ANNUAL REPORT FY2024
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ARCHTIS LIMITED
2024 ANNUAL REPORT
ARCHTIS LIMITED | AR9 | ACN 123 098 671
ANNUAL REPORT FY2024
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ANNUAL REPORT FY2024
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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.
ANNUAL REPORT FY2024
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ARCHTIS LIMITED
CONTENTS
CORPORATE DIRECTORY
4
LETTER FROM THE CHAIRMAN & MANAGING DIRECTOR
5
HIGHLIGHTS
7
EXECUTIVE LEADERSHIP
10
OVERVIEW OF FY24
12
DIRECTOR’S REPORT
16
FINANCIAL STATEMENTS
30
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
31
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
32
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
33
CONSOLIDATED STATEMENT OF CASH FLOWS
34
NOTES TO THE FINANCIAL STATEMENTS
35
DIRECTORS’ DECLARATION
68
INDEPENDENT AUDITOR’S DECLARATION
69
INDEPENDENT AUDITOR’S REPORT TO
THE MEMBERS OF ARCHTIS LIMITED
70
SHAREHOLDER INFORMATION
73
ARCHTIS LIMITED
ANNUAL REPORT FY2024
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ANNUAL REPORT FY2024
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DIRECTORS
Miles Jakeman AM
Daniel Lai
Leanne Graham
JOINT COMPANY SECRETARIES
Erlyn Dawson
Winton Willesee
Robert Andrew Burns
REGISTERED OFFICE
Level 3, archTIS House
10 National Circuit
Barton ACT 2600
PRINCIPAL PLACE OF BUSINESS
Level 3, archTIS House
10 National Circuit
Barton ACT 2600
(02) 6162 2783
SHARE REGISTRIES
Automic
Level 5, 191 St Georges Terrace
Perth, WA 6000
(08) 9324 2099
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:
Australian Securities Exchange (ASX): AR9
OTCQB Venture Market: ARHLF
WEBSITE
www.archtis.com
INVESTOR PORTAL
investors.archtis.com
CORPORATE
DIRECTORY
ANNUAL REPORT FY2024
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ANNUAL REPORT FY2024
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ARCHTIS LIMITED
Dear Shareholders,
It is important to reflect on financial year 2024
(FY2024) and to share our achievements, challenges,
and vision for the future of archTIS. This year has
been marked by significant growth as we achieved
our financial objectives, strategic advancements, and
a reinforced commitment to our mission of providing
innovative data-centric security solutions to protect
the world’s most sensitive information.
Performance Overview
The FY2024 has been a landmark year for archTIS.
We have achieved:
•
Strong annual revenue growth of 54%, with a
58% increase in overall licensing revenue.
•
Annual recurring revenue (ARR) surpassing
$4M with 104% of net revenue growth from our
existing customer base.
•
Increased gross margin percentages to 60% with
a 79% expansion in gross margin dollars.
•
Decrease in annual operating expenses by 21%.
•
Achieved positive annual operating cash of $1.6M
generated through record cash receipts of over
$12M, which was an improvement of 158% from
the prior annual period. Overall cash outflows for
operating and investing activities was ($1.1M),
an improvement of $3.9M from the FY2023 cash
outflow of ($5.0M) and ($12.3M) from FY2022.
Our expanded client base, including several
high-profile governmental and enterprise clients,
underscores the trust and confidence that the market
has in our capabilities. Our pipeline and defined
opportunities remain strong across the global defense
and defense manufacturing targeted markets as we
enter FY2025.
Strategic Developments
Throughout the year, strong market tailwinds have
assisted us in making significant strides in enhancing
our product offerings and expanding our market
presence.
Key highlights include:
Product Innovation: We have introduced new
features and enhancements to our Kojensi and NC
Protect platforms, further solidifying their positions
as leading automation solutions in the secure
collaboration and data protection spaces.
Market Focus: We have continued to expand within
our target markets and to build into equivalent
overseas markets, via a mix of strategic partnerships,
alliances and direct channel sales.
Client Acquisition: Our client portfolio has grown
to include several new government agencies and
enterprise clients, including within the Australian
Department of Defence, NATO, US DoD, Penten,
BAE, DHL, Bank of Finland, and KPMG. These
successful deployments evidence the relevance,
robustness and reliability of our solutions.
Research and Development: We continue to invest
heavily in R&D to stay ahead of the competitive and
evolving cybersecurity landscape. This investment
ensures that our products remain at the forefront of
innovation and being capable of addressing the most
sophisticated security threats. We are aggressively
looking at newer technologies that will assist in
expanding our offerings for global data governance,
policy orchestration, attribute-based encryption and
overall data security for all types of information.
Financial Performance
Our financial results for FY2024 have been strong,
with revenue growth exceeding most of our
expectations. We delivered positive operating
cash flow as we increased revenue by over 50%
and maintained a disciplined approach to cost
management, ensuring that we deliver value to our
shareholders while continuing to invest in our future.
Our balance sheet remains healthy for our size of
business, providing us with the flexibility to pursue
strategic opportunities as they arise.
LETTER FROM
THE CHAIRMAN & MANAGING DIRECTOR
ARCHTIS LIMITED
DR. MILES JAKEMAN AM & DANIEL LAI
ANNUAL REPORT FY2024
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LETTER FROM
THE CHAIRMAN & MANAGING DIRECTOR (CONT)
DR. MILES JAKEMAN AM & DANIEL LAI
Yours sincerely,
Looking Ahead
As we look to the future, we are confident in our
strategic direction and our ability to capitalise on
the growing demand for advanced data-centric
cybersecurity solutions. Our focus will remain on:
Innovation: Continuing to innovate and enhance our
product offerings to meet the evolving needs of our
clients.
Expansion: Leveraging our market presence to enter
new regions and sectors, further diversifying our
revenue streams.
Customer Success: Ensuring that our clients
achieve their security objectives through our
solutions, thereby fostering long-term relationships
and driving repeat business.
Sustainability: Committing to sustainable
business practices that not only drive growth, but
also contribute positively to our community and
environment.
Conclusion
In closing, we would like to express our gratitude
to our dedicated team, whose hard work and
commitment have been instrumental in our
success this year. We would also like to thank
our shareholders for their continued support
and confidence in our vision. Together, we are
well-positioned to navigate the challenges and
opportunities that lie ahead.
Thank you for being a part of archTIS’ journey. We
look forward to another year of growth, innovation,
and success.
Daniel Lai
Managing Director & CEO
Dr. Miles Jakeman, AM
Chairman of the Board
ANNUAL REPORT FY2024
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ARCHTIS LIMITED
FY2024 HIGHLIGHTS
ARCHTIS LIMITED
ROBUST FINANCIAL RESULTS (FY24 VS. FY23)
Total Revenue
Annual Recurring Revenue (ARR)
Cash from Operating Activities
Operating Expenses
+
+
ANNUAL REPORT FY2024
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FY2024 HIGHLIGHTS
CUSTOMER HIGHLIGHTS
archTIS was engaged by BAE Systems
Australia to rapidly develop a Concept
Demonstrator for their Navy and Industry
Collaboration Environment. This consisted of
a data orchestration platform, with embedded
data-centric security (DCS) and governance
controls to demonstrate a variety integration
use cases across the Maritime Shipbuilding
and Sustainment capabilities within the Data
Management System (DMS).
“Kojensi is very appealing because of its
low start-up time. It is easy to use and
functionally rich.
However, compliance is a living program and
often requires changes. It easily accommodates
any user access and process updates as our
requirements change.”
Ilze Lamberton
Portfolio Operations Lead, Secrecy and Critical
Infrastructure, Government Security & Secrecy
(GS2), SAP Australia Pty Ltd
•
A licensing agreement with Penten to provide
Kojensi as part of a solution for an Australian
national security agency to enable secure
collaboration among internal parties regarding highly
sensitive information. The contract will provide an
annual recurring revenue licence fee of $264K and
implementation services of $202K.
•
A command and control department within the
Australian Department of Defence purchased $630K
of services to adopt NC Protect for the war-fighter
network, with additional licence purchases pending.
•
A US-based defence contractor selected NC Protect
to secure Microsoft 365 to secure GCC High and
assist with CMMC and CUI compliance.
•
One of the largest law firms in the US purchased
NC Protect to provide dynamic read-only access and
watermarking requirements for the collaboration of
sensitive court documents.
•
A US Defence manufacturer that provides space
warfare capabilities expanded its use of NC Protect
by purchasing NC Encrypt for data encryption and
key management to bolster its security practices.
•
archTIS partner, Secure State, sold Kojensi SaaS
to a French aerospace company for the secure
collaboration of sensitive information across industry
and government.
•
A multinational manufacturing company renewed
its six-figure subscription to NC Protect to protect
intellectual property across its R&D teams.
•
Australian Naval Infrastructure (ANI) signed a total
contract value of $342,540 (including GST), of which
$112,200 is ARR to licence Kojensi SaaS. ANI now
solves key collaboration challenge across the supply
chain for navy ship building facilities.
•
A global defence firm that manages and operates
extensive testing and evaluation capabilities for air,
land, sea and target systems selected Kojensi SaaS
for collaboration associated with AUKUS.
•
Two European reseller partners chose NC Protect
and NC Encrypt for independent encryption key
management for their Microsoft 365 and SharePoint
on-premises customer environments to maintain
digital sovereignty and add data-centric protection to
combat insider threats.
ANNUAL REPORT FY2024
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ARCHTIS LIMITED
FY2024 HIGHLIGHTS
ARCHTIS LIMITED
DYNAMIC ACCESS & DATA
PROTECTION FOR MICROSOFT
365 APPS & FILE SHARES
Prevent data loss,
misuse and human
error
Discover, classify
and secure sensitive
information
Audit and report
for compliance
SENSITIVE & CLASSIFIED
INFORMATION
SHARED SECURELY
Share sensitive
and classified files
securely
Accredited
secure document
collaboration
Enforce zero trust with
attribute-based access
control (ABAC)
ANNUAL REPORT FY2024
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Daniel 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 Daniel
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.
Daniel 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 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.
Kurt 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). Kurt 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.
Kurt has served on the advisory
boards of numerous companies and
professional organisations within the
technology industry.
Robert Andrew (Andrew) has over
25 years of experience in senior
leadership roles and has significant
ASX experience.
He led the listing process as a
consulting CFO for Racing and Sports
Limited (ASX:RTH) and Openpay
Ltd (ASX:OPY), in 2021, and 2019
respectively, including multiple
subsequent capital raises. Andrew
was employed the CFO for The
Citadel Group Limited (ASX:CGL)
for 11 years until 2018, prior to
specializing as a Governance and
risk Management consultant. Andrew
has strong technical competencies in
financial management, accounting,
risk management and process
improvement techniques with a focus
in B2B technology and businesses.
Andrew holds an Executive MBA
in Business from the Australian
Graduate School of Management
(AGSM) and a Bachelor of Commerce
and Accounting from the University
of Canberra. He is a member the
Chartered Accountants Australia and
New Zealand, and the Australian
Institute of Company Directors. He
is currently a director of Viva Leisure
Limited (ASX:VVA).
DANIEL LAI
KURT MUEFFELMANN
ROBERT ANDREW BURNS
CEO & Managing Director
Global COO & US President
Chief Financial Officer
EXECUTIVE LEADERSHIP
ANNUAL REPORT FY2024
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ARCHTIS LIMITED
As CTO, Thomas 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 Thomas a deep
breadth of expertise from which to call
upon to innovate archTIS technology
platforms and ensure seamless client
delivery.
THOMAS MYERSCOUGH
Chief Technology Officer
Tony 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.
Irena 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, Irena 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.
Irena holds a Bachelor of Science
in Mass Communications from
Boston University’s College of
Communication.
TONY HOWELL
IRENA MROZ
Global Chief Architect,
Defence & Intelligence
Chief Marketing Officer
EXECUTIVE LEADERSHIP
ANNUAL REPORT FY2024
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INTRODUCTION
archTIS is trusted to safeguard the world’s most
sensitive information. Our performance in FY2024
reflected the Company’s ability to execute against
a well-defined strategic plan that allowed for robust
financial results achieved through record revenue
growth and the lowering of operating expenses, leading
to positive operating cashflow. Strong customer
adoption through direct and partnership distribution
channels, including Microsoft, drove expanded global
opportunities across key defence and defence industrial
target markets. archTIS remains confident in our product
and services offerings with continued investment in
product innovation to support the growth tailwinds
across the data-centric security market.
ROBUST AND GROWING FINANCIAL
RESULTS
FY2024 cash from operating activities was $1.6M driven
by continued revenue growth, increased margins and
lower operating expenses. archTIS had record-breaking
customer receipts of over $12M. YTD revenue was up
54%, driven by a $1.8M increase in licence revenue and
a $2M increase in services. Gross margin for the year
was 60% or $5.85M up 79% on FY2023. The higher
gross margins are derived from the increase in licence
revenues and strong executional delivery on the services
contracts. The strategic objective of positive operating
cash flow is reflected in the continued focus on the
management of operating expenditure (Opex), resulting
in a reduction of 21% for the year. The Company
finished the year with $3.99M of available funding.
GROWING BUSINESS IN SPECIFIC
MARKETS
archTIS continues to concentrate on the data-centric
security market within the defence and defence
industrial markets. The global defense cyber security
market size was valued at USD 16.45 billion in 2023 and
is projected to grow from USD 19.14 billion in 2024 to
USD 63.38 billion by 2032, exhibiting a CAGR of 16.1%
during the forecast period.1
The data-centric security market is experiencing rapid
growth due to the increasing importance of protecting
sensitive data in various industries. In 2023, the market
was valued at approximately USD 6.52 billion and
is expected to grow to USD 22.03 billion by 2028,
representing a compound annual growth rate (CAGR) of
around 27.5%.2 This growth is driven by the increasing
frequency of data breaches, regulatory compliance
requirements, and the proliferation of mobile devices
and cloud services.
The market’s expansion is also fueled by advancements
in data protection technologies, such as automated data
discovery, classification, encryption, and compliance
monitoring. The adoption of cloud-based solutions
is particularly notable, with cloud-based data-centric
security expected to grow at a CAGR of 25.1% from
2023 to 2030.3 The need for secured collaborations and
data sharing across organisations has further spurred
demand.
PRODUCT INNOVATION
Over the past year, archTIS has made significant
advancements in its product offerings, NC Protect and
Kojensi. Kojensi has continued to serve as a secure,
accredited SaaS platform for sensitive information
sharing within the defense industry, government,
multinational coalitions, and other critical sectors. It
enables secure collaboration of sensitive and classified
information, employing military-grade security measures,
including ABAC policies, to control access based on
users’ needs and roles. The platform supports various
use cases, including compliance with Australian and US
regulations (e.g., DISP, ITAR), facilitating collaboration
among international partners, and managing critical
infrastructure data securely.
NC Protect has expanded its capabilities to include
dynamic, real-time data loss prevention across various
Microsoft platforms, including SharePoint Modern
Experience, Office 365 Groups, and GCC High.
This expansion enhances data security by providing
attribute-based access control (ABAC) and protection
policies that adjust dynamically based on user context
and file content, ensuring compliance with regulations
OVERVIEW OF FY2024
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT FY2024
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ANNUAL REPORT FY2024
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ARCHTIS LIMITED
and preventing unauthorized data access and data
misuse. Notably, NC Protect has been integrated with
other platforms, including Windows File Shares, NetApp
ONTAP, and Nutanix Files, offering robust encryption
and protection against data breaches and unauthorized
file sharing.
Continued innovations have allowed archTIS to build
a new technology product demonstrator for BAE to
secure collaboration and data integration capability.
archTIS was engaged to securely collaborate across
multiple data sets with key stakeholders, suppliers and
customers on a need-to-know basis.
CORPORATE
archTIS was named the “2023 Cyber Business of the
Year” by the Australian Defence Industry Awards. The
company was also recognised as a Microsoft Security
Excellence Awards 2024 Finalist for Compliance &
Privacy Trailblazer.
Robert Andrew Burns (Andrew) was appointed to the
role of Chief Financial Officer and Joint Company
Secretary. Andrew will oversee the company’s financial
planning and analysis, accounting and controllership,
taxation, audit and compliance, corporate governance,
and enterprise risk management functions. He was
previously CFO and 2iC to MD/CEO of the then-listed
Citadel Group Limited alongside current archTIS
Chairman Miles Jakeman.
archTIS extended its capital funding programs through
the non-dilutive receipt of an R&D tax incentive payment
of $2.1M from the ATO and the increased extension of
a market rate lending facility with the Commonwealth
Bank of Australia (CBA) for $2.0M.
OUTLOOK
Support our core strategic objectives to be:
•
The preferred platform for sharing information
across Government, Defence and Defence Industry;
•
A premium provider of Policy Enforced Access
Management products to the global defence
market;
•
A leader in the provision of Policy Enforced
Encryption; and,
•
A global thought leader in data-centric architecture.
Achieve financial objectives of:
•
Maintaining positive operating cash flow;
•
Continuing strong revenue growth with greater
focus on licensing that drives higher margins and
the predictability associated with annual recurring
revenue (ARR); and,
•
Maintaining operating expense levels that support
growth while maintaining margins.
Deliver continuous product innovation to drive high
customer and partner satisfaction by:
•
Developing and releasing high-quality, mission-
ready products for the defence and defence
industrial markets that drive increased sales and
market share;
•
Creating and monetising leading technology
alliances with technology leaders, including
Microsoft and Oracle; and,
•
Identifying and expanding global distribution
channels that broaden geographical and vertical
market opportunities.
OVERVIEW OF FY2024
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2023
13
ANNUAL REPORT FY2024
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1 Fortune Business Insights, https://www.fortunebusinessinsights.com/defense-cyber-security-market-105139
2 Research and Markets, https://www.researchandmarkets.com/reports/5783071/data-centric-security-global-market-report
3 Grand View Research, https://www.grandviewresearch.com/press-release/global-data-centric-security-market
ANNUAL REPORT FY2024
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GLOBALLY RECOGNIZED FOR DEVELOPING
SOLUTIONS TO SAFEGUARD THE WORLD’S MOST
SENSITIVE INFORMATION
OVERVIEW OF FY2024
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT FY2024
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ARCHTIS LIMITED
MATERIAL BUSINESS RISKS
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.
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 is uncertain.
Moreover, the level of profitability cannot be predicted.
ANNUAL REPORT FY2024
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DIRECTORS’
REPORT
ANNUAL REPORT FY2024
17
ARCHTIS LIMITED
DIRECTORS’ REPORT
DR. MILES JAKEMAN, AM
Chairman of the Board
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 2024 (‘Reporting Period’ or ‘FY2024’).
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, AM
•
Daniel Lai
•
Leanne Graham
DIRECTORS AND MEETINGS OF DIRECTORS
The qualifications and experience of directors, including current and recent directorships, are detailed below:
Miles 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.
Miles 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.
Miles holds 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 FY2024
18
Daniel 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: 10,150,762
ordinary shares, 707,804 unlisted options and
1,893,364 performance rights
Other current public listed company
directorships: None
Former public listed company directorships
(last 3 years): None
DANIEL LAI
CEO & Managing Director
DIRECTORS’ REPORT
LEANNE GRAHAM
Non-Executive Director
Leanne has over 30 years of experience in
the software industry. As an entrepreneur and
executive, she has been instrumental in the
success of multiple startups and global tech
companies. Leanne has provided guidance to
businesses around the world, and in 2018, she
was honoured with the New Zealand Order
of Merit for her contributions to the software
sector. She also serves as a director at Energy
One Limited and continues to advise companies
globally.
Interest in Shares and Options: 1,011,569
ordinary shares, and 869,047 unlisted options
Other current public listed company
directorships: Non-Executive Director of Energy
One Ltd (ASX:EOL) (appointed 10 December
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), Bridge SaaS Limited
(ASX:BGE) (24 May 2022 to 10 January 2024.
ANNUAL REPORT FY2024
19
ARCHTIS LIMITED
WINTON WILLESEE
Joint-Company Secretary
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 Winton Willesee, Erlyn Dawson and
Robert Andrew Burns.
Number of Meetings Held
Number Attended
Miles Jakeman
13
13
Leanne Graham
13
13
Daniel Lai
13
13
The number of meetings of the company’s Board of Directors (‘the Board’) held during the year ended 30 June 2024,
and the number of meetings attended by each director were:
DIRECTORS’ REPORT
Erlyn 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.
Erlyn 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.
ERLYN DAWSON
Joint-Company Secretary
Andrew has over 25 years of
experience in senior leadership
roles and has significant ASX
experience. He led the listing
process as a consulting CFO
for Racing and Sports Limited
(ASX:RTH) and Openpay Ltd
(ASX:OPY), in 2021, and 2019
respectively , including multiple
subsequent capital raises. Andrew
was employed the CFO for The
Citadel Group Limited (ASX:CGL)
for 11 years until 2018, prior to
specializing as a Governance and
risk Management consultant. Andrew
has strong technical competencies in
financial management, accounting,
risk management and process
improvement techniques with
a focus in B2B technology and
businesses.
Andrew holds a Bachelor of
Commerce, Executive Masters of
Business Administration, and is a
Member of Chartered Accountants
Australia and New Zealand, and a
Member of the Australian Institute of
Company Directors.
ROBERT ANDREW BURNS
Joint-Company Secretary
Winton is an experienced company
director and secretary with over
20 years’ experience in various
roles within the Australian and
international capital markets. Winton
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.
Winton 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.
ANNUAL REPORT FY2024
20
PRINCIPAL ACTIVITIES
During the financial year the principal continuing activities of the consolidated entity 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;
•
Consulting and solutions services for secure information sharing and interorganisational collaboration related to
the above software sales;
•
Continued innovations in Data-Centric Security focus on protecting data at its source, enhancing privacy and
compliance by securing data throughout its lifecycle; and,
•
Evolving Attribute-Based Access Controls (ABAC) as the primary mechanism for innovation of dynamically
managed access based on user and environment attributes, providing granular and adaptive data protection.
DIVIDENDS
No dividends were paid during the financial year.
REVIEW OF OPERATIONS
Refer to pages 12-14 of the annual report for an overview of the FY24 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 2024 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 costs 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.
DIRECTORS’ REPORT
ANNUAL REPORT FY2024
21
ARCHTIS LIMITED
SHARES UNDER OPTION
Unissued ordinary shares of archTIS Limited under option at the date of this report are as follows:
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.
Class Code
Grant Date
Expiry Date
Exercise Price
Number under
Option
AR9016
21 Dec 2023
21 Dec 2026
$0.0792
378,673
AR9017
21 Dec 2023
21 Dec 2026
$0.0792
1,448,060
AR9018
21 Dec 2023
21 Dec 2026
$0.0792
732,977
AR9O12
24 Nov 2021
24 Nov 2025
$0.316
1,750,000
AR9O13
23 Dec 2022
23 Dec 2025
$0.200
3,337,102
AR9O14
13 Dec 2022
13 Dec 2025
$0.2000
8,642,851
AR9O15
6 Mar 2023
6 Mar 2026
$0.1428
1,492,977
Total options on issue
17,782,640
DIRECTORS’ REPORT
ANNUAL REPORT FY2024
22
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 distinctly different.
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; and,
•
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’) 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.
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
ANNUAL REPORT FY2024
23
ARCHTIS LIMITED
2024
Directors
Miles Jakeman AM
Non-executive 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 (finished 12 April 2024)
Robert Andrew Burns
Chief Financial Officer (commenced 1 April 2024)
During the prior comparative period, the key management personnel of the Group consisted of the following personnel
of archTIS Limited.
2023
Directors
Miles Jakeman AM
Non-executive 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
DIRECTORS’ REPORT
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:
ANNUAL REPORT FY2024
24
DIRECTORS’ REPORT
Short-term benefits
Salary &
Fees
Cash
bonus
Other
Share-
based
pay-
ments
Post
employ-
ment
super
Long
service
leave
Termina-
tion
Benefits
Total
% of
salary
assoc.
with
perfor-
mance
Share-
based
pay
ments
as a %
of total
$
$
$
$
$
$
$
%
%
2024
Non-Executive Directors
Miles Jakeman AM
76,314
-
-
17,327
8,395
-
-
102,036
-
17%
Leanne Graham
55,341
-
-
12,996
-
-
-
68,336
-
19%
Executive Directors
Daniel Lai
300,000
21,953
-
34,533
30,140
5,000
-
391,626
7%
9%
Key Management Personnel
Kurt Mueffelmann** 380,373
20,464
-
41,577
-
-
-
442,414
5%
9%
Kylie Sheather***
224,222
-
37,035
3,046
28,708
(9,829)
64,615
347,797
0%
1%
Robert Andrew
Burns
132,300
-
-
25,000
-
-
-
157,300
-
16%
2023
Non-Executive Directors
Miles Jakeman AM
75,000
-
-
40,056
7,875
-
-
122,931
-
33%
Leanne Graham
54,756
-
-
30,042
-
-
-
84,798
-
35%
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%
6%
Kylie Sheather
280,000
35,535
21,975
23,027
36,308
5,219
-
402,064
30%
6%
*Estimated AUD remuneration based on USD to AUD 2023/24 average exchange rate of 1.5215
** Estimated AUD remuneration based on USD to AUD 2022/23 average exchange rate of 1.4903
*** Finished 12 April 2024
REMUNERATION REPORT (AUDITED) (CONTINUED)
ANNUAL REPORT FY2024
25
ARCHTIS LIMITED
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 is $351,225 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: Kurt Mueffelmann
Title: Senior Vice President of Sales, 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, Kurt 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 is US$262,500 per year, plus variable compensation of up to an additional 80% of base
salary, comprising of an annual cash bonus and long-term equity incentives, subject to achievement of annual KPIs
set by the Board.
Name: Andrew Burns
Title: Chief Financial Officer
Agreement commenced: 1 April 2024
Term of agreement: 15 Months 1 April 2024 to 30 June 2025
Details: Burns Executive Services Pty Ltd is contracted to provide outsourced corporate services to archTIS Ltd from
1 April 2024 to 30 June 2025. The contracted corporate services include the role of Chief Financial Officer of which
Andrew Burns is the specified personnel. The contract remuneration covers the Chief Financial Officer (CFO) role,
but it is important to note that this is just one of several positions included in the agreement. The total contract value
compensates for a team of professionals delivering a range of shared services. These services encompass various
essential functions, including: Financial controllership, Financial planning and analysis, Accounts payable, Payroll
management, People and culture administration. The contract’s remuneration package is comprehensive, covering
the costs associated with providing these critical business functions.
•
Base rate of $525,000 excluding GST;
•
Performance rights on contract commencement of $125,000, 50% vesting 31 December 2024 and
50% 30 June 2025;
•
STI of $62,500 based on the same specific annual targets and KPIs being achieved as the Executive;
•
LTI of $187,500 based on the same terms for the FY25 LTI as the Executive; and,
•
Three months’ notice by either party is required for termination of the contract.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
DIRECTORS’ REPORT
ANNUAL REPORT FY2024
26
DIRECTORS’ REPORT
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:
* 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
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
ANNUAL REPORT FY2024
27
ARCHTIS LIMITED
REMUNERATION REPORT (AUDITED) (CONTINUED)
Share-based compensation (continued)
Options classes AR9O15, 16, 17, 18 are granted to the executive directors and key management personnel and staff
as part of a retention strategy. The options are issued based on the discretion of Non-Executive Directors which is
reviewed annually, and are not part of the executive directors and key management personnel remuneration packages.
The options vest annually on the 30th of June based on continued engagement. The options are exercisable by the
holder from the vesting date. If the holder ceases to be engaged by 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.
DIRECTORS’ REPORT
Grant
Date
Vesting
Date
Expiry
Date
Exercise
Price
Value
Per Option
Number
Under Option
AR9O15, 16, 18
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
23 Nov 23
30 Jun 24
21 Dec 26
$0.0792
$0.0385
126,224
23 Nov 23
30 Jun 25
21 Dec 26
$0.0792
$0.0385
126,224
23 Nov 23
30 Jun 26
21 Dec 26
$0.0792
$0.0385
126,225
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
21 Dec 23
30 Jun 24
21 Dec 26
$0.0792
$0.0371
158,653
21 Dec 23
30 Jun 25
21 Dec 26
$0.0792
$0.0371
158,653
21 Dec 23
30 Jun 26
21 Dec 26
$0.0792
$0.0371
158,653
* Subject to continued employment with the Company on the date of vesting.
ANNUAL REPORT FY2024
28
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:
DIRECTORS’ REPORT
Opening
Balance
Granted
Exercised/
Vested
Expired/
Forfeited
Closing
Balance
Non-Executive Directors
Miles Jakeman AM
1,476,190
-
-
-
1,476,190
Leanne Graham
875,659
-
-
-
875,659
Executive Directors
Daniel Lai
1,493,389
2,272,0371,2
210,084
954,174
2,601,168
Key Management Personnel
Kurt Mueffelmann
1,656,722
2,855,7532
249,032
996,132
3,297,311
This concludes the remuneration report, which has been audited.
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:
1 1,893,364 Performance Rights and 378,673 Tenure Options were issued to Lai under the Company’s Employee Incentive Plan (adopted at the Company’s
Annual General Meeting under listing rule 10.14 held on 23 November 2023).
2 A summary of the vesting conditions attached to these securities is set out in Note 24.
REMUNERATION REPORT (AUDITED) (CONTINUED)
Share-based compensation (continued)
Opening
Balance
Received
as part of
remuneration
Additions
Disposals
Closing
Balance
Non-Executive Directors
Miles Jakeman AM
2,586,925
-
-
-
2,586,925
Leanne Graham
1,011,569
-
-
-
1,011,569
Executive Directors
Daniel Lai
9,834,086
316,676
-
-
10,150,762
Key Management Personnel
Kurt Mueffelmann
18,262,456
249,032
-
-
18,511,488
Robert Andrew Burns
91,735
-
-
-
91,735
ANNUAL REPORT FY2024
29
ARCHTIS LIMITED
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 2024 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 69.
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
29 August 2024
Canberra, ACT
DIRECTORS’ REPORT
ANNUAL REPORT FY2024
30
FINANCIAL
STATEMENTS
ANNUAL REPORT FY2024
31
ARCHTIS LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2024
2024
2023
Note
$
$
Revenue
3(a)
9,799,517
6,367,123
Cost of sales
(3,951,346)
(3,102,642)
Gross Profit
5,848,171
3,264,481
Other income
3(b)
1,928,702
2,455,468
Sales and marketing
5
(1,629,781)
(3,824,276)
General administration
5
(10,755,986)
(10,439,180)
Loss before income tax
(4,608,894)
(8,543,507)
Income tax (expense) / benefit
6
352,918
305,552
Other Comprehensive Income
-
-
Total Comprehensive Income for the Year
(4,255,976)
(8,237,955)
Earnings per share
Cents
Cents
Basic earnings per share
35
(1.49)
(2.99)
Diluted earnings per share
35
(1.49)
(2.99)
The above consolidated statement of profit and loss and other comprehensive income should be read in conjunction with
the accompanying notes.
ANNUAL REPORT FY2024
32
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
2024
2023
Note
$
$
ASSETS
Current assets
Cash and cash equivalents
7
2,916,097
3,245,108
Trade and other receivables
8
413,516
4,289,228
Other current assets
9
2,285,337
3,688,316
Provision for income tax
16,174
16,145
Total current assets
5,631,124
11,238,797
Non-current assets
Other non-current assets
10
36,971
67,501
Property, plant and equipment
11
106,929
152,773
Intangible assets
12
10,732,837
12,701,443
Right of use asset
13
107,661
714,675
Total non-current assets
10,984,398
13,636,392
Total assets
16,615,522
24,875,189
LIABILITIES
Current liabilities
Trade and other payables
14
802,305
2,264,880
Employee benefits
15
301,377
346,490
Provisions
16
680,651
339,314
Other current liabilities
17
461,984
642,900
Contract liabilities
17
2,517,719
5,142,015
Lease liability
18
166,588
181,616
Borrowings
19
1,000
1,000
Total current liabilities
4,931,624
8,918,215
Non-current liabilities
Employee benefits
15
133,331
176,231
Provisions
16
-
78,309
Contract liabilities
20
529,539
705,305
Deferred tax and other
21
578,700
963,627
Lease liability
18
-
597,742
Borrowings
19
1,000,000
-
Total non-current liabilities
2,241,570
2,521,214
Total liabilities
7,173,194
11,439,429
NET ASSETS
9,442,328
13,435,760
EQUITY
Issued capital
22
43,407,980
43,276,195
Reserves
23
1,672,786
1,542,027
Retained profits (accumulated losses)
25
(35,638,438)
(31,382,462)
TOTAL EQUITY ATTRIBUTABLE TO THE OWNERS
9,442,328
13,435,760
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
ANNUAL REPORT FY2024
33
ARCHTIS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2024
Consolidated
Note
Issued capital
Reserves
Retained profits
Total equity
$
$
$
$
Balance at 1 July 2023
43,276,195
1,542,027
(31,382,462)
13,435,760
Total comprehensive
income for the year
-
-
(4,255,976)
(4,255,976)
Transactions with owners in their capacity as owners:
Issue of share capital
22
-
-
-
-
Exercise of options
22
-
-
-
Vesting of performance
rights
22
134,009
(134,009)
-
Capital raise and
establishment costs
22
(2,224)
-
-
(2,224)
Foreign exchange reserve
23
-
20,599
-
20,599
Share-based payments
23
-
244,169
-
244,169
Balance at 30 June 2024
22,23,25
43,407,980
1,672,786
(35,638,438)
9,442,328
Balance at 1 July 2022
41,099,800
1,248,014
(23,144,507)
19,203,307
Total comprehensive
income for the year
-
-
(8,237,955)
(8,237,955)
Transactions with owners in their capacity as owners:
Issue of share capital
22
2,300,802
-
-
2,300,802
Exercise of options
22
61,740
(19,740)
42,000
Vesting of performance
rights
22
73,472
(73,472)
-
Capital raise fees
22
(259,619)
-
-
(259,619)
Foreign exchange reserve
23
-
174,832
-
174,832
Share-based payments
23
-
212,393
-
212,393
Balance at 30 June 2023
22,23,25
43,276,195
1,542,027
(31,382,462)
13,435,760
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
ANNUAL REPORT FY2024
34
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2024
2024
2023
Note
$
$
Cash flows from operating activities
Receipts from customers
12,081,835
7,648,865
Payments to suppliers and employees
(12,619,575)
(12,265,304)
Receipts from R&D tax incentive
2,117,769
1,785,442
Government grants & incentives
36,600
72,600
Interest received
92,594
48,102
Interest paid Lease
(37,848)
(56,883)
Interest Paid Other
(8,679)
(7,229)
Income tax paid
(26,324)
(17,380)
Net cash provided by / (used in) operating activities
34
1,636,372
(2,791,787)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
-
72,426
Purchase of property, plant and equipment
-
(112,503)
Purchase of intangibles
12
(2,739,360)
(2,164,120)
Payment for purchase of business, net of cash acquired
-
-
Net cash provided by / (used in) investing activities
(2,739,360)
(2,204,197)
Cash flows from financing activities
Proceeds / (repayment) of borrowings
1,000,000
1,000
Proceeds from issue of shares
-
2,242,802
Costs of capital raise
(2,224)
(249,157)
Repayments under leases
(224,416)
(263,289)
Net cash provided by / (used in) financing activities
773,360
1,731,356
Net increase / (decrease) in cash held
(329,628)
(3,264,628)
Cash and cash equivalents at beginning of period
3,245,108
6,520,536
Effects of exchange rate changes on cash and cash equivalents
617
(10,801)
Cash and cash equivalents at end of period
7
2,916,097
3,245,107
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
ANNUAL REPORT FY2024
35
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
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 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 $4,255,976 ,(2023 $8,237,955) and
had net movement in cash of ($329,628),
compared to (2023: $3,264,628). 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 Company is currently exploring
sales opportunities with various
potential customers across the
Government and Private sectors;
•
The Company has $999,000 in unused
bank loan facilities.
•
The Company has the ability to issue
additional equity securities to raise
further working capital by way of
capital raising
The Company has the ability to further
curtail administrative, marketing and
overhead cash outflows if required
(b)
New or amended Accounting
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
Interpretations issued by the Australian
Accounting Standards Board ('AASB') and
the Corporations Act 2001, as appropriate
for for-profit oriented entities. These
financial statements also comply with
International Financial Reporting Standards
as issued by the International Accounting
Standards Board ('IASB').
Historical cost convention
The financial statements have been
prepared under the historical cost
convention, except for, where applicable, the
revaluation of financial assets and liabilities
at fair value through profit or loss, financial
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
accounting estimates. It also requires
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 2024 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 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.
Intercompany transactions, balances and
unrealised gains on transactions between
entities in the consolidated entity are
eliminated. Unrealised losses are also
eliminated unless the transaction provides
evidence of the impairment of the asset
transferred. Accounting policies of
subsidiaries have been changed where
necessary to ensure consistency with the
policies adopted by the consolidated entity.
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
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.
Foreign currency transactions
Foreign currency transactions are translated
into Australian dollars using the exchange
rates prevailing at the dates of the
ANNUAL REPORT FY2024
36
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
Note 1. Significant Accounting Policies
transactions. Foreign exchange gains and
losses resulting from the settlement of such
transactions and from the translation at
financial year-end exchange rates of
monetary assets and liabilities denominated
in foreign currencies are recognised in profit
or loss.
Foreign operations
The assets and liabilities of foreign
operations are translated into 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 period. All resulting foreign exchange
differences are recognised in other
comprehensive income through the foreign
currency reserve in equity.
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 events.
Such estimates are determined using either
the 'expected value' or 'most likely amount'
method. The measurement of variable
consideration is subject to a constraining
principle whereby revenue will only be
recognised to the extent that it is highly
probable that a significant reversal in the
amount of cumulative revenue 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.
Sale of goods
Revenue from the sale of goods is
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 tax rate for each jurisdiction,
adjusted by the changes in deferred tax
assets and liabilities attributable to
temporary differences, unused tax losses
and the adjustment recognised for prior
periods, where applicable.
Deferred tax assets and liabilities are
recognised for temporary differences at the
tax rates expected to be applied when the
assets are recovered or liabilities are
settled, based on those tax rates that are
enacted or substantively enacted, except
for:
•
When the deferred income tax asset or
liability arises from the initial
recognition of goodwill or an asset or
liability in a transaction that is not a
business combination and that, at the
time of the transaction, affects neither
the accounting nor taxable profits; or
•
When the taxable temporary difference
is associated with interests in
subsidiaries, associates or joint
ventures, and the timing of the reversal
can be controlled and it is probable
that the temporary difference will not
reverse in the foreseeable future.
Deferred tax assets are recognised for
deductible temporary differences and
unused tax losses only if it is probable that
future taxable amounts will be available to
utilise those temporary differences and
losses.
The carrying amount of recognised and
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
ANNUAL REPORT FY2024
37
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
Note 1. Significant Accounting Policies
taxes to allocate to members of the tax
consolidated group.
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 liabilities on the statement of
financial position.
(l)
Trade and other receivables
Trade receivables are initially recognised at
fair value and subsequently measured at
amortised cost using the effective interest
method, less any allowance for expected
credit losses. Trade receivables are
generally due for settlement within 30 days.
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.
Other receivables are recognised at
amortised cost, less any allowance for
expected credit losses.
(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 classification. Classification 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.
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
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.
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:
Leasehold
improvements
Term of lease
Office furniture &
equipment
2-5 years
Computer equipment
2-4 years
The residual values, useful 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 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
ANNUAL REPORT FY2024
38
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
Note 1. Significant Accounting Policies
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
liability, adjusted for, as applicable, any
lease payments made at or before the
commencement date net of any lease
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.
The consolidated entity has elected not to
recognise a right-of-use asset and
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 loss arising
from 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.
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 impaired; and is carried at cost
less accumulated impairment losses.
Impairment losses on goodwill are taken to
profit or loss and are not subsequently
reversed.
Research and development
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 resources and intent to
complete the 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.
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 Government Grants in
accordance with 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 recognises the
related costs for which the assistance is
intended to compensate. The proportion of
the refund that relates to capitalised
development is deducted against the
carrying amount of the related non-current
assets.
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 basis over the period of their expected
benefit, being their finite life of between 3 to
5 years.
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
might be impaired. Other non-financial
assets are reviewed for impairment
whenever events or changes in
circumstances indicate that the carrying
amount may not be recoverable. An
impairment loss is recognised for the
amount by which the asset's carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an
asset's fair value less costs of disposal and
value-in-use. The value-in-use is the present
value of the estimated future cash flows
relating to the asset using a pre-tax
discount rate specific to the asset or cash-
generating unit (CGU) to which the asset
belongs. Assets that do not have
independent cash flows are grouped
together to form a CGU.
(r)
Trade and other payables
These amounts represent liabilities for
goods and services provided to the
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
A lease liability is recognised at the
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
ANNUAL REPORT FY2024
39
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
Note 1. Significant Accounting Policies
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 less any lease incentives
receivable, variable lease payments that
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
Loans and borrowings are initially
recognised at the fair value of the
consideration received, net of transaction
costs. They are subsequently measured at
amortised cost using the effective interest
method.
(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.
(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.
(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 to defined contribution
superannuation plans 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.
Equity-settled transactions are awards of
shares, or options over shares, that are
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.
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 the employees to
receive payment. No account is taken of any
other vesting conditions.
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.
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
follows:
•
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.
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
conditions are satisfied.
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
ANNUAL REPORT FY2024
40
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
Note 1. Significant Accounting Policies
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 immediately. If a new
replacement award is substituted for the
cancelled award, the cancelled and new
award is treated as if they were a
modification.
(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.
Fair value is measured using 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 use of relevant observable inputs and
minimising the use of unobservable inputs.
Assets and liabilities measured at fair value
are classified into three levels, using a fair
value hierarchy that reflects the significance
of the inputs used in making 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 is significant to the fair
value measurement.
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 applied in the latest
valuation and a comparison, where
applicable, with external sources of data.
(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 interest in the acquiree is
measured at either fair value or at the
proportionate share of the acquiree's
identifiable net assets. All acquisition costs
are expensed as incurred to profit or loss.
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.
Where the business combination is
achieved in stages, the consolidated entity
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.
Contingent consideration to be transferred
by the acquirer is recognised at the
acquisition-date fair value. Subsequent
changes in the fair value of the contingent
consideration classified as an asset or
liability is recognised in profit or loss.
Contingent consideration classified as
equity is not remeasured and its
subsequent settlement is accounted for
within equity.
The difference between the acquisition-date
fair value of assets acquired, liabilities
assumed and any non-controlling interest in
the acquiree and the fair value of the
consideration transferred and the fair value
of any pre-existing investment in the
acquiree is recognised as goodwill. If the
consideration transferred and the pre-
existing fair value is less than the fair value
of the identifiable net assets acquired, being
a bargain purchase to the acquirer, the
difference is recognised as a gain directly in
profit or loss by the acquirer on the
acquisition-date, but only after a
reassessment of the identification and
measurement of the net assets acquired,
the non-controlling interest in the acquiree,
if any, the consideration transferred and the
acquirer's previously held equity interest in
the acquirer.
(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
Revenues, expenses and assets are
recognised net of the amount of associated
ANNUAL REPORT FY2024
41
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
Note 1. Significant Accounting Policies
GST, unless the GST incurred is not
recoverable from the tax authority. In this
case it is recognised as part of the cost of
the acquisition of the asset or as part of the
expense.
Receivables and payables are stated
inclusive of the amount of GST receivable or
payable. The net amount of GST
recoverable from, or payable to, the tax
authority is included in other receivables or
other payables in the statement of financial
position.
Cash flows are presented on a gross basis.
The GST components of cash flows arising
from investing or financing activities which
are recoverable from, or payable to the tax
authority, are presented as operating cash
flows.
Commitments and contingencies are
disclosed net of the amount of GST
recoverable from, or payable to, the tax
authority.
(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 2024. 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.
ANNUAL REPORT FY2024
42
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
Note 2: Critical Accounting Judgements, Estimates and Assumptions
The preparation of the financial statements requires management
to make judgements, estimates and assumptions that affect the
reported amounts in the financial statements. Management
continually evaluates its judgements and estimates in relation to
assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements, estimates and assumptions on
historical experience and on other various factors, including
expectations of future events, management believes to be
reasonable under the circumstances. The resulting accounting
judgements and estimates will seldom equal the related actual
results. The judgements, estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities (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 CGU 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 term
The lease term is a significant component in the measurement of
both the right-of-use asset and lease liability. Judgement is
exercised in determining whether there is reasonable certainty that
an option to extend the lease or purchase the underlying asset will
be exercised, or an option to terminate the lease will not be
exercised, when ascertaining the periods to be included in the lease
term. In determining the lease term, all facts and circumstances
that create an economical incentive to exercise an extension
option, or not to exercise a termination option, are considered at the
lease commencement date. Factors considered may include the
importance of the asset to the 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.
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.
ANNUAL REPORT FY2024
43
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 3. Revenue
Consolidated
2024
2023
$
$
(a) Revenue from contracts with customers
Licensing
4,996,167
3,171,060
Services
4,785,375
2,777,174
Equipment
17,975
418,889
9,799,517
6,367,123
(b) Other income
Government grants (i)
1,822,271
2,336,272
Interest income
92,594
48,102
Other income (ii)
13,837
71,094
1,928,702
2,455,468
(i) Government grants mainly comprise research & development tax incentives and also include an amount
for export market development grant.
(ii) Other income relates to reimbursed travel expenses and insurance proceeds (year ending 30 June 2023)
relating to a property damage claim at the Canberra head office net of the written down value of property,
plant & equipment disposed.
Licensing
Licensing revenue represents recurring revenue from archTIS solutions developed, customised and
maintained for customers including Kojensi and, NC Protect, delivered to Australian and international
customers. Licensing revenue is recognised on straight-line basis over the licensing period.
Services
Services revenue includes archTIS services relating to systems integration and security consulting.
Note 4: Operating segments
Identification of reportable operating segments
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 executive team (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.
Major customers
During the year ended 30 June 2024 approximately $5,297,000 (2023: $3,760,000) of the consolidated
entity’s external revenue was derived from sales to the Australian government.
Geographical information
Segment information by geographical regions is not available, and the cost to develop this information would
be excessive.
ANNUAL REPORT FY2024
44
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 5. Expenses
Consolidated
2024
2023
$
$
(a) Employee benefits
Salaries and wages
5,361,957
6,401,127
Superannuation
490,043
541,439
Other employee benefits
992,487
722,514
Share-based payments
244,169
212,393
less: capitalised to software development
(2,107,656)
(2,164,120)
4,981,000
5,713,353
(b) Depreciation and amortisation
Depreciation - property, plant and equipment
45,845
45,873
Depreciation – right of use asset
180,812
237,054
Amortisation - intangibles
4,599,559
4,423,865
4,826,216
4,706,792
(c) Finance costs
Interest and finance charges paid
46,527
64,112
46,527
64,112
(d) Contractors
Payments to contractors
1,344,806
1,550,615
less: capitalised to software development
(631,704)
-
713,102
1,550,615
(e) Hosting charges
Hosting charges
319,411
408,502
319,411
408,502
ANNUAL REPORT FY2024
45
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 6. Income tax expense
Consolidated
2024
2023
Note
$
$
Income tax expense
Deferred tax
(384,927)
(313,859)
Foreign exchange movement
32,009
7,401
Current tax
-
906
Income tax expense / (income)
(352,918)
(305,552)
Loss before income tax
(4,608,894)
(8,543,507)
Tax at the statutory rate of 25% - Australia
(830,324)
(1,669,712)
Tax at the statutory rate of 21% (22.83% prior year) – USA
(265,131)
(317,019)
Tax at the statutory rate of 19% – UK
(2,878)
(62,924)
Tax at the statutory rate of 15.8% – Germany
(1,568)
906
Total tax at the statutory rate
(1,099,901)
(2,048,748)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Entertainment expenses
2,074
2,376
Share-based payments
60,622
53,098
Research & development expenditure
460,719
708,068
Intangible amortisation - internally generated
543,244
514,584
Income from research & development incentives
(455,418)
(565,918)
Other
419
234
Sub-total
611,661
712,441
Current year deferred tax not recognised
135.322
1,030,755
Deferred tax asset derecognised
-
-
135.322
1,030,755
Income tax expense / (income)
(352,918)
(305,552)
A net deferred tax asset of $5,395,356 ($4,982,999 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 FY2024
46
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 7. Cash and cash equivalents
Consolidated
2024
2023
$
$
Cash and cash equivalents
Cash at bank
1,718,536
2,927,378
Cash on deposit
1,197,562
317,730
2,916,097
3,245,108
Note 8. Trade and other receivables
Consolidated
2024
2023
$
$
Trade receivables
406,569
4,249,660
less: Allowance for expected credit losses
-
-
406,569
4,249,660
Other receivables
6,947
39,568
413,516
4,289,228
Allowance for expected credit losses
The consolidated entity has no credit risk exposure as at 30 June 2024. The consolidated entity reviewed all
outstanding receivables greater than 90 days as at 30 June 2024, determined that the balances were recoverable, and
accordingly no expected credit loss provision was raised (2023: Nil).
The ageing of the trade receivables and allowance for expected credit losses provided for above are as follows:
2024
Carrying amount
$
2024
Allowance for
expected credit
losses
$
Not yet due
284,536
-
0 - 3 months overdue
110,409
-
3 - 6 months overdue
-
-
6+ months overdue
11,624
-
406,569
-
Note 9. Other current assets
Consolidated
2024
$
2023
$
Prepayments & deposits
313,980
1,187,304
Accrued income
-
302,075
Research & development tax incentive
1,876,207
2,080,725
Capitalised commissions
95,150
118,212
2,285,337
3,688,316
ANNUAL REPORT FY2024
47
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 10. Other non-current assets
Consolidated
2024
$
2023
$
Capitalised commissions
36,971
67,501
36,971
67,501
Note 11. Property, plant & equipment
Consolidated
2024
2023
$
$
Leasehold improvements - at cost
85,512
85,512
less: accumulated depreciation
(14,258)
(2,041)
71,255
83,471
Computer equipment - at cost
259,037
259,037
less: accumulated depreciation
(240,797)
(212,035)
18,241
47,002
Office equipment - at cost
56,670
56,670
less: accumulated depreciation
(39,237)
(34,370)
17,433
22,300
106,929
152,773
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous year are set out
below:
Leasehold
improvements
$
Computer
equipment
$
Office
equipment
$
Total
$
Balance at 1 July 2022
-
68,723
22,312
91,035
Additions
85,512
20,708
6,283
112,503
Disposals
-
(4,220)
(672)
(4,892)
Depreciation
(2,041)
(38,209)
(5,623)
(45,873)
Balance at 30 June 2023
83,471
47,002
22,300
152,773
Balance at 1 July 2023
83,471
47,002
22,300
152,773
Additions
-
-
-
-
Disposals
-
-
-
-
Depreciation
(12,216)
(28,762)
(4,867)
(45,843)
Balance at 30 June 2024
71,255
18,241
17,433
106,929
ANNUAL REPORT FY2024
48
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
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.
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.
ANNUAL REPORT FY2024
49
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 12. Intangible assets (continued)
Customer contracts
Customer contracts represent 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.
2024
Internally
generated
software
Development
in progress
Customer
contracts
Software
Goodwill
Total
Cost
$
$
$
$
$
$
Opening balance at 1 July 2023
10,460,101
3,682,380
2,117,679
8,782,988
2,789,524
27,832,672
Commercialisation of development
to software
1,381,601
(1,381,601)
-
-
-
-
Additions
-
2,739,360
-
-
-
2,739,360
Impairment
-
-
-
-
-
-
Effect of foreign exchange
translation
-
-
1,766
6,547
-
8,313
Closing balance at 30 June 2024
11,841,701
5,040,140
2,119,445
8,789,535
2,789,524
30,580,345
Accumulated amortisation
Opening balance at 1 July 2023
(6,003,302)
-
(1,072,832)
(4,521,107)
-
(11,597,240)
Amortisation
(2,172,978)
-
(449,467)
(1,977,115)
-
(4,599,559)
Impairment
-
-
-
-
-
-
Effect of foreign exchange
translation
-
-
2,307
8,553
-
10,860
Closing balance at 30 June 2024
(8,176,279)
-
(1,519,991)
(6,489,669)
-
(16,185,939)
Deferred research & development
tax incentive
Opening balance at 1 July 2023
(1,932,152)
(1,601,837)
-
-
-
(3,533,989)
Additions
-
(1,074,555)
-
-
-
(1,074,555)
Re-classification
(600,997)
600,997
-
-
-
-
Recognised in income
946,975
-
-
-
-
946,975
Closing balance at 30 June 2024
(1,586,174)
(2,075,395)
-
-
-
(3,661,569)
Net book value
2,079,248
2,964,745
599,454
2,299,866
2,789,524
10,732,837
ANNUAL REPORT FY2024
50
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 12. Intangible assets (continued)
Internally
generated
software
Development
in progress
Customer
contracts
Software
Goodwill
Total
$
$
$
$
$
$
2023
Cost
Balance at 1 July 2022
8,245,624
3,732,736
2,044,823
8,514,291
2,789,524
25,326,998
Commercialisation of
development to software
2,214,477
(2,214,477)
-
-
-
-
Additions
-
2,164,121
-
-
-
2,164,121
Effect of foreign exchange
translation
-
-
72,856
268,697
-
341,553
Balance at 30 June 2023
10,460,101
3,682,380
2,117,679
8,782,988
2,789,524
27,832,672
Accumulated amortisation
Balance at 1 July 2022
(3,944,967)
-
(706,414)
(2,397,136)
-
(7,048,517)
Amortisation
(2,058,335)
-
(338,697)
(2,026,833)
-
(4,423,865)
Impairment
-
-
-
-
-
-
Effect of foreign exchange
translation
-
-
(27,720)
(97,138)
-
(124,858)
Balance at 30 June 2023
(6,003,302)
-
(1,072,831)
(4,521,107)
-
(11,597,240)
Deferred research & development
tax incentive
Balance at 1 July 2022
(1,959,318)
(1,623,740)
-
-
-
(3,583,058)
Additions
-
(941,394)
-
-
-
(941,394)
Re-classification
(963,297)
963,297
-
-
-
-
Recognised in income
990,463
-
-
-
-
990,463
Balance at 30 June 2023
(1,932,152)
(1,601,837)
-
-
-
(3,533,989)
Net book value at 30 June 2023
2,524,647
2,080,543
1,044,848
4,261,881
2,789,524
12,701,443
ANNUAL REPORT FY2024
51
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 12. Intangible assets (continued)
For impairment assessment purposes, assets are grouped at the lowest level at which independent cash
inflows are generated, referred to as CGUs. Consistent with Note 4 Operating Segments It has been
determined that archTIS LTD operates as a single CGU. This conclusion is based on the company's centralized
management structure, and product development processes, the business operates a geographically
dispersed sales model which is not consider an independent CGU.
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 CGU is most
sensitive.
The following key judgements and assumptions were used in the discounted cash flow model for the new
products:
•
13.125% 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 to estimate of
sales, projected sales through current and new reseller partners, and estimated increase in users with
existing customers;
•
Annual retention (renewals) rate of 100% for named strategic licence accounts over the 5 year term,
75% for all other licencing;
•
Implementation services revenue is estimated based on 25% of enterprise licence revenue;
•
Staffing costs are projected to increase by 15% of total revenue;
•
4-20% per annum increase in operating costs and overheads; and,
•
Terminal EBITDA Multiple of 4X.
These assumptions were applied consistently to the consolidated group, which has been determined to be the
lowest level of CGU.
Based on the above, no impairment charge has been applied to the internally generated software and
development in progress or the Nucleus Cyber Inc CGU as the discounted recoverable amount for the CGU
exceeds the carrying value of the intangibles.
ANNUAL REPORT FY2024
52
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 13. Right-of-use asset
Consolidated
2024
2023
$
$
Balance as at 1 July
714,675
951,729
Additions
-
-
Lease modifications
(426,202)
-
Depreciation
(180,812)
(237,054)
Balance as at 30 June
107,661
714,675
The right-of-use asset represents the lease of the Canberra head office which has a remaining lease term of 9 months with
an option to extend after this period. The lease of a Melbourne regional office was terminated during the period.
Note 14. Trade and other payables
Consolidated
2024
2023
$
$
Trade payables
677,148
1,852,816
Other payables
125,157
412,065
802,305
2,264,881
Note 15. Employee benefits
Consolidated
2024
2023
$
$
Current
Provision for annual leave
258,347
312,662
Provision for long service leave
43,030
33,828
301,377
346,490
Non-current
Provision for long service leave
133,331
176,231
133,331
176,231
434,708
522,721
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.
ANNUAL REPORT FY2024
53
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 16. Provisions
Consolidated
2024
2023
$
$
Current
Lease make good
79,651
-
Provision for Short term incentive
601,000
339,314
601,000
339,314
Non-current
Lease make good
-
78,309
-
78,309
680,651
417,623
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
Consolidated
2024
2023
$
$
Accrued expenses
461,984
642,900
Deferred revenue
2,517,719
5,142,015
2,979,703
5,784,915
Note 18. Lease liabilities
Consolidated
2024
2023
$
$
Balance as at 1 July
779,357
985,763
Additions
-
-
Lease modifications
(426,202)
-
Interest
37,848
56,883
Payments made
(224,416)
(263,288)
Balance as at 30 June
166,588
779,358
Current
166,588
181,616
Non-current
-
597,742
166,588
779,358
The expected gross cash outflows for the lease over the next 12 months is $198,230, noting the lease expires
at the end of March 2025. The short-term lease expense for the year amounts to $47,055 (FY23 nil).
ANNUAL REPORT FY2024
54
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 19. Borrowings
Consolidated
2024
2023
$
$
Bank loan
1,001,000
1,000
1,001,000
1,000
Total secured liabilities
The total secured liabilities are as follows:
Consolidated
2024
2023
Current
$
$
Bank loan
1,000
1,000
Non-current
Bank loan
1,000,000
-
1,001,000
1,000
Assets pledged as security
The bank loan is secured by a term deposit of $240,504 (2023: $214,500) held with the
bank.
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Consolidated
2024
2023
Total facilities
$
$
Bank loan
2,000,000
1,500,000
2,000,000
1,500,000
Used at reporting date
Bank loan
1,001,000
1,000
1,001,000
1,000
Unused at reporting date
Bank loan
999,000
1,499,000
999,000
1,499,000
Note 20. Other non-current liabilities
Consolidated
2024
2023
$
$
Deferred revenue
529,539
705,305
529,539
705,305
ANNUAL REPORT FY2024
55
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
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
$
$
$
$
$
2024
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
(963,627)
384,927
-
-
(578,700)
Deferred tax
liability
(963,627)
384,927
-
-
(578,700)
Net deferred tax
asset / (liability)
(963,627)
384,927
-
-
(578,700)
ANNUAL REPORT FY2024
56
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 21. Deferred tax assets and liabilities (continued)
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
(1,224,722)
261,095
-
-
(963,627)
Deferred tax
liability
(1,224,722)
261,095
-
-
(963,627)
Net deferred tax
asset / (liability)
(1,224,722)
261,095
-
-
(963,627)
ANNUAL REPORT FY2024
57
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 22. Issued capital
Consolidated
2024
2023
2024
2023
Shares
Shares
$
$
Ordinary shares - fully paid
286,624,298
285,580,331
43,407,981
43,276,195
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance
30-Jun-22
263,803,207
41,099,800
Shares released from escrow NC Inc
acquisition
26-Jul-22
-
-
100,000
Exercise of options
10-Oct-22
420,000
$0.1000
61,740
Issue of shares
9-Dec-22
12,857,142
$0.1050
1,350,000
Vesting of performance rights
15-Dec-22
201,483
-
70,342
Issue of shares
23-Dec-22
6,674,268
$0.1050
700,802
Issue of shares
23-Feb-23
1,428,570
$0.1050
150,000
Vesting of performance rights
22-Jun-23
195,661
-
3,130
Share issue transaction costs, net of tax
-
-
(259,619)
Balance
30-Jun-23
285,580,331
43,276,195
Vesting of performance rights
21-Nov-23
106,592
-
22,917
Vesting of performance rights
21-Dec-23
570,693
-
56,142
Vesting of performance rights
15-Jun-24
366,682
-
54,951
Establishment costs, net of tax
-
-
(2,224)
Balance
30-Jun-24
286,624,298
43,407,981
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.
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.
ANNUAL REPORT FY2024
58
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 23. Reserves
Consolidated
2024
2023
$
$
Share-based payments reserve
1,086,235
976,075
Foreign currency reserve
586,551
565,952
1,672,786
1,542,027
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:
Consolidated
Share-based
payments
Foreign
currency
Total
$
$
$
Balance at 1 July 2022
856,894
391,120
1,248,014
Share-based payments
119,181
-
119,181
Arising due to translation of financial statements
for foreign subsidiaries
-
174,832
174,832
Balance at 30 June 2023
976,075
565,952
1,542,027
Balance at 1 July 2023
976,075
565,952
1,542,027
Share-based payments
110,160
-
110,160
Arising due to translation of financial statements
for foreign subsidiaries
-
20,598
20,598
Balance at 30 June 2024
1,086,235
586,551
1,672,785
ANNUAL REPORT FY2024
59
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 24. Share-based payments
Performance rights
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 2024 financial year are subject to financial
performance conditions which measure growth in revenue, annual recurring revenue, gross margin and cashflow. The
performance hurdles are challenging but achievable and focus executives on sales growth consistent with shareholder
wealth creation.
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 2024 financial year, the vesting proportions based on the
performance hurdles outlined in the Notice of Annual General Meeting announced 24 October 2023 (Resolution 4) are
outlined in the table below.
FY2024
Financial performance conditions for the financial
period
Proportion of performance rights to vest if target is
met or exceeded
Positive Cashflow
30%
Annual recurring revenue
30%
Consolidated Group Revenue
20%
Gross Margin
20%
* Subject to the holder remaining an ‘Eligible Participant’ under the Company’s Employee Incentive Plan as at:
(a) 15 December 2025, at which point 50% of performance rights that have previously met the relevant performance
milestone will vest; and
(b)
15 June 2026, at which point the balance of the performance rights that have previously met the relevant
performance milestone will vest.
FY2023
Revenue for the financial period
Proportion of performance rights to vest if revenue
hurdle is met*
Less than 75% of target
0%
Between 75% - 100% of target
Straight line vesting between 0% and 40%
Greater than 100% of target
40%
Annual recurring revenue for the financial period
Proportion of performance rights to vest if annual
recurring revenue hurdle is met*
Less than 75% of target
0%
Between 75% - 100% of target
Straight line vesting between 0% and 40%
Greater than 100% of target
40%
Operating costs for the financial period
Proportion of performance rights to vest if operating
costs hurdle is met*
Greater than 125% of target
0%
Between 100% - 125% of target
Straight line vesting between 0% and 20%
Less than 100% of target
20%
* Subject to the holder remaining an ‘Eligible Participant’ under the Company’s Employee Incentive Plan as at:
(a)
15 December 2024, at which point 50% of performance rights that have previously met the relevant performance
milestone will vest; and
(b)
15 June 2025, at which point the balance of the performance rights that have previously met the relevant performance
milestone will vest.
The Incentive Performance Rights expire two years after the grant date.
ANNUAL REPORT FY2024
60
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 24. Share-based payments (continued)
Tenure options
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. Outstanding tenure options include:
AR9O15 which expire on 6 March 2026 with and exercise price of $0.1428 per option.
AR9O16,17 and 18 which expire on 21 December 2026 with and exercise price of $0.0792 per option.
Recognition and measurement
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.
Fair value
During the year 10,658,255 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) (2023: 5,983,333) at a weighted average fair
value of $0.098 (2022: $0.098). During the year 3,834,433 options were granted to employees under the Company’s
Employee Incentive Plan (adopted at the Company’s Annual General Meeting on 24 November 2021) (2023: 2,089,402)
at a weighted average fair value of $0.038 (2022: $0.038).
The amount recognised as employee benefits (Note 5(a)) in the current financial year for share-based payment
transactions was 433,807 (2022: $212,393).
Number of options / performance rights
2024
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
23/12/2021
23/12/2023
$0.35
10,044,257
-
-
(10,044,257)
-
AR9O3
22/05/2018
01/07/2023
$0.20
800,000
-
-
(800,000)
-
AR9O7
20/11/2019
01/07/2023
$0.20
250,000
-
-
(250,000)
-
AR9O9
30/06/2020
01/07/2023
$0.10
500,000
-
-
(500,000)
-
AR9O12
24/11/2021
24/11/2025
$0.316
1,750,000
-
-
-
1,750,000
AR9O13
23/12/2022
23/12/2025
$0.20
3,337,102
-
-
-
3,337,102
AR9O14
13/12/2022
13/12/2025
$0.20
8,642,851
-
-
-
8,642,851
Performance
rights FY22
24/11/2021
24/11/2023
-
106,592
-
(106,592)
-
-
Performance
rights FY23
6/03/2023
06/03/2025
-
5,983,333
-
(937,375)
(5,045,958)
-
AR9015
6/03/2023
06/03/2026
$0.1428
2,089,402
-
-
(596,425)
1,492,977
AR9PR7,8,9
21/12/2023
21/12/2026
$0.099
-
10,658,255
-
(3,678,243)
6,980,012
AR9016,17,18
21/12/2023
21/12/2026
$0.079
-
3,834,433
-
(1,274,723)
2,559,710
33,503,537
14,492,688
(1,043,967)
(22,133,626)
24,762,652
ANNUAL REPORT FY2024
61
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 24. Share-based payments (continued)
Number of options / performance rights (continued)
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
23/12/2021
23/12/2023
$0.35
10,044,257
-
-
-
10,044,257
AR9O1
10/10/2017
10/10/2022
$0.10
420,000
-
(420,000)
-
-
AR9O3
22/05/2018
01/07/2023
$0.20
800,000
-
-
-
800,000
AR9O5
06/09/2018
06/09/2022
$0.24
1,330,000
-
-
(1,330,000)
-
AR9O7
20/11/2019
01/07/2023
$0.20
250,000
-
-
-
250,000
AR9O8
13/02/2020
13/02/2023
$0.20
360,000
-
-
(360,000)
-
AR9O9
30/06/2020
01/07/2023
$0.10
500,000
-
-
500,000
AR9O12
24/11/2021
24/11/2025
$0.316
1,750,000
-
-
-
1,750,000
AR9O13
23/12/2022
23/12/2025
$0.20
-
3,337,102
-
-
3,337,102
AR9O14
13/12/2022
13/12/2025
$0.20
-
8,642,851
-
-
8,642,851
Performance
rights FY22
24/11/2021
24/11/2023
-
3,048,170
-
(397,144)
(2,544,434)
106,592
Performance
rights FY23
6/03/2023
06/03/2025
-
-
5,983,333
-
-
5,983,333
AR9015
6/03/2023
06/03/2026
$0.1428
-
2,089,402
-
-
2,089,402
18,502,427
20,052,688
(817,144)
(4,234,434)
33,503,537
Note 25. Retained profits / (accumulated losses)
Consolidated
2024
2023
$
$
Retained losses at the beginning of the financial year
(31,382,462)
(23,144,507)
Loss after income tax expense for the year
(4,255,976)
(8,237,955)
Retained losses at the end of the financial year
(35,638,438)
(31,382,462)
Note 26. Dividends
Dividends
No dividends were paid or declared during the year.
Franking Credits
Consolidated
2024
2023
$
$
Franking credits available for subsequent financial years based
on tax rate of 26%
71,533
15,549
ANNUAL REPORT FY2024
62
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
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.
Market risk
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 borrowings. Borrowings obtained at variable rates
expose the consolidated entity to interest rate risk. An official increase/decrease in interest rates of 100 basis
points would have an adverse/favourable effect on profit before tax of $10,000 per annum.
Credit 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.
The consolidated entity has no credit risk exposure as at 30 June 2024. The consolidated entity reviewed all
outstanding receivables greater than 90 days as at 30 June 2024, determined that the balances were
recoverable, and accordingly no expected credit loss provision was raised.
Liquidity risk
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 FY2024
63
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 27. Financial instruments (continued)
2024
2023
$
$
Categories of financial instruments
Financial assets measure at amortised cost
Cash and cash equivalents
2,916,097
3,245,108
Trade and Receivables
413,516
4,289,228
Research & development tax incentive
1,876,207
2,080,725
Total financial assets at amortised cost
5,205,820
9,615,061
Total financial assets
5,205,820
9,615,061
Financial liabilities measured at amortised cost
Trade Creditors
802,305
2,264,881
Bank Loan
1,001,000
1,000
Total financial liabilities measured at amortised cost
1,803,305
2,265,881
Total financial liabilities
1,803,305
2,265,881
Note 28. Key management personnel disclosures
Consolidated
2024
2023
$
$
Short term employee benefits
1,248,001
1,269,596
Post-employment benefits
67,242
88,536
Long term benefits
(4,829)
10,220
Share-based payments
134,478
148,915
Termination Benefits
64,615
-
1,509,508
1,517,267
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:
Consolidated
2024
2023
$
$
Audit services
Audit or review of the financial statements
116,585
129,148
Other services
Research and development tax grant
75,200
67,760
75,200
67,760
195,873
196,908
ANNUAL REPORT FY2024
64
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 30. Commitments
Consolidated
2024
2023
$
$
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities:
Within one year
20,252
20,252
One to five years
10,954
31,206
31,206
51,458
Operating lease commitments includes contracted amounts for office and computer equipment under non-
cancellable operating leases expiring within one to five years.
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:
Consolidated
2024
2023
$
$
Payments for services from other related
parties:
Payment for Corporate Advisor services from
Shop Capital Pty Ltd
-
17,325
Transactions with subsidiaries
Opening Balance
2024 Movement
Balance at 30 June
2024
Loan to archTIS US, Inc.
1,521,871
(544,823)
977,048
Loan from Nucleus Cyber Pty Ltd
(88,115)
4,913
(83,202)
Loan to archTIS UK Limited
808,805
30,620
839,424
Loan to archTIS EU GmbH
57,686
873
58,560
2,300,247
(508,417)
1,791,830
Opening Balance
2023 Movement
Balance at 30 June
2023
Loan to archTIS US, Inc.
2,417,374
(895,503)
1,521,871
Loan from Nucleus Cyber Pty Ltd
(148,328)
60,213
(88,115)
Loan to archTIS UK Limited
422,483
386,322
808,805
Loan to archTIS EU GmbH
51,825
5,861
57,686
2,743,354
(443,107)
2,300,247
Terms and conditions
All transactions were conducted under standard commercial terms and conditions at prevailing market rates,
with related party short-term working facilities provided interest-free.
ANNUAL REPORT FY2024
65
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 32. Parent entity information
Set out below is the supplementary information about the parent entity.
Parent
2024
2023
Statement of profit or loss and other comprehensive income
$
$
Loss after income tax
(3,074,609)
(6,748,570)
Total comprehensive income
(3,074,609)
(6,748,570)
Statement of financial position
Total current assets
5,322,065
10,870,050
Total non-current assets
14,785,412
16,115,062
Total assets
20,107,478
26,985,112
Total current liabilities
5,321,428
8,428,999
Total non-current liabilities
536,363
1,431,194
Total liabilities
5,857,791
9,860,193
Net assets
14,249,687
17,124,919
Equity
Issued capital
43,407,981
43,276,195
Reserves
1,360,243
1,292,652
Retained profits / (accumulated losses)
(30,518,537)
(27,443,928)
Total equity
14,249,687
17,124,919
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 2024 and 30 June 2023.
Capital commitments
The parent entity had no capital commitments as at 30 June 2024 and 30 June 2023.
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
Country of incorporation
2024
2023
%
%
archTIS EU s.r.o
Czech Republic
100%
100%
archTIS US, Inc.
US
100%
100%
Nucleus Cyber Pty Ltd
Australia
100%
100%
archTIS UK Limited
UK
100%
100%
archTIS EU GmbH
Germany
100%
100%
ANNUAL REPORT FY2024
66
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
Note 34. Reconciliation of profit after income tax expense to net cash from operating activities
Consolidated
2024
2023
$
$
Loss after income tax expense for the year
(4,255,976)
(8,237,955)
Adjustments for:
Depreciation and amortisation
4,826,216
4,706,792
Net gain on disposal of assets
-
(71,094)
Share-based payments
244,169
212,393
Interest on lease liabilities
37,848
56,883
Other non-cash items
107,649
(23,780)
Foreign exchange differences
15,054
35,663
Change in operating assets and liabilities:
(Increase) / decrease in trade and other receivables
3,875,712
(1,807,630)
(Increase) / decrease in accrued revenue
302,075
(158,297)
(Increase) / decrease in prepayments
873,324
(993,077)
(Increase) / decrease in other assets
53,592
(25,339)
(Increase) / decrease in R&D tax incentive receivable
204,518
(477,915)
(Increase) / decrease in deferred tax assets
-
-
Increase / (decrease) in trade and other payables
(1,462,576)
1,520,953
Increase / (decrease) in accrued expenses
(180,916)
93,538
Increase / (decrease) in income taxes payable
6,529
(13,994)
Increase / (decrease) in employee benefits
(88,013)
(115,562)
Increase / (decrease) in provisions
263,027
162,788
Increase / (decrease) in deferred revenue
(2,800,061)
2,652,783
Increase / (decrease) in deferred tax liabilities
(385,800)
(308,938)
Net cash from operating activities
1,636,372
(2,791,787)
Note 35. Earnings per share
2024
2023
$
$
Loss after income tax attributable to the owners
(4,255,976)
(8,237,955)
Number
Number
Weighted average number of ordinary shares used in calculating basic
earnings per share
285,959,393
275,322,611
Adjustments for calculation of diluted earnings per share:
Options
22,227,660
20,837,577
Performance rights
6,527,233
2,615,670
Weighted average number of ordinary shares used in calculating diluted
earnings per share
314,714,286
298,775,858
Cents
Cents
Basic earnings per share
(1.49)
(2.99)
Diluted earnings per share
(1.49)*
(2.99)*
*Antidilutive Effect: If basic EPS is negative, adding more shares to the denominator would decrease the loss
per share, making the EPS less negative. AASB 133(43) requires the disclosure of diluted EPS to be the same
as basic EPS.
ANNUAL REPORT FY2024
67
ARCHTIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2024
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.
Note 37. Consolidated Entity Disclosure Statement as at 30 June 2024
ArchTIS Limited is the Group’s Ultimate Parent Company. ArchTIS Limited is a Public Company incorporated
and domiciled in Australia. The address of its registered office and its principal place of business Level 3,
archTIS House, 10 National Circuit, BARTON ACT 2600.
Entity Name
Entity Type
Country of
Incorporation
Ownership
Interest
Tax Residency
archTIS EU s.r.o
Body Corporate
Czech Republic
100%
Czech Republic
archTIS US, Inc.
Body Corporate
US
100%
US
Nucleus Cyber Pty Ltd
Body Corporate
Australia
100%
Australia
archTIS UK Limited
Body Corporate
UK
100%
UK
archTIS EU GmbH
Body Corporate
Germany
100%
Germany
ANNUAL REPORT FY2024
68
DIRECTORS DECLARATION
30 JUNE 2024
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 2024 and of its performance for the financial year ended on that date;
•
the consolidated entity disclosure statement required by subsection (3A) is true and correct; in accordance with
s295 (4) (da) of the Corporations Act 2001; 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
29 August 2024
Canberra
ANNUAL REPORT FY2024
69
ARCHTIS LIMITED
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
RSM Australia Partners
Equinox Building 4, Level 2, 70 Kent Street Deakin ACT 2600
GPO Box 200 Canberra ACT 2601
T +61 (0) 2 6217 0300
F +61 (0) 2 6217 0401
www.rsm.com.au
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 2024, 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: 29 August 2024
C J HUME
Partner
ANNUAL REPORT FY2024
70
RSM Australia Partners
Equinox Building 4, Level 2, 70 Kent Street Deakin ACT 2600
GPO Box 200 Canberra ACT 2601
T +61 (0) 2 6217 0300
F +61 (0) 2 6217 0401
www.rsm.com.au
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 2024, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement of
cash flows for the year then ended, and notes to the financial statements, including material accounting policy
information, the consolidated entity disclosure statement 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 2024 and of its financial
performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our
report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (including independence standards) (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the
directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report 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.
ANNUAL REPORT FY2024
71
ARCHTIS LIMITED
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 2024, 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.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of:
a.
the financial report (other than the consolidated entity disclosure statement) that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001; and
b.
the consolidated entity disclosure statement that is true and correct in accordance with the Corporations
Act 2001, and
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:
•
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(p), 1(q), 2 and 12.
Our audit procedures included the following:
•
Evaluated the appropriateness of capitalisation
policies, as per AASB 138.
•
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(p), 1(q), 2 and 12.
ANNUAL REPORT FY2024
72
for such internal control as the directors determine is necessary to enable the preparation of:
i.
the financial report (other than the consolidated entity disclosure statement) that gives a true and fair view
and is free from material misstatement, whether due to fraud or error; and
ii.
the consolidated entity disclosure statement that is true and correct and is free of 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: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf.
This description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 22 to 28 of the directors' report for the year ended
30 June 2024.
In our opinion, the Remuneration Report of archTIS Limited., for the year ended 30 June 2024, 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: 29 August 2024
C J HUME
Partner
ANNUAL REPORT FY2024
73
ARCHTIS LIMITED
SHAREHOLDER INFORMATION
29 July 2024
The shareholder information set out below was applicable as at 29 July 2024.
Quotation
Listed securities in archTIS Limited are quoted on the Australian Securities Exchange under ASX code: AR9 (Fully Paid
Ordinary Shares), and the OTCQB Venture Market under the symbol: ARHLF (Fully Paid Ordinary Shares).
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.
Restricted Securities
There are no restricted securities listed on the Company’s register as at 29 July 2024.
On market buy-back
There is currently no on market buy back in place.
Distribution of shareholders
i)
Fully Paid Ordinary Shares
Holdings Range
Holders
Units
%
1 to 1,000
139
64,020
0.02%
1,001 to 5,000
1,329
3,578,327
1.25%
5,001 to 10,000
628
4,900,013
1.71%
10,001 to 100,000
1,343
47,351,321
16.52%
100,001 and over
344
230,730,617
80.50%
3,783
286,624,298
100.00%
On 29 July 2024, there were 1,631 holders of unmarketable parcels of less than 6,173 Shares (based on a share price
of $0.081).
ANNUAL REPORT FY2024
74
SHAREHOLDER INFORMATION
29 July 2024
ii)
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
1,750,000
100%
2
1,750,000
100%
Holders who hold more than 20% of the securities in this class are:
•
Miles Jakeman – 1,000,000 options
•
Cloud Rainmakers Limited – 750,000 options
iii) AR9O13 Unlisted Options exercisable at $0.20 on or before 23 December 2025
Holdings Range
Holders
Units
%
1 to 1,000
-
-
-
1,001 to 5,000
27
128,785
3.86%
5,001 to 10,000
-
-
-
10,001 to 100,000
48
1,541,652
46.20%
100,001 and over
11
1,666,665
49.94%
86
3,337,102
100%
There are no holders who hold more than 20% of the securities in this class.
iv) AR9O14 Unlisted Options exercisable at $0.20 on or before 13 December 2025
Holdings Range
Holders
Units
%
1 to 1,000
-
-
-
1,001 to 5,000
-
-
-
5,001 to 10,000
-
-
-
10,001 to 100,000
11
601,181
6.96%
100,001 and over
14
8,041,670
93.04%
25
8,642,851
100%
Holders who hold more than 20% of the securities in this class are:
•
Brio Capital Master Fund Ltd – 3,571,428 options
ANNUAL REPORT FY2024
75
ARCHTIS LIMITED
SHAREHOLDER INFORMATION
29 July 2024
v)
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
-
-
-
100,001 and over
1
1,492,977
100%
28
1,492,977
100%
All securities in this class were issued under an employee incentive scheme.
i)
AR9O16 Unlisted Employee Options exercisable at $0.0792 on or before 21 December 2026
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
378,673
100.00%
1
378,673
100.00%
All securities in this class were issued under an employee incentive scheme.
ii)
AR9O17 Unlisted Employee Options exercisable at $0.0792 on or before 21 December 2026
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
1,448,060
100.00%
1
1,448,060
100.00%
All securities in this class were issued under an employee incentive scheme.
iii) AR9O18 Unlisted Employee Options exercisable at $0.0792 on or before 21 December 2026
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
732,977
100.00%
1
732,977
100.00%
All securities in this class were issued under an employee incentive scheme.
ANNUAL REPORT FY2024
76
SHAREHOLDER INFORMATION
29 July 2024
iv) Performance Rights – AR9PR07
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
1,893,364
100.00%
1
1,893,364
100.00%
All securities in this class were issued under an employee incentive scheme.
v)
Performance Rights – AR9PR08
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
1,678,782
100.00%
1
1,678,782
100.00%
All securities in this class were issued under an employee incentive scheme.
i)
Performance Rights – AR9PR09
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
3,407,865
100.00%
1
3,407,865
100.00%
All securities in this class were issued under an employee incentive scheme.
Substantial Shareholders
The names of the substantial shareholders as notified to the Company as at 29 July 2024 are:
1.
Kurt Muffelmann
•
Holder of: 18,511,488 fully paid ordinary shares
•
Notice Received: 14 December 2022
•
Interest Held at Date of Notice: 6.55%
Kurt Mueffelmann has acquired 370,099 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
ANNUAL REPORT FY2024
77
ARCHTIS LIMITED
SHAREHOLDER INFORMATION
29 July 2024
is not reportable under section 671B of the Corporations Act, and as such, an updated Substantial Holder Notice has not
been lodged.
2.
SG Hiscock & Company Limited
•
Holder of: 13,709,182 fully paid ordinary shares
•
Notice Received: 3 December 2020
•
Interest Held at Date of Notice: 6.67%
Top Security Holders
The twenty largest shareholders of the Company’s quoted Shares as at 29 July 2024 are as follows:
Number held
% of total
shares issued
1
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
18,221,607
6.36%
2
KURT MUEFFELMANN*
13,146,153
4.59%
3
BRIO CAPITAL MASTER FUND LTD
11,690,683
4.08%
4
CITICORP NOMINEES PTY LIMITED
9,828,767
3.43%
5
MR PETER ROBERT WOODLAND
7,919,410
2.76%
6
DANIEL CHUN LEUNG LAI
7,637,292
2.66%
7
MR BRUCE ALEXANDER TALBOT & MRS SUZANNE TALBOT
6,866,436
2.40%
8
MR RHYS DAVID FORD
4,438,904
1.55%
9
POSSUM HILL PTY LTD
4,429,469
1.55%
10
MR OTTMAR WEISS
3,895,527
1.36%
11
MICHAEL DE FELICE PTY LTD
3,313,847
1.16%
12
MR DAVID WOOD
3,213,491
1.12%
13
PHILLIP JONATHAN DEAN & ROBYN CLAIRE DEAN
3,000,000
1.05%
14
BNW GROUP PTY LTD
3,000,000
1.05%
15
MR ANTHONY MANUEL WHITFIELD
2,730,000
0.95%
16
MR MICHAEL JAMES WARE
2,200,000
0.77%
17
RED STRIPE PTY LTD
2,170,000
0.76%
18
MR DANIEL CHUN LEUNG LAI
2,163,636
0.75%
19
SYRAX INVESTMENTS PTY LTD
2,050,000
0.72%
19
MISS SOPHIE RHIAN RICHARDS
2,032,855
0.71%
20
LEIGH ROWLAND
2,001,714
0.70%
Top 20 Holders of Ordinary Shares
115,949,791
40.45%
Total Remaining Holders Balance
170,674,507
59.55%
ANNUAL REPORT FY2024
78
ARCHTIS LIMITED
ARCHTIS LIMITED | AR9 | ACN 123 098 671