Cogeco
Annual Report 2022

Plain-text annual report

CPT Global Limited ABN 16 083 090 895 Annual Report For the year ended 30 June 2022 +61 3 9684 7900 Info@cptglobal.com www.cptglobal.com 1 Chairman’s Review Dear Fellow CPT Global Shareholder, While CPT was unable to repeat last year’s record performance, 2022 has been a year of significant change for the Company during which the foundations for the next phase of a strong and prosperous future have been put in place. On 1 November 2021 CPT’s founder and CEO Gerry Tuddenham handed over the reins of the company he established almost 30 years ago to his son Luke. Gerry’s vision, expertise and tireless energy has built CPT into a successful, highly regarded specialist IT adviser with many significant clients around the globe. Furthermore Gerry has developed a loyal team of specialist technical consultants who continue to solve the complex IT problems of some of the world’s largest companies. After thirty years at the helm Gerry has earned the right to step back from the day to day demands of CPT’s business especially the unrelenting travel that is once again building in a post-Covid world. However we are delighted that as CPT’s founder and largest shareholder Gerry will remain actively involved with the company as a director and an important mentor for all CPT’ers. He will also oversee our exciting initiative to develop a suite of tools and software for clients that will automate and enhance our consulting services. As CPT’s new CEO Luke Tuddenham has already established a strong rapport with our team and the respect of our clients through his boundless energy, enthusiasm and initiative. Prior to taking over as CEO Luke lead the strong growth of our international business based in the USA and is well placed to drive CPT’s next phase of development. Much work has already been done on establishing CPT’s future vision, building the appropriate structure, attracting new talent and aligning our teams. While the benefits of these initiatives will take time to emerge the early signs are very positive. The Australian business had a more difficult year in 2022 as a major project in the Southern region concluded and work at a Federal Government client neared completion. Furthermore, being Melbourne based, CPT was subject to amongst the longest and most restrictive lockdowns of any place in the world. This resulted in a fall in revenue and some pressure on margins. However activity during the second half increased through the addition of some new clients which have shown strong growth and has resulted in the deployment of additional consultants. Also as Covid restrictions have relaxed our salesforce has been better able to more actively engage in new business development. In 2022 five of our ten largest clients were based in Australia. During 2022 CPT’s international business maintained its strong growth and now generates around half of CPT’s total revenue at attractive margins. While most of this growth was again driven by our USA operations we have more recently re-engaged with a client in Canada and are continuing to pursue some good prospects in Europe where we have many former clients. During the year we bolstered our international sales team to maintain the growth in revenue and the sales pipeline remains healthy. For the fourth year in a row CPT’s largest client was in the USA and five of our top ten clients in 2022 were based in North America. In 2022 our revenue fell by 10% to $29.9m with the continuing strong increase in the USA insufficient to offset the reduction in revenue from the Australian operations. Net profit after tax was $1.5m as against the exceptional result of $3.4m in the prior year. Our 2022 performance was impacted by the fall in revenue, lower margins in Australia and additional costs relating to positioning the business for future growth. CPT will pay a final fully franked dividend of 1.0 cents per share in addition to the interim dividend of 1.5 cents. Total dividends of 2.5 cents per share compare to last year’s dividend of 5.0 cents per share but represent a higher payout ratio of 71% as against 59% last year. At financial year-end CPT maintained a healthy cash position of $4.1m as against $4.3m in the prior year. During 2022 CPT has established a solid platform across its operations from which to build for the future. With the transition of CPT’s leadership to Luke Tuddenham and the pursuit of a new strategic initiative in software the company is well placed to grow the scope and scale of our global business. As the impact of Covid recedes our strengthened sales force is actively marketing our services to many existing and past clients and establishing new client relationships to build a strong pipeline of new business. CPT Global Limited – Annual Report 2 Chairman’s Review After a year of transition CPT is well placed to increase our revenue and profitability both in Australia and offshore. Going forward shareholders will continue to be rewarded via attractive dividends based on a healthy payout of earnings balanced against the cash demands of growing our business. At this exciting time of transition I would like to thank our founder and former Managing Director Gerry Tuddenham for his drive and energy in building CPT into a successful listed company with a global presence and a strong reputation for solving its clients’ complex technical challenges. After yearend Nigel Sandiford retired as a director and I would like to thank him for his dedicated service to CPT during a challenging time. In addition I am pleased to thank CPT’s staff together with my fellow directors including our new Managing Director, Luke Tuddenham, for their ongoing commitment and significant dedication in serving our clients while positioning CPT for a very exciting and prosperous future. Fred S. Grimwade Chairman CPT Global Limited – Annual Report 3 Managing Director’s Review Dear Shareholders, We have concluded another successful year at CPT. I’m delighted to present the Operating and Financial review for CPT Global Limited (the Company) and its controlled entities (the Group) for the year ended 30 June 2022. FY2022 has been a period of consolidation after the record FY2021 results and the start of a period of change as the next chapter in the Company’s life began under my leadership, as the new CEO. The transition has brought considerable energy and drive with a bold vision to grow the business. During my first 7 months as CEO, the focus was on building greater structure, new talent attraction and forming key executive and management committees to strategically align the team, towards the new vision. During the year, we have seen high growth in our North American business, whilst the Australian business has experienced contracts coming to an end after successful completion, impacting revenue. We have invested in systems, business development, marketing, structure and most importantly on people during the year. Our focus this year has been on new modernisation partnerships, enhanced service offerings and expanding into proprietary software. To that effect, we are building our solution by harnessing the IP from our pool of consultants, to build a unique market proposition to productise our services into tools and repeatable solutions. Our objective is to deliver long term, sustainable, profitable growth. To achieve this we are: • commercialising our IP to: substantially scale our delivery capacity; and o o drive repeatable and annuity revenue; • • • • • focusing on our core competencies and technical expertise as a differentiator and niche provider; partnering with global leaders in the modernisation space to drive growth; enhancing our service offerings with end-to-end solutions under our service lines of Optimisation, Modernisation and Assurance; building the platform to facilitate and support growth pursuing opportunities that could fast-track our growth targets or complement our existing capabilities and expertise by initiating a structured mergers and acquisition plan; and • becoming the trusted advisor that our clients are looking for and value CPT Global Limited – Annual Report 4 Managing Director’s Review OPERATING AND FINANCIAL REVIEW The net profit for FY2022 is $1.5m on revenue of $29.9m. After the record profit in FY2021 it was important for us to consolidate the gains we made and provide a platform to build upon. This has been achieved. The table below shows the performance of the business over the last three reporting periods. Revenue Profit before tax Tax expense Net profit FY2022 HY2022 FY2021 m’s 29.9 2.1 0.6 1.5 m’s 15.9 1.7 0.5 1.2 m’s 33.3 4.5 1.1 3.4 In comparison to FY2021 we have seen a steady growth in North America revenue and a decline in Australia revenue, resulting in a net decline in revenue in FY2022. We have seen a similar trend with regards to margin between the two years. Second half of FY2022 saw the same trends continuing with regards to revenue, with North America performing well. We have made some investments as a part of our build strategy in the second half of FY2022, and also incurred one-off expenses increasing the cost base in the second half. This resulted in a profit before tax of approx. $300k in the second half of FY2022. The highlights of our performance in FY2022 were: • • revenue up 19% in North America in FY 2022 as we continued to expand our footprint in our two largest clients; revenue decreased 25% in Australia in FY2022 as a major project came to an end and our second largest client began scaling back head count as its major project nears completion in 2022; • • • margins in North America continue to hold up despite pressure from clients and the market for talent tightening. Overall the margins in FY2022 were down due to high margin Australian customers slowing down their projects; direct costs for commercialising IP amounted to $120k; financing costs continued to decline as we have been able to fund the business from free cash flow and limit the use of our debtor financing facility. Finance costs are down 52% compared to FY2021; the effective tax rate increased from 24% to 29%. The USA business contributed an increasing proportion of profit to the business and is taxed at approximately 30% (including state taxes) while the Australian business is taxed at 25%. In addition, tax losses in other regions have not been booked as deferred tax assets as the criteria for recognition has not been met. • • we have made investments in resources and systems, where ROI will be in future years • • tight control over discretionary costs; travelling costs have increased, particularly for the North American sales team, however, we are yet to see clients mandate a return to office work on a part-time or full-time basis, especially for external consultants; and there were one-off employment related costs in second half of FY2022 • Basic earnings per share amounted to 3.54 cents per share (diluted earnings 3.49 cents per share). CPT Global Limited – Annual Report 5 Managing Director’s Review Financial Position CPT Global’s performance over the last 2 years has resulted in a strengthening of the balance sheet with net tangible assets of more than $5m as at 30 June with no external debt. Movements in the balance sheet: • • Trade and other receivables (Current) increased $2.1m which is due to strong invoicing in North America in May and June and previously non-current tax receivable moving to current trade and other receivables. Trade and other payables increased by $1.6m. This is due to timing differences for recurrent monthly payments and other payable items that were settled post year end. Cash Flow CPT had $4.1 million in cash as at 30 June 2022 ($4.3 million 30 June 2021). Our cash position provides the business the ability to fund our growth strategies Capital Management A fully franked final dividend of 1.00 cents per share has been declared for the year to 30 June 2022. This brings the total dividend for FY2022 to 2.50 cents per share. This is an annualised yield of 6.76% (9.01% including franking credits) on a share price of $0.37 as at 30 June 2022. The total value of the final dividend is $416,071 and will be paid on 11 November 2022. This represents an annual payout ratio of 71%. The payout ratio for the FY2021 dividends was 59%. The dividend reinvestment plan will apply to the dividend. The DRP discount will be 2.5%. No funds were drawn against our debtor funding at 30 June 2022 and $0.8 million was available to draw on. OUTLOOK At CPT Global, we are committed to helping our clients improve their technology, delivery, performance, and capabilities. To achieve this, we have identified growth opportunities, and created both short and long term strategies to invest in our people, software, solutions, as well as our clients to enable us to achieve long term success. Revenue is currently split approximately 50/50 between the Northern Hemisphere and Australia. Given the higher margins and geographical footprint of the Northern Hemisphere, we plan to invest in doubling our sales force to increase our reach within the industries we currently work with, which present our greatest opportunities for growth. Our strategy of investing in growing our current sales team will not only increase revenue and profits, but further establish CPT as an industry leader by allowing us to grow our client base and showcase our skills. CPT has identified and understands the unique advantages, complexities, and limitations of the mainframe. We see the untapped potential of how the cloud will continue to present opportunities for more agile and efficient processes and insights. We use this deep mainframe knowledge to inspire our Fortune 1,000 clients to trust us in assessing the most optimal solutions for them, which includes moving away from their legacy footprint and adapting to cloud-based technologies. Our extensive and in-depth experience has enabled our experts to identify gaps, issues and unforeseen challenges that may arise during the modernization process. We are extremely well positioned to provide those looking to modernize with the most optimal opportunities and cost-effective approaches. For nearly three decades, our clients have trusted us as the “go to” independent partner for many of their most critical IT strategic initiatives which include legacy as well as modernization efforts. Our unbiased assessment of their unique needs enables us to create roadmaps that can be acted upon with confidence, knowing that we have no agenda other than their CPT Global Limited – Annual Report 6 Managing Director’s Review most optimal outcomes. There is a huge opportunity to assist in reducing risk and increasing resiliency due to cyber-risks as companies transition to the cloud. We are actively engaged in discussions with potential partners to optimize our role and growth in this area. Along with such security partners, we will utilize our deep mainframe and testing knowledge to further demonstrate our commitment to be “the” trusted advisors that will ensure low risk coupled with high levels of comfort, reliability, and resiliency for those looking to modernize. CPT has a team of 140 plus, with decades of experience. We pride ourselves on having top tier talent. Most of our technical team has high tenure and has been with us for at least a decade. We are actively engaged in capturing the IP and knowledge from our consultant base to ensure that we retain and build upon it. We are taking this knowledge and putting it into repeatable processes and solutions. This knowledge and software will play a critical role as we continue to recruit younger talent to CPT. In addition to our efforts of utilizing software, we have invested in a mentoring program, enabling new hires to learn first-hand from our experts. This mentoring program will continue to be a key strategic initiative as we continue to hire to meet the ever- growing needs of our current and prospective clients. We have found that a barrier young talent faces in many other companies is that they are siloed in one area of their institution. Under CPT’s mentoring and talent program, we are providing them with the tools and guidance they need to succeed by exposing them to multiple areas within the field. This is consistent with CPT’s tradition and history. We have consistently cultivated diversity in our consultants to become true experts. By strategically focusing on our mentoring and talent programs, we are helping to ensure that our future consultants and leaders will possess the same unique “value proposition” that we currently offer to our clients. As stated, for nearly three decades, we have been succeeding within this industry by establishing ourselves as a trusted partner for our clients. We will continue this strategy by investing in and growing our team as well as developing and acquiring new skills, software, and partners in high growth areas. We are positioning ourselves for great growth while strategically ensuring that we adapt to operating and business risks. Luke Tuddenham Managing Director Aspen Colorado, 30 September 2022 CPT Global Limited – Annual Report 7 Content Directors’ Report Auditors Independence Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Independent Audit Report Corporate Information ASX Additional Information 9 19 20 21 22 23 24 58 59 64 65 CPT Global Limited – Annual Report 8 Directors’ Report Your directors submit their report for the year ended 30 June 2022. DIRECTORS The names and details of the Company's directors in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Names, qualifications, experience, and special responsibilities Fred S Grimwade (Non-executive Chairman) Luke Tuddenham (Managing Director & CEO) Fred chairs CPT’s Finance and Audit Committee and is a member of the Remuneration Committee. He is a director of specialist corporate advisory and investment firm Fawkner Capital and is also a non-executive director of ASX listed companies Select Harvests Limited, and Australian United Investment Company Limited and chairs XRF Scientific Limited. Fred was a commercial lawyer and later worked with Goldman, Sachs & Co. in New York and Sydney. He also served as Company Secretary and General Manager of Shareholder Relations at Western Mining Corporation. In 1996, he joined Colonial Mutual as Group Company Secretary and General Manager for Legal Affairs and subsequently became Head of Private Capital for Colonial First State Investments. He was Managing Director of the Colonial Agricultural Company from 1998 to 2006 and a non-executive director of AWB Limited from 2008 to 2010. Fred is a senior fellow and life member of the Financial Services Institute of Australasia (Finsia), and a Fellow of the Australian Institute of Company Directors and Chartered Secretaries Australia. In his position as CEO, Luke brings a wealth of tech experience and enterprise knowledge to CPT Global, where he’s played an instrumental role in the company’s growth. Luke started his career in Melbourne with Andersen in 2000 and joined CPT Global in 2005 from PricewaterhouseCoopers. Luke joined CPT overseeing the company’s Australian and US markets, before becoming Vice President in 2011. In 2016, Luke was named President of the Americas and Europe, where he played a critical role in helping the company generate record- breaking revenue and profit margins in FY2021. Luke has been helping Fortune 500 technology leaders drive performance and efficiency in their organisations. He has strategically and successfully grown and expanded CPT’s services offerings and delivery across the globe to include Australia, Canada, Europe & the USA. Luke holds a Bachelor of Business Information Systems, earned his Certificate in Business Excellence at Columbia University’s Business School, is a member of the Australian Computer Society and a member of the Australian Institute of Company Directors. Gerry Tuddenham (Executive Director) Gerry is the founder of and a major shareholder in CPT. He has more than 40 years experience in IT consulting and is a hands-on technologist with a reputation for delivering practical solutions. Gerry is widely known as a technical specialist in performance tuning, capacity planning and testing in IBM mainframes, with additional expertise in expert systems, transaction processors, middleware and database management systems. Gerry was the lead developer of the Expetune and Expetest utilities, which automate a number of intricate tuning and testing activities. He has worked internationally in a broad range of industries, with a focus on financial services and telecommunications. Gerry is a member of the Australian Institute of Company Directors. Gerry is a member of the Finance and Audit Committee. Nigel Sandiford (Non-executive Director) Resigned 1 August 2022. Nigel was a member of CPT’s Finance and Audit Committee and chaired the Remuneration Committee. CPT Global Limited – Annual Report 9 Directors’ Report Mark Licciardo (Company Secretary) Appointed on 22 June 2022. Mark is the founder of Mertons Corporate Services, now part of Acclime Australia and is responsible for Acclime Australia’s Listed Services Division. He is also an ASX-experienced director and chair of public and private companies, with expertise in the listed investment, infrastructure, bio-technology and digital sectors. He currently serves as a director on a number of Australian company boards as well as foreign controlled entities and private companies. During his executive career, Mark held roles in banking and finance, funds management, investment and infrastructure development businesses, including being the Company Secretary for ASX:100 companies Transurban Group and Australian Foundation Investment Company Limited. Mark holds a Bachelor of Business degree in accounting, a Graduate Diploma in Governance and is a Fellow of the Chartered Governance Institute, the Governance Institute of Australia and the Australian Institute of Company Directors INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY AND RELATED BODIES CORPORATE As at the date of this report, the interests of the directors in the shares and performance rights of the Company were: Nigel Sandiford (resigned 1 August 2022) Fred S Grimwade Luke Tuddenham Gerry Tuddenham EARNINGS PER SHARE Basic earnings per share Diluted earnings per share DIVIDENDS Ordinary Shares 309,058 718,200 1,066,848 14,396,829 Performance Rights - - 1,000,000 - Cents 3.54 3.49 A fully franked final dividend of 1.00 cents per share has been declared for the year to 30 June 2022. This brings the total dividend for FY2022 to 2.50 cents per share. This is an annualised yield of 6.76% (9.01% including franking credits) on a share price of $0.37 as at 30 June 2022. The total value of the final dividend is $416,071 and will be paid on 11 November 2022. The financial effect of the dividend will be recognised in the 2023 financial year as it was declared after the end of the 2022 financial year. Based on the existing participation rate in the dividend reinvestment plan, 14.59% of the dividend will be satisfied by the issue of shares. CORPORATE INFORMATION Nature of operations and principal activities The principal activities of the Group during the financial year were the provision of specialist IT consultancy services. There have been no significant changes in the nature of those activities during the year. Employees The Group employed 138 employees and contractors as at 30 June 2022 (2021: 160 employees and contractors). SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS No significant changes in the state of affairs of the Company occurred during the financial year. CPT Global Limited – Annual Report 10 Directors’ Report SIGNIFICANT EVENTS AFTER THE BALANCE DATE No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years. LIKELY DEVELOPMENTS AND EXPECTED RESULTS Likely developments, future prospects and business strategies of the operations of the Group are detailed in the Chairman’s Statement and Managing Director’s Review on pages 2 and 4 respectively. ENVIRONMENTAL REGULATION AND PERFORMANCE The Company's operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a State or Territory. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company has paid premiums to insure the current directors and officers against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director and officer of the Company, other than conduct involving a wilful breach of duty in relation to the Company. The total premium paid was $81,400. DIRECTORS' MEETINGS The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attended by each director were as follows: Directors’ Meetings Finance and Audit Committee Meetings Remuneration and Nomination Committee Meetings** Number eligible to attend Number attended Number eligible to attend Number attended Number eligible to attend Number attended Fred S Grimwade Nigel Sandiford* Gerry Tuddenham Luke Tuddenham 11 11 11 7 11 11 11 7 2 2 2 0 2 2 2 0 0 0 0 0 0 0 0 0 *Nigel Sandiford resigned on 1 August 2022 ** due to the composition of the Board, the remuneration and nomination functions were dealt with by the Board for the reporting period Committee membership As at the date of this report, the Company had a Finance and Audit Committee and a Remuneration and Nomination Committee of the Board of Directors. Members acting on the committees of the Board during the year were: Finance and Audit Fred Grimwade (Chair) Remuneration and Nomination Nigel Sandiford (Chair) (resigned 1 August 2022) Nigel Sandiford (resigned 1 August 2022) Fred Grimwade Gerry Tuddenham CPT Global Limited – Annual Report 11 Directors’ Report PROCEEDINGS ON BEHALF OF COMPANY No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year. NON-AUDIT SERVICES The Board of Directors, in accordance with advice from the Finance and Audit Committee, is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons: • • all non-audit services are reviewed and approved by the Finance and Audit Committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and the nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional & Ethical Standards Board. The following fees for non-audit services were paid/payable to SW Audit during the year ended 30 June 2022: • Taxation compliance services $22,392 CPT Global Limited – Annual Report 12 Directors’ Report REMUNERATION REPORT The Remuneration Report for the year ended 30 June 2022 outlines the Director and executive remuneration arrangements of CPT Global in accordance with the requirements of the Corporations Act 2001 and its regulations. For the purposes of this Report, key management personnel (KMP) of CPT Global are defined as those persons having authority and responsibility for planning, directing, and controlling the major activities of CPT Global, directly or indirectly, including any Director of the parent Company. Persons to who the report applies The remuneration disclosures in this Report cover the following persons: Key Management Person Fred S Grimwade Nigel Sandiford Luke Tuddenham Gerry Tuddenham Grant Sincock Remuneration policy Position Non-executive Chairman Non-executive Director (resigned 1 August 2022) CEO and Managing Director Executive Director Company Secretary and Chief Financial Officer (resigned 13 May 2022) The Remuneration and Nomination Committee of the Board of Directors is responsible for determining and reviewing compensation arrangements for the directors, the managing director and the executive team. The Remuneration and Nomination Committee assesses the appropriateness of the nature and amount of remuneration of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team. The outcomes of the remuneration structure are expected to comply with Executive Share and Option Scheme Guidelines. The payment of bonuses, performance rights and other incentive payments are reviewed by the Remuneration and Nomination Committee annually as part of the review of executive remuneration and a recommendation is put to the Board for approval. All bonuses, performance rights and incentives must be linked to pre-determined performance criteria. The Board can exercise its discretion in relation to approving the incentives, bonuses and performance rights and can recommend changes to the Committee's recommendations. Any changes must be justified by reference to measurable performance criteria. Details of such incentives awarded during the year are detailed below. To assist in achieving these objectives, the Remuneration and Nomination Committee links the nature and amount of executive directors' and officers' remuneration to the Company's financial and operational performance and shareholders’ value. Performance-based remuneration Executives have short-term ‘at risk’ cash bonuses, the payment of which depends on the executive meeting their KPIs. Additional bonuses for exceptional performance in relation to the pre-agreed KPIs may be paid up to a maximum of three times the target bonus. The KPIs are set annually after consultation with the directors and executives. The measures are specifically tailored to the areas where each executive has a level of control. The KPIs target areas the Board believes hold the greatest potential for expansion and profit, covering financial and non-financial goals, for both the short and long-term. They can include financial, people, client, strategy and risk measures. Executive directors can receive performance rights with vesting conditions tied to the cumulative ordinary EPS of the Company over a three-year period. The performance-based remuneration does not include any clawback provisions. Company performance, shareholder wealth and director and executive remuneration The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives. There have been two methods applied in achieving this aim, the first being annual salary reviews based on key performance indicators, and the second being the issue of shares and options to selected directors and executives to encourage the alignment of personal and shareholder interests. During this financial year, Mr Luke Tuddenham obtained his USA Green Card and was promoted to CEO to take effect on 1 November 2021. His package was amended from an expat package to a USA executive package commensurate with the change in role and responsibilities. CPT Global Limited – Annual Report 13 Directors’ Report Of the 450,000 performance rights issued to Directors at the 2018 AGM only 50,000 vested as the profit hurdle for FY2021 was met, and as a result 50,000 shares were issued during FY2022. The balance of the performance rights have lapsed. During FY2022 executive bonuses increased in line with the performance of the business as sales, margin and net profit targets in incentive plans were outperformed. The following table shows the net profit and dividends for the last five years for the listed Company, as well as the share price at the end of the respective financial years. The analysis reflects the steady improvement in performance since 2018 with 2021 being a record performance for CPT. The net loss in 2020 includes the write down in goodwill of $4.2m. The board believes the remuneration policy is effective and can be linked to current years result. Net profit/(loss) Share price at year end Dividends paid and declared 2018 $0.8m $0.12 0.25c 2019 $1.0m $0.20 0.75c 2020 ($3.3m) $0.115 1.25c 2021 $3.4m $0.50 5.0c 2022 $1.5m $0.37 2.5c During the year, no shares were purchased as part of the share buyback. The share price during the year ranged from a low of $0.37 to a high of $0.68. Remuneration of Non-executive Directors Non-executive Directors are entitled to a fixed fee per annum for acting as a Director of CPT Global. No additional fees are paid for membership of an active committee. Under CPT Global’s Constitution, Non-executive Director’s fees cannot exceed the aggregate cap approved by shareholders by an ordinary resolution. The current cap is $300,000 and was adopted at the 2018 AGM. The aggregate fees paid to non-Executive directors in the 2022 financial year do not exceed the cap. There has been no change to the fees paid to individual Non-executive Directors during or after the year end. Remuneration of Senior Executives The executive directors and the executives specified in this remuneration report, have their employment conditions formalised in contracts of employment and are permanent employees of CPT Global Limited. The employment contracts are for a fixed term of one year and contain the following common features: • • • • • • • an annual review of the Base Salary which is dependent upon CPT Global’s performance, the individual’s performance, and market changes. Any increase has to be approved by the Managing Director and the Remuneration and Nomination Committee; short term performance incentive payments are paid, dependent upon CPT Global achieving its objectives and the individual achieving their KPIs; at CPT Global’s discretion, allowances and adjustments to Base Salary may be paid when an Executive is required to travel on CPT Global business. Any adjustments must be agreed in advance, documented in writing and signed by the Executive and the Company; post-employment restraints covering non-solicitation of employees, contractors and clients and non- competition; CPT Global may at its discretion elect to make payment in lieu of notice when the contract is terminated by the employee or the Company; a contract can be terminated immediately without notice by CPT Global for serious misconduct; and any options not vested as at the date of termination will lapse. CPT Global Limited – Annual Report 14 Directors’ Report Specific details of each Senior Executive’s contract of employment which applied at the end of the financial year ending 30 June 2022 are summarised in the tables on the following pages. Summary of Contracts of Employment Applicable at 30 June 2022 Position Fixed Remuneration Luke Tuddenham CEO and Managing Director Base Salary excl statutory on-costs US$350,000 401K (incl. matching) US$42,000 Medical Insurance Non-monetary benefits US$33,612 Mobile telephone, car park, road tolls, petrol, motor vehicle lease, education expenses and other miscellaneous expenses Performance Based Remuneration Annual target bonus USD$125,000 Other benefits Post-employment benefits Nil Nil Post-employment restraint 12 months Termination 4 weeks notice Termination benefits Nil Position Fixed Remuneration Base Salary Superannuation Non-monetary benefits Gerry Tuddenham Executive Director Grant Sincock Chief Financial Officer & Company Secretary (resigned 13 May 2022) $387,385 $27,500 $265,000 $26,500 Mobile telephone, car park, road tolls and superannuation. Mobile telephone, road tolls and salary sacrifice arrangements for motor vehicle and superannuation. Performance Based Remuneration Annual target bonus Other benefits Post-employment benefits N/a Nil Nil Post-employment restraint 6 months Termination 4 weeks notice Termination benefits Nil $30,000 Nil Nil 6 months 4 weeks notice Nil CPT Global Limited – Annual Report 15 Directors’ Report Details of remuneration for the year ended 30 June 2022 Details of the nature and amount of each element of the remuneration of each director of the Company and executive officers of the company and the Group receiving the highest remuneration for the financial year and its comparative year are as follows: Notes 1. The elements of remuneration have been determined based on the cost to the group. 2. In FY2021 other Benefits for Mr Luke Tuddenham include expatriate costs. Mr Luke Tuddenham and CPT entered a new arrangement applicable from 1 April 2021 which did not include certain expatriate costs. The terms of that arrangement are disclosed on page 15 3. Mr Luke Tuddenham and CPT are currently negotiating a new contract which will not include any expatriate costs, and his role as Managing director his annual target bonus will be increased to USD 250,000 4. Grant Sincock resigned on 13 May 2022. CPT Global Limited – Annual Report 16 Post Emp’t BenefitsTotalPerformance relatedOtherBenefits$$$$$$$$$DirectorsFred Grimwade202278,647 - - 7,798 - - 86,4450.0%202182,546 - - 7,408 - - 89,9540.0%Nigel Sandiford202250,228 - - 5,023 - - 55,2510.0%202152,739 - - 4,772 - - 57,5110.0%Luke Tuddenham2022 - Managing Director524,79641,492205,510149,038- - 130,0921,050,92919.56%2021 - VP N: America340,22128,234280,985254,34547,289 - - 951,07429.54%Gerry Tuddenham2022 - Managing Director134,66018,856 - 2,1489,167 - 164,8310.0%2022 - Executive Director 131,330(48,622) - 4,29518,333 - 105,3370.0%Total 2022265,991(29,766) - 6,44327,500 - - 270,1680.0%2021243,66114,172 - 10,12525,000 - - 292,9590.0%Total Remuneration2022919,66211,726205,510155,48140,321 - 130,0921,462,79214.05%2021719,16842,406280,985264,47084,468 - - 1,391,49720.19%Executive OfficersGrant Sincock2022302,0898,37044,00068828,34914,508 - 398,00411.06%2021253,668(1,727)70,0001,09725,000- - 348,03820.11%Total Remuneration2022302,0898,37044,00068828,34914,508 - 398,00411.06%2021253,668(1,727)70,0001,09725,000- - 348,03820.11%OtherShort-Term BenefitsOther Long-SalaryShort-term BonusSuperShare Based PaymentsAnnual & Long Service Leave Directors’ Report Performance income as a proportion of total remuneration Executive directors and executives are paid performance related bonuses based on set monetary figures, rather than proportions of salary since these payments are discretionary. This has led to the proportions of remuneration related to performance varying between individuals. Performance Rights granted as remuneration Granted No. Grant Date Vested No. Value per Share at Grant Date Exercise Price $ Last Exercise Date Luke Tuddenham 1,000,000 29/11/21 Total 1,000,000 $ - - $0.66 $0.00 29/11/24 Further details on the service and performance criteria attached to these rights can be found in note 20. Balance at beginning of Period Granted as Remun eration Rights Exercised Rights Lapsed /Cancelled Balance at End of Period Exercisable at End of Period Vested and Unexercise d at End of Period Luke Tuddenham 1,000,000 Total 1,000,000 - - - - - - 1,000,000 1,000,000 - - - - Shareholdings of Key Management Personnel Shares held by key management personnel directly, indirectly or beneficially including their related parties: Granted as Remuneration On Exercise of Options Net Change Other Ord Ord Shares held in CPT Global Limited Fred S Grimwade Nigel Sandiford (resigned 1 August 2022) Gerry Tuddenham Luke Tuddenham Balance 1 July 2020 Ord 718,200 229,836 12,946,902 891,254 - - - - Specified Executives Grant Sincock (resigned 13 May 2022) Total 196,310 14,982,502 35,928 35,928 Balance 30 June 2021 Ord 718,200 240,817 13,839,606 991,335 Ord - 10,981 892,704 100,081 22,044 254,282 1,025,810 15,052,905 - - - - - - CPT Global Limited – Annual Report 17 Directors’ Report Shares held in CPT Global Limited Fred S Grimwade Nigel Sandiford (resigned 1 August 2022) Gerry Tuddenham Luke Tuddenham Specified Executives Grant Sincock (resigned 13 May 2022) Total Balance 30 June 2021 Ord 718,200 240,817 13,839,606 991,335 254,282 15,052,905 Ord - - - - - - Granted as Remuneration On Exercise of Options Net Change Other Ord - - 50,000 - Ord - 68,241 470,467 75,513 Balance 30 June 2022 Ord 718,200 309,058 14,360,073 1,066,848 - - - 254,282 700,977 16,745,217 AUDITOR’S INDEPENDENCE DECLARATION The lead auditor’s independence declaration for the year ended 30 June 2022 has been received and can be found on page 19 of the directors’ report. ROUNDING The amounts contained in this report and in the financial statements have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191. The Company is an entity to which the Class Order applies. Signed in accordance with a resolution of the directors. Luke Tuddenham Managing Director Aspen Colorado, 30 September 2022 CPT Global Limited – Annual Report 18 Take the lead AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF CPT GLOBAL LIMITED As lead auditor, I declare that, to the best of my knowledge and belief, during the year ended 30 June 2022 there have been: i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit, and ii. no contraventions of any applicable code of professional conduct in relation to the audit. SW Audit (formerly ShineWing Australia) Chartered Accountants R Blayney Morgan Partner Melbourne, 30 September 2022 Brisbane Level 15 240 Queen Street Brisbane QLD 4000 T + 61 7 3085 0888 Melbourne Level 10 530 Collins Street Melbourne VIC 3000 T + 61 3 8635 1800 Perth Level 25 108 St Georges Terrace Perth WA 6000 T + 61 8 6184 5980 Sydney Level 7, Aurora Place 88 Phillip Street Sydney NSW 2000 T + 61 2 8059 6800 SW Audit ABN 39 533 589 331. Liability limited by a scheme approved under Professional Standards Legislation. SW Audit is an independent member of ShineWing International Limited. sw-au.com 19 Consolidated Statement of Profit or Loss and Other Comprehensive Income YEAR ENDED 30 JUNE 2022 Notes Revenue Other income Salaries and employee benefits Consultants benefits Depreciation and amortisation Insurance Finance costs Occupancy costs Other expenses Foreign currency gains/(losses) PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE PROFIT AFTER INCOME TAX Other Comprehensive Income: 2 2 2022 $’000 29,941 16 (2,768) (21,741) (16) (355) (92) (266) (2,689) 23 2,053 2021 $’000 33,256 153 (2,328) (24,011) (130) (310) (191) (193) (1,720) (50) 4,478 4 (581) (1,073) 1,472 3,405 Items that may be subsequently reclassified to comprehensive income Exchange differences on translating foreign controlled entities (463) (289) Total Other Comprehensive Loss for the year, net of tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR PROFIT ATTRIBUTABLE TO MEMBERS OF CPT GLOBAL LIMITED TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO MEMBERS OF CPT GLOBAL LIMITED (463) (289) 1,009 3,116 1,472 3,405 1,009 3,116 Basic earnings per share (cents per share) Diluted earnings per share (cents per share) 23 23 3.54 3.49 8.77 8.76 The Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the Notes to the Financial Statements. CPT Global Limited – Annual Report 20 Consolidated Statement of Financial Position AT 30 JUNE 2022 Notes CURRENT ASSETS Cash and cash equivalents Trade and other receivables Contract Assets Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Trade and other receivables Deferred tax assets Property, plant and equipment TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Current tax liabilities Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Deferred tax liability Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY 6 7 8 9 7 15 12 13 15 16 15 16 17 18 2022 $’000 4,087 5,119 1,318 639 11,163 2,262 1,200 14 3,476 14,639 8,355 52 760 9,167 121 32 153 9,320 5,319 13,818 709 (9,208) 5,319 2021 Restated $’000 4,264 2,954 1,321 634 9,173 2,768 1,017 17 3,801 12,975 6,717 46 760 7,523 158 62 220 7,743 5,232 13,033 1,049 (8,850) 5,232 The Consolidated Statement of Financial Position is to be read in conjunction with the Notes to the Financial Statements. CPT Global Limited – Annual Report 21 Consolidated Statement of Changes in Equity YEAR ENDED 30 JUNE 2022 $’000 $’000 $’000 $’000 $’000 Issued Capital Ordinary Accumulated Losses Employee Compensation Reserve Foreign Currency Translation Reserve Total 12,396 (10,990) 1,706 (369) 2,743 - - - - 637 637 3,405 - 3,405 (1,264) - (1,264) - - - - - - (289) (289) 3,405 (289) 3,116 - - - (1,264) 637 (627) Balance at 1 July 2020 Comprehensive Income Profit for the year Other comprehensive loss Total comprehensive income for the year Transactions with owners, in their capacity as owners Dividends paid or provided for Issue of shares Total transactions with owners, in their capacity as owners Balance at 30 June 2021 13,033 (8,849) 1,706 (658) 5,232 Balance at 1 July 2021 Comprehensive Income Profit for the year Other comprehensive loss Total comprehensive income for the year Transactions with owners, in their capacity as owners Dividends paid or provided for Issue of shares Share-based payments Total transactions with owners, in their capacity as owners 13,033 (8,849) 1,706 (658) 5,232 - - - 1,472 - 1,472 - - - - (463) (463) 1,472 (463) 6,241 - 785 - (1,831) - - - (7) 130 - - - (1,831) 778 130 785 (1,831) 123 - (923) Balance at 30 June 2022 13,818 (9,208) 1,829 (1,121) 5,319 The Consolidated Statement of Changes in Equity is to be read in conjunction with the Notes to the Financial Statements CPT Global Limited – Annual Report 22 Consolidated Statement of Cash Flows YEAR ENDED 30 JUNE 2022 Notes 2022 $’000 2021 $’000 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Finance costs Income tax paid NET CASH FLOWS FROM OPERATING ACTIVITIES 19 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment, software NET CASH FLOWS (USED IN) INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds/(Repayments) of borrowings Payment of dividends on ordinary shares NET CASH FLOWS USED IN FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS HELD Opening cash and cash equivalents Effects of exchange rate changes on cash and cash equivalents CLOSING CASH AND CASH EQUIVALENTS CARRIED FORWARD 6 29,020 (27,193) 5 (22) (794) 1,016 (12) (12) - (1,178) (1,178) (175) 4,264 (2) 4,087 36,452 (33,668) 13 (59) (175) 2,563 (10) (10) (666) (695) (1,361) 1,192 3,133 (62) 4,264 The Consolidated Statement of Cash Flows is to be read in conjunction with the Notes to the Financial Statements. CPT Global Limited – Annual Report 23 Notes to the Financial Statements Year Ended 30 June 2022 1. Summary of Significant Accounting Policies The consolidated financial statements comprise the financial statements of CPT Global Limited (the Company) and its subsidiaries (the Group). The separate financial statements of the Parent Entity, CPT Global Limited, have not been presented within this financial statement as permitted by the Corporations Act 2001. The principal activities of the Group during the financial year were the provision of specialist IT consultancy services. The registered address and principal place of business is level 3, 818 Bourke Street, Docklands, Victoria. The financial statements were authorised for issue on 30 September 2022 by the Board of Directors. Basis of Preparation These general purpose financial statements have been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board and International Financial Reporting Standards as issued by the International Accounting Standards Board. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Material accounting policies adopted in the preparation of this financial statements are presented below and have been consistently applied unless otherwise stated. The financial statements, except for the cash flow information, have been prepared on an accruals basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. All amounts are in Australian dollars unless otherwise stated. Accounting Policies (a) Principles of consolidation The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (CPT Global Limited) and all of the subsidiaries (including any structured entities). Subsidiaries are entities the parent controls. The parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. A list of the subsidiaries is provided in Note 10. The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date on which control is obtained by the Group. Intercompany transactions, balances and unrealised gains or losses on transactions between Group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group. The financial statements of the subsidiaries used in the preparation of these consolidated financial statements have been prepared as of the same reporting date as the parent. CPT Global Limited – Annual Report 24 Notes to the Financial Statements Year Ended 30 June 2022 1. Summary of Significant Accounting Policies (continued) (b) Income Tax The income tax expense for the year comprises current income tax expense/(benefit) and deferred tax expense/(benefit). Current income tax expense/(benefit) charged to the profit or loss is the tax payable/(receivable) on taxable income/(loss) for the current period. Current tax liabilities/ (assets) are therefore measured at the amounts expected to be paid to/(recovered from) the relevant taxation authority using tax rates (and tax laws) that have been enacted or subsequently enacted by the end of the reporting period. Deferred income tax expense/(benefit) reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses. Current and deferred income tax expense/(benefit) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at the end of the reporting period. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profits will be available against which the benefits of the deferred tax asset can be utilised. Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences, and it is probable that the differences will not reverse in the foreseeable future. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. (c) Contract Assets Contract assets are revenue that has not been invoiced at period end and is measured and recognised in accordance with the policies set out in note 1(p). CPT Global Limited – Annual Report 25 Notes to the Financial Statements Year Ended 30 June 2022 1. Summary of Significant Accounting Policies (continued) (d) Property, Plant & Equipment Each class of property, plant and equipment is carried at cost less accumulated depreciation and, where applicable impairment losses. Property, Plant and equipment The carrying amount of property, plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. When there are indications of any impairment, the recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are recognised in profit or loss during the financial period in which they are incurred. Depreciation The depreciable amount of all fixed assets is depreciated on a straight-line basis over the asset’s useful life to the Group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Leasehold improvements Fixtures Fittings and Equipment Motor Vehicles Depreciation Rate 20% to 50% 33% to 50% 12% to 20% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Gains and losses on disposals are determined by comparing net proceeds with the carrying amount. These gains and losses are recognised in profit and loss. (e) Leases The Group assesses whether a contract is or contains a lease at inception of the contract. A right-of-use asset and a corresponding lease liability is recognised on the balance sheet for all lease arrangements in which CPT is the lessee, except for leases with a term of 12 months or less and leases of low value assets. The lease payments for these leases are recognised as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise: ▪ ▪ fixed lease payments less any lease incentives receivable; variable lease payments that depend on an index or rate which are initially measured using the index or rate at the commencement date; CPT Global Limited – Annual Report 26 Notes to the Financial Statements Year Ended 30 June 2022 1. Summary of Significant Accounting Policies (continued) ▪ ▪ ▪ the amount expected to be paid under residual guarantees; the exercise price of purchase options if it is reasonably certain that the option will be exercised; and payments of penalties for terminating a lease if the lease term reflects the exercise of an option to terminate a lease. Lease liabilities are presented in the borrowings line item in the consolidated statement of financial position. Lease liabilities are subsequently measured by increasing the carrying amount to reflect interest on the lease liability and reducing the carrying amount for lease payments made. The lease liability is remeasured whenever: ▪ ▪ the lease term has changed or there has been a change in the assessment of the exercise of a purchase option as a result of a significant event or change in circumstances; the lease payments change due to a change in an index or a change in expected payment under a guaranteed residual value; ▪ a lease contract is modified and the modification is not accounted for as a separate lease. Corresponding adjustments to the right-of-use asset are made whenever the lease liability is remeasured. No adjustments to the lease liability were required during this financial period. Right-of use assets comprise the initial measurement of the lease liability, lease payments made at or before the commencement date, less any lease incentives received and any initial direct costs. Subsequent measurement is at cost less accumulated depreciation and impairment losses. Right-of use assets are depreciated over the lease term or the useful life of the underlying asset, whichever is the shorter. Depreciation starts from the commencement date of the lease. Right-of-use assets are presented as a separate line in the consolidated statement of financial position. (f) Financial Instruments Recognition and measurement Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the Group commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified ‘at fair value through profit or loss’, in which case transaction costs are expensed to profit or loss immediately. Classification of financial assets Financial assets recognised by the Group are subsequently measured at either amortised cost or fair value subject to their classification. Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories: (i) (ii) (iii) measured at amortised cost fair value through profit or loss; and fair value through other comprehensive income. (iii) The classification of financial assets is based on both the business model for managing the financial asset and the contractual cash flow characteristics of the financial asset. CPT does not have any financial assets categorised as fair value through other comprehensive income. CPT Global Limited – Annual Report 27 Notes to the Financial Statements Year Ended 30 June 2022 1. Summary of Significant Accounting Policies (continued) Classification of financial liabilities Financial liabilities classified as held-for-trading, contingent consideration payable by the Group for the acquisition of a business and financial liabilities designated at fair value through profit or loss are subsequently measured at fair value. All other financial liabilities recognised by the Group are subsequently measured at amortised cost. Impairment of Financial Assets At the end of each reporting period, the Group tests financial assets for impairment by applying the expected credit loss impairment model. The Group has adopted the simplified approach under AASB 9 Financial Instruments to measure the allowance for credit losses for receivables from contracts with customers and contract assets. The allowance for credit losses is determined based on the lifetime expected credit losses of the financial asset. Lifetime expected credit losses represent the credit losses that are expected to result from default events over the life of the financial asset. The Group has no other financial assets subject to impairment testing under AASB 9. In applying the simplified approach under AASB 9, the Group uses a provision matrix based on historical experience at the client and segment level, adjusted for factors that are specific to the financial asset, as well as current and future expected economic conditions relevant to the financial asset. The time value of money is incorporated into the measurement of expected credit losses if it is material. There has been no change in the estimation techniques or significant assumptions made during the reporting period. Contractual payments more than 180 days past due are considered default events for the purpose of measuring expected credit losses based on the historical experience of the Group. The measurement of expected credit losses reflects the Group’s expected rate of loss and is measured as the difference between all contractual cash flows due and all contractual cash flows expected based on the Group’s exposure at default, discounted at the financial asset’s effective interest rate, where appropriate. Financial assets are considered credit impaired when one or more events has occurred that provides objective evidence that there has been a detrimental impact on the estimated future cash flows of the financial asset. Indicators that a financial asset is credit impaired include observable data that: the debtor has significant financial difficulties; the debtor is likely to enter bankruptcy or financial reorganisation; breaches of contract have occurred; and the debtor has defaulted or there is delinquency in payments. Financial assets which are not collectible are written off by reducing the carrying amount directly when CPT has no realistic expectation of recovery of the financial asset. Financial assets written off remain subject to enforcement action by CPT. Any financial assets that have been written off but subsequently recovered in whole or in part are recognised in profit or loss. Financial guarantees Where material, financial guarantees issued, which require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due, are recognised as a financial liability at fair value on initial recognition. The guarantee is subsequently measured at the higher of the best estimate of the obligation and the amount initially recognised less, when appropriate, cumulative amortisation in accordance with AASB 15: Revenue. Where the Group gives guarantees in exchange for a fee, revenue is recognised under AASB 15. The fair value of financial guarantee contracts has been assessed using a probability weighted discounted cash flow approach. The probability has been based on: • • • the likelihood of the guaranteed party defaulting in a year period; the proportion of the exposure that is not expected to be recovered due to the guaranteed party defaulting; and the maximum loss exposed if the guaranteed party were to default. CPT Global Limited – Annual Report 28 Notes to the Financial Statements Year Ended 30 June 2022 1. Summary of Significant Accounting Policies (continued) Derecognition Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the Group no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. (g) Receivables Trade receivables are a part of financial instruments (loans and receivables) and are initially recognised at transaction price and are subsequently measured at amortised cost less any impairment allowance. Trade receivables are generally due for settlement within 30 days. (h) Impairment of non-financial assets At the end of each reporting period, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is recognised as an expense in the profit and loss. Impairment testing is performed annually for goodwill and other intangible assets with indefinite lives. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Non-financial assets, other than goodwill that suffered impairment, are reviewed for possible reversals of the impairment at the end of each reporting period. (i) Intangibles Goodwill Goodwill is initially recorded at the amount by which the purchase price for a business combination exceeds the fair value attributed to the interest in the net fair value of identifiable assets, liabilities and contingent liabilities at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Intellectual Property Intellectual property is recognised at the cost of acquisition and has an indefinite useful life. Intellectual property is tested annually for impairment and carried at cost less accumulated impairment losses. Computer Software Computer software is recognised at the cost of acquisition. Computer software costs have a finite useful life and are carried at cost less accumulated amortisation and any impairment losses. Computer software costs are amortised on a straight-line basis over their useful life. The amortisation rate used for software costs varies from 14% to 50%. CPT Global Limited – Annual Report 29 Notes to the Financial Statements Year Ended 30 June 2022 1. Summary of Significant Accounting Policies (continued) (j) Foreign Currency Transactions and Balances Functional and presentation currency The functional currency of each of the Group’s entities is the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the Company’s functional and presentation currency. Transaction and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are re-translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non- monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recognised in the profit or loss, except where deferred in equity as a qualifying cash flow or net investment hedges. Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the underlying gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the profit or loss. Group companies The financial results and position of foreign operations whose functional currency is different from the Group’s presentation currency are translated as follows: — assets and liabilities are translated at year-end exchange rates prevailing at the end of the reporting period; — — income and expenses are translated at average exchange rates for the period; and retained earnings are translated at the exchange rates prevailing at the date of the transaction. On consolidation, exchange differences arising from translation of transactions considered to be net investment in foreign operations are transferred directly to the Group’s foreign currency translation reserve in the statement of financial position. These differences are recognised in the profit or loss in the period in which the operation is disposed. (k) Trade and other payables Trade and other payables are a part of financial instruments (non-derivative financial liabilities). These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method. (l) Employee Benefits Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be wholly settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Those cashflows are discounted using market yields on corporate bonds with terms to maturity that match the expected timing of cashflows. Wages and salaries, annual leave and sick leave (i) Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled wholly within 12 months of the end of the reporting period are recognised in other payables in respect of employees’ services up to the end of the reporting period and are measured at the undiscounted amounts expected to be paid when the liabilities are settled. When measuring sick leave entitlement, only the unutilised entitlement that is likely to be utilised over and above the leave entitlement that continues to accrue in the future periods is taken into account. CPT Global Limited – Annual Report 30 Notes to the Financial Statements Year Ended 30 June 2022 1. Summary of Significant Accounting Policies (continued) Long service leave (ii) The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period. 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 end of the reporting period on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. (iii) Contributions to defined contributions superannuation funds are recognised as an expense as they become payable. Retirement benefit obligations (iv) Share-based payments Share-based compensation benefits are provided to certain directors and employees via the CPT Employee Equity Plan. Information relating to this scheme is set out in note 20. The fair value of performance rights granted under the CPT Employee Equity Plan is recognised as an employee benefit expense with a corresponding increase in equity in the period the rights are granted. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the rights. The fair value at grant date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the right, 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 right. The fair value of the rights granted is adjusted to reflect market vesting conditions but excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of rights that are expected to become exercisable. At the end of each reporting period, the Group revises its estimate of the number of rights that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. The impact of the revision to the original estimates, if any, is recognised in the profit and loss with a corresponding adjustment to equity. (m) Provisions Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. A provision for dividends is not recognised as a liability unless the dividends are declared, determined or publicly recommended on or before the end of the reporting period. (n) Issued Capital Issued and paid-up capital is recognised at the fair value of the consideration received by the Group. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. (o) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position. CPT Global Limited – Annual Report 31 Notes to the Financial Statements Year Ended 30 June 2022 1. Summary of Significant Accounting Policies (continued) (p) Revenue and Other Income The Group recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Group expects to be entitled in exchange for the goods or services. The Group enters contracts with clients to provide IT consulting services on a time and materials, fixed price, milestone based and risk/reward basis, or variations thereof. The performance obligations in each contract are identified and the total transaction price for each contract is allocated against the various performance obligations based on their stand-alone selling prices. The transaction price excludes any amounts collected on behalf of third parties. The Group determines the stand-alone selling price by direct reference to contracts and pricing schedules for the services being delivered. Revenue is recognised either at a point in time or over time as performance obligations are satisfied by transferring the goods or services to the client. Revenue is recognised over time if: ▪ ▪ ▪ the client simultaneously receives and consumes the benefits as the Group performs; the client controls the asset as the Group creates or enhances it; or the Group’s performance does not create an asset for which the client has an alternative use and there is a right to payment for performance to date. If the criteria above are not met, revenue is recognised at a point in time. When revenue is recognised over time the progress towards complete satisfaction of the performance obligations as the services are delivered is measured using the stage of completion method, except for risk/reward contracts as discussed below. Stage of completion is measured by reference to the labour hours incurred to date as a percentage of total estimated hours for each performance obligation. Clients are invoiced monthly in arrears unless the contract specifies otherwise. Payment terms are generally 30 days. Any amounts that remain unbilled at the end of a reporting period are presented in the statement of financial position as contract assets. Only the passage of time is required before these amounts are invoiced and collected. Risk/reward revenue is recognised by measuring the progress towards complete satisfaction of the performance obligations. The method of measuring progress is determined using an output method as the Group has determined that an output method best reflects the pattern of transfer of value to the customer. The output is measured in either MIPS or MSUs saved for the customer and the progress is measured by reference to the MIPS or MSUs saved to date as a percentage of total estimated MIPS or MSUs for each performance obligation. The MIPS or MSUs saved to date is determined by identifying all opportunities identified at a point in time and weighting the likelihood of the client realising the savings based on fixed and measurable stages in a risk/reward project. The weighting at each stage is based on the Group’s experience completing risk/reward projects. Clients are invoiced in accordance with the contract terms which generally stipulate that invoices can be submitted when the savings have been measured and confirmed by the client and the Group. Payment terms are generally 30 days. Any amounts that remain unbilled at the end of a reporting period are presented in the statement of financial position as contract asset. Clients may be invoiced in advance for the provision of services and this is recognised as a liability until the Group provides, and the client consumes, the benefits of the service. Interest revenue is recognised on a proportional basis considering the effective interest rates applicable to the financial assets. All revenue is stated net of the amount of goods and services tax (GST). (q) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use of those assets, until such time as the assets are substantially ready for their intended use or sale. CPT Global Limited – Annual Report 32 Notes to the Financial Statements Year Ended 30 June 2022 1. Summary of Significant Accounting Policies (continued) (r) Earnings per share Basic EPS is calculated as net profit attributable to members, adjusted to exclude costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted EPS is calculated as net profit attributable to members, adjusted for: ▪ ▪ ▪ ▪ costs of servicing equity (other than dividends) and preference share dividends; the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; and divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. (s) Consumption Taxes (GST and VAT) Revenues, expenses and assets are recognised net of the amount of GST and VAT, except where the amount of GST and VAT incurred is not recoverable from the taxation authority. In these circumstances the GST and VAT is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST and VAT. Cash flows are presented in the statement of cash flows inclusive of GST and VAT. The GST and VAT components of cash flows arising from investing or financing activities which are recoverable from, or payable to, the taxation authority are presented as operating cash flows included in receipts from customers or payments to suppliers. (t) Government Grants Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and all grant conditions will be met. Grants relating to expense items are recognised as income over the periods necessary to match the grant to the costs they are compensating. (u) Prior Period Restatement During the year ended 30 June 2022 the Group identified a classification error in the receivables due from the Canada Revenue Agency being classified as offsetting trade and other payables. The impact of adjusting the classification of these balances is shown below: CPT Global Limited – Annual Report 33 Notes to the Financial Statements Year Ended 30 June 2022 1. Summary of Significant Accounting Policies (continued) STATEMENT OF FINANCIAL POSITION As previously presented Adjustment As Restated $ $ $ 30 June 2021 Assets Current assets Trade and other receivables Total current assets Non-current assets Trade and other receivables Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Total Current liabilities Total liabilities Net assets 2,954 9,173 - 1,035 10,208 3,950 4,765 4,976 5,232 - - 2,898 2,898 2,898 2,898 2,898 2,898 - 2,954 9,173 2,898 3,933 13,106 6,848 7,654 7,874 5,232 There was no impact on profit or loss, statement of changes in equity or the cash flow statement. (v) Rounding of Amounts The parent entity has applied the relief available to it under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and accordingly, amounts in the financial statements and directors’ report have been rounded off to the nearest $1,000, or in certain cases the nearest dollar. (w) Critical Accounting Estimates & Judgements The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. CPT Global Limited – Annual Report 34 Notes to the Financial Statements Year Ended 30 June 2022 1. Summary of Significant Accounting Policies (continued) Key estimates and judgements (i) Impairment losses on trade and other receivables, and contract assets An impairment loss is recognised based on an expected credit loss model. The Group assesses the expected credit loss of trade receivables and contract assets based on individual debtor level expectations relative to credit terms. The Group assesses the expected credit loss on receivables due from tax authorities based on the expected recovery. There is a high degree of judgement in estimating whether these receivables require an impairment provision. (ii) Contract asset The Group measures contract assets based on information available at the time of recognition. This information includes historical trends, data analysis, significant judgments from key management personnel as to the reasonable expectations of future events and completion of projects in progress. See Note 8 for further details. (iii) Deferred taxes In assessing whether future taxable amounts will be available to utilise temporary differences and losses, management review the past performance of the relevant company, the budgets for the forthcoming financial year, forecasts and sales pipelines. (x) Accounting standards issued but not yet effective Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2022 reporting periods and have not been early adopted by the group. These standards are not expected to have a material impact in the current or future reporting periods. CPT Global Limited – Annual Report 35 Notes to the Financial Statements Year Ended 30 June 2022 2. REVENUE REVENUE Services Revenue – recognised over time Total Revenue OTHER INCOME Interest Income Government grants received Other income Total Other Income 3. PROFIT OR LOSS FOR THE YEAR Profit or loss for the year also includes the following specific expense items: Finance costs: Interest expense on borrowings Interest on lease liabilities Total finance costs Foreign currency translation losses Occupancy expenses Depreciation of property plant and equipment Depreciation of right of use assets Defined superannuation contribution expense – Others Defined superannuation contribution expense – KMP 2022 $'000 2021 $'000 29,941 29,941 33,256 33,256 5 11 - 16 13 137 2 153 2022 $'000 2021 $'000 92 - 92 (23) 301 16 - 958 129 153 38 191 49 243 15 115 1,155 108 CPT Global Limited – Annual Report 36 Notes to the Financial Statements Year Ended 30 June 2022 4. INCOME TAX EXPENSE Tax expense comprises: Current tax Deferred tax Under/(over) provision of previous year The prima facie tax on profit before income tax is reconciled to the income tax as follows: Prima facie tax on profit before income tax at 25% (2021: 26%) Tax effect of ▪ Change in tax rate ▪ Tax on overseas income at a different rate ▪ Other non-allowable items ▪ Current year tax losses not brought to account ▪ Tax losses utilised that were not previously recognised ▪ Government grants ▪ Under/(over) provision of previous year ▪ Non-deductible interest expense Income tax expense attributable to the entity 2022 $'000 764 (182) - 581 2021 $'000 895 147 31 1,073 513 1,164 24 73 105 65 (314) - 33 82 581 21 11 (5) 63 (267) (23) 31 78 1,073 The applicable weighted average effective tax rates are as follows: 28% 24% 5. DIVIDENDS PAID OR PROVIDED FOR ON ORDINARY SHARES 2022 2021 $'000 $'000 (a) Dividends paid during the year • Current year interim Franked dividends (1.5c per share) (2021: 2.0c per share) 621 786 • Prior year final Franked dividends (3.00c per share) (2021: 1.25c per share) 1,209 1,830 478 1,264 (b) Dividends proposed and not recognised as a liability • Franked dividends (1.00c per share) (2021: 3.00c per share) 416 1,209 (c) Franking credit balance Balance of franking account at year end adjusted for: • Franking debits arising from payment of proposed dividends 2,291 2,291 2,022 2,022 CPT Global Limited – Annual Report 37 Notes to the Financial Statements Year Ended 30 June 2022 6. CASH AND CASH EQUIVALENTS Cash at bank Reconciliation of cash Cash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the statement of financial position as follows: Cash and cash equivalents 7. TRADE AND OTHER RECEIVABLES CURRENT Trade receivables Provision for impairment Other receivables GST/ HST receivables NON-CURRENT Employee withholding tax receivables GST/ HST receivables 2022 $'000 2021 $'000 4,087 4,264 4,087 4,087 4,264 4,264 2022 $'000 4,336 - 4,336 147 636 5,119 2022 $'000 - 2,262 2,262 2021 $'000 2,784 - 2,784 170 2,954 2021 $'000 607 - 607 Notes 7(a) 7(c) Notes 7(b) 7(c) a) Trade receivables are non-interest bearing and generally on 30-day terms. The average credit period on rendering of services is 53 days (2021: 30.6 days). b) Employee withholding tax receivables are refunds expected from the Canada Revenue Agency relating to tax payments made on behalf of employees. c) GST/HST receivables are refunds expected from the Canada Revenue Agency relating to payments made in 2017 – 2020 associated with GST/HST that are expected to be refunded. CPT Global Limited – Annual Report 38 Notes to the Financial Statements Year Ended 30 June 2022 7. TRADE AND OTHER RECEIVABLES (Cont.) Before accepting new customers, the Group assesses the creditworthiness of the potential client using information provided by independent rating agencies, publicly available information and its own trading record. The Group’s client portfolio consists of leading blue chip companies, Fortune Global 500 companies and Government departments within Australia. The profile of the trade receivable balance as at the reporting date is as follows: Of the trade receivable balance at the end of the reporting period: • • • • • • $960k (2021: $886k) was due from a leading banking institution in Australia with an S&P credit rating of AA-; $290k (2021: $0) was due from a leading Australian online recruitment platform; $340k (2021: $0) was due from a Victorian government agency; $254k (2021: $0) was due from an Australian federal government agency; $212k (2021: $13k) was due from a leading insurance company in the USA; and $1.060m (2021: $47k) was due from a leading healthcare company in the USA There are no other customers who represent more than 5% of the total balance of trade receivables. Of the trade receivables balance at the end of the reporting period, a concentration of $2.5m (58%) relates to Australia (2021: $2.4m (86%) and $1.6m relates to US (2021: $299k (11%). The remaining amounts are not individually significant. All these receivables were collected subsequent to year end Trade receivables that are past due and are impaired There are no provision for impairments during the year. Trade receivables that are past due but not impaired Included in the trade receivable balance are debtors with a carrying amount of $491k (2021: $82k) in the Group which are past due at the end of the reporting period but have not been provided for as there has not been a significant change in credit quality and the amounts are still considered recoverable. The balance relates to two USA clients and one for Australia. Since the end of year we have collected payments for some invoices and are in the process of collecting the balance payments. At this stage no risk is foreseen in collecting all the outstanding payments. The ageing analysis of trade receivables is: 1-3 months Within initial trade terms 2022 $'000 491 3,845 4,336 2021 $'000 82 2,702 2,784 The carrying value of trade and other receivables approximates its fair value. Trade and other receivables are recoverable within 12 months, hence the effects of discounting is immaterial. 8. CONTRACT ASSETS Contract asset Total 2022 $'000 1,318 1,318 2021 $'000 1,321 1,321 Contract asset represents amounts relating to revenue recognised in accordance with the accounting policies detailed in Note 1(c) that had not been invoiced to the customer as at the end of the reporting period. There is no amount of the contract asset that was initially recognised more than 12 months prior to the end of the reporting period. CPT Global Limited – Annual Report 39 Notes to the Financial Statements Year Ended 30 June 2022 9. OTHER CURRENT ASSETS Prepayments 2022 $'000 639 639 2021 $'000 634 634 Prepayments consists of insurance policies, licence fees, subscriptions and other expenses. 10. INTERESTS IN SUBSIDIARIES Name Country of incorporation Percentage of equity & voting interest held by the economic entity CPT Global Ltd CPT Global GmbH CPT Global Inc CPT Global Consulting Corp CPT Global France CPT Global Australia Pty Ltd CPT Global International Pty Ltd CPT Global Pte Ltd CPT Global SRL CPT Consultoria Global Em Informatica Ltda CPT Global Software Pty Ltd United Kingdom Germany USA Canada France Australia Australia Singapore Italy Brazil Australia 2022 % 2021 % 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 - There are no known restrictions on the transfer of cash or assets within the group. No subsidiaries were acquired or sold during the financial year. 11. PARENT INFORMATION The following information has been extracted from the books and records of the parent and has been prepared in accordance with Accounting Standards. STATEMENT OF FINANCIAL POSITION ASSETS Current Assets Non-Current Assets Total Assets LIABILITIES Current Liabilities Non-Current Liabilities Total Liabilities EQUITY Issued Capital Reserves Accumulated losses Total Deficit 2022 $'000 1,587 449 2,036 8,557 198 8,755 2021 $'000 1,584 446 2,030 5,912 206 6,118 13,818 1,731 (22,267) (6,718) 13,033 1,608 (18,728) (4,087) CPT Global Limited – Annual Report 40 Notes to the Financial Statements Year Ended 30 June 2022 STATEMENT OF COMPREHENSIVE INCOME/(LOSS) Total profit/(loss) Total comprehensive profit/(loss) Guarantees (6,341) (6,341) (1,540) (1,540) The parent has not entered into any guarantees, in the current or previous financial year, in relation to the debts of its subsidiaries. Refer to Note 21 for details of bank guarantees in relation to leased offices. 12. PROPERTY, PLANT AND EQUIPMENT Motor vehicles At cost Accumulated depreciation Office equipment At cost Disposals Purchases Accumulated depreciation Furniture, fixtures and fittings At cost Accumulated depreciation Right of Use Assets At cost Disposals 2022 $'000 2021 $'000 36 (36) - 148 - 16 (150) 14 6 (6) - 11 (11) - 36 (36) - 139 (4) 13 (131) 17 6 (6) - 11 (11) - Total property, plant and equipment 14 17 (a) Reconciliations Reconciliations of the carrying amounts of property, plant and equipment at the beginning and end of the current financial year. Motor vehicles Cost at beginning of year Movements in exchange rate Cost at end of year Accumulated depreciation at beginning of year Depreciation and effects of movements in exchange rate Write back of accumulated amortisation on disposals Accumulated depreciation at end of year 2022 $'000 2021 $'000 35 1 36 (35) (1) - (36) 35 1 36 (35) (1) - (36) Carrying amount - - CPT Global Limited – Annual Report 41 Notes to the Financial Statements Year Ended 30 June 2022 12. PROPERTY, PLANT AND EQUIPMENT (Cont.) Office Equipment Cost at beginning of year Purchases Disposals Cost at end of year Accumulated depreciation at beginning of year Depreciation and effects of movements in exchange rate Accumulated depreciation at end of year Carrying value Furniture, fixtures and fittings Cost at beginning of year Cost at end of year Accumulated depreciation at beginning of year Depreciation Accumulated depreciation at end of year Carrying amount Right of use assets Cost at beginning of year Early termination of lease Cost at end of year Depreciation Accumulated depreciation at end of year Carrying amount 2022 $'000 148 16 - 164 (131) (19) (150) 2021 $'000 139 13 (4) 148 (119) (12) (131) 14 17 5 5 (4) (1) (5) - - - - - - - 5 5 (4) (1) (5) - 681 (670) 11 (11) (11) - On initial recognition of right of use assets in FY2020 it was assumed that a 3 year option in the lease of our head office would be exercised in FY2021. The lease was only extended for 1 year till the end of June 2023. Therefore, the right of use asset was derecognised. CPT Global Limited – Annual Report 42 Notes to the Financial Statements Year Ended 30 June 2022 13. TRADE AND OTHER PAYABLES CURRENT Trade and other payables Accruals Annual leave provision Contract liabilities 2022 $'000 6,563 837 653 302 8,355 2021 $'000 5,055 872 563 227 6,717 Due to the short-term nature of these payables, their carrying value is assumed to approximate to their fair value. There are no financial guarantees in place other than the bank guarantee for the head office lease as disclosed in Note 21. Contract liabilities are recorded as a current liability as the underlying performance obligations are expected to be completed within 12 months. The balance of unearned revenue at 30 June 2021 was recognised as revenue in FY2022. 14. BORROWINGS CURRENT Secured borrowings Lease liabilities Total current borrowings NON-CURRENT Lease liabilities Total non-current borrowings Unutilised financing facilities Credit facility available Amount secured utilised Note 14(a) 14(b) 14(b) 14(a) 2022 2021 $'000 $'000 - - - - - - - - - - 5,000 - 5,000 5,000 - 5,000 (a) The parent entity has a debtors financing facility in place. The facility is secured by a first registered company charge (mortgage debenture) over the carrying value of the total assets of the parent entity, which totalled $2.0m at the end of the reporting period. Interest is charged at a 5.5% margin above the 90 day Bank Bill Swap Rate. The maximum facility is $5m with the available facility based on the value of the Australian debtor book. At 30 June 2022, the available funding under the facility was $0.8m. (b) Lease liabilities were initially recognised at the beginning of FY2020 under AASB 16. At 31 May 2021 the lease liability relating to the Head Office was derecognised as the option in the contract was not exercised. A lease for a photocopier ended in FY2021. CPT had no contracts at 30 June 2022 that would require recognition as leases on the balance sheet. CPT Global Limited – Annual Report 43 Notes to the Financial Statements Year Ended 30 June 2022 15. TAX LIABILITIES Non Current Deferred tax liabilities comprise: Prepayments Unrealised foreign exchange gain Reconciliation of deferred tax liabilities Opening balance Debited/(Credited) to the statement of comprehensive income as current tax Closing balance ASSETS Non Current Deferred tax assets comprise: Foreign currency losses Employee entitlements Accruals Income losses Other Reconciliation of deferred tax assets Opening balance (Debited)/Credited to the statement of comprehensive income 5 Closing balance 2022 $'000 2021 $'000 34 35 69 158 (89) 69 628 376 37 123 36 42 116 158 86 72 158 505 360 27 88 37 1,200 1,017 1,017 183 1,200 1,092 (75) 1,017 The future income tax benefit of the deferred tax assets will only be realised if the conditions of deductibility set out in Note 1(b) occur. Deferred tax assets not brought to account for which the benefits will only be realised if the conditions for deductibility set out in Note 1(b) occur amount to $712,313 (2021: $807,886). CPT Global’s tax losses that have not been brought to account are generally not subject to restrictions. Of the losses not brought to account in FY2021 66% relate to the UK. CPT Global Limited – Annual Report 44 Notes to the Financial Statements Year Ended 30 June 2022 16. PROVISIONS Current Employee benefits – Long Service Leave Total Current Provisions Non-Current Employee benefits – Long Service Leave Total Non-Current Provisions 2022 $'000 760 760 32 62 2021 $'000 760 760 62 62 Total Provision 792 822 A provision has been recognised for employee entitlements relating to long service leave. In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based on historical data. The measurement and recognition criteria relating to employee benefits have been included in Note 1(l) to these financial statements. Analysis of Total Provisions Long Service Leave Total Opening balance at 1 July 2021 Provided for during the year Taken during the year Balance at 30 June 2022 17. ISSUED CAPITAL (a) Issued and paid up capital 41,607,143 (2021: 40,306,551) fully paid ordinary shares $'000 822 (4) (26) $'000 822 (4) (26) 792 792 2022 $’000 2021 $’000 13,818 13,033 13,033 13,033 (b) Movements in shares on issue 2022 2021 Beginning of the financial year New shares issued End of the financial year Number of shares 40,306,551 1,300,592 41,607,143 $’000’ 13,033 735 13,818 Number of shares 38,260,251 2,046,300 40,306,551 $’000’ 12,396 637 13,033 (i) Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. During the year ended 30th June 2020 no ordinary shares were bought back under the on market buyback (2021: 0). Ordinary shares have no par value. (ii) The on market buyback commenced on the 27th August 2020 with 3,000,000 shares being the maximum to be bought back of which 2,385,106 were outstanding as at 30 June 2022. CPT Global Limited – Annual Report 45 Notes to the Financial Statements Year Ended 30 June 2022 ISSUED CAPITAL (Cont.) 17. (c) Options For information relating to the CPT Global Limited employee option plan, including details of options issued, exercised and lapsed during the financial year and the options outstanding at year-end, refer to Note 20 Share-based payments. For information relating to share options issued to key management personnel during the financial year, refer to the Note 20 Share-Based Payments. (d) Capital Management Management controls the capital of the Group in order to maintain an appropriate debt to equity ratio, provide shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern. The Group does not currently have significant debt capital employed in the business as indicated in the following table. Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusts its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders, share buy-backs and share issues. There have been no changes in the strategy adopted by management to control the capital of the group since the prior year. This strategy is to ensure that the Group’s gearing ratio remains at an appropriate level between 0% and 50%. The gearing ratios for the year ended 30 June 2022 and 30 June 2021 are as follows: Borrowings Lease liabilities Less cash and cash equivalents Net Debt Total equity Total capital employed Gearing ratio 2022 $’000 - - (4,087) (4,087) 5,319 5,319 0% 2021 $’000 - - (4,264) (4,339) 5,232 5,232 0% A bank guarantee facility provided by the Company’s banker is cash backed in the amount of $191k. The cash is not available for CPT Global to utilise until the bank guarantee is returned to our Banker at the end of the lease. The lease expires in June 2023. CPT Global Limited – Annual Report 46 Notes to the Financial Statements Year Ended 30 June 2022 RESERVES 18. (a) Foreign currency translation The foreign currency translation reserve records exchange differences arising on translation of the financial statements of foreign subsidiaries. (b) Equity reserve The equity reserve is a non-distributable reserve used to record share-based payment expense. (c) Analysis of items of other comprehensive income by each class of reserve 2022 $’000 2021 $’000 Foreign currency translation reserve Exchange difference on translating foreign controlled entities Movement in foreign currency translation reserve (463) (463) (289) (289) Total other comprehensive income for the year (463) (289) 19. CASH FLOW INFORMATION (a) Reconciliation of the profit after tax to the net cash flows from operations Net profit/(loss) Non-Cash Items Depreciation and amortisation of non-current assets Share-based payments Changes in assets and liabilities Decrease in trade and term receivables (Increase) in prepayments Decrease/(Increase)/ in contract asset (Increase)/decrease in deferred tax asset Increase/(decrease) in trade payables and accruals Increase) in income taxes payable (Decrease) in deferred tax liabilities Increase in employee entitlements Net cash flow from operating activities There were no acquisitions or disposals of subsidiaries in the 2022 financial year. 2022 $'000 2021 $'000 1,472 3,405 16 133 130 68 (1,878) (44) 3 (182) 1,344 6 (36) 182 1,016 191 (141) (206) 75 (1,931) 752 70 150 2,563 CPT Global Limited – Annual Report 47 Notes to the Financial Statements Year Ended 30 June 2022 20. SHARE-BASED PAYMENTS The following share-based payment arrangements existed at 30 June 2022: Directors Performance Rights Issue date Expiry date Exercise Price Granted As at 1 July 2021 Forfeited/ Exercised/ transferred / expired As at 30 June 2022 29/11/21 28/11/24 $0.00 - - 1,000,000 1,000,000 - - 1,000,000 1,000,000 On 29 November 2021, at the Company’s Annual General Meeting, 1,000,000 performance rights were granted to Luke Tuddenham to take up ordinary shares at an exercise price of $0.00 per share. The fair value of these performance rights at the date of grant was $616,346. The fair value has been calculated using a Black Scholes pricing methodology using the following inputs: Weighted average exercise price Maximum life of right Underlying share price $0.00 3 years $0.660 As the exercise price is $0.00, share price volatility, risk free interest rate and dividend yield do not have a material impact on the fair value of the performance rights. The exercise of the performance rights related to FY2022 was contingent upon the following conditions being met: No of Shares to be Issued Conditions to be met at least 10% of the Company’s revenue, as reported in the Company’s 30 June 2024 Annual Report is earned from the sale, subscription or licensing of software and intellectual property; and 1,000,000 the cumulative earnings per share (EPS) as reported in the Company’s Annual Report for the 3 financial years ending on 30 June 2022, 30 June 2023 and 30 June 2024 is equal to or greater than the cumulative basic EPS target over the 3-year period from 1 July 2021 to 30 June 2024. The performance rights hold no voting or dividend rights, are not transferrable and will lapse in the event of the resignation of the director. CPT Global Limited – Annual Report 48 Notes to the Financial Statements Year Ended 30 June 2022 20. SHARE-BASED PAYMENTS (continued) An amount of $130,092 pertaining to these entitlements has been included in the statement of comprehensive income for the period. Information with respect to the number of performance rights granted is as follows: 2022 2021 Number of options Weighted average exercise price Number of options Weighted average exercise price 50,000 1,000,000 50,000 - 1,000,000 $ - - - - - 450,000 - - 400,000 50,000 $ - - - - - Outstanding at the beginning of the year Granted Exercised Expired Outstanding at year end There are no other options or performance rights granted by CPT Global Limited to any other party. Options do not confer on the holder any right to vote or participate in the dividends of the Company and are not transferable. 21. CONTINGENT LIABILITIES Guarantees CPT Global Limited has provided a guarantee of $124k (2021: $124k) to third parties in relation to its performance and obligations in respect of property lease rentals. The guarantee is secured against a term deposit equal to the value of the guarantee. The guarantee is for the term of the lease. The guarantee for lease covers the next 12 months. 22. EVENTS AFTER THE REPORTING PERIOD On 31st August 2022, a fully franked final dividend of 1.00 cent per share was declared for the 2022 financial year. CPT Global Limited – Annual Report 49 Notes to the Financial Statements Year Ended 30 June 2022 23. EARNINGS PER SHARE (a) The following reflects the income and share data used in the calculations of basic and diluted earnings per share: 2022 $'000 2021 $'000 Net (loss)/profit & earnings used in calculating basic and diluted earnings per share 1,472 3,404 Weighted average number of ordinary shares used in calculating basic earnings per share Weighted average number of options outstanding Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share 24. AUDITORS' REMUNERATION Amounts received or due and receivable by ShineWing Australia and Mazars London for: • an audit or review of the financial statements of the Company and any other entity in the Group other services in relation to the Company and any other entity in the Group - tax compliance - other services • Services relate to accounting and taxation services. Number of shares Number of shares 41,607,143 40,306,551 50,000 594,521 42,201,664 40,356,551 2022 $'000 2021 $'000 143 123 13 - 156 20 1 144 25. KEY MANAGEMENT PERSONNEL COMPENSATION (a) Names and positions held of economic entity key management personnel in office at any time during the financial year are: Key Management Person Fred S Grimwade Nigel Sandiford Luke Tuddenham Grant Sincock Gerry Tuddenham Position Non-executive Chairman Non-executive Director (resigned 1 August 2022) Chief Executive Officer Company Secretary and Chief Financial Officer (resigned 13 May 2022) Executive Director CPT Global Limited – Annual Report 50 Notes to the Financial Statements Year Ended 30 June 2022 25. KEY MANAGEMENT PERSONNEL COMPENSATION (continued) b) Key Management Personnel Compensation Refer to the Remuneration Report contained in the Director’s Report for details of the remuneration paid to each member of the Group’s key management personnel for the year ended 30 June 2022. The totals of remuneration paid to key management personnel of the Company and the Group during the year are as follows: Short-term employee benefits Post-employment benefits Other long-term benefits Share based payments 26. RELATED PARTY DISCLOSURES (a) Controlling Relationships 2022 $000 1,780 69 24 130 2021 $000 1,675 109 24 - 2,003 1,809 Interests in subsidiaries are set out in note 10. The parent entity and the ultimate controlling party of the group is CPT Global Limited. (b) Key management personnel Disclosures relating to key management personnel are set out in the Remuneration Report and note 25. Key management personnel include the board of directors and key executives who are accountable and responsible for the operational, management and strategic direction of the Group. (c) Transactions with related parties During the financial year there were no transactions with related parties. 27. OPERATING SEGMENTS Identification of Reportable Segments CPT Global Limited has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing the performance and determining the allocation of resources. The reportable segments disclosed are based on a geographical basis. Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics and are also similar with respect to the following: - - - services provided by the segment; the type of customer for the services provided; and external regulatory requirements CPT Global Limited – Annual Report 51 Notes to the Financial Statements Year Ended 30 June 2022 27. OPERATING SEGMENTS (continued) Types of Services by Segment Below outlines the major lines of services provided to customers for each reportable segment: Australia - - Transformation and Modernisation services Program Governance and Assurance Services - Quality Assurance Services - Mainframe and Midrange Optimisation and Cost Reduction Services - Capacity Management Services Europe - Mainframe & Midrange performance - Technical Support services North America - Mainframe & Midrange performance - Management, Functional & Automation Testing - - - Technical Support services Cost Reduction Capacity Planning Basis of accounting for purposes of reporting by reportable segments Accounting policies adopted Unless stated otherwise, all amounts reported to the Board of Directors with respect to operating segments are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Company. Inter-segment transactions Segment revenues, expenses and results exclude transfers between segments. The prices charged on intersegment transactions are the same as those charged for similar services to parties outside of the Group on an arm’s length basis. These transfers are eliminated on consolidation. Segment Assets and Liabilities Segment assets and liabilities reported are based on the internal reports reviewed by the Board of Directors. Assets include trade debtors and contract asset balances. Liabilities include trade creditors and accruals. Unallocated items The Board of Directors review segment performance to the gross profit level. All other items of revenue and expenses are not allocated to operating segments as they are not considered part of the core operations of any segment. Liabilities are not reported by segment for internal reporting purposes for the Board of Directors and therefore have been treated as unallocated items. CPT Global Limited – Annual Report 52 Notes to the Financial Statements Year Ended 30 June 2022 OPERATING SEGMENTS (continued) 27. Segment Performance Australia Europe North America Consolidated 2022 $’000 2021 $’000 2022 $’000 2021 $’000 2022 $’000 2021 $’000 2022 $’000 2021 $’000 REVENUE External Sales recognised over time 14,937 19,989 44 740 14,960 12,527 29,941 33,256 Total Group Revenue - - - - - - 29,941 33,256 Segment Gross Profit before tax 3,671 5,467 (16) 285 7,604 6,202 11,276 12,107 Reconciliation of segment result to group profit/loss before tax Goodwill impairment Unallocated Items - Overheads - - - - - - (9,223) (7,629) Profit/ (Loss) before tax 2,053 4,478 Segment Assets Australia Europe North America Consolidated (restated) 2022 $’000 2021 $’000 2022 $’000 2021 $’000 2022 $’000 2021 $’000 2022 $’000 2021 $’000 Segment Assets 2,674 2,658 (29) 105 5,907 4,110 8,552 6,873 Segment asset increases for the period: - Capital Expenditure - - - - - - - - 2,674 2,658 (29) 105 5,907 4,110 8,552 6,873 Reconciliation of segment assets to group assets Unallocated assets: - Property, plant & equipment - Other Assets - - - - - - - - - - - - 14 17 6,015 6,009 Total Group Assets 14,581 12,900 CPT Global Limited – Annual Report 53 Notes to the Financial Statements Year Ended 30 June 2022 OPERATING SEGMENTS (Continued) 27. Segment Liabilities Australia Europe North America Consolidated (restated) 2022 $’000 2021 $’000 2022 $’000 2021 $’000 2022 $’000 2021 $’000 2022 $’000 2021 $’000 Segment Liabilities 5,250 4,594 1,095 589 2,005 1,505 8,349 6,688 5,250 4,594 1,095 589 2,005 1,505 8,349 6,688 Reconciliation of segment liabilities to group liabilities Unallocated liabilities: - Provisions 826 863 - - 87 117 913 980 Total Group Liabilities Major Customers 9,262 7,668 CPT Global Limited provides services to a range of clients in the financial services, superannuation, healthcare and government industries. CPT’s top 10 clients account for 90% of the Group’s global revenue (2021: 89%), totalling $26.9m (2021: $29.5m). Four of CPT’s clients contributed more than 10% of the annual revenue (28% - a major American bank, 17% - a major Australian Bank, 13% - a major healthcare provider in US and 11% - an Australian government department). 28. FINANCIAL INSTRUMENTS Financial Risk Management The group’s financial instruments consist mainly of deposits with banks, accounts receivable and payable. The main purpose of non-derivative financial instruments is to raise finance for Group operations. Derivatives may be used by the Group for hedging purposes. Such instruments include forward exchange and currency option contracts. The Group does not speculate in the trading of derivative instruments. The board of directors is responsible for monitoring and managing financial risk exposures of the Group. The board reviews the effectiveness of internal controls relating to interest rate risk and foreign currency risk. The overall risk management strategy seeks to assist the Group in meeting its financial targets, while minimising potential adverse effects on financial performance from financial and currency rate risk. The main risks the Group is exposed to through its financial instruments are interest rate risk, foreign currency risk, liquidity risk and credit risk. (a) Interest rate risk The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value and cash flows will fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on classes of financial assets and financial liabilities, is as follows: CPT Global Limited – Annual Report 54 Notes to the Financial Statements Year Ended 30 June 2022 28. FINANCIAL INSTRUMENTS (Continued) Economic Entity Floating interest rate Fixed interest rate maturing in 1 to 5 years Non-interest bearing Total carrying amount as per statement of financial position Weighted average effective interest rate 2022 $'000 2021 $'000 2022 $'000 2021 2022 2021 $'000 $'000 $'000 2022 $'000 2021 $'000 2022 % 2021 % (i) Financial assets Cash and cash equivalents Trade receivables Total financial assets (ii) Financial liabilities at amortised cost Bank overdrafts Trade and sundry payables Borrowings Total financial liabilities 4,087 - 4,087 4,264 - 4,264 - - (57) (57) - - (76) (75) - - - - - - - - - - 5,119 - 5,119 - 2,954 2,954 4,087 4,425 9,206 4,264 2,954 7,218 0.10 0.03 - - - 6,563 - - - 6,563 - 5,055 - 5,055 - 6,563 (57) 6,466 - 5,055 (76) 4,998 8.0 8.6 Interest rate risk arises on cash and cash equivalents, debtor funding facilities and bank overdrafts. Interest rate risk is managed by monitoring and reviewing cash flow forecasts and the trade receivables balance of the Group. Interest rate sensitivity analysis The sensitivity analysis below has been determined based on the exposure to interest rates for cash and cash equivalents as this is the only financial instrument materially exposed to floating interest rates. The analysis is based on actual monthly borrowing amounts throughout the year, as reported to management, with the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period. A 100 basis point increase or decrease has been used and represents management’s assessment of the possible changes in interest rates. At the reporting date, if interest rates had been 100 basis points higher or lower and all other variables were held constant, the Group’s profit before income tax would increase by $46k and decrease by $46k (2021: increase by $29k and decrease by $29k). (b) Foreign currency risk The group is exposed to fluctuations in foreign currencies arising from the sale and purchase of services in currencies other than the group’s functional currency, and the translation of foreign subsidiary results, financial position and borrowing between the group on consolidation. CPT Global Limited – Annual Report 55 Notes to the Financial Statements Year Ended 30 June 2022 28. FINANCIAL INSTRUMENTS (Continued) The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period is as follows: US dollars Euro Liabilities Assets 2022 $'000 136 - 2021 $'000 131 - 2022 $'000 256 38 2021 $'000 267 22 The amounts disclosed above in relation to Australian dollars relate to intercompany payables and receivables in each of the foreign subsidiaries whose functional currency is not Australian dollars. Foreign currency sensitivity analysis The Group is mainly exposed to US dollars, Sterling, Euros and Canadian dollars. The following table details the Group’s sensitivity to a 10% increase and decrease in the Australian dollar against the relevant foreign currencies. 10% is the sensitivity rate used as it represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external assets and liabilities as well as loans, receivables and payables balances with foreign subsidiaries where the denomination of the balance is in a currency other than the functional currency of the lender or borrower. A positive number indicates an increase in profit or loss and other equity where the Australian dollar strengthens against the respective currency. For a weakening of the Australian dollar against the respective currency there would be an equal and opposite impact on the profit and other equity, and the balances below would be negative. USD Impact Sterling Impact Euro Impact CAD Impact 2022 $'000 70 (95) 2021 $'000 10 (155) 2022 $'000 24 (200) 2021 $'000 - (235) 2022 $'000 (34) (134) 2021 $'000 20 (103) 2022 $'000 (26) (23) 2021 $'000 1 3 Profit or loss Other equity The above impacts are mainly attributable to the exposure of intercompany payables, receivables and loan balances at the end of the reporting period. CPT Global Limited – Annual Report 56 Notes to the Financial Statements Year Ended 30 June 2022 28. FINANCIAL INSTRUMENTS (Continued) (c) Liquidity risk Liquidity risk is the risk the group will not be able to meet its financial obligations as they fall due. The group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised borrowing facilities are maintained. Included in Note 14 is a listing of additional undrawn facilities that the Group has at its disposal to further reduce liquidity risk. The borrowing facilities may be drawn at any time and may be terminated by the financing provider with three months’ notice. All facilities are subject to annual review. Maturity analysis The table below represents the undiscounted contractual settlement terms for financial instruments and management’s expectations for settlement of undisclosed maturities. <12 months 2022 $'000 2021 $'000 4,087 4,483 1,318 (5,457) 57 4,264 2,878 1,321 (3,950) 75 Cash and cash equivalents Receivables Contract asset Payables Borrowings Net maturities 4,488 4,588 (d) Credit risk 1-5 years 2020 2021 $'000 $'000 - - - - - - - - - - - - Total contractual cash flows 2022 $'000 4,087 4,483 1,318 (5,457) 57 2021 $'000 4,264 2,878 1,321 (3,950) 75 Carrying amount 2021 $'000 2022 $'000 4,087 4,483 1,318 (5,457) 57 4,264 2,878 1,321 (3,950) 75 4,488 4,588 4,488 4,588 Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group and essentially arises from holdings of cash and deposits and trade receivables as well as from the parent’s potential obligations under the indemnity guarantee provided to banks. The risk is largely managed through a policy of only dealing with creditworthy counterparties. Periodic assessments of debtor balances are undertaken and provisions for impairment are recognised where appropriate. The maximum credit risk exposure is the carrying value of cash and deposits and trade receivables as disclosed in notes 6 and 7. Information of the Group’s credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the Group are included in note 7. The Group minimises concentrations of credit risk in relation to trade receivables by undertaking transactions with a large number of clients. i. ii. Cash deposits Credit risk for cash deposits is managed by holding all cash deposits with major Australian and global banks. Trade receivables Credit risk for trade receivables is managed by setting credit limits and completing credit checks for new customers. Outstanding receivables are regularly monitored for payment in accordance with credit terms. The ageing analysis of trade and other receivables is provided in note 7. As the Group undertakes transactions with a large number of customers and regularly monitors payments in accordance with credit terms, the financial assets that are neither past due nor impaired, are expected to be received in accordance with the credit terms. The Group assess the expected credit loss based on individual debtor level expectations relative to credit terms. The Group does not have any material credit risk exposure for other receivables or other financial instruments. CPT Global Limited – Annual Report 57 Directors’ Declaration The directors of the company declare that: 1. the financial statements and notes, as set out on pages 20 to 57, are in accordance with the Corporations Act 2001 and: a. b. comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS); and give a true and fair view of the financial position as at 30 June 2022 and of the performance for the year ended on that date of the company and economic entity. 2. the Chief Executive Officer and Chief Financial Officer have each declared that: a. b. c. the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001; the financial statements and notes for the financial year comply with Accounting Standards; and the financial statements and notes for the financial year give a true and fair view. 3. in the directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the Board of Directors. Luke Tuddenham Managing Director Aspen Colorado, 30 September 2022 CPT Global Limited – Annual Report 58 Take the lead INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CPT GLOBAL LIMITED Report on the Audit of the Financial Report Opinion We have audited the financial report of CPT Global Limited (the Company) and its subsidiaries (the Group) which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a. giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial performance for the year then ended, and b. 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 & 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 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. Brisbane Level 15 240 Queen Street Brisbane QLD 4000 T + 61 7 3085 0888 Melbourne Level 10 530 Collins Street Melbourne VIC 3000 T + 61 3 8635 1800 Perth Level 25 108 St Georges Terrace Perth WA 6000 T + 61 8 6184 5980 Sydney Level 7, Aurora Place 88 Phillip Street Sydney NSW 2000 T + 61 2 8059 6800 SW Audit ABN 39 533 589 331. Liability limited by a scheme approved under Professional Standards Legislation. SW Audit is an independent member of ShineWing International Limited. sw-au.com 59 1. Revenue Recognition Key audit matter Refer to Note 2 Revenue and Note 8 Contract Assets The Group earned revenue of $29,941,000 during the year and recognised contract assets of $1,318,000 at reporting date. Revenue is earned from variable (risk/reward) and fixed price contracts and is recognised in accordance with AASB 15 Revenue from Contracts with Customers. Recognition of revenue is a key audit matter due to the revenue from contracts being based on management’s estimates. Given the level of estimation there is significant audit effort to test revenue and as a result it is a key audit matter. 2. Recognition of income tax related balances Key audit matter Refer to Note 15 Tax The Group operates in multiple tax jurisdictions with differing tax laws and regulations increasing the potential for misstatement of tax related balances and transactions. The tax balances have significant complexity and as a result they are a key audit matter. Take the lead How our audit addressed the key audit matter Our procedures included:  Documenting and assessing the internal control environment and performing tests of controls  Testing a sample of revenue to supporting documentation and assessing whether revenue has been accurately recorded in accordance with contractual terms  Confirming new contracts executed during the year have been accounted for in accordance with AASB 15 Revenue from Contracts with Customers  Performing trend analysis and other analytic techniques on revenue to validate amounts recorded during the year  Ensuring estimated savings detailed in project status reports and recognised as revenue have been acknowledged and approved by the Group’s customers  Ensuring all estimated savings reflected in project status reports were recognised as revenue in the correct accounting period  Ensuring contract assets have been invoiced after year end, and  Assessing the adequacy of revenue related disclosures in the financial statements. How our audit addressed the key audit matter Our procedures included:  Engaging tax experts to assess management’s calculations and application of relevant tax laws and regulations  Reviewing income tax provision calculations for each jurisdiction  Reconciling income tax expense to prima facie expense for the year, and  Assessing the adequacy of the disclosures in relation to tax related balances. 60 Take the lead 3. Recognition of indirect tax related balances Key audit matter How our audit addressed the key audit matter Refer to Note 7 Trade and other receivables Our procedures included: The Group has $2,898,000 of other receivables comprising:  $636,000 of employee withholding taxes relating to tax payments made on behalf of employees, and  $2,262,000 of GST/HST receivables relating to payments made associated with GST/HST. These are expected refunds from the Canadian Revenue Agency (CRA), there is significant judgement in the estimation of the recoveries of these balances and as a result it is a key audit matter.  Documenting and assessing the work performed by the advisors engaged by the Group to recover these amounts  Reviewing and assessing the adequacy of expected credit loss provisions associated with employee withholding tax receivables and GST/HST receivables  Considering the expected time frame of recovery and ensuring the classification of the receivables was in accordance with the accounting standards  Assessing the qualifications and experience of experts relied on by management, and  Assessing the adequacy of the disclosures in relation to CRA receivable balances. Information Other than the Financial Report and Auditor’s Report Thereon 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 2022 but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and 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 the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can 61 Take the lead arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:  Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.  Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.  Evaluate the overall presentation, structure, and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.  Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them, all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 62 Take the lead Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 13 to 18 of the directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of CPT Global Limited for the year ended 30 June 2022 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. SW Audit (formerly ShineWing Australia) Chartered Accountants R Blayney Morgan Partner Melbourne, 30 September 2022 63 Corporate Information ACN 083 090 895 ABN 16 083 090 895 Directors Fred Grimwade (Non-executive Chairman) Luke Tuddenham (Managing Director & CEO) Gerard (Gerry Tuddenham (Executive Director) Company Secretary Mark Licciardo Principal Registered Office Level 3, 818 Bourke Street Docklands VIC 3008 Telephone: Internet: +61 (0)3 9684 7900 www.CPTglobal.com Auditors SW Audit (formerly ShineWing Australia) Level 10, 530 Collins Street Melbourne VIC 3000 Share Register Boardroom Pty Ltd Level 12, 225 George Street Sydney NSW 2000 Telephone: 1300 737 760 Facsimile: +61 (0)2 9290 9600 Solicitors Nicholson Ryan Lawyers Bankers ANZ Banking Group Limited ASX Code CGO 2022 Annual General Meeting The Annual General Meeting of CPT Global Limited members will be held on Tuesday, 15 November 2022 at 11.00am at CPT Global’s head office 818 Bourke Street, Docklands, Victoria. CPT Global on the Web For an introduction to the company and access to company announcements, descriptions of our core business, services and careers, and our corporate governance policies and procedures visit our website at www.CPTglobal.com CPT Global Limited – Annual Report 64 ASX Additional Information Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 28th of September 2022. (a) Distribution of equity securities The number of shareholders, by size of holding, in each class of share are: Ordinary shares Number of holders 1 1,001 5,001 10,001 100,001 - 1,000 - 5,000 - 10,000 - 100,000 and over The number of shareholders holding less than a marketable parcel of shares are: 93 369 164 274 50 951 124 Units 50,443 998,933 1,263,308 8,592,984 30,701,475 41,607,143 87,057 (b) Twenty largest shareholders The names of the twenty largest holders of quoted shares are: Ordinary Fully paid Shares LUKE TUDDENHAM & ASSOC. TUDDY SUPER PTY LTD GNP NOMINEES PTY LTD 1 2 3 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 4 WESTFERRY OPERATIONS PTY LTD 5 6 MR PHILIP ADAM & MRS SANDRA ADAM 7 8 9 MR PAWEL REJ & MRS MIROSLAWA REJ 10 CLAPSY PTY LTD 11 FRED GRIMWADE AND ASSOC. 12 MR KEVIN STEVEN AKOM AND ASSOC. BENJAMIN TUDDENHAM & ASSOC. TEN TALENTS (2020) LIMITED MR NEVILLE WINSTON ANDREW HASKETT & MRS VICKI PAULINE HASKETT 13 14 BNP PARIBAS NOMS PTY LTD 15 MRS ALISON BOLGER 16 17 MRS JULIE ANN CAREY 18 MR MICHAEL LAZORIK 19 GRANT SINCOCK 20 CITICORP NOMINEES PTY LIMITED INVIA CUSTODIAN PTY LIMITED Number of shares 10,854,618 2,709,046 2,664,993 2,325,290 1,015,877 916,255 828,702 805,667 758,641 744,308 718,200 593,014 501,000 363,442 362,550 309,058 306,000 300,000 254,282 238,986 Percentage of ordinary shares 26.09% 6.51% 6.41% 5.59% 2.44% 2.20% 1.99% 1.94% 1.82% 1.79% 1.73% 1.43% 1.20% 0.87% 0.87% 0.74% 0.74% 0.72% 0.61% 0.57% 27,569,929 66.26% CPT Global Limited – Annual Report 65 ASX Additional Information (c) Shares held in escrow On 31 December 2021 163,169 ordinary shares were released from escrow. There are no escrowed securities on issue at the date of this Report. (d) Substantial shareholders The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are: MR GERRY TUDDENHAM AND HIS ASSOCIATES (EXCLUDING HIS BENEFICIAL INTEREST IN THE CPT TRUST) GNP NOMINEES PTY LTD AS TRUSTEE FOR THE CPT TRUST SONDA FONDO DE INVERSION PRIVADO WESTFERRY OPERATIONS PTY LTD ATF THE WESTFERRY TRUST Number of Shares 11,651,027 2,709,046 2,664,993 2,550,500 (e) Voting rights All ordinary shares (whether fully paid or not) carry one vote per share without restriction. Performance rights do not carry voting rights. CPT Global Limited – Annual Report 66 

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