unit exceeds the carrying value of the intangibles.
ANNUAL REPORT 2023
50
44
2
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 12. Intangible assets (continued)
Note 13. Right-of-use asset
The table below sets out the carrying amount of goodwill and intangible assets allocated to the consolidated
entity’s two Cash Generating Units (CGUs): Kojensi and NC Protect:
Development in progress
Internally generated software
Customer contracts
Software
Goodwill
NC Protect
Kojensi
$
521,154
192,207
1,044,848
4,261,881
2,789,524
1,559,389
2,080,543
2,332,440
2,524,647
TOTAL
$
1,044,848
4,261,881
2,789,524
$
-
-
-
8,809,614
3,891,829
12,701,443
The recoverable amount of the consolidated entity’s Intangible Assets has been determined by a value-in-use
calculation using a discounted cash flow model, based on a 5-year projection period approved by
management. The key assumptions are those to which the recoverable amount of an asset or cash-generating
units is most sensitive.
The following key assumptions were used in the discounted cash flow model for the new products:
•
•
•
•
•
14.6% post-tax discount rate. This discount rate reflects management’s estimate of the time value of
money and the entity’s weighted average cost of capital adjusted for the product, the risk-free rate and
the volatility of the share price relative to market movements;
Projected revenue growth rate based on current sales pipeline, projected sales through current reseller
partners, sales through new partnerships with resellers and increased users with existing customers;
• Management has performed a thorough line-by-line review of the current sales pipeline and then taken
a conservative estimate of sales, projected sales through current and new reseller partners, and
estimated increase in users with existing customers;
Annual retention (renewals) rate of 90% for licensing and 100% for services;
4-20% per annum increase in operating costs and overheads; and,
A terminal value arrived at using a long-term company cash growth rate of 3.25% - in line with the
long-term inflation rate.
These assumptions were applied consistently to the consolidated entity’s two CGUs, Kojensi and NC Protect.
Based on the above, no impairment charge has been applied to the internally generated software and
development in progress or the Nucleus Cyber Inc cash generating unit as the discounted recoverable amount
for the cash generating unit exceeds the carrying value of the intangibles.
Balance as at 1 July
Additions
Adjustment to lease arrangement
Depreciation
Balance as at 30 June
Consolidated
2023
$
951,729
-
-
(237,054)
714,675
2022
$
1,092,021
51,066
-
(191,358)
951,729
The right-of-use asset represents the lease of the Canberra head office which has a lease term of 3 years with an
option to extend after this period and the lease of a Melbourne regional office.
Note 14. Trade and other payables
Trade payables
Other payables
Note 15. Employee benefits
CCuurrrreenntt
Liability for annual leave
Liability for long service leave
NNoonn--ccuurrrreenntt
Liability for long service leave
Consolidated
2023
$
1,852,815
412,065
2,264,880
Consolidated
2023
$
312,662
33,828
346,490
176,231
176,231
2022
$
491,352
252,576
743,928
2022
$
389,453
143,843
533,296
104,987
104,987
522,721
638,283
Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the
amount expected to be paid if the consolidated entity has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Long-term employee benefits
The consolidated entity’s net obligation in relation to long-term employee benefits is the amount of future benefit
that employees have earned in return for their service in the current and prior periods. The benefit is calculated
using expected future increases in salaries including related on-costs and expected settlement dates and is
discounted to present value at the reporting date.
44
2
ANNUAL REPORT 2023
51
45
2
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 16. Provisions
CCuurrrreenntt
Contingent consideration
Other
NNoonn--ccuurrrreenntt
Lease make good
Consolidated
2023
$
-
339,314
339,314
78,309
78,309
2022
$
100,000
177,845
277,845
76,990
76,990
417,623
354,835
Recognition and measurement
A provision is recognised when the consolidated entity has a present legal or constructive obligation as a result of
a past event that can be estimated reliably, and it is probable that an outflow of resources will be required to settle
the obligation. The provision is calculated by discounting the expected future cash flows.
Lease make good
The lease make good provision represents the value of the estimated costs to make good the premises leased by
the consolidated entity at the end of the lease term.
Note 17. Other current liabilities
Accrued expenses
Deferred revenue
Note 18. Lease liabilities
Balance as at 1 July
Additions
Interest
Payments made
Balance as at 30 June
Current
Non-current
Consolidated
2023
$
642,900
5,142,015
5,784,915
2022
$
549,362
1,740,168
2,289,530
Consolidated
2023
$
985,763
-
56,883
(263,288)
779,358
181,616
597,742
779,358
2022
$
1,080,706
51,066
64,584
(210,593)
985,763
214,603
771,160
985,763
ANNUAL REPORT 2023
52
46
2
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 19. Borrowings
Bank loan
Total secured liabilities
The total secured liabilities are as follows:
CCuurrrreenntt
Bank loan
NNoonn--ccuurrrreenntt
Bank loan
Recognition and measurement
A provision is recognised when the consolidated entity has a present legal or constructive obligation as a result of
a past event that can be estimated reliably, and it is probable that an outflow of resources will be required to settle
the obligation. The provision is calculated by discounting the expected future cash flows.
Lease make good
The lease make good provision represents the value of the estimated costs to make good the premises leased by
the consolidated entity at the end of the lease term.
Note 16. Provisions
CCuurrrreenntt
Other
Contingent consideration
NNoonn--ccuurrrreenntt
Lease make good
Note 17. Other current liabilities
Accrued expenses
Deferred revenue
Note 18. Lease liabilities
Balance as at 1 July
Additions
Interest
Payments made
Balance as at 30 June
Current
Non-current
Consolidated
2023
$
-
339,314
339,314
78,309
78,309
2022
$
100,000
177,845
277,845
76,990
76,990
417,623
354,835
Consolidated
2023
$
642,900
5,142,015
5,784,915
2022
$
549,362
1,740,168
2,289,530
Consolidated
2023
985,763
$
-
56,883
(263,288)
779,358
181,616
597,742
779,358
2022
$
1,080,706
51,066
64,584
(210,593)
985,763
214,603
771,160
985,763
Assets pledged as security
The bank loan is secured by a term deposit of $214,500 held with the bank.
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Bank loan
Used at reporting date
Bank loan
Unused at reporting date
Bank loan
Note 20. Other non-current liabilities
Deferred revenue
Consolidated
2023
$
1,000
1,000
2022
$
-
-
Consolidated
2023
2022
1,000
-
1,000
-
-
-
2022
$
-
-
-
-
-
-
Consolidated
2023
$
1,500,000
1,500,000
1,000
1,000
1,499,000
1,499,000
Consolidated
2023
$
705,305
705,305
2022
$
1,454,368
1,454,368
46
2
ANNUAL REPORT 2023
53
47
2
ARCHTIS LIMITED
Credited /
(charged) to
profit or loss
$
Balance
recognised on
acquisition
$
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 21. Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Opening
balance
$
-
-
-
-
-
-
-
-
2023
Deferred tax asset on:
Accrued income &
prepayments
Property, plant & equipment
Provisions
Costs of raising equity
Accrued expenditure
Lease incentives
Tax losses
Deferred tax asset
Deferred tax liability on:
Intangible assets
Deferred tax liability
(1,224,722)
(1,224,722)
261,095
261,095
Net deferred tax asset /
(liability)
(1,224,722)
261,095
-
-
-
-
-
-
-
-
Opening
balance
$
-
-
-
-
-
-
263,781
263,781
Credited /
(charged) to
profit or loss
$
Balance
recognised on
acquisition
$
-
-
-
-
-
-
(263,781)
(263,781)
-
-
-
-
-
-
-
-
(1,662,952)
(1,662,952)
480,206
480,206
(41,976)
(41,976)
(1,399,171)
216,425
(41,976)
2022
Deferred tax asset on:
Accrued income &
prepayments
Property, plant & equipment
Provisions
Costs of raising equity
Accrued expenditure
Lease incentives
Tax losses
Deferred tax asset
Deferred tax liability on:
Intangible assets
Deferred tax liability
Net deferred tax asset /
(liability)
-
-
-
-
-
-
-
-
-
-
-
Changes in
tax rates
Closing
balance
$
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
(963,627)
(963,627)
(963,627)
Changes in
tax rates
Closing
balance
$
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
(1,224,722)
(1,224,722)
(1,224,722)
ANNUAL REPORT 2023
54
48
2
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 21. Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Opening
balance
Credited /
(charged) to
profit or loss
Balance
recognised on
acquisition
Changes in
tax rates
Closing
balance
(1,224,722)
(1,224,722)
261,095
261,095
Net deferred tax asset /
(liability)
(1,224,722)
261,095
Opening
balance
Credited /
(charged) to
profit or loss
Balance
recognised on
acquisition
Changes in
tax rates
Closing
balance
$
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
2023
Deferred tax asset on:
Accrued income &
prepayments
Property, plant & equipment
Provisions
Costs of raising equity
Accrued expenditure
Lease incentives
Tax losses
Deferred tax asset
Deferred tax liability on:
Intangible assets
Deferred tax liability
2022
Deferred tax asset on:
Accrued income &
prepayments
Property, plant & equipment
Provisions
Costs of raising equity
Accrued expenditure
Lease incentives
Tax losses
Deferred tax asset
Deferred tax liability on:
Intangible assets
Deferred tax liability
Net deferred tax asset /
(liability)
$
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
263,781
263,781
(263,781)
(263,781)
(1,662,952)
(1,662,952)
480,206
480,206
(41,976)
(41,976)
(1,224,722)
(1,224,722)
Note 22. Issued capital
Ordinary shares - fully paid
Movements in ordinary share capital
Details
Balance
Issue of shares
Exercise of options
Exercise of options
Issue of shares
Exercise of options
Share issue transaction costs, net of tax
2023
Shares
285,580,331
Consolidated
2022
Shares
263,803,207
2023
$
43,276,195
2022
$
41,099,800
Date
Shares
Issue price
$
30-Jun-21
26-Jul-21
12-Aug-21
12-Aug-21
18-Nov-21
23-Dec-21
226,845,057
6,390,302
400,000
35,000
28,260,870
1,871,978
-
$0.3300
$0.2000
$0.2400
$0.2300
$0.2300
-
Balance
30-Jun-22
263,803,207
(963,627)
(963,627)
(963,627)
Shares released from escrow NC Inc
acquisition
Exercise of options
Issue of shares
Vesting of performance rights
Issue of shares
Issue of shares
Vesting of performance rights
Share issue transaction costs, net of tax
15-I t k-22
10-Oct-22
9-Dec-22
15-Dec-22
23-Dec-22
23-Feb-23
22-Jun-23
-
-
420,000
12,857,142
201,483
6,674,268
1,428,570
195,661
-
$0.1000
$0.1050
-
$0.1050
$0.1050
-
-
32,636,977
2,108,800
80,000
8,400
6,500,000
430,553
(664,930)
41,099,800
100,000
61,740
1,350,000
70,342
700,802
150,000
3,130
(259,619)
Balance
30-Jun-23
285,580,331
43,276,195
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to
the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not
have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall
have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The consolidated entity’s objectives are to prudently manage capital so as to continue as a going concern, so that it can provide
returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of
capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as
total borrowings less cash and cash equivalents.
(1,399,171)
216,425
(41,976)
(1,224,722)
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividend paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
48
2
ANNUAL REPORT 2023
55
49
2
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 23. Reserves
Share-based payments reserve
Foreign currency reserve
Consolidated
2023
$
976,075
565,952
1,542,027
2022
$
856,894
391,120
1,248,014
Share-based payments reserve
This reserve is used to recognise equity-settled share-based payments to certain suppliers, directors and employees. Under
AASB 2, options and performance rights granted are measured at fair value at the date of the grant, using a Binomial valuation.
The valuation of each tranche of options and performance rights granted is expensed on a straight-line basis over the vesting
period, subject to performance conditions being met if applicable.
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Balance at 1 July 2021
Share-based payments
Arising due to translation of financial statements
for foreign subsidiaries
Balance at 30 June 2022
Balance at 1 July 2022
Share-based payments
Arising due to translation of financial statements
for foreign subsidiaries
Balance at 30 June 2023
Share-based
payments
$
719,384
137,510
-
856,894
856,894
119,181
-
976,075
Consolidated
Foreign
currency
$
(11,724)
-
402,844
391,120
391,120
-
174,832
565,952
Total
$
707,660
137,510
402,844
1,248,014
1,248,014
119,181
174,832
1,542,027
ANNUAL REPORT 2023
56
50
2
Consolidated
2023
$
976,075
565,952
1,542,027
2022
$
856,894
391,120
1,248,014
Share-based payments reserve
Foreign currency reserve
Share-based payments reserve
Foreign currency reserve
operations to Australian dollars.
period, subject to performance conditions being met if applicable.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Arising due to translation of financial statements
Balance at 1 July 2021
Share-based payments
for foreign subsidiaries
Balance at 30 June 2022
Balance at 1 July 2022
Share-based payments
for foreign subsidiaries
Balance at 30 June 2023
Arising due to translation of financial statements
Share-based
payments
$
719,384
137,510
-
-
856,894
856,894
119,181
976,075
Consolidated
Foreign
currency
$
(11,724)
-
-
402,844
391,120
391,120
174,832
565,952
Total
$
707,660
137,510
402,844
1,248,014
1,248,014
119,181
174,832
1,542,027
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 23. Reserves
Note 24. Share-based payments
PPeerrffoorrmmaannccee rriigghhttss
Under the long-term incentive plan, performance rights are offered to participants which entitle the holder to ordinary
shares in the company subject to meeting certain financial performance hurdles and the holder remaining in
employment with the company until the nominated vesting date.
The performance hurdles in relation to performance rights granted in the 2023 financial year are subject to financial
performance conditions which measure growth in revenue, annual recurring revenue and containment of operating
costs. The performance hurdles are challenging but achievable and focus executives on sales growth consistent with
shareholder wealth creation.
This reserve is used to recognise equity-settled share-based payments to certain suppliers, directors and employees. Under
AASB 2, options and performance rights granted are measured at fair value at the date of the grant, using a Binomial valuation.
The valuation of each tranche of options and performance rights granted is expensed on a straight-line basis over the vesting
The long-term incentive plan runs over a two-year performance period and the rights will only vest if the performance
hurdles are achieved. If the vesting conditions and performance hurdles are achieved, ordinary shares will be issued
to the participants at no cost. If the performance hurdles are not met, then the rights lapse.
For performance rights granted to executives for the 2023 financial year, the vesting proportions based on the
performance hurdles outlined in the Notice of Annual General Meeting announced 5 September 2022 (Schedule 4) are
outlined in the table below.
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
Revenue for the financial period
Less than 75% of target
Between 75% - 100% of target
Greater than 100% of target
Proportion of performance rights to vest if revenue
hurdle is met*
0%
Straight line vesting between 0% and 40%
40%
Annual recurring revenue for the financial
period
Less than 75% of target
Between 75% - 100% of target
Greater than 100% of target
Proportion of performance rights to vest if annual
recurring revenue hurdle is met*
0%
Straight line vesting between 0% and 40%
40%
Operating costs for the financial period
Greater than 125% of target
Between 100% - 125% of target
Less than 100% of target
Proportion of performance rights to vest
operating costs hurdle is met*
0%
Straight line vesting between 0% and 20%
20%
if
* Subject to the holder remaining an ‘Eligible Participant’ under the Company’s Employee Incentive Plan as at:
(a)
(b)
15 December 2023, at which point 50% of performance rights that have previously met the relevant
performance milestone will vest; and
15 June 2024, at which point the balance of the performance rights that have previously met the relevant
performance milestone will vest.
The Incentive Performance Rights expire on 6 March 2025.
TTeennuurree ooppttiioonnss
Under the long-term incentive plan, tenure options are offered to participants which entitle the holder to purchase
ordinary shares in the company subject to remaining in employment with the company until the nominated vesting
dates.
The long-term incentive plan runs over a three-year performance period. If the vesting conditions are achieved, the
employee can exercise the vested options. Ordinary shares will be issued to the participants at an exercise price of
$0.1428 per option.
The Tenure Options expire on 6 March 2026.
50
2
ANNUAL REPORT 2023
57
51
2
ARCHTIS LIMITED NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 24. Share-based payments (continued)
RReeccooggnniittiioonn aanndd mmeeaassuurreemmeenntt
The grant date fair value of performance rights granted to employees is recognised as an employee benefits expense, with a
corresponding increase in equity (share-based payment reserve), over the specified two-year period that the performance rights
vest. The amount recognised as an expense is adjusted to reflect the actual number of performance rights for which the related
service and performance hurdles are met, such that the amount ultimately recognised as an expense is based on the number of
performance rights that meet the related service and performance conditions at the vesting date.
The grant date fair value of tenure options granted to employees is recognised as an employee benefits expense, with a
corresponding increase in equity (share-based payment reserve), over the specified three-year period that the tenure options vest.
The amount recognised as an expense is adjusted to reflect the actual number of tenure options for which the related employment
service conditions are met, such that the amount ultimately recognised as an expense is based on the number of tenure options
that meet the related service conditions at the vesting date.
FFaaiirr vvaalluuee
During the year 5,983,336 performance rights were granted to employees under the Company’s Employee Incentive Plan (adopted
at the Company’s Annual General Meeting on 24 November 2021) (2022: 3,048,170) at a weighted average fair value of $0.098
(2022: $0.19). During the year 2,089,402 options were granted to employees under the Company’s Employee Incentive Plan (adopted
at the Company’s Annual General Meeting on 24 November 2021) (2022: 1,750,000) at a weighted average fair value of $0.038
(2022: $0.097).
The amount recognised as employee benefits (Note 5(a)) in the current financial year for share-based payment transactions was
$212,393 (2022: $137,510).
NNuummbbeerr ooff ooppttiioonnss // ppeerrffoorrmmaannccee rriigghhttss
2023
Grant date
Expiry date Exercise
price
Balance at
beginning
of the year
Granted
during
the year
Vested/
exercised
during
the year
Forfeited
during
the year
Balance at
end of
the year
AR9O listed
options
AR9O1
AR9O3
AR9O5
AR9O7
AR9O8
AR9O9
AR9O12
AR9O13
AR9O14
Performance
rights FY22
Performance
rights FY23
Tenure
options FY23
23/12/2021 23/12/2023
$0.35
10,044,257
-
-
-
10,044,257
10/10/2017 10/10/2022
22/05/2018 01/07/2023
06/09/2018 06/09/2022
20/11/2019 01/07/2023
13/02/2020 13/02/2023
30/06/2020 01/07/2023
24/11/2021 24/11/2025
23/12/2022 23/12/2025
13/12/2022 13/12/2025
24/11/2021 24/11/2023
$0.10
$0.20
$0.24
$0.20
$0.20
$0.10
$0.316
$0.20
$0.20
-
6/03/2023
06/03/2025
-
6/03/2023
06/03/2026 $0.1428
420,000
800,000
1,330,000
250,000
360,000
500,000
1,750,000
-
-
3,048,170
-
-
-
-
-
-
-
-
-
3,337,102
8,642,851
-
5,983,333
2,089,402
(420,000)
-
-
-
-
-
-
-
-
(397,144)
-
-
(1,330,000)
-
(360,000)
-
-
-
(2,544,434)
-
-
-
-
-
800,000
-
250,000
-
500,000
1,750,000
3,337,102
8,642,851
106,592
5,983,333
2,089,402
18,502,427 20,052,688
(817,144)
(4,234,434) 33,503,537
ANNUAL REPORT 2023
58
52
2
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 24. Share-based payments (continued)
RReeccooggnniittiioonn aanndd mmeeaassuurreemmeenntt
Note 24. Share-based payments (continued)
NNuummbbeerr ooff ooppttiioonnss // ppeerrffoorrmmaannccee rriigghhttss ((ccoonnttiinnuueedd))
The grant date fair value of performance rights granted to employees is recognised as an employee benefits expense, with a
2022
Grant date
Expiry date Exercise
price
Balance at
beginning
of the year
Granted
during
the year
Vested/
exercised
during
the year
Forfeited
during
the year
Balance at
end of
the year
AR9O listed
options
AR9O1
AR9O3
AR9O5
AR9O4
AR9O7
AR9O8
AR9O9
AR9O12
Performance
rights FY22
23/12/2021 23/12/2023
$0.35
-
10,044,257
-
-
10,044,257
10/10/2017 10/10/2022
22/05/2018 01/07/2023
06/09/2018 06/09/2022
06/07/2018 05/07/2021
20/11/2019 01/07/2023
13/02/2020 13/02/2023
30/06/2020 01/07/2023
24/11/2021 24/11/2025
24/11/2021 24/11/2023
$0.10
$0.20
$0.24
$0.20
$0.20
$0.20
$0.10
$0.316
-
420,000
1,200,000
1,365,000
1,600,000
250,000
360,000
500,000
-
-
-
-
-
-
-
-
-
1,750,000
3,048,170
-
(400,000)
(35,000)
-
-
-
-
-
-
-
-
-
(1,600,000)
-
-
-
-
420,000
800,000
1,330,000
-
250,000
360,000
500,000
1,750,000
3,048,170
5,695,000 14,842,427
(435,000)
(1,600,000) 18,502,427
The amount recognised as employee benefits (Note 5(a)) in the current financial year for share-based payment transactions was
Note 25. Retained profits / (accumulated losses)
2023
Grant date
Expiry date Exercise
Balance at
price
beginning
of the year
Granted
during
the year
Forfeited
Balance at
during
the year
end of
the year
Retained losses at the beginning of the financial year
Loss after income tax expense for the year
Consolidated
2023
2022
$
(23,144,507)
(8,237,955)
$
(13,699,219)
(9,445,288)
AR9O listed
23/12/2021 23/12/2023
$0.35
10,044,257
Retained losses at the end of the financial year
(31,382,462)
(23,144,507)
Note 26. Dividends
Dividends
No dividends were paid or declared during the year.
Franking Credits
Franking credits available for subsequent financial years based
on tax rate of 26%
Consolidated
2023
$
2022
$
15,549
15,549
corresponding increase in equity (share-based payment reserve), over the specified two-year period that the performance rights
vest. The amount recognised as an expense is adjusted to reflect the actual number of performance rights for which the related
service and performance hurdles are met, such that the amount ultimately recognised as an expense is based on the number of
performance rights that meet the related service and performance conditions at the vesting date.
The grant date fair value of tenure options granted to employees is recognised as an employee benefits expense, with a
corresponding increase in equity (share-based payment reserve), over the specified three-year period that the tenure options vest.
The amount recognised as an expense is adjusted to reflect the actual number of tenure options for which the related employment
service conditions are met, such that the amount ultimately recognised as an expense is based on the number of tenure options
that meet the related service conditions at the vesting date.
During the year 5,983,336 performance rights were granted to employees under the Company’s Employee Incentive Plan (adopted
at the Company’s Annual General Meeting on 24 November 2021) (2022: 3,048,170) at a weighted average fair value of $0.098
(2022: $0.19). During the year 2,089,402 options were granted to employees under the Company’s Employee Incentive Plan (adopted
at the Company’s Annual General Meeting on 24 November 2021) (2022: 1,750,000) at a weighted average fair value of $0.038
FFaaiirr vvaalluuee
(2022: $0.097).
$212,393 (2022: $137,510).
NNuummbbeerr ooff ooppttiioonnss // ppeerrffoorrmmaannccee rriigghhttss
options
AR9O1
AR9O3
AR9O5
AR9O7
AR9O8
AR9O9
AR9O12
AR9O13
AR9O14
rights FY22
Performance
rights FY23
Tenure
options FY23
10/10/2017 10/10/2022
22/05/2018 01/07/2023
06/09/2018 06/09/2022
20/11/2019 01/07/2023
13/02/2020 13/02/2023
30/06/2020 01/07/2023
$0.10
$0.20
$0.24
$0.20
$0.20
$0.10
420,000
800,000
1,330,000
250,000
360,000
500,000
24/11/2021 24/11/2025
$0.316
1,750,000
23/12/2022 23/12/2025
13/12/2022 13/12/2025
$0.20
$0.20
6/03/2023
06/03/2025
6/03/2023
06/03/2026 $0.1428
-
-
-
-
-
-
3,337,102
8,642,851
5,983,333
2,089,402
-
-
-
-
-
-
-
-
-
Performance
24/11/2021 24/11/2023
3,048,170
(397,144)
(2,544,434)
Vested/
exercised
during
the year
(420,000)
-
-
-
-
-
-
-
-
-
-
-
(1,330,000)
(360,000)
-
-
-
-
-
-
-
-
-
10,044,257
800,000
250,000
-
-
-
500,000
1,750,000
3,337,102
8,642,851
106,592
5,983,333
2,089,402
18,502,427 20,052,688
(817,144)
(4,234,434) 33,503,537
52
2
ANNUAL REPORT 2023
59
53
2
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 27. Financial instruments
The consolidated entity's activities expose it to a variety of financial risks: market risk, credit risk and liquidity
risk. The consolidated entity'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 consolidated
entity. The consolidated entity uses different methods to measure different types of risk to which it is exposed.
These methods include sensitivity analysis in the case of interest rate and foreign exchange risks and ageing
analysis for credit risk.
Risk management is carried out under policies approved by the Board of Directors ('the Board'). These policies
include identification and analysis of the risk exposure of the consolidated entity and appropriate procedures,
controls and risk limits.
MMaarrkkeett rriisskk
Foreign exchange risk
The consolidated entity is not exposed to any significant foreign exchange risk.
Price risk
The consolidated entity is not exposed to any significant price risk.
Interest rate risk
The consolidated entity's main interest rate risk arises from short-term borrowings. Borrowings obtained at
variable rates expose the consolidated entity to interest rate risk.
CCrreeddiitt rriisskk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the consolidated entity. The consolidated entity has a strict code of credit. The consolidated entity has
adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables using fixed
rates of credit loss provisioning. These provisions are considered representative across all customers of the
consolidated entity based on recent sales experience, historical collection rates and forward-looking
information that is available. There are no guarantees against any receivable but management closely monitors
the receivable balance on a monthly basis and is in regular contact with customers to mitigate risk.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of
this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to
make contractual payments for a period greater than 1 year.
LLiiqquuiiddiittyy rriisskk
Liquidity risk refers to the risk that the consolidated entity maintains sufficient liquid assets to pay debts as
and when they become due and payable. The consolidated entity manages liquidity risk by maintaining
adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast
cash flows and matching the maturity profiles of financial assets and liabilities.
ANNUAL REPORT 2023
60
54
2
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 27. Financial instruments
Note 28. Key management personnel disclosures
The consolidated entity's activities expose it to a variety of financial risks: market risk, credit risk and liquidity
risk. The consolidated entity'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 consolidated
entity. The consolidated entity uses different methods to measure different types of risk to which it is exposed.
These methods include sensitivity analysis in the case of interest rate and foreign exchange risks and ageing
Risk management is carried out under policies approved by the Board of Directors ('the Board'). These policies
include identification and analysis of the risk exposure of the consolidated entity and appropriate procedures,
analysis for credit risk.
controls and risk limits.
MMaarrkkeett rriisskk
Foreign exchange risk
Price risk
Interest rate risk
CCrreeddiitt rriisskk
The consolidated entity is not exposed to any significant foreign exchange risk.
The consolidated entity is not exposed to any significant price risk.
The consolidated entity's main interest rate risk arises from short-term borrowings. Borrowings obtained at
variable rates expose the consolidated entity to interest rate risk.
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the consolidated entity. The consolidated entity has a strict code of credit. The consolidated entity has
adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables using fixed
rates of credit loss provisioning. These provisions are considered representative across all customers of the
consolidated entity based on recent sales experience, historical collection rates and forward-looking
information that is available. There are no guarantees against any receivable but management closely monitors
the receivable balance on a monthly basis and is in regular contact with customers to mitigate risk.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of
this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to
make contractual payments for a period greater than 1 year.
LLiiqquuiiddiittyy rriisskk
Liquidity risk refers to the risk that the consolidated entity maintains sufficient liquid assets to pay debts as
and when they become due and payable. The consolidated entity manages liquidity risk by maintaining
adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast
cash flows and matching the maturity profiles of financial assets and liabilities.
Short term employee benefits
Post-employment benefits
Long term benefits
Share-based payments
Consolidated
2023
$
1,269,596
88,536
10,220
148,915
1,517,267
2022
$
1,047,157
64,389
5,000
137,510
1,254,056
Note 29. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by RSM Australia Partners,
the auditor of the company, and its network firms:
Audit services
Audit or review of the financial statements
Other services
Review of deferred consideration on acquisition
Tax advice
Research and development tax grant
Note 30. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities:
Within one year
One to five years
Consolidated
2023
$
2022
$
129,148
140,535
-
-
67,760
67,760
6,000
7,500
61,800
75,300
196,908
215,835
Consolidated
2023
$
20,252
31,206
51,458
2022
$
24,585
30,731
55,316
Operating lease commitments includes contracted amounts for office and computer equipment under non-
cancellable operating leases expiring within one to five years.
54
2
ANNUAL REPORT 2023
61
55
2
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 31. Related party transactions
Parent entity
archTIS Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 33.
Associates
There are no associates.
Key management personnel
Disclosures relating to key management personnel are set out in note 28 and the remuneration report included
in the directors' report.
Transactions with related parties
The following transactions occurred with related parties:
Payments for services from other related parties:
Payment for Corporate Advisor services from Shop Capital Pty Ltd
Payment for Corporate Advisor services from Amicaa/MST
Transactions with subsidiaries
Loan to archTIS US, Inc.
Loan to Nucleus Cyber Pty Ltd
Loan to archTIS UK Limited
Loan to archTIS EU GmbH
17,325
-
(895,503)
60,213
386,322
5,861
443,107
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Consolidated
2023
$
2022
$
-
420,000
2,357,161
(88,115)
422,482
51,825
2,743,353
ANNUAL REPORT 2023
62
56
2
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 31. Related party transactions
Parent entity
archTIS Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 33.
Associates
There are no associates.
Key management personnel
in the directors' report.
Transactions with related parties
The following transactions occurred with related parties:
Disclosures relating to key management personnel are set out in note 28 and the remuneration report included
Payments for services from other related parties:
Payment for Corporate Advisor services from Shop Capital Pty Ltd
Payment for Corporate Advisor services from Amicaa/MST
Transactions with subsidiaries
Loan to archTIS US, Inc.
Loan to Nucleus Cyber Pty Ltd
Loan to archTIS UK Limited
Loan to archTIS EU GmbH
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Consolidated
2023
$
17,325
-
(895,503)
60,213
386,322
5,861
443,107
2022
$
-
420,000
2,357,161
(88,115)
422,482
51,825
2,743,353
Note 32. Parent entity information
Set out below is the supplementary information about the parent entity.
SSttaatteemmeenntt ooff pprrooffiitt oorr lloossss aanndd ootthheerr ccoommpprreehheennssiivvee iinnccoommee
Loss after income tax
Total comprehensive income
SSttaatteemmeenntt ooff ffiinnaanncciiaall ppoossiittiioonn
Total current assets
Total assets
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits / (accumulated losses)
Total equity
Parent
2023
$
(6,748,570)
(6,748,570)
2022
$
(8,026,687)
(8,026,687)
10,870,050
10,268,947
26,985,112
27,420,056
8,428,999
3,632,987
9,860,193
6,003,374
17,124,919
21,416,682
43,276,195
1,292,652
(27,443,928)
17,124,919
41,099,800
1,012,241
(20,695,359)
21,416,682
The parent entity and its subsidiaries are not party to any deeds of cross guarantee under which each company
guarantees the debts of the others.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2023 and 30 June 2022.
Capital commitments
The parent entity had no capital commitments as at 30 June 2023 and 30 June 2022.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in
note 1, except for investments in subsidiaries which are accounted for at cost, less any impairment, in the parent
entity.
Note 33. Interest in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-
owned subsidiaries in accordance with the accounting policy described in note 1:
Ownership interest
archTIS EU s.r.o
archTIS US, Inc.
Nucleus Cyber Pty Ltd
archTIS UK Limited
archTIS EU GmbH
Country of incorporation
Czech Republic
US
Australia
UK
Germany
2023
%
100%
100%
100%
100%
100%
2022
%
100%
100%
100%
100%
100%
56
2
ANNUAL REPORT 2023
63
57
2
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 34. Reconciliation of profit after income tax expense to net cash from operating activities
Loss after income tax expense for the year
(8,237,955)
(9,445,288)
Consolidated
2023
$
2022
$
Adjustments for:
Depreciation and amortisation
Net gain on disposal of assets
Share-based payments
Interest on lease liabilities
Foreign exchange differences
Change in operating assets and liabilities:
(Increase) / decrease in trade and other receivables
(Increase) / decrease in accrued revenue
(Increase) / decrease in prepayments
(Increase) / decrease in research and development assets
(Increase) / decrease in other assets
(Increase) / decrease in R&D tax incentive receivable
(Increase) / decrease in deferred tax assets
Increase / (decrease) in trade and other payables
Increase / (decrease) in accrued expenses
Increase / (decrease) in income taxes payable
Increase / (decrease) in employee benefits
Increase / (decrease) in provisions
Increase / (decrease) in deferred revenue
Increase / (decrease) in deferred tax liabilities
4,706,792
(71,094)
212,393
56,883
35,663
(1,807,630)
(158,297)
(993,077)
(2,164,120)
(25,339)
(477,915)
-
1,497,174
93,538
(13,994)
(115,562)
162,788
2,652,783
(308,938)
3,779,380
-
137,510
64,584
36,145
(1,854,889)
(143,778)
(19,935)
(2,192,798)
(59,018)
(168,057)
287,866
(333,147)
213,539
-
314,645
179,142
(733,377)
(632,042)
Net cash from operating activities
(4,955,907)
(10,569,518)
ANNUAL REPORT 2023
64
58
2
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2023
Note 34. Reconciliation of profit after income tax expense to net cash from operating activities
Note 35. Earnings per share
Loss after income tax expense for the year
(8,237,955)
(9,445,288)
Adjustments for:
Depreciation and amortisation
Net gain on disposal of assets
Share-based payments
Interest on lease liabilities
Foreign exchange differences
Change in operating assets and liabilities:
(Increase) / decrease in trade and other receivables
(Increase) / decrease in accrued revenue
(Increase) / decrease in prepayments
(Increase) / decrease in research and development assets
(Increase) / decrease in other assets
(Increase) / decrease in R&D tax incentive receivable
(Increase) / decrease in deferred tax assets
Increase / (decrease) in trade and other payables
Increase / (decrease) in accrued expenses
Increase / (decrease) in income taxes payable
Increase / (decrease) in employee benefits
Increase / (decrease) in provisions
Increase / (decrease) in deferred revenue
Increase / (decrease) in deferred tax liabilities
Net cash from operating activities
Consolidated
2023
$
2022
$
4,706,792
(71,094)
212,393
56,883
35,663
(1,807,630)
(158,297)
(993,077)
(2,164,120)
(25,339)
(477,915)
-
1,497,174
93,538
(13,994)
(115,562)
162,788
2,652,783
(308,938)
3,779,380
-
137,510
64,584
36,145
(1,854,889)
(143,778)
(19,935)
(2,192,798)
(59,018)
(168,057)
287,866
(333,147)
213,539
314,645
179,142
(733,377)
(632,042)
-
(4,955,907)
(10,569,518)
Loss after income tax attributable to the owners
Weighted average number of ordinary shares used in calculating basic
earnings per share
Adjustments for calculation of diluted earnings per share:
Options
Performance rights
Weighted average number of ordinary shares used in calculating diluted
earnings per share
Basic earnings per share
Diluted earnings per share
2023
$
2022
$
(8,237,955)
(9,445,288)
Number
Number
275,322,611
251,476,896
20,837,577
2,615,670
298,775,858
10,676,212
1,820,551
263,973,659
Cents
(2.99)
(2.76)
Cents
(3.76)
(3.58)
Note 36. Matters subsequent to the end of the financial year
No matter or circumstance has arisen since reporting date that has significantly affected, or may significantly
affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of
affairs in future financial years.
58
2
ANNUAL REPORT 2023
65
59
2
ARCHTIS LIMITED
DIRECTORS DECLARATION
30 JUNE 2023
In the directors' opinion:
•
•
•
•
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards,
the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial position
as at 30 June 2023 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors,
Miles Jakeman AM
Chairman
23 August 2023
Canberra
ANNUAL REPORT 2023
66
60
2
DIRECTORS DECLARATION
30 JUNE 2023
In the directors' opinion:
•
•
•
•
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards,
the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial position
as at 30 June 2023 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors,
Miles Jakeman AM
Chairman
23 August 2023
Canberra
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of archTIS Limited and its controlled entities for the year ended
30 June 2023, 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.
RSM AUSTRALIA PARTNERS
Canberra, Australian Capital Territory
Dated: 23rd August 2023
C J HUME
Partner
60
2
ANNUAL REPORT 2023
67
67
ARCHTIS LIMITED
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
archTIS LIMITED
Opinion
We have audited the financial report of archTIS Limited (the Company) and its subsidiaries (the Group), which
comprises the consolidated statement of financial position as at 30 June 2023, the consolidated statement of profit
and loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flow 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 2023 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 (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.
ANNUAL REPORT 2023
68
68
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matters described below to be the key audit matters to be communicated in our report.
Capitalisation of assets, including useful lives, amortisation and impairment
Refer to Note 12 in the financial statements
There are a number of areas where judgments
significantly impact the carrying value of intangible
assets, and their respective amortisation profile.
These areas are as follows:
policies, as per AASB 138.
Our audit procedures included the following:
• Evaluated the appropriateness of capitalisation
•
•
•
the decision to capitalise or expense costs,
as per AASB 138 Intangible Assets;
the annual asset life and impairment review,
as per AASB 136 Impairment of Assets; and
significant changes that have taken place
during the period or are expected to take
place in the near future, which will impact the
extent to which, or manner in which, an asset
is used or is expected to be used.
Changes in these judgments have a significant
impact on the results of the Group. Accordingly, this
was considered a key audit matter.
Disclosures relating to the capitalisation and
impairment of assets can be found at Notes 1(q),
1(r), 2 and 12.
• Tested a sample of costs capitalised to
determine whether capitalisation was
appropriate.
• Evaluated the reasonableness of management’s
assessment of expected future economic
benefits that are attributable to the intangible
assets.
We assessed the application of the Group’s annual
asset life review. This included the judgments made
by the Group on:
•
the appropriateness of assets lives applied in the
calculation of amortisation.
Our audit procedures in relation to management's
assessment of impairment included:
• Evaluating the valuation methodology used.
• Evaluating the reasonableness of key
assumptions including the cashflow forecasts,
revenue growth rates, discount rates and other
inputs used in the model.
We evaluated the adequacy of disclosures included
in Notes 1(q), 1(r), 2 and 12.
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 2023, but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly 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.
ANNUAL REPORT 2023
69
69
ARCHTIS LIMITED
SHAREHOLDER INFORMATION
1 AUGUST 2023
Responsibilities of the Directors for the Financial Report
The shareholder information set out below was applicable as at 1 August 2023.
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 have no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with 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.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf.
This description forms part of our auditor's report.
Report on the Remuneration Report
Listed securities in archTIS Limited are quoted on the Australian Securities Exchange under ASX code AR9 (Fully Paid
Ordinary Shares) and AR9O (Listed Options), and the OTCQB Venture Market under the symbol ARHLF (Fully Paid Ordinary
Shares), and are not listed on any other exchange.
Quotation
Voting Rights
The voting rights attached to the Fully Paid Ordinary Shares of the Company are:
(a) at a meeting of shareholders or classes of shareholders each shareholder entitled to vote may vote in person or
by proxy, attorney or representative, or, if a determination has been made by the Board, by direct vote; and
(b) on a show of hands, every person present who is a shareholder (or their proxy, attorney or representative) has one
vote (even though they may represent more than one member), and
(c) on a poll, every person present who is a shareholder, or a proxy, attorney or representative of a shareholder (or
where a direct vote has been lodged) shall have one vote for each fully paid ordinary share held.
There are no voting rights attached to any Options or Performance Rights on issue.
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 21 to 27 of the directors' report for the year ended
30 June 2023.
Distribution of shareholders
i) Fully Paid Ordinary Shares
In our opinion, the Remuneration Report of archTIS Limited., for the year ended 30 June 2023, 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.
RSM AUSTRALIA PARTNERS
Canberra, Australian Capital Territory
Dated:23rd August 2023
C J HUME
Partner
ANNUAL REPORT 2023
70
70
2 1
Holdings Range
Holders
Units
%
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
146
1,537
702
1,428
348
69,575
0.02%
4,166,680
1.46%
5,497,073
1.92%
49,178,222
17.22%
226,668,781
79.37%
4,161
285,580,331
100.00%
On 1 August 2023, there were 1549 holders of unmarketable parcels of less than 4,762 Shares (based on the
closing Share price of $0.105).
Responsibilities of the Directors for the Financial Report
The shareholder information set out below was applicable as at 1 August 2023.
SHAREHOLDER INFORMATION
1 AUGUST 2023
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 have no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with 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.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf.
We have audited the Remuneration Report included in pages 21 to 27 of the directors' report for the year ended
This description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
30 June 2023.
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.
RSM AUSTRALIA PARTNERS
Canberra, Australian Capital Territory
Dated:23rd August 2023
C J HUME
Partner
Quotation
Listed securities in archTIS Limited are quoted on the Australian Securities Exchange under ASX code AR9 (Fully Paid
Ordinary Shares) and AR9O (Listed Options), and the OTCQB Venture Market under the symbol ARHLF (Fully Paid Ordinary
Shares), and are not listed on any other exchange.
Voting Rights
The voting rights attached to the Fully Paid Ordinary Shares of the Company are:
(a) at a meeting of shareholders or classes of shareholders each shareholder entitled to vote may vote in person or
by proxy, attorney or representative, or, if a determination has been made by the Board, by direct vote; and
(b) on a show of hands, every person present who is a shareholder (or their proxy, attorney or representative) has one
vote (even though they may represent more than one member), and
(c) on a poll, every person present who is a shareholder, or a proxy, attorney or representative of a shareholder (or
where a direct vote has been lodged) shall have one vote for each fully paid ordinary share held.
There are no voting rights attached to any Options or Performance Rights on issue.
Distribution of shareholders
i) Fully Paid Ordinary Shares
In our opinion, the Remuneration Report of archTIS Limited., for the year ended 30 June 2023, complies with
section 300A of the Corporations Act 2001.
Holdings Range
Holders
Units
%
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
146
1,537
702
1,428
348
69,575
0.02%
4,166,680
1.46%
5,497,073
1.92%
49,178,222
17.22%
226,668,781
79.37%
4,161
285,580,331
100.00%
On 1 August 2023, there were 1549 holders of unmarketable parcels of less than 4,762 Shares (based on the
closing Share price of $0.105).
70
ANNUAL REPORT 2023
71
2 1
ARCHTIS LIMITED
SHAREHOLDER INFORMATION
1 AUGUST 2023
ii) AR9O Listed Options exercisable at $0.35 on or before 23 December 2023
Holdings Range
Holders
Units
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
1
35
16
40
18
100,406
1.00%
113,303
1.13%
1,421,722
14.15%
8,408,825
83.72%
110
10,044,257
100%
iii) AR9O12 Unlisted Options exercisable at $0.316 on or before 24 November 2025
Holdings Range
Holders
Units
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
-
-
-
-
2
2
1 Holders who hold more than 20% of securities are:
Mr Miles Gareth Jakeman – 1,000,000 options
Cloud Rainmakers Limited – 750,000 options
1,750,0001
100%
1,750,000
100%
%
-
%
-
-
-
-
1
-
-
-
-
ANNUAL REPORT 2023
72
2 2
ii) AR9O Listed Options exercisable at $0.35 on or before 23 December 2023
Holdings Range
Holders
Units
1 to 1,000
1,001 to 5,000
100,406
1.00%
5,001 to 10,000
113,303
1.13%
10,001 to 100,000
1,421,722
14.15%
100,001 and over
8,408,825
83.72%
110
10,044,257
100%
%
-
%
-
-
-
-
1
-
-
-
-
1
35
16
40
18
-
-
-
-
2
2
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
1,750,0001
100%
SHAREHOLDER INFORMATION
1 AUGUST 2023
SHAREHOLDER INFORMATION
1 AUGUST 2023
iv) AR9O13 Unlisted Options exercisable at $0.20 on or before 23 December 2025
iii) AR9O12 Unlisted Options exercisable at $0.316 on or before 24 November 2025
v) AR9O14 Unlisted Options exercisable at $0.20 on or before 13 December 2025
86
3,337,102
100%
Holdings Range
Holders
Units
Holdings Range
Holders
Units
Holdings Range
Holders
Units
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
-
27
-
48
11
128,785
3.86%
-
-
1,541,652
46.20%
1,666,665
49.94%
%
-
%
-
-
-
-
-
-
-
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
-
-
-
11
14
601,181
6.96%
8,041,6701
93.04%
1,750,000
100%
25
8,642,851
100%
1 Holders who hold more than 20% of securities are:
Mr Miles Gareth Jakeman – 1,000,000 options
Cloud Rainmakers Limited – 750,000 options
1 Holders who hold more than 20% of securities are:
Brio Capital Master Fund Ltd – 3,571,428 options
2 2
ANNUAL REPORT 2023
73
2 3
ARCHTIS LIMITED SHAREHOLDER INFORMATION
1 AUGUST 2023
vi) AR9O15 Unlisted Employee Options exercisable at $0.1428 on or before 6 March 2026
Holdings Range
Holders
Units
1 to 1,000
1,001 to 5,000
5,001 to 10,000
-
-
-
-
-
-
%
-
-
-
10,001 to 100,000
25
1,434,207
89.29%
100,001 and over
3
655,195
10.71%
28
2,089,402
100%
vii) Performance Rights – AR9PR01
Holdings Range
Holders
Units
%
-
-
-
-
-
-
-
-
106,5921
100%
106,592
100%
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
-
-
-
-
1
1
1 All the securities in this class are held by:
Daniel Chun Leung Lai
ANNUAL REPORT 2023
74
2 4
SHAREHOLDER INFORMATION
1 AUGUST 2023
SHAREHOLDER INFORMATION
1 AUGUST 2023
vi) AR9O15 Unlisted Employee Options exercisable at $0.1428 on or before 6 March 2026
viii) Employee Performance Rights
Holdings Range
Holders
Units
Holdings Range
Holders
Units
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
-
-
-
-
11
11
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
-
-
-
-
3
3
3,923,832
100%
3,923,832
100%
%
-
-
-
-
%
-
-
-
-
-
-
-
-
-
-
-
-
2,059,501
100%
2,059,501
100%
ix) Employee Restricted Stock Units
Holdings Range
Holders
Units
1 to 1,000
1,001 to 5,000
5,001 to 10,000
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
10,001 to 100,000
25
1,434,207
89.29%
100,001 and over
3
655,195
10.71%
28
2,089,402
100%
vii) Performance Rights – AR9PR01
Holdings Range
Holders
Units
%
-
-
-
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
1
100,001 and over
106,5921
100%
106,592
100%
1 All the securities in this class are held by:
Daniel Chun Leung Lai
2 4
ANNUAL REPORT 2023
75
2 5
ARCHTIS LIMITED SHAREHOLDER INFORMATION
1 AUGUST 2023
Substantial Shareholders
The names of the substantial shareholders as notified to the Company as at 1 August 2023 are:
Name: Kurt Mueffelmann
•
•
Holder of: 18,262,456 fully paid ordinary shares
Last Substantial Holder Notice Received: 14 December 2022
Kurt Mueffelmann has acquired 121,067 Shares (pursuant to the conversion of securities issued under the Company’s
Employee Incentive Scheme) since lodgement of the abovementioned Substantial Holder Notice. This increase in interest is
not reportable under section 671B of the Corporations Act, and as such, an updated Substantial Holder Notice has not been
lodged.
Name: SG Hiscock & Company Limited
•
•
Holder of: 13,709,182 fully paid ordinary shares
Substantial Holder Notice Received: 3 December 2020
Restricted Securities
There are no restricted securities listed on the Company’s register as at 1 August 2023.
On market buy-back
There is currently no on market buy back in place.
ANNUAL REPORT 2023
76
2 6
SHAREHOLDER INFORMATION
1 AUGUST 2023
Substantial Shareholders
Name: Kurt Mueffelmann
Holder of: 18,262,456 fully paid ordinary shares
Last Substantial Holder Notice Received: 14 December 2022
Kurt Mueffelmann has acquired 121,067 Shares (pursuant to the conversion of securities issued under the Company’s
Employee Incentive Scheme) since lodgement of the abovementioned Substantial Holder Notice. This increase in interest is
not reportable under section 671B of the Corporations Act, and as such, an updated Substantial Holder Notice has not been
•
•
•
•
lodged.
Name: SG Hiscock & Company Limited
Holder of: 13,709,182 fully paid ordinary shares
Substantial Holder Notice Received: 3 December 2020
Restricted Securities
On market buy-back
There is currently no on market buy back in place.
There are no restricted securities listed on the Company’s register as at 1 August 2023.
The names of the substantial shareholders as notified to the Company as at 1 August 2023 are:
The twenty largest shareholders of the Company’s quoted Shares as at 1 August 2023 are as follows:
Number held
% of total shares
SHAREHOLDER INFORMATION
1 AUGUST 2023
Equity security holders
i) Fully Paid Ordinary Shares
1
2
3
4
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
KURT MUEFFELMANN
BRIO CAPITAL MASTER FUND LTD
CITICORP NOMINEES PTY LIMITED*
19,003,188
13,146,153
11,690,683
10,349,384
5 MR BRUCE ALEXANDER TALBOT & MRS SUZANNE TALBOT
8,366,436
6 MR PETER ROBERT WOODLAND
7
8
DANIEL CHUN LEUNG LAI
POSSUM HILL PTY LTD
9 MR RHYS DAVID FORD
10 MR OTTMAR WEISS
11 MR DAVID WOOD
12 MR ANTHONY MANUEL WHITFIELD
13 MICHAEL DE FELICE PTY LTD
14 BNP PARIBAS NOMINEES PTY LTD
15 MR MICHAEL JAMES WARE
16 MR DANIEL CHUN LEUNG LAI
17 MR JOHN BAIRD SAMSON RASAKU
18 LEIGH ROWLAND
19 SYRAX INVESTMENTS PTY LTD
19 PHILLIP JONATHAN DEAN & ROBYN CLAIRE DEAN
20 NETWEALTH INVESTMENTS LIMITED
7,869,850
7,320,616
5,429,469
4,950,000
3,895,527
3,213,491
2,600,000
2,569,136
2,211,393
2,200,000
2,163,636
2,055,000
2,001,714
2,000,000
2,000,000
1,816,249
issued
6.65%
4.60%
4.09%
3.62%
2.93%
2.76%
2.56%
1.90%
1.73%
1.36%
1.13%
0.91%
0.90%
0.77%
0.77%
0.76%
0.72%
0.70%
0.70%
0.70%
0.64%
Top 20 Holders of Ordinary Shares
116,851,925
40.92%
Total Remaining Holders Balance
168,728,406
59.08%
*Citicorp Nominees Pty Limited hold 4,995,236 shares as a custodian for Kurt Mueffelmann
2 6
ANNUAL REPORT 2023
77
2 7
ARCHTIS LIMITED SHAREHOLDER INFORMATION
1 AUGUST 2023
ii) AR9O Listed Options exercisable at $0.35 on or before 23 December 2023
The twenty largest holders of the Company’s quoted Options as at 1 August 2023 are as follows:
1
2
3
3
CITICORP NOMINEES PTY LIMITED
BRIO CAPITAL MASTER FUND LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
4 MR JAMES HANKIN
5 MR SPENCER SHERWOOD
6 MR JONTE HANNIGAN
7 MR JAMES HANKIN
8 MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
9 MISS JESSICA ANN BAGGS
10 NETWEALTH INVESTMENTS LIMITED
11 MR PAUL CLIVE CHAMBERS & MISS KATRINA LOUISE CHAMBERS
12 TVCT PTY LTD
12 MR JAMIE JOHN DUFFIELD
12 MR PAUL MICHEAL GLOSSOP
12 MOMENTUM PARTNERSHIPS PTY LTD
13 DAVID WOOD FLIGHTSPEED PTY LTD (ABN 22 150 755 007)
14 CITICORP NOMINEES PTY LIMITED
15 MR DAVID FREDERICK OAKLEY
16 MR JAMES DOUGLAS CORKILL
17 MR CHUNG YEE WONG
18 LYCD NO 1 PTY LTD
18
IRENA MROZ
18 NEAVE TRADING PTY LTD
19 DR KYLE LEE HOEHN
20 JR CONTRACTING MILDURA PTY LTD
Top 20 Holders of Listed Options
Total Remaining Holders Balance
ANNUAL REPORT 2023
78
Number held
2,173,913
1,449,275
% of total shares
issued
21.64%
14.43%
724,638
724,638
444,927
368,650
368,414
352,993
289,855
250,000
217,390
205,000
144,928
144,928
144,928
144,928
136,957
122,463
86,957
84,683
81,377
72,464
72,464
72,464
65,288
62,246
9,006,768
1,037,489
7.21%
7.21%
4.43%
3.67%
3.67%
3.51%
2.89%
2.49%
2.16%
2.04%
1.44%
1.44%
1.44%
1.44%
1.36%
1.22%
0.87%
0.84%
0.81%
0.72%
0.72%
0.72%
0.65%
0.62%
89.67%
10.33%
2 8
SHAREHOLDER INFORMATION
1 AUGUST 2023
ii) AR9O Listed Options exercisable at $0.35 on or before 23 December 2023
The twenty largest holders of the Company’s quoted Options as at 1 August 2023 are as follows:
Number held
% of total shares
1
2
3
3
CITICORP NOMINEES PTY LIMITED
BRIO CAPITAL MASTER FUND LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
4 MR JAMES HANKIN
5 MR SPENCER SHERWOOD
6 MR JONTE HANNIGAN
7 MR JAMES HANKIN
8 MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
9 MISS JESSICA ANN BAGGS
10 NETWEALTH INVESTMENTS LIMITED
11 MR PAUL CLIVE CHAMBERS & MISS KATRINA LOUISE CHAMBERS
12 TVCT PTY LTD
12 MR JAMIE JOHN DUFFIELD
12 MR PAUL MICHEAL GLOSSOP
12 MOMENTUM PARTNERSHIPS PTY LTD
13 DAVID WOOD FLIGHTSPEED PTY LTD (ABN 22 150 755 007)
14 CITICORP NOMINEES PTY LIMITED
15 MR DAVID FREDERICK OAKLEY
16 MR JAMES DOUGLAS CORKILL
17 MR CHUNG YEE WONG
18 LYCD NO 1 PTY LTD
18
IRENA MROZ
18 NEAVE TRADING PTY LTD
19 DR KYLE LEE HOEHN
20 JR CONTRACTING MILDURA PTY LTD
Top 20 Holders of Listed Options
Total Remaining Holders Balance
2,173,913
1,449,275
724,638
724,638
444,927
368,650
368,414
352,993
289,855
250,000
217,390
205,000
144,928
144,928
144,928
144,928
136,957
122,463
86,957
84,683
81,377
72,464
72,464
72,464
65,288
62,246
9,006,768
1,037,489
issued
21.64%
14.43%
7.21%
7.21%
4.43%
3.67%
3.67%
3.51%
2.89%
2.49%
2.16%
2.04%
1.44%
1.44%
1.44%
1.44%
1.36%
1.22%
0.87%
0.84%
0.81%
0.72%
0.72%
0.72%
0.65%
0.62%
89.67%
10.33%
2 8
ANNUAL REPORT 2023
79
ANNUAL REPORT 2023
79
ARCHTIS LIMITED ARCHTIS LIMITED | AR9 | ACN 123 098 671
ANNUAL REPORT 2023
80
ARCHTIS LIMITED ANNUAL REPORT 2023
81
ARCHTIS LIMITEDARCHTIS LIMITED