Connexion Telematics Ltd
ABN 68 004 240 31
Annual Report
Year ended 30 June 2019
For personal use only Connexion Telematics Ltd
Contents
Corporate Information ........................................................................................................................................... 2
Directors’ Report .................................................................................................................................................... 3
Remuneration Report ........................................................................................................................................... 10
Auditor’s Independence Declaration .................................................................................................................... 15
Statement of Profit or Loss and Other Comprehensive Income ........................................................................... 16
Statement of Financial Position ............................................................................................................................ 17
Statement of Changes in Equity ........................................................................................................................... 18
Statement of Cash Flows ...................................................................................................................................... 19
Notes to the Financial Statements ....................................................................................................................... 20
Directors’ Declaration ........................................................................................................................................... 46
Independent Auditor’s Report to the members of Connexion Telematics Ltd .................................................... 47
Shareholder Information .................................................................................................................................... 50
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For personal use only Connexion Telematics Ltd
Corporate Information
Directors
Mark Caruso
Robert Downey
Aaryn Nania
Guy Perkins
Company secretary
Peter Torre
Registered office
Level 8, 350 Collins Street
Melbourne, VIC 3000
Phone: +61 3 9529 2655
Principal place of business
Level 8, 350 Collins Street
Melbourne, VIC 3000
Phone: +61 3 9529 2655
Share register
Boardroom Pty Limited
Level 12, 225 George Street
Sydney NSW 2000
Phone: +61 2 9290 9600
Auditor
William Buck
Level 20, 181 William Street
Melbourne VIC 3000
Phone: +61 3 9824 8555
Bankers
Commonwealth Bank of Australia
Level 20, Tower One
Collins Square
727 Collins Street
Docklands VIC 3008
Stock exchange listing
Connexion Telematics Ltd shares are listed on the Australian Securities Exchange (ASX code: CXZ)
Website
www.connexionltd.com
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Connexion Telematics Ltd
Directors’ Report
Your Directors present their report together with the financial statements of the consolidated entity (referred
to hereafter as the ‘Group’ or the ‘consolidated entity’), consisting of Connexion Telematics Ltd (referred to
hereafter as the ‘Company’ or the ‘Parent entity’) and the entities it controlled at the end of, or during, the year
ended 30 June 2019. In order to comply with the provisions of the Corporations Act 2001, the Directors report
as follows:
Directors
The names of Directors who held office during or since the end of the year and until the date of this report are
as follows. Directors were in office for this entire period unless otherwise stated.
Name:
Title:
Experience and expertise:
Other current directorships ¹:
Interests in shares:
As at 30 June 2019
As at reporting date
Interests in performance rights:
Name:
Title:
Experience and expertise:
Other current directorships ¹:
Interests in shares:
Interests in performance rights:
Name:
Title:
Experience and expertise:
Other current directorships ¹:
Interests in shares:
As at 30 June 2019
As at reporting date
Interests in performance rights:
Mark Caruso
Non-Executive Chairman
Mr Caruso is a successful executive and entrepreneur with a strong,
transferrable business acumen. He has substantial corporate experience
driving growth and creating value in small companies. Previously, Mr
Caruso was the Chairman of Allied Gold Mining PLC (‘AGMP’) and was
responsible for the delivery of the Gold Ridge Project in the Solomon
Island and the Simberi Gold Project in Papua New Guinea. Mark is
currently Executive Chairman and Chief Executive Officer of Mineral
Commodities Ltd.
Executive Chairman of Mineral Commodities Ltd
Perpetual Resources Limited (retired 17 June 2018)
68,280,640 Fully Paid Ordinary Shares
45,319,680 Fully Paid Ordinary Shares
7,000,000
Robert Downey
Non-Executive Director
Mr Downey is a qualified solicitor who has practised mainly in the areas
of international resources law, corporate law and initial public offerings
as well as mergers and acquisitions. He has extensive experience as an
advisor, founder and director of various ASX, TSX and AIM companies.
Mr Downey is currently a partner at Dominion Legal, a boutique law firm
in Perth.
Metalsearch Ltd
RPM Automotive Group Limited
Nil
10,000,000
Aaryn Nania
Non-Executive Director (appointed 19 September 2018)
Mr Nania is the Head of Funds Management at Lucerne Investment
Partners – an active, long-term investor in both listed and unlisted
companies globally. Prior to co-founding Lucerne, Mr Nania was a
Portfolio Manager at Canadian investment bank Canaccord Genuity
(Australia) where he founded and managed the Absolute Return
Portfolio.
None
182,571,201 Fully Paid Ordinary Shares
170,033,022 Fully Paid Ordinary Shares
10,000,000
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Directors’ Report (continued)
Directors (continued)
Name:
Title:
Experience and expertise:
Other current directorships ¹:
Interests in shares:
Interests in performance rights:
Name:
Title:
Experience and expertise:
Other current directorships ¹:
Interests in shares:
Interests in performance rights:
Guy Perkins
Managing Director (appointed 5 August 2019)
Mr Perkins is an experience IT executive with proven Senior Executive
roles in ESRI Australia Pty Ltd, Pitney Bowes Inc and NearMap Ltd. Most
recently he was one of the Founders of Spookfish Ltd, which was listed
on the ASX until July 2018, when it was acquired by US-based EagleView
Technologies for $122m.
None
1,114,290 Fully Paid Ordinary Shares
Nil
David Connolly
Non-Executive Director (resigned 28 September 2018)
Mr Connolly is currently a Platform Sales Executive at Oracle. Mr
Connolly is a Dean Scholarship-awarded graduate of the prestigious
Swinburne International Bachelor of IT program and an Inferno Award-
winning graduate of the IBM Global Sales School program.
None
Nil
Nil
¹
Other current directorships include directorships held for ASX listed companies only in the 3 years
immediately before the end of the financial year.
Company Secretary
Mr Peter Torre is the principal of Torre Corporate, a specialist corporate advisory firm which provides corporate
secretarial services to a range of listed companies. Prior to establishing Torre Corporate, Peter was a partner
and Chairman of the National Corporate Services Committee of an internationally affiliated firm of Chartered
Accountants working within its corporate services division for over nine years.
Principal activities
The principal activities of the entities within the Group during the year were the development and
commercialisation of its smart car technology for the automotive industry.
Review of operations
Group overview
The year has been a transformational one for the Company, moving from pure development, through
commercialisation and into a revenue generating position in a relatively short time frame.
The key achievement during the year has been the commercialisation and implementation of the Company’s
flagship product, OnTRAC fleet management software, referred to as ‘OnTRAC’.
As announced on 29 August 2018, GM awarded the Company a 3-year contract for the design, development and
delivery of application programs and supporting infrastructure to fully automate GM’s Courtesy Transportation
Program (‘CTP’). The Company has successfully delivered the applications to GM under its Software as a Service
(‘SaaS’) agreement, with data licensed from GM Onstar under a separate agreement.
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Connexion Telematics Ltd
Directors’ Report (continued)
Review of operations (continued)
Furthermore, and as announced on 30 October 2018, GM issued a direction to its US based dealers advising that
their CTP and their Cadillac Courtesy Transportation Alternative (‘CTA’) programs will both require the exclusive
use of the Company’s OnTRAC fleet management software.
OnTRAC is the only fleet management software used by GM, which includes Buick, GMC, Chevrolet and Cadillac
dealers. The inclusion of Cadillac under the CTA has increased overall vehicles subscriptions by approximately
10,000 vehicles.
The OnTRAC program was initiated with General Motors LLC (‘GM’) in October 2018, with a soft launch date of
1 December 2018. Following the initial OnTRAC product launch, customisation and feature enhancement work,
aimed at optimising the current features is ongoing. These include enhanced dealership analytics, reporting and
other various user functions required by the large GM dealer network.
Revenue commenced with 23,000+ vehicles pre-registered to adopt CTP, which has steadily grown since
inception to circa 70,000+ vehicles utilising OnTRAC as at 30 June 2019.
The lean and efficient rollout of OnTRAC demonstrates the Company’s ability to execute and deliver its products
with customers of the size and scale of a multi-national company like GM.
In respect to the Company’s Commercial Link (‘CL’) product, a steady growth rate in its subscription base has
been achieved, which sits at 4,981 vehicles as at 30 June 2019. Based on recent advice from GM, they may
insource CL in the near future. Discussions are ongoing in this regard and the Company will update the market
once a final decision is made and any agreement executed. In the interim period, the Company continues to
explore other opportunities for this product, offsetting any reduction in future revenue.
The combined revenue-generating subscriptions of CL and OnTRAC peaked at 77,352 vehicles as at 30 June 2019.
Through continued focus on its product portfolio, the Company ceased operating the WEX product with services
removed from marketplace in July 2019.
Operating result for the year
The consolidated profit for the year ended 30 June 2019, after providing for income tax was to $466,034 (2018
profit: $361,804).
Total revenues from ordinary activities for the financial year were $3,555,221, a 222% increase in revenue
reported for the year ended 30 June 2018 of $1,105,485. In addition to total revenues, the Group also
recognised gross receipts of $406,948 (2018: $1,522,074) relating to Research and Development (‘R&D’) tax
incentives.
Consolidated total assets have increased from $1,035,883 as at 30 June 2018 to $3,355,291 as at 30 June 2019.
Consolidated net assets also increased by $1.3m from the prior year end, to $1,741,894 as at 30 June 2019. The
continued improvement in the positive net asset position was a result of operational performance, strong cash
management and the elimination of all debts, which were paid off in full in the current financial year.
Corporate
As announced on 3 September 2018, the Company undertook a placement of shares (‘Placement’) to
sophisticated and professional investors, including existing shareholders. Westar Capital acted as Lead Manager
for the Placement, which received strong support. Under the Placement, the Company received subscriptions
for 109.8 million new fully paid ordinary shares at $0.006 per share, raising $656k before costs.
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Connexion Telematics Ltd
Directors’ Report (continued)
Review of operations (continued)
As announced on 7 December 2018, following shareholder approval and subsequent ASIC confirmation, the
Company changed its name to Connexion Telematics Ltd.
As announced on 31 May 2019, the Company has eliminated all external debt, through the repayment of the
final principal loan amount of $150,000. The Company and Board have worked diligently over the past two years
to restructure the Company and eliminate all debt, placing it well financially to deliver its strategy.
During this transformational and growth period, the Company has been restructured through the elimination of
all external debt and the rationalisation of costs and products, whilst maintaining a level of personnel to ensure
the high-level of service provided to GM is maintained as well as having the ability to continually assess other
project opportunities.
Outlook
The Company will continue to build on its flagship OnTRAC fleet management software within the GM dealership
network. It expects to maintain revenue paying subscriptions for OnTRAC at circa 70,000 monthly subscriptions.
Ongoing optimisation and customisation work currently in hand will continue to drive net revenue per
subscription.
Growth opportunities are also being actively pursued within the current GM dealership network, as well as
actively looking at external applications with other OEM vehicle dealerships within the US and also Australia.
The Company is well advanced in conducting a strategic review of its business operating model to investigate
how best to extract further value of its telematics access and software initiatives.
Having stabilised the Company’s operations, and as announced on 5 August 2019, the Company has appointed
and established executive, Guy Perkins as Managing Director, who will commence employment on 2 September
2019. Full details relating to Mr Perkins’ appointment is detailed on page 14 of the Remuneration Report. His
appointment is in line with the Company’s strategy to appoint a suitable Executive to lead the Company and
build a highly capable Management and Sales team to drive the drive the Company into its next phase of
development and growth.
Significant changes in the state of affairs
Other than disclosed elsewhere in this report, there were no significant changes in the state of affairs of the
consolidated entity during the financial year.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Significant events after balance date
Other than matters already disclosed elsewhere in this Report, no matter or circumstance has arisen since 30
June 2019 that has significantly affected, or may significantly affect the consolidated entity's operations, the
results of those operations, or the consolidated entity's state of affairs in future financial years.
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Connexion Telematics Ltd
Directors’ Report (continued)
Likely developments and expected results of operations
Other than matters already disclosed in the Review of operations, pursuant to sections 299(3) and 299A(3) of
the Corporations Act 2001, this Report omits information relating to likely developments in the Company's
operations in the future because to do so will result, in the opinion of the Directors, in unreasonable prejudice
to the consolidated entity.
Directors’ meetings
The number of meetings of the Company's Board of Directors (the ‘Board’) held during the year ended 30 June
2019, and the number of meetings attended by each Director were:
Mark Caruso
Robert Downey
Aaryn Nania (appointed as Director on 19 September 2018)
David Connolly (resigned as Director on 28 September 2018)
Full Board
Attended
6
6
2
1
Held
6
6
2
4
The Directors held further discussions on an ongoing and regular basis, in addition to the above, formal Board
meetings.
Interests in the shares, options, performance rights and convertible notes of the Company and related bodies
corporate
2019
Mark Caruso
Robert Downey
Aaryn Nania
David Connolly
Guy Perkins ¹
Fully paid ordinary
shares
Number
45,319,680
-
170,033,022
-
1,114,290
Options
Number
Performance rights
Number
Convertible notes
Number
-
-
-
-
-
7,000,000
10,000,000
10,000,000
-
-
-
-
-
-
¹ Full details relating to Mr Perkins’ appointment is detailed on page 14 of the Remuneration Report.
2018
Mark Caruso
Robert Downey
David Connolly
Fully paid ordinary
shares
Number
67,280,640
-
-
Options
Number
Performance rights
Number
Convertible notes
Number
-
-
-
-
-
-
-
-
-
Shares issued during or since the end of the year as a result of exercise
As at the date of this report there are no ordinary shares issued by the Company during or since the end of the
financial year as a result of the exercise of an option.
Unissued shares under option
As at the date of this report there are no unissued ordinary shares or interests of the Company under option.
Remuneration report
The Remuneration Report, which forms part of the Directors’ report, outlines the remuneration arrangements
in place for the Key Management Personnel of the consolidated entity for the financial year ended 30 June 2019
and is included on page 10.
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Connexion Telematics Ltd
Directors’ Report (continued)
Environmental regulation
The consolidated entity is not subject to any significant environmental regulation under Australian
Commonwealth or State law.
Indemnification and insurance of Directors and Officers
The Company has indemnified the Directors and Executives of the Company for costs incurred, in their capacity
as a Director or Executive, for which they may be held personally liable, except where there is a lack of good
faith.
During the financial year, the Company paid a premium in respect of a contract to insure the Directors and
Executives of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract
of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
Indemnification and insurance of Auditors
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the
Auditor of the Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the Auditor of
the Company or any related entity.
Non-audit services
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor
are outlined in Note 24 to the financial statements. The Directors are satisfied that the provision of non-audit
services is compatible with the general standard of independence for auditors imposed by the Corporations Act
2001.
The Directors are of the opinion that the services do not compromise the auditor’s independence as all non-
audit services have been reviewed to ensure that they do not impact the impartiality and objectivity of the
auditor and none of the services undermine the general principles relating to auditor independence as set out
in Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional
& Ethical Standards Board.
Auditor's independence declaration
Section 307C of the Corporations Act 2001 requires our auditors, William Buck, to provide the Directors of the
Company with an Independence Declaration in relation to the audit of the annual report. This Independence
Declaration is set out on page 15 and forms part of this Directors’ report for the year ended 30 June 2019.
Proceedings on behalf of the 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.
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Connexion Telematics Ltd
Directors’ Report (continued)
Corporate governance statement
The Board is committed to achieving and demonstrating the highest standards of corporate governance. As such,
Connexion Telematics Ltd and its controlled entities have adopted the third edition of the Corporate Governance
Principles and Recommendations which was released by the ASX Corporate Governance Council on 27 March
2015 and became effective for financial years beginning on or after 1 July 2015.
The Group’s Corporate Governance Statement for the financial year ending 30 June 2019 is dated as at 29 August
2019 and was approved by the Board on 29 August 2019. The Corporate Governance Statement was announced
by the Company on 30 August 2019 and is also available on the Company’s website at www.connexionltd.com.
This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
On behalf of the Directors
Mark Caruso
Chairman
Perth, 30 August 2019
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Connexion Telematics Ltd
Remuneration Report
The Remuneration Report, which
is Audited, details the key management personnel remuneration
arrangements for the consolidated entity, in accordance with the requirements of the Corporations Act 2001
and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the entity, directly or indirectly, including all Directors.
The remuneration report is set out under the following main headings:
•
•
•
•
•
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's executive reward framework is to ensure reward for performance is
competitive and appropriate for the results delivered. The framework aligns executive reward with the
achievement of strategic objectives and the creation of value for shareholders, and it is considered to conform
to the market best practice for the delivery of reward. The Board ensures that executive reward satisfies the
following key criteria for good reward governance practices:
•
•
•
•
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
The Board is responsible for determining and reviewing remuneration arrangements for its Directors and
executives. The performance of the consolidated entity depends on the quality of its Directors and Executives.
The remuneration philosophy is to attract, motivate and retain high performance and high-quality personnel.
The reward framework is designed to align executive reward to shareholders' interests. The Board have
considered that it should seek to enhance shareholders' interests by:
•
•
•
having economic profit as a core component of plan design
focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and
delivering constant or increasing return on assets as well as focusing the executive on key non-financial
drivers of value
attracting and retaining high calibre executives
Additionally, the reward framework should seek to enhance executives' interests by:
•
•
•
rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth
providing a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive director and executive
director remuneration is separate.
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Connexion Telematics Ltd
Remuneration Report (continued)
Non-executive Directors remuneration
Fees and payments to Non-Executive Directors reflect the demands and responsibilities of their role. Non-
executive Directors' fees and payments are reviewed annually by the Board. The chairman's fees are determined
independently to the fees of other Non-Executive Directors based on comparative roles in the external market.
The chairman is not present at any discussions relating to the determination of his own remuneration. Non-
Executive Directors do not receive share options or other incentives.
ASX listing rules require the aggregate Non-Executive Directors remuneration be determined periodically by a
general meeting. The current aggregate remuneration limit is $250,000.
Executive remuneration
The consolidated entity aims to reward executives based on their position and responsibility, with a level and
mix of remuneration which has both fixed and variable components.
•
•
•
•
base pay and non-monetary benefits
short-term performance incentives
share-based payments where applicable
other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed
annually by the Board, based on individual and business unit performance, the overall performance of the
consolidated entity and comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor
vehicle benefits) where it does not create any additional costs to the consolidated entity and provides additional
value to the executive.
The Company did not offer a short or long-term incentive plan to its Directors and Key Management Personnel
during the year. As at the date of this report, plans are being established which will enable short and long-term
incentives to be utilised during the 2019/20 financial year.
Consolidated entity performance and link to remuneration
Remuneration for certain individuals is directly linked to the performance of the consolidated entity. A portion
of cash bonus and incentive payments are dependent on defined earnings per share targets being met. The
remaining portion of the cash bonus and incentive payments are at the discretion of the Board.
The Board is of the opinion that the continued improved results can be attributed in part to the adoption of
performance-based compensation and is satisfied that this improvement will continue to increase shareholder
wealth if maintained over the coming years.
Voting and comments made at the Company's 2018 Annual General Meeting ('AGM')
At the 2018 AGM, 94.8% of the votes received supported the adoption of the remuneration report for the year
ended 30 June 2018. The Company did not receive any specific feedback at the AGM regarding its remuneration
practices.
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Remuneration Report (continued)
Details of remuneration
2019
Short-term benefits
Cash salary
and fees
$
Cash bonus
$
Non-
monetary
$
Connexion Telematics Ltd
Post-
employment
benefits
Super-
annuation
$
Long-term
benefits
Long
service
leave
$
Share- based
payments
Equity-settled
$
Total
$
30,000
30,000
23,370
-
83,370
-
-
-
-
-
-
-
-
-
-
2,850
2,850
2,220
-
7,920
-
-
-
-
-
70,000
70,000
70,000
102,850
102,850
95,590
-
-
210,000
301,290
¹ Mr Connolly was Executive Director on 1 July 2018, then transitioned to Non-Executive Director on 3 August
2018. He subsequently resigned as a Director on 28 September 2018.
2018
Short-term benefits
Cash salary
and fees
$
Cash bonus
$
Non-
monetary
$
Post-
employment
benefits
Super-
annuation
$
Long-term
benefits
Long
service
leave
$
Share- based
payments
Equity-settled
$
Total
$
30,000
30,000
30,000
90,000
-
-
-
-
-
-
-
-
-
2,850
-
2,850
-
-
-
-
-
-
-
-
30,000
32,850
30,000
92,850
Directors
Non-Executive:
Mark Caruso
Robert Downey
Aaryn Nania
Executive:
David Connolly ¹
Total
Directors
Non-Executive:
Mark Caruso
Robert Downey
Executive:
David Connolly
Total
Service agreements
Subsequent to the year end, on 5 August 2019, Guy Perkins was appointed as Managing Director. Refer to page
14 for details of his remuneration package.
Share-based compensation
Issue of shares
There were no shares issued to Directors and other key management personnel as part of compensation during
the year ended 30 June 2019.
Options
There were no options issued, held or vested by Directors or Key Management Personnel during the year ended
30 June 2019.
Performance Rights
Details of Performance Rights issued to Directors or Key Management Personnel during the year ended 30 June
2019 are detailed in the below tables.
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Connexion Telematics Ltd
Remuneration Report (continued)
Additional disclosures relating to key management personnel
Shareholdings
The number of ordinary shares in the Company, held by each Director and other members of key management
personnel of the consolidated entity, including their related parties, is set out below:
2019
Directors
Mark Caruso
Robert Downey
Aaryn Nania ¹
David Connolly
Balance at 1
July 2018
Received as
part of
remuneration
Exercise of
Options
Disposal as a
result of
resignation
Other
Disposals
Balance as
at 30 June
2019
Additions
67,280,640
-
-
-
-
-
-
-
-
-
-
-
1,000,000
-
182,571,201
-
-
-
-
-
-
-
-
-
68,280,640
-
182,571,201
-
¹ Mr Nania was appointed as a Non-Executive Director on 19 September 2018. As disclosed is Mr Nania’s initial Directors interest Notice
(Appendix 3X), released to the market on the same day, he held the following relevant interests in securities:
Lucerne Australia Pty Ltd
Principis Master Fund SPC – Lucerne Composite Master Fund SPC
2,000,000 fully paid ordinary shares
180,571,201 fully paid ordinary shares
Mr Nania is a director and shareholder of Lucerne Australia Pty Ltd and Portfolio Manager of the Composite Fund.
2018
Directors
Mark Caruso
Robert Downey
David Connolly
Balance at 1
July 2017
Received as
part of
remuneration
Exercise of
Options
Disposal as a
result of
resignation
Other
Disposals
Balance as
at 30 June
2018
Additions
4,319,680
-
-
-
-
-
-
-
-
62,960,960
-
-
-
-
-
-
-
-
67,280,640
-
-
Performance Rights
The number of Performance Rights in the Company, held by each Director and other members of key
management personnel of the consolidated entity, including their related parties, is set out below:
2019
Directors
Mark Caruso
Robert Downey
Aaryn Nania
David Connolly
2018
Directors
Mark Caruso
Robert Downey
David Connolly
Balance at 1
July 2018
Received as
part of
remuneration
Exercise of
Options
Disposal as a
result of
resignation
Other
Disposals
Balance as
at 30 June
2019
Additions
-
-
-
-
10,000,000
10,000,000
10,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,000,000)
-
-
-
7,000,000
10,000,000
10,000,000
-
Balance at 1
July 2017
Received as
part of
remuneration
Exercise of
Options
Disposal as a
result of
resignation
Other
Disposals
Balance as
at 30 June
2018
Additions
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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Connexion Telematics Ltd
Remuneration Report (continued)
Additional disclosures relating to key management personnel (continued)
Subsequent events
As announced on 5 August 2019, Guy Perkins was appointed as Managing Director and will commence
employment with the Company on 2 September 2019. Keys details of his remuneration package are outlined
below:
Annual salary: $150,000 (excluding superannuation)
Short Term Incentive:
Mr Perkins will be entitled to an annual bonus during the year ending 30 June 2020 of up to 5,000,000 (five
million) Ordinary Shares, measured against the following criteria:
i.
ii.
Achieving revenue of AU$10,000,000 (ten million) for the financial year ending 30 June 2020 (75%
weighting); and
Achieving EBITDA against Budget taking into account uncontrollable variables, at the discretion of the
Board (25% weighting).
The subsequent years following 30 June 2020 will be determined via KPIs set by the Board at the beginning of
each year of subsequent employment.
Long Term Incentive:
Mr Perkins will be entitled to receive performance rights under the Employer’s Incentive Performance Rights
Plan (“Performance Rights”).
The number of Performance Rights to be granted shall be based on the following table:
Year
Date
Ordinary Shares on Issue
Share Price
1
30 June 2020
15,000,000
3 cents
2
30 June 2021
15,000,000
4 cents
3
30 June 2022
15,000,000
6 cents
The vesting condition for each tranche of Performance Rights shall be the share price at the date specified above.
This concludes the Remuneration Report, which has been audited.
14
For personal use only
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE DIRECTORS OF CONNEXION TELEMATICS LTD
I declare that, to the best of my knowledge and belief during the year ended 30 June 2019
there have been:
— no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
— no contraventions of any applicable code of professional conduct in relation to the
audit.
William Buck Audit (Vic) Pty Ltd
ABN 59 116 151 136
A. A. Finnis
Director
Melbourne, 30 August 2019
For personal use only Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2019
Connexion Telematics Ltd
Continuing operations
Revenue
Cost of Sales
Gross Profit
Other income
Expenses
Corporate and administrative expenses
Selling, distribution and marketing expenses
Research and development costs
Share based payment expenses
Depreciation and amortisation expenses
Profit from operating activities
Finance costs
Profit before income tax expense
Consolidated
2019
$
2018
$
Note
5
3,555,221
1,105,485
(1,414,284)
(109,436)
2,140,937
996,049
408,397
1,524,782
(1,542,621)
-
-
(266,000)
(229,933)
(875,855)
(9,508)
(314,954)
-
(151,867)
5
6
12
510,780
1,168,647
(44,746)
(838,884)
466,034
329,763
Income tax expense
7
-
-
Profit after income tax expense for the year attributable to the
owners of Connexion Telematics Ltd
466,034
329,763
Other comprehensive (loss) / income, net of tax
(28,196)
32,041
Total comprehensive income attributable to the owners of
Connexion Telematics Ltd
437,838
361,804
Basic earnings per share
Diluted earnings per share
Cents
Cents
9
9
0.06
0.06
0.07
0.07
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
16
For personal use only Statement of Financial Position
As at 30 June 2019
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventory
Total current assets
Non-current assets
Plant and equipment
Capitalised development costs
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Employee benefits
Borrowings
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Connexion Telematics Ltd
Consolidated
2019
$
2018
$
Note
10
11
12
13
14
938,612
1,612,964
3,962
2,555,538
5,270
794,483
799,753
168,052
235,575
21,961
425,588
3,648
606,647
610,295
3,355,291
1,035,883
1,562,893
50,504
-
1,613,397
325,171
8,186
300,000
633,357
1,613,397
633,357
1,741,894
402,526
15
16
16,405,069
248,845
(14,912,020)
1,741,894
15,748,539
32,041
(15,378,054)
402,526
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
17
For personal use only Connexion Telematics Ltd
Statement of Changes in Equity
For the year ended 30 June 2019
Issued
Capital
$
Share based
payment
reserve
$
Consolidated
Foreign
currency
translation
reserve
$
Accumulated
losses
$
Total
equity
$
Balance as at 1 July 2018
15,748,539
Profit for the year
Other comprehensive income for
the period, net of income tax
Total comprehensive income for
the period
-
-
-
-
-
-
-
32,041
(15,378,054)
402,526
-
466,034
466,034
(28,196)
-
(28,196)
(28,196)
466,034
437,838
Shares issued
Share issue costs
Share based payments
Exercise of performance rights
656,160
(20,630)
-
21,000
-
-
266,000
(21,000)
-
-
-
-
-
-
-
-
656,160
(20,630)
266,000
-
Balance as at 30 June 2019
16,405,069
245,000
3,845
(14,912,020)
1,741,894
Share
based
payment
reserve
$
Consolidated
Foreign
currency
translation
reserve
$
Issued
Capital
$
Balance as at 1 July 2017
9,363,046
Profit for the year
Other comprehensive income for
the period, net of income tax
Total comprehensive income for
the period
-
-
-
Shares issued
Share issue costs
6,390,993
(5,500)
Balance as at 30 June 2018
15,748,539
-
-
-
-
-
-
-
Accumulated
losses
$
Total
equity
$
(15,707,817)
(6,344,771)
329,763
329,763
-
-
32,041
-
32,041
32,041
329,763
361,804
-
-
-
-
6,390,993
(5,500)
32,041
(15,378,054)
402,526
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
18
For personal use only Statement of Cash Flows
For the year ended 30 June 2019
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Research and Development tax refund
Interest received
Interest paid
Net cash inflow from operating activities
Cash flows from investing activities
Net cash (outflow)/inflow from the addition and disposal of plant
and equipment
Payments for capitalised development costs
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issues of shares, net of costs
Repayment of borrowings, net of costs
Net cash inflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Foreign exchange gains and losses
Cash and cash equivalents at the end of the financial year
Connexion Telematics Ltd
Consolidated
2019
$
2018
$
Note
2,064,725
(1,623,434)
406,948
1,449
(7,500)
842,188
1,251,889
(1,998,780)
1,339,455
-
(189,620)
402,944
(6,590)
(414,279)
(420,869)
3,081
(758,051)
(754,970)
635,530
(300,000)
335,530
152,884
-
152,884
756,849
(199,142)
168,052
13,711
938,612
367,194
-
168,052
10
15
10
The above statement of cash flows should be read in conjunction with the accompanying notes
19
For personal use only
Connexion Telematics Ltd
Notes to the Financial Statements
Note 1: Basis of preparation
These financial statements are general purpose financial statements, which have been prepared in accordance
with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards Board.
The financial statements comprise the consolidated financial statements for the Group. For the purposes of
preparing the consolidated financial statements, the Group is a for-profit entity.
The accounting policies detailed below have been consistently applied to all of the years presented unless
otherwise stated. The financial statements have been prepared on a historical cost basis, except for selected
non-current assets, financial assets and financial liabilities, which have been measured at fair value as explained
in the relevant accounting policies. Historical cost is based on the fair values of the consideration given in
exchange for goods and services.
The financial statements are presented in Australian dollars. The Company is a listed public Company,
incorporated in Australia and operating in Australia, the United States of America, Canada and Mexico. The
entity’s principal activities are detailed in the Directors Report. Its registered office and principal place of
business is:
Level 8, 350 Collins Street
Melbourne
Victoria, 3000
Australia
(a) Statement of compliance
The financial report was authorised for issue on 30 August 2019.
The financial report complies with Australian Accounting Standards, which include Australian equivalents to
International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report,
comprising the financial statements and notes thereto, complies with International Financial Reporting
Standards (IFRS).
(b) Adoption of New and Revised Standards
Standards and Interpretations applicable to 30 June 2019
In the year ended 30 June 2019, the Directors have reviewed all of the new and revised Standards and
Interpretations issued by the AASB that are relevant to the Group and effective for the current annual reporting
period. Those which have a material impact on the Group are set out in Note 3.
(c) Going concern
The financial report has been prepared on the going concern basis, which contemplates continuity of normal
business activities and the realisation of assets and settlements of liabilities in the ordinary course of business.
20
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Connexion Telematics Ltd
Notes to the Financial Statements
Note 1: Basis of preparation (continued)
(d) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company and its subsidiaries. Control is achieved when the Company:
•
•
•
has power over the investee;
is exposed, or has rights, to variable returns from its involvement in with the investee; and
has the ability to its power to affect its returns.
The Company reassess whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements listed above.
When the Company has less than a majority of the voting rights if an investee, it has the power over the investee
when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee
unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the
Company’s voting rights are sufficient to give it power, including:
•
•
•
the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other
vote holders;
potential voting rights held by the Company, other vote holders or other parties; rights arising from other
contractual arrangements; and
any additional facts and circumstances that indicate that the Company has, or does not have, the current
ability to direct the relevant activities at the time that decisions need to be made, including voting patterns
at previous shareholder meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when
the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or
disposed of during the year are included in the consolidated statement of profit or loss and comprehensive
income from the date the Company gains control until the date when the Company ceases to control the
subsidiary.
Changes in the Group’s ownership interest in subsidiaries that do not result in the Group losing control over the
subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the
non-controlling interests are adjusted to reflect the changes in their relative interests in subsidiaries. Any
difference between the amount paid by which the noncontrolling interests are adjusted and the fair value of the
consideration paid or received is recognised directly in equity and attributed to the owners of the Company.
When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the
difference between:
•
•
The aggregate of the fair value of the consideration received and the fair value of any retained interest;
and
The previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any
non-controlling interests.
All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted
for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to
profit or loss or transferred to another category of equity as specified/permitted by the applicable AASBs). The
fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the
fair value on initial recognition for subsequent accounting under AASB 139, when applicable, the cost on initial
recognition of an investment in an associate or a joint venture.
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Connexion Telematics Ltd
Notes to the Financial Statements
Note 1: Basis of preparation (continued)
(e) Foreign currency translation
Both the functional and presentation currency of Connexion Telematics Ltd and its Australian subsidiaries is
Australian dollars. Each entity in the Group determines its own functional currency and items included in the
financial statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at the balance date.
All exchange differences in the consolidated financial report are taken to profit or loss with the exception of
differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity.
These are taken directly to equity until the disposal of the net investment, at which time they are recognised in
profit or loss.
Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair value was determined. Translation
differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.
The functional currency of the foreign operations, Connexion Media Inc is USD (U$). As at the balance date the
assets and liabilities of these subsidiaries are translated into the presentation currency of Connexion Telematics
Ltd at the rate of exchange ruling at the balance date and income and expense items are translated at the
average exchange rate for the period, unless exchange rates fluctuated significantly during that period, in which
case the exchange rates at the dates of the transactions are used. The exchange differences arising on the
translation are taken directly to a separate component of equity, being recognised in the foreign currency
translation reserve.
On disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a
disposal involving loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an
interest in a joint arrangement or an associate that includes a foreign operation of which the retained interest
becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation
attributable to the owners of the Company are reclassified to profit or loss.
In addition, in relation to the partial disposal of a subsidiary that includes a foreign operation that does not result
in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences
are re-attributed to non-controlling interests and are not recognised in profit or loss. For all other partial
disposals (i.e. partial disposals of associates or jointly arrangements that do not result in the Group losing
significant influence or joint control), the proportionate share of the accumulated exchange differences is
reclassified to profit or loss.
Goodwill and fair value adjustments to identifiable assets acquired and liabilities assumed through acquisition
of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of
exchange prevailing at the end of the reporting period. Exchange differences are recognised in other
comprehensive income
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Connexion Telematics Ltd
Notes to the Financial Statements
Note 2: Significant accounting policies
(a) Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected
to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer,
the consolidated entity:
-
-
-
-
-
identifies the contract with a customer;
identifies the performance obligations in the contract;
determines the transaction price, which takes into account estimates of variable consideration and the time
value of money;
allocates the transaction price to the separate performance obligations on the basis of the relative stand-
alone selling price of each distinct good or service to be delivered; and
recognises revenue when each performance obligation is satisfied in a manner that depicts the transfer to
the customer of the goods or services promised.
Variable consideration with the transaction price, if any, reflects concessions provided to the customer such as
discounts, any potential add-ons or bonuses from the customer and any other contingent events. Such
estimates are determined using either the ‘expected value’ or ‘most likely amount’ method. The measurement
of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the
extent that it is highly probable that a significant reversal in the amount of cumulative revenue will not occur.
The measurement constraint continues until the uncertainty associated with the variable consideration is
subsequently resolved. Amounts received that are subject to the constraining principle are initially recognised
as deferred revenue in the form of a separate liability.
Revenue from a contract to provide services is recognised over time as the services are rendered based on either
a fixed price or hourly rate.
(b) Other income and expenses
Interest income
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to
the Group and the amount of revenue can be reliably measured. Interest income is accrued on a time basis, by
reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly
discounts estimated future cash receipts through the expected life of the financial asset to that assets’ net
carrying amount on initial recognition.
Government grants
Grants from the government, including Research and Development (R&D) tax incentive income, are recognised
at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply
with all attached conditions.
Government grants relating to costs are deferred and recognised in the profit or loss over the period necessary
to match them with the costs that they are intended to compensate.
Government grants relating to the purchase of property, plant and equipment are included in non-current
liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of
the related assets.
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Connexion Telematics Ltd
Notes to the Financial Statements
Note 2: Significant accounting policies (continued)
(c)
Income tax expense
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based
on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary difference and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the Company’s subsidiaries and associates operate and
generate taxable income. Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted by the balance date.
Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets
and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are
recognised for all taxable temporary differences except:
• when the deferred income tax liability arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
• when the taxable temporary difference is associated with investments in subsidiaries, associates or
interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and
it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax
assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be
utilised, except:
• when the deferred income tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries, associates or
interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is
probable that the temporary difference will reverse in the foreseeable future and taxable profit will be
available against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent
that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance date.
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Connexion Telematics Ltd
Notes to the Financial Statements
Note 2: Significant accounting policies (continued)
(d)
Income tax expense (continued)
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity
and the same taxation authority.
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority,
in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense
item as applicable; and
receivables and payables, which are stated with the amount of GST included.
•
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables
or payables in the statement of financial position. Cash flows are included in the statement of cash flows on a
gross basis and the GST component of cash flows arising from investing and financing activities, which is
recoverable from, or payable to, the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
taxation authority.
(e) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief
Operating Decision Maker. The Chief Operating Decision Maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the Board of Directors of Connexion
Telematics Ltd.
(f) Earnings per share
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude
any 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 earnings per share is calculated as
net profit attributable to members of the parent, 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; and
other non-discretionary changes in revenues or expenses during the period that would result from the
dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and
dilutive potential ordinary shares, adjusted for any bonus element.
(g) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the
discretion of the entity, on or before the end of the reporting period but not distributed at the end of the
reporting period.
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Connexion Telematics Ltd
Notes to the Financial Statements
Note 2: Significant accounting policies (continued)
(h) Cash and cash equivalents
Cash comprises cash at bank and in hand.
Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings
in current liabilities in the statement of financial position.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents
as defined above, net of outstanding bank overdrafts.
(i)
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less provisions for impairment, doubtful debts and rebates. Trade receivables are
generally due for settlement within 30 – 90 days.
In relation to the financial assets carried at amortised cost, AASB 9 requires an expected credit loss model to be
applied as opposed to an incurred credit loss model under AASB 139. The expected credit loss model requires
the Group to account for expected credit losses and changes in those expected credit losses at each reporting
date to reflect changes in credit risk since initial recognition of the financial asset. AASB 9 requires the Group to
measure the loss allowance at an amount equal to lifetime expected credit loss (“ECL”) if the credit risk on the
instrument has increased significantly since initial recognition. If the credit risk on the financial instrument has
not increased significantly since initial recognition the Group is required to measure the loss allowance for that
financial instrument at an amount equal to the ECL within the next 12 months.
The amount of the impairment loss is recognised in the Consolidated Statement of Profit or Loss and Other
Comprehensive Income within other expenses.
When a trade receivable, for which an impairment allowance had been recognised, becomes uncollectible in a
subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously
written off are credited against other expenses in the Consolidated Statement of Profit or Loss and Other
Comprehensive Income.
(j)
Inventories
Inventory consists of sophisticated telemetry devices and is stated at the lower of cost and net realisable value.
Cost comprises of purchase and delivery costs, net of rebates and discounts received or receivable. Net realisable
value is the estimated selling price in the ordinary course of business less the estimated costs of completion and
the estimated costs necessary to make the sale.
(k) Property, plant and equipment
Plant and equipment are stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items. Depreciation is calculated on a
straight-line basis to write off the net cost of each item of plant and equipment over their expected useful lives
which are in between 3 - 10 years.
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Notes to the Financial Statements
Note 2: Significant accounting policies (continued)
(l) Capitalised development costs
Development costs are capitalised when it is probable that the project will be a success considering its
commercial and technical feasibility; the Company is able to use or sell the assets; the Company has sufficient
resources; and intent to complete the development and its costs can be measured reliably. Capitalised
development costs are amortised on a straight-line basis over the period of their expected benefit, being their
finite life of 3 years. Research costs are expensed in the period in which they are incurred.
(m) Trade and other payables
Trade and other payables
Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services
provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes
obliged to make future payments in respect of the purchase of these goods and services. Trade and other
payables are presented as current liabilities unless payment is not due within 12 months.
Employee leave benefits
Wages, salaries, annual leave and sick leave Liabilities accruing to employees in respect of wages and salaries,
annual leave, long service leave and sick leave expected to be settled within 12 months of the balance date are
recognised in other payables in respect of employees’ services up to the balance date. They are measured at the
amounts expected to be paid when the liabilities are settled.
Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates
paid or payable. Liabilities accruing to employees in respect of wages and salaries, annual leave, long service
leave and sick leave not expected to be settled within 12 months of the balance date are recognised in non-
current other payables in respect of employees’ services up to the balance date. They are measured as the
present value of the estimated future outflows to be made by the Group.
(n) Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction
costs. They are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting
date, the loans or borrowings are classified as non-current.
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in
the statement of financial position, net of transaction costs.
Convertible notes are initially classified as a financial liability on the amortised cost basis until extinguished on
conversion or redemption. The increase in the liability due to the passage of time is recognised as a finance cost.
The corresponding interest on convertible notes is expensed to profit or loss.
(o) Finance costs
Finance costs are expensed in the year that they are incurred.
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Connexion Telematics Ltd
Notes to the Financial Statements
Note 2: Significant accounting policies (continued)
(p) Share-based payments
Equity settled transactions
The Group provides benefits to employees (including senior executives) of the Group in the form of share-based
payments, whereby employees render services in exchange for shares or rights over shares (equity-settled
transactions). There is currently one plan in place to provide these benefits, being the Performance Rights Plan
(‘PRP’), which provides benefits to Directors and other Key Management Personnel.
The cost of these equity-settled transactions with employees is measured by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined by an external valuer
using a Black-Scholes model.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions
linked to the price of the shares of the Company (market conditions) if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the
period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant
employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each balance date until vesting date
reflects (i) the extent to which the vesting period has expired and (ii) the Group’s best estimate of the number
of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance
conditions being met as the effect of these conditions is included in the determination of fair value at grant date.
The statement of profit or loss and other comprehensive income charge or credit for a period represents the
movement in cumulative expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only
conditional upon a market condition.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had
not been modified. In addition, an expense is recognised for any modification that increases the total fair value
of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date
of modification. If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation,
and any expense not yet recognised for the award is recognised immediately. However, if a new award is
substituted for the cancelled award and designated as a replacement award on the date that it is granted, the
cancelled and new award are treated as if they were a modification of the original award, as described in the
previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of
earnings per share.
(q) Parent entity disclosures
The financial information for the parent entity, Connexion Telematics Ltd, has been prepared on the same basis
as the consolidated financial statements.
(r)
Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
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Notes to the Financial Statements
Note 3: New Standard adopted
AASB 15 Revenue from Contracts with Customers (‘AASB 15’)
The consolidated entity has adopted AASB 15 as issued in May 2014 with the date of initial application being 1
July 2018. In accordance with the transition provisions in AASB 15 the standard has been applied using the
modified retrospective approach. On this basis there were no restatements of prior comparative balances.
AASB 15 supersedes AASB 118 – Revenue, AASB 111 Construction Contracts and related interpretations and it
applies to all revenue arising from contracts with customers, unless these contracts are in scope of other
standards. The new standard establishes a five-step model to account for revenue arising from contracts with
customers. Under AASB 15 Revenue is recognised at an amount that reflects the consideration to which an
entity expects to be entitled in exchange for transferring goods or services to a customer.
At 30 June 2019 all material contracts were assessed by the consolidated entity and it was determined that the
adoption of AASB 15 had no significant impact on the consolidated entity. The updated accounting policy for
revenue has been disclosed above.
AASB 9 Financial Instruments (‘AASB 9’)
The consolidated entity has adopted AASB 9 as issued in July 2014 with the date of initial application being 1 July
2018. In accordance with the transitional provisions in AASB 9, comparative figures have not been restated.
AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement (‘AASB 139’), bringing together
all three aspects of the accounting for financial instruments: clarification and measurement; impairment; and
hedge accounting. The accounting policies have been updated to reflect the application of AASB 9 below.
Measurement and classification
At the date of initial application, existing financial assets and liabilities of the consolidated entity were assessed
in terms of the requirements of AASB 9. The assessment was conducted on instruments that had not been de-
recognised as at 1 July 2018. In this regard the consolidated entity has determined that the adoption of AASB 9
has impacted the classification of financial instruments at 1 July 2018 as follows:
Class of financial instrument
presented in the statement of
financial position
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Interest bearing liabilities
Original measurement category
under AASB 139 (i.e. prior to 1
July 2018)
Loans and receivables
Loans and receivables
Financial liability at amortised cost Financial liability at amortised cost
Financial liability at amortised cost Financial liability at amortised cost
New Measurement category
under AASB 9 (i.e. from 1 July
2018)
Financial asset at amortised cost
Financial asset at amortised cost
The change in classification has not resulted in any re-measurement adjustments at 1 July 2018.
Impairment of financial assets
In relation to the financial assets carried at amortised cost, AASB 9 requires an expected credit loss model to be
applied as opposed to an incurred credit loss model under AASB 139. The expected credit loss model requires
the consolidated entity to account for expected credit losses and changes in those expected credit losses at each
reporting date to reflect changes in credit risk since initial recognition of the financial asset. AASB 9 requires the
consolidated entity to measure the loss allowance at an amount equal to lifetime expected credit loss (‘ECL’) if
the credit risk on the instrument has increased significantly since initial recognition. If the credit risk on the
financial instrument has not increased significantly since initial recognition the consolidated entity is required
to measure the loss allowance for that financial instrument at an amount equal to the ECL within the next 12
months.
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Notes to the Financial Statements
Note 3: New Standard adopted (continued)
At 1 July 2018, the consolidated entity reviewed and assessed the existing financial assets for impairment using
reasonable and supportable information. In accordance with AASB 9, where the consolidated entity concluded
that it would require undue cost and effort to determine the credit risk of a financial asset on initial recognition,
the consolidated entity recognises lifetime ECL. The result of the assessment is as follows;
Items existing at 1 July 2018 that
are subject to the impairment
provisions of AASB 9
Cash and cash equivalents
Trade receivables
Cumulative additional loss
allowance required on 1 July
2018
-
-
reputable
Credit risk attributes
All bank balances are assessed to
have
low credit risk at each
reporting date as they are held
with
financial
institutions.
The consolidated entity applied
the
simplified approach and
concluded that the lifetime ECL
would be negligible on receivable
balances not already provided for
and therefore no loss allowance
was required at 1 July 2018.
AASB 16 Leases (‘AASB 16’)
AASB 16 replaces AASB 117 Leases. AASB 16 removes the classification of leases as either operating leases of
finance leases for the lessee – effectively treating all leases as finance leases. AASB 16 is applicable to annual
reporting periods beginning on or after 1 July 2019. However, the impact to the consolidated entity is immaterial
as it only has one lease relating to its business premises in Melbourne, as disclosed in Note 19.
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Notes to the Financial Statements
Note 3: New Standard adopted (continued)
Accounting standards and interpretations issued but not yet effective
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not
yet effective and have not been adopted by the Group for the annual reporting period ending 30 June 2019 are
outlined in the table below.
Standard
Mandatory date for
annual reporting periods
beginning on or after)
Reporting period
standard adopted by
the company
AASB 16 Leases
1 January 2019
1 July 2019
2018-1 Amendments to Australian Accounting Standards –
Annual Improvements 2015-2017 Cycle
1 January 2019
1 July 2019
Interpretation 22 Foreign Currency Transactions and Advance
Consideration
1 January 2018
1 July 2018
Interpretation 23 Uncertainty over Income Tax Treatments
1 January 2019
1 July 2019
AASB 2014-5 Amendments to Australian Accounting
Standards arising from AASB 15 Revenue
AASB 2015-8 Amendments to Australian Accounting
Standards – Effective Date of AASB 15
AASB 2016-3 Amendments to Australian Accounting
Standards – Clarifications to AASB 15
AASB 2017-7 Amendments to Australian Accounting
Standards – Long-term Interests in Associates and Joint
Ventures
1 January 2019
1 July 2019
1 January 2019
1 July 2019
1 January 2019
1 July 2019
1 January 2019
1 July 2019
The revised Conceptual Framework for Financial Reporting
1 January 2020
1 July 2020
AASB 2018-6 Amendments to Australian Accounting
Standards – Definition of a Business
1 January 2020
1 July 2020
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Connexion Telematics Ltd
Notes to the Financial Statements
Note 4: Significant accounting estimates and judgements
The application of accounting policies requires the use of judgements, estimates and assumptions about carrying
values of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the
period in which the estimate is revised if it affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
Capitalisation of internally developed software
Distinguishing the research and development phases of a new customised software project and determining
whether the recognition requirements for the capitalisation of development costs are met requires judgement.
After capitalisation, management monitors whether the recognition requirements continue to be met and
whether there are any indicators that capitalised costs may be impaired.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined by an external valuer
using a Black-Scholes model, using the assumptions detailed in Note 17.
The Group measures the cost of cash-settled share-based payments at fair value at the grant date using the
Black-Scholes model taking into account the terms and conditions upon which the instruments were granted.
32
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Notes to the Financial Statements
Note 5: Revenue and other income
Revenue
Revenue from contracts with customers
Other income
Interest income
Governments grants – R&D refund
Note 6: Expenses
Corporate and administrative expenses include the following specific expenses:
Wages and salaries
Consulting fees
Rental expense
Superannuation expense
Note 7: Income tax expense
Connexion Telematics Ltd
Consolidated
2019
$
2018
$
3,555,221
1,105,485
1,449
406,948
408,397
2,708
1,522,074
1,524,782
Consolidated
2019
$
2018
$
539,909
231,696
80,000
49,353
526,160
135,556
77,760
41,493
Income tax expense has not been recognised for the period as the Company is in an accumulated tax loss
position.
As at 30 June 2019 the Group had accumulated losses, as set out in the statement of financial position that may
be applied in its calculation of carry-forward tax losses that may be potentially be offset against future assessable
income. It is noted that not all amounts in accumulated losses would be included in carry-forward tax losses
which may or may not be available to offset against assessable income which may arise in the future.
Based on independent tax advice obtained by the Group the profit achieved by the Group in the current and
prior year would not attract income tax as any tax payable would be offset by carried forward tax losses.
Note 8: Segment reporting
Identification of reportable operating segments
During the year ended 30 June 2019 the group operated in one segment, specialising in developing global
information technology solutions for automotive industries in Australia, the United States of America, Canada
and Mexico. For the year ended 30 June 2019 all of its sales revenue was from one customer located in the USA
(2018: one customer). All revenue is recorded over time for rendering of services.
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Notes to the Financial Statements
Note 9: Earnings per share
Basic and diluted earnings per share
From continuing operations
• Basic earnings per share (cents per share)
• Diluted earnings per share (cents per share)
Earnings
Earnings used in the calculation of basic and diluted earnings per share is as follows:
Connexion Telematics Ltd
Consolidated
2019
0.06
0.06
2018
0.07
0.07
Consolidated
2019
$
2018
$
Earnings from continued operations used in the calculation of basic
earnings per share
466,034
329,763
Weighted average number of ordinary shares
The weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share
is as follows:
Consolidated
2019
Number
2018
Number
Weighted average number of ordinary shares for the purpose of
basic earnings per share
821,065,715 447,652,957
Shares deemed to be issued for no consideration in respect of:
• Options
• Convertible notes
• Performance shares
-
-
21,715,068
-
-
-
Weighted average number of ordinary shares for the purpose of
diluted earnings per share
842,780,783 447,652,957
The options held by option holders were not included in the weighted average number of ordinary shares used
in calculating dilutive earnings per share as they did not meet the requirements for inclusion as outlined in AASB
133 ‘Earnings per Share’. The options were non-dilutive as they expired around the year end date and the impact
would not be material to the financial statements.
34
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Notes to the Financial Statements
Note 10: Cash and cash equivalents
Cash at bank and on hand
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Reconciliation to the Statement of Cash Flows
Connexion Telematics Ltd
Consolidated
2019
$
2018
$
938,612
168,052
For the purposes of the statement of cash flows, cash and cash equivalents comprise cash on hand and at bank
and investments in money market instruments, net of outstanding bank overdrafts.
Cash and cash equivalents as shown in the statement of cash flows is reconciled to the related items in the
statement of financial position.
Reconciliation of profit for the year to net cash flows from operating activities
Profit after income tax expense for the year
Equity settled share-based payment
Depreciation and amortisation
Finance charges included in loan payments
Foreign currency translation reserve
(Increase) / decrease in assets:
Trade and other receivables
Inventory
Increase / (decrease) in liabilities:
Trade and other payables
Employee benefits
Net cash from operating activities
Consolidated
2019
$
2018
$
466,034
329,763
266,000
229,933
-
(16,974)
-
151,867
547,128
32,041
(1,390,845)
17,999
(186,138)
62,811
1,227,723
42,318
(445,881)
(88,644)
842,188
402,947
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Notes to the Financial Statements
Note 11: Trade and other receivables
Trade receivables
Less: allowance for credit losses
Other receivables
Connexion Telematics Ltd
Consolidated
2019
$
2018
$
1,583,135
(14,296)
1,568,939
44,025
1,612,964
36,843
-
36,843
198,732
235,575
(i)
Trade receivables are non-interest bearing and are generally on terms of 30 days to 90 days. All amounts
are short term. The carrying value of trade receivables is considered a reasonable approximation of fair
value.
(ii) Note 18 includes disclosures relating to the credit risk exposures and analysis relating to the allowance for
expected credit losses.
Aged receivables
The aging of trade receivables as at 30 June 2019 is detailed in the table below:
Current
1 month
2 months
3 months
Older
Note 12: Capitalised development costs
Carrying value
Development asset – cost
Development asset – accumulated amortisation
Carrying value
Consolidated
2019
$
2018
$
488,972
563,557
480,882
2,708
47,016
1,583,135
26,246
5,390
726
205
4,276
36,843
Consolidated
2019
$
2018
$
1,172,330
(377,847)
794,483
758,051
(151,404)
606,647
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Notes to the Financial Statements
Note 12: Capitalised development costs (continued)
Reconciliation
Cost
Opening balance as at 1 July
Additions
Closing balance as at 30 June
Amortisation
Opening balance as at 1 July
Amortisation charge
Closing balance as at 30 June
Carrying value
Connexion Telematics Ltd
Consolidated
2019
$
2018
$
758,051
414,279
1,172,330
151,404
226,443
377,847
-
758,051
758,051
-
151,404
151,404
794,483
606,647
From 1 July 2017, the Company recognised developed intangible assets in terms of its Aus Industry and
Australian Tax Office Research & Development tax incentive programme. These intangible assets comprised the
key technologies developed for use in the Company’s operations – telematics and wireless communications.
Development costs are capitalised when it is probable that the project will be a success considering its
commercial and technical feasibility; the Company is able to use or sell the assets; the Company has sufficient
resources; and intent to complete the development and its costs can be measured reliably. Capitalised
development costs are amortised on a straight-line basis over the period of their expected benefit, being their
finite life of 3 years. Research costs are expensed in the period in which they are incurred.
The total R&D tax incentive receivable is apportioned between other income and the capitalised development
asset based on the split of expenditure in the claim.
Note 13: Trade and other payables
Trade payables
Other payables
Consolidated
2019
$
2018
$
1,410,614
152,279
1,562,893
256,249
68,922
325,171
(i)
Trade payables are non-interest bearing and are normally settled on a 30 to 90-day term. All amounts are
short term. The net carrying value of trade payables is considered a reasonable approximation of fair
value.
(ii) For terms and conditions relating to related party payables refer to Note 21.
37
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Notes to the Financial Statements
Note 14: Borrowings
Secured loan
Secured loan
Connexion Telematics Ltd
Consolidated
2019
$
2018
$
-
300,000
On 21 January 2013 the legal parent entity, Connexion Telematics Ltd, entered into a loan agreement with a
third-party investor. The loan's maturity date was extended to 28 January 2019. There is no share conversion to
equity option attached to the loan. The loan is secured by a registered charge over the Company's real and
intangible property. The loan attracts an annual interest charge of 15% which is prepaid. The principal amount
was paid off in full during the financial year.
Note 15: Issued capital
Ordinary shares on issue
Consolidated
2019
$
2018
$
Ordinary shares issued and fully paid
16,405,069
15,748,539
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company
in proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to
one vote, and upon a poll each share is entitled to one vote. Ordinary shares have no par value and the Company
does not have a limited amount of authorised capital.
Movement in ordinary shares on issue
Date
Detail
1 July 2017
Opening balance
27 November 2017
27 November 2017
27 November 2017
8 December 2017
25 January 2018
30 June 2018
Conversion of Series 1 Notes
Conversion of Series 2 Notes
Issue of Shares
Issue of Shares
Issue of Shares
Costs of Issuing Equity
30 June 2018
Closing balance
Number
117,822,774
218,275,454
381,013,892
384,615
100,000
15,208,377
-
732,805,112
11 September 2018
28 March 2019
30 June 2018
Issue of Shares
Conversion of performance rights
Costs of Issuing Equity
109,360,000
3,000,000
-
Issue price
(cents)
0.0104
0.0104
0.0130
0.0130
0.0100
0.006
0.007
$
9,363,046
2,270,064
3,962,545
5,000
1,300
152,084
(5,500)
15,748,539
656,160
21,000
(20,630)
30 June 2019
Closing balance
845,165,112
16,405,069
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Connexion Telematics Ltd
Notes to the Financial Statements
Note 15: Issued capital (continued)
Share options
On 6 July 2016, 3,042,172 unlisted options were issued with an exercise price of $0.25 and an expiry date of 1
January 2018. Furthermore, on the same date, 7,133,617 unlisted options issued with an exercise price of $0.25
expiring on the second anniversary of their issue date.
The options have been included in the below table for completeness purposes, as they were issued as free-
attaching options to other equity instruments. All 7,133,167 options expired on 6 July 2018, unexercised.
Movement in share options
Date
Detail
1 July 2017
Opening balance
Issue price
(cents)
Number
10,175,789
1 January 2018
Expiration of share options
(3,042,172)
30 June 2018
Closing balance
7,133,617
6 July 2018
Expiration of share options
(7,133,617)
30 June 2019
Closing balance
-
-
-
Performance rights
$
-
-
-
-
-
The Company has established a Performance Rights Plan (‘PRP’) under which ordinary shares may be issued to
certain Directors, Key Management and Employees, on conversion of the Performance Rights.
Movement in performance rights
Date
Detail
1 July 2018
Opening balance
Fair value at
grants date
(cents)
Number
-
26 November 2018
28 March 2019
Issue of performance rights
Conversion of performance rights
38,000,000
(3,000,000)
0.007
0.007
30 June 2019
Closing balance
35,000,000
$
-
266,000
(21,000)
245,000
The establishment of the above PRP was approved by shareholders at the Company’s AGM held on 26 November
2018.
Each performance right vests on the closing share price reaching $0.008 and remaining at or above this price for
a period of 5 consecutive trading days. The performance rights expire on 26 November 2023.
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Connexion Telematics Ltd
Notes to the Financial Statements
Note 16: Reserves
Nature and purpose of reserves
Share-based payments reserve
This reserve is used to record the value of equity benefits provided to employees and Directors as part of their
remuneration.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of
the financial statements of foreign subsidiaries. It is also used to record the effect of hedging net investments in
foreign operations.
Note 17: Share-based payment plans
Performance Rights Plan (“PRP”)
The Company established a PRP, which was approved by shareholders at the Company’s AGM, held on 26
November 2018.
Following approval by shareholders, the Company granted the following performance rights under the PRP:
•
•
•
•
10,000,000 performance rights to Mark Caruso (or his nominee/s);
10,000,000 performance rights to Robert Downey (or his nominee/s);
10,000,000 performance rights to Aaryn Nania (or his nominee/s); and
8,000,000 performance rights to other Officers and Employees of the Company.
The above performance rights each convert into one (1) ordinary share for no consideration on exercise by the
holder once vested, prior to the expiry date which is five (5) years from the grant date. The performance rights
will vest upon the closing share price of the Company reaching A$0.008 and remaining at or above A$0.008 for
a period of five (5) consecutive trading days.
As at 30 June 2019 all the performance rights had vested. The fair value of each performance right was 0.7
cents, being the share price on the day of issue. This value was confirmed by an independent valuation.
Note 18: Financial instruments
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern
while maximising the return to stakeholders through the optimisation of the debt and equity balance.
The Group’s overall strategy remains largely unchanged from 2018.
The capital structure of the Group consists of cash and cash equivalents, borrowings (for 2018) and equity
attributable to equity holders of the parent, comprising
issued capital, reserves and retained
earnings/accumulated losses.
None of the Group’s entities are subject to externally imposed capital requirements.
Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such
as general administrative outgoings.
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Connexion Telematics Ltd
Notes to the Financial Statements
Note 18: Financial instruments (continued)
Financial risk management objectives
The Group is exposed to (i) market risk (which includes foreign currency exchange risk and interest rate risk), (ii)
credit risk, and (iii) liquidity risk.
The consolidated entity's overall risk management program focuses on the management of these risks through
cashflow forecasting capital management.
Risk management is carried out by the Board and Management informally on a frequent periodic basis. The
process includes identification and analysis of the risk exposure of the consolidated entity and appropriate
procedures, controls and risk limits.
Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and
interest rates.
The Group does not enter into any derivative financial instruments, including foreign exchange forward
contracts, to manage its exposure to or to hedge against foreign currency exchange rate fluctuations. There has
been no change to the Group’s exposure to market risks or the manner in which it manages and measures the
risk from the previous period.
Interest rate risk
Borrowings issued at fixed rates expose the consolidated entity to fair value interest rate risk. Borrowings that
were held as at 30 June 2018 were at a fixed interest rate, and no interest rate risk applies, however, these
borrowings have all been repaid in the current year, as detailed in Note 14.
Credit risk
Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The group is exposed to
credit risk from financial assets including cash and cash equivalents held at banks and trade and other
receivables.
The credit risk in respect of cash balances held with banks and deposits with banks are managed via holding
funds only with major reputable financial institutions.
The Group continuously monitors the credit quality of customers and to deal only with credit worthy
counterparties. The credit terms range between 30 and 90 days. The ongoing credit risk is managed through
regular review of ageing analysis. Trade receivables mainly consist of debts due from its largest customer.
Liquidity risk
Ultimate responsibility for liquidity risk management rests with the Board, who have built an appropriate
liquidity risk management framework for the management of the Group’s short, medium and long-term funding
and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves,
banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and
matching the maturity profiles of financial assets and liabilities.
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Connexion Telematics Ltd
Notes to the Financial Statements
Note 18: Financial instruments (continued)
Non-derivative financial liabilities
The following tables detail the Group’s expected contractual maturity for its non-derivative financial liabilities.
These have been drawn up based on undiscounted contractual maturities of the financial liabilities based on the
earliest date the Group can be required to repay. The below tables include both interest and principal cash flows:
2019
Non-derivatives
Non-interest bearing
Trade and other payables
Other loans
Total non-derivatives
2018
Non-derivatives
Non-interest bearing
Trade and other payables
Other loans
Total non-derivatives
Fair value measurements
Weighted
average
interest
rate
%
Between
0 – 6
months
$
Between
6 – 12
months
$
Between
1 – 2
years
$
Between
2 – 5
years
$
Over
5
years
$
Remaining
contractual
maturities
$
0%
15%
1,562,893
-
1,562,893
-
-
-
-
-
-
-
-
-
-
-
-
1,562,893
-
1,562,893
Weighted
average
interest
rate
%
Between
0 – 6
months
$
Between
6 – 12
months
$
Between
1 – 2
years
$
Between
2 – 5
years
$
Over
5
years
$
Remaining
contractual
maturities
$
0%
15%
325,171
-
325,171
-
300,000
300,000
-
-
-
-
-
-
-
-
-
325,171
300,000
625,171
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or
for disclosure purposes. The following table presents the Group’s assets and liabilities measured and recognised
at fair value at 30 June 2019 and 30 June 2018:
Assets
Cash and cash equivalents
Trade and other receivables
Total assets
Liabilities
Trade and other payables
Borrowings
Total liabilities
Consolidated
2019
$
2018
$
938,612
1,612,964
2,551,576
1,562,893
-
1,562,893
168,052
235,575
403,627
325,171
300,000
625,171
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Connexion Telematics Ltd
Notes to the Financial Statements
Note 19: Commitments
Lease commitments - operating
As at 30 June 2019 the Group has commitments totalling $49,500 (2018: nil) relating to its office lease
Commitments contracted for at balance date but not recognised as liabilities are as follows:
Lease commitments payable:
• Within one year
• After one year but more than five years
• More than five years
Consolidated
2019
$
2018
$
49,500
-
-
49,500
-
-
-
-
Note 20: Contingent liabilities and assets
The Group has no contingent liabilities and assets as at 30 June 2019 (2018: nil).
Note 21: Related party disclosure
Key Management Personnel
The following persons were Directors of Connexion Telematics Ltd during the financial year and are also
identified as Key Management Personnel (“KMP”):
• Mark Caruso
•
•
•
•
Robert Downey
Aaryn Nania
David Connolly (resigned 28 September 2018)
Guy Perkins (appointed 5 August 2019)
Transactions with KMP
The aggregate compensation made to Directors and other KMP of the Group is set out below:
Consolidated
2019
$
2018
$
83,370
7,920
-
-
210,000
301,290
90,000
2,850
-
-
-
92,850
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefit
Share-based payments
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Connexion Telematics Ltd
Notes to the Financial Statements
Note 21: Related party disclosure (continued)
Other transactions with KMP
No member of KMP appointed during the period received a payment as part of his or her consideration for
agreeing to hold the position.
The Group used the legal services of Dominion Legal Pty Ltd during the year, a legal firm associated with Robert
Downey. The amounts billed related to this legal service amounted to $27,591 (2018: $73,316), based on normal
market rates and $3,167 remained unpaid at the reporting date.
The Group also used CFO consulting and general accounting services of Mine Site Construction Services Pty Ltd
during the year, a company associated with Mark Caruso. The amounts billed related to this service amounted
to $56,000 (2018: nil), based on normal market rates and $26,726 remained unpaid at the reporting date.
There were no loans to/from related parties during the current or previous reporting period.
Note 22: Interest in subsidiaries
Connexion Telematics Ltd is the ultimate Australian parent entity and ultimate parent of the Group.
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly
owned subsidiaries in accordance with the accounting policy described in Note 1:
Entity name
Country of incorporation
Flexvs Pty Ltd
miRoamer Pty Ltd
Connexion Media Inc
Connexion LLC
BC 1125816
CXZ Mexico
Australia
Australia
United States of America
United States of America
Canada
Mexico
Note 23: Parent entity disclosures
Statement of profit or loss and other comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive (loss)/income
Ownership interest
2019
%
100
100
100
100
100
100
2018
%
100
100
100
100
100
100
Consolidated
2019
$
2018
$
758,403
-
758,403
208,946
-
208,946
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Notes to the Financial Statements
Note 23: Parent entity disclosures (continued)
Statement of financial position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Equity
Issued capital
Share-based payment reserve
Accumulated losses
Total equity
Connexion Telematics Ltd
Consolidated
2019
$
2018
$
1,810,352
2,200,176
(1,379,328)
-
2,631,200
397,868
1,486,528
(307,700)
(605,429)
971,267
16,405,069
245,000
(14,018,869)
2,631,200
15,748,539
-
(14,777,272)
971,267
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2019 and 30 June
2018.
Contingent liabilities of the parent entity
As at 30 June 2019 Connexion Telematics Ltd has no contingent liabilities (2018: nil).
Note 24: Auditors remuneration
The Auditor of Connexion Telematics Ltd is William Buck.
During the financial year the following fees were paid or payable for services provided by William Buck:
Audit services - William Buck
Audit or review of the financial statements
Other services - William Buck
Other assurance services, including taxation
Preparation of Research & Development tax incentive claim
Note 25: Significant events after balance date
Consolidated
2019
$
2018
$
38,000
38,000
21,700
69,732
129,432
5,000
43,000
Other than disclosed elsewhere in the Annual Report, there has been no additional matter or circumstance that
has arisen after balance date that has 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 periods.
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Connexion Telematics Ltd
Directors’ Declaration
In the Directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting
Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board as described in Note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial
position as at 30 June 2019 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act
2001.
On behalf of the directors
Mark Caruso
Chairman
Perth, 30 August 2019
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Connexion Telematics Ltd
Independent auditor’s report to members
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Connexion Telematics Ltd (the Company and its
subsidiaries (the Group)), which comprises the consolidated statement of financial position
as a 30 June 2019, the consolidated statement of comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year
then ended, and notes to the financial statements, including a summary of significant
accounting policies and other explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations
2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our
responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of
the Corporations Act 2001 and the ethical requirements of the Accounting Professional and
Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that we have complied with the independence requirements of the
Corporations Act 2001.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
For personal use only 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.
CAPITALISATION OF DEVELOPMENTS COSTS
Area of focus
Refer also to notes 2 and 12
During the year to 30 June 2019 the Group has
capitalised $0.4 million in respect of
development costs, which is partially offset by
an amortisation charge of $0.2 million.
How our audit addressed it
Our audit procedures included:
— Reviewing management’s internal
documentation and policy in respect of
development costs;
Determining that the requirements of AASB 138
Intangible Assets could be met was complex
and required significant judgement by the
Directors and Group management, specifically
in determining that the specific criteria, for
capitalisation, stipulated by AASB 138 were
addressed.
— Assessing that only development costs are
captured in accordance with Group policies;
— Performing detailed testing over the
development cost balance at 30 June 2019; and
— Assessing that the amortisation charge for the
year was consistent with the Group policy.
As a consequence, we have determined this to
be a key area of focus in the current year.
We also assessed the adequacy of the Group’s
disclosures in respect of the capitalised
development costs.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2019 but does not include the financial
report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of 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.
For personal use only
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted
in accordance with the Australian Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of this financial report.
A further description of our responsibilities for the audit of these financial statements is located at the
Auditing and Assurance Standards Board website at:
www.auasb.gov.au/auditors_responsibilities/ar1.pdf .
This description forms part of our independent auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2019.
In our opinion, the Remuneration Report of Connexion Telematics Ltd, for the year ended 30 June 2019,
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.
William Buck Audit (Vic) Pty Ltd
ABN: 59 116 151 136
A. A. Finnis
Melbourne, 30 August 2019
For personal use only Connexion Telematics Ltd
Shareholder Information
The shareholder information set out below was applicable as at 26 August 2019.
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
No.
Holder
Shares
%
1
2
3
4
5
6
7
8
9
10
11
CITICORP NOMINEES PTY LIMITED
ZURICH BAY HOLDINGS PTY LTD
ROCSANGE PTY LTD
J F BYRNES SUPER PTY LTD
MR CHING KHOON TAN
NATIONAL NOMINEES LIMITED
RATIO NOMINEES PTY LTD
MR MICHAEL ANTHONY SMITH
SHYMEA PTY LTD
BARBRIGHT AUSTRALIA PTY LTD
HAMMOND ROYCE CORPORATION PTY LTD
COACH DEVELOPMENTS PTY LTD
12
13 MR MARINUS ADRIAN STRYBOSCH & MRS PENELOPE K
STRYBOSCH
KASSETT PTY LTD
S A HILLMAN SMSF PTY LTD
14
15
16 MS ELIZABETH ANN WHITE
17 MR ROBERT CAMERON GALBRAITH
18 MR MAURICE FORTE & MRS MARISA FORTE
19 MR LEONARD ROBERT SMITH & MRS LYNETTE NANCY SMITH
20
KEITH SEABROOK NOMINEES PTY LTD
Total Securities of Top 20 Holdings
Total of Securities
Distribution of equity securities
Analysis of number of equity security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
50
168,671,341
40,000,000
28,588,942
25,435,528
24,611,617
22,000,000
22,000,000
17,254,010
15,670,425
15,000,000
13,808,864
13,504,210
12,390,813
12,000,000
10,725,939
10,490,218
10,296,296
19.84%
4.71%
3.36%
2.99%
2.89%
2.59%
2.588%
2.02%
1.84%
1.76%
1.62%
1.58%
1.45%
1.41%
1.26%
1.23%
1.21%
9,000,000
1.05%
7,878,158
0.92%
7,878,158
0.92%
487,204,519
850,165,112
57.307%
Number of holders
of ordinary shares
7,191
82,097
230,732
15,100,087
834,745,005
850,165,112
161
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Shareholder Information (continued)
Substantial holders
There following two shareholders are considered substantial holders in the Company.
Holder
Shares
% IC
Lucerne Group Pte Ltd and its Associates
170,033,022
19.99%
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a
poll each share shall have one vote.
Restricted securities
There are no restricted securities.
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