Connexion Telematics Ltd
Connexion Telematics Ltd
Appendix 4E
Final Report
1. Company details
Name of entity:
ABN:
Reporting period:
Previous period:
Connexion Telematics Ltd
68 004 240 313
For the year ended 30 June 2023
For the year ended 30 June 2022
For and on behalf of the Directors
____________________________
Aaryn Nania
Managing Director
Dated: 17 August 2023
2. Results for announcement to the market
2.1 Revenues from ordinary activities
Increase of
74%
2.2 Other income
Increase of
2,050%
%
2023
US$
6,629,284
549,364
to
to
2.3 Profit from ordinary activities after tax
attributable to the members of Connexion
Telematics Ltd
2.4 Profit for the year attributable to the
members of Connexion Telematics Ltd
3. Net tangible assets per ordinary security
Net tangible assets per ordinary security
Increase of
1,114%
to
1,762,912
Increase of
1,114%
to
1,762,912
Reporting
Period
(Cents)
0.55
Previous
Period
(Cents)
0.39
4. Details of entities over which control has been gained or lost during the period
No changes from previous period.
1
5. Details of individual and total dividends or distributions and dividend or distribution payments
Nil.
Connexion Telematics Ltd
6. Details of dividend or distribution reinvestment plans in operation
Nil.
7. Details of associates and joint venture entities
Nil.
8. Foreign entities
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly
owned foreign entities:
Entity name
Country of incorporation
Connexion Media Inc
1125816 B.C. Ltd
United States of America
Canada
9. Accounting Standards Used
Ownership interest
2023
%
100
100
2022
%
100
100
Connexion Telematics Ltd’s financial statements are prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act
2001, as appropriate for for-profit oriented entities. The financial statements also comply with International
Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board ('IASB').
10. Statement relating to the status of the audit
This report is based on audited Annual Report of Connexion Telematics Ltd for the year ended 30 June 2023.
The Company received an unqualified audit report, as detailed in the Independent Auditors Report to Members
contained within the Annual Report.
2
Connexion Telematics Ltd
ABN 68 004 240 313
Annual Report
Year ended 30 June 2023
Connexion Telematics Ltd
Contents
Corporate Information ........................................................................................................................................... 2
Directors’ Report .................................................................................................................................................... 3
Auditor’s Independence Declaration .................................................................................................................... 20
Consolidated Statement of Profit or Loss and Other Comprehensive Income..................................................... 21
Consolidated Statement of Financial Position ...................................................................................................... 22
Consolidated Statement of Changes in Equity ..................................................................................................... 23
Consolidated Statement of Cash Flows ................................................................................................................ 24
Notes to the Financial Statements ....................................................................................................................... 25
Directors’ Declaration ........................................................................................................................................... 53
Independent Auditor’s Report to the members of Connexion Telematics Ltd .................................................... 54
Shareholder Information ...................................................................................................................................... 58
1
Connexion Telematics Ltd
Corporate Information
Directors
Robert Downey
Aaryn Nania
Greg Ross
Simon Scalzo
Company secretary
Elizabeth Spooner
Registered office
Level 3, 162 Collins Street
Melbourne, VIC 3000
Principal place of business
Level 3, 162 Collins Street
Melbourne, VIC 3000
Share registry
Automic Group
Level 35, 477 Collins Street
Melbourne VIC 3000
Phone: 1300 288 664 (Australia) +61 2 9698 5414 (overseas)
Auditor
William Buck
Level 20, 181 William Street
Melbourne VIC 3000
Phone: +61 3 9824 8555
Bankers
National Australia Bank
Stock exchange listing
Connexion Telematics Ltd’s shares are listed on the Australian Securities Exchange (ASX code: CXZ)
Website
www.connexionltd.com
2
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’, the ‘Parent entity’ or ‘Connexion’) and the entities it controlled at the end of, or
during, the year ended 30 June 2023. 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:
Current and former directorships in
the last 3 years¹:
Interests in shares:
Interests in performance rights:
Interests in Loan Funded Share
Robert Downey
Non-Executive Chairman
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.
Zeotech Ltd (appointed 18 October 2016)
Reach Resources Ltd (formerly Cervantes Corporation Ltd) (appointed 20
December 2021)
Askari Metals Ltd (appointed 20 November 2020)
Mt Malcom Mines NL (appointed 9 December 2020)
10,000,000 Fully Paid Ordinary Shares
Nil
Plan:
Nil
Name:
Title:
Experience and expertise:
Current and former directorships in
the last 3 years¹:
Interests in shares:
Interests in performance rights:
Interests
Plan:
in Loan Funded Share
Aaryn Nania
Managing Director & Chief Executive Officer
Prior to joining Connexion as Managing Director, Mr Nania was co-
founder of Lucerne Investment Partners, and remains a Director of the
Lucerne Composite Fund – an active, long-term investor in both listed
and unlisted companies globally. Prior to this, Mr Nania was a Portfolio
Manager at Canadian investment bank Canaccord Genuity (Australia)
where he founded and managed the Absolute Return Portfolio. Aaryn
has previously held directorships across a diverse range of public
companies, both listed and unlisted.
Aaryn holds a Bachelor of Commerce from the University of Melbourne.
Pureprofile Ltd (appointed 28 August 2019 - resigned 2 September 2020)
28,500,000 Fully Paid Ordinary Shares
Nil
20,612,180
3
Directors’ Report (continued)
Directors (continued)
Name:
Title:
Experience and expertise:
Connexion Telematics Ltd
Greg Ross
Non-Executive Director
Mr Ross is currently an Investor and Advisor for several Connected Car
businesses, working as an independent consultant and as Connected Car
Practice Lead for the industry’s premier automotive consultancy,
motormindz LLC. Mr Ross is widely considered an expert in the
Connected Car industry, and the activation of this technology through
new and innovative business models. Greg’s experience is founded on a
31-year career with General Motors, where he built and managed an
extensive, multi-million-dollar global portfolio of strategic alliances for
GM’s Connected Car business, including Wireless Carriers, Satellite Radio
Broadcasters, Insurance Carriers, Streaming Music Providers, Fleet
Management companies, Car Rental companies, Car Sharing services,
App Developers, and many others.
Greg was also instrumental in the growth and scaling of GM’s OnStar
business. Prior to his work in Connected Car, Greg’s General Motors
in Corporate Strategy, Product
career
Development, Product Marketing, and Retail Network Development.
Greg holds a Master’s Degree in Business Administration and a
Bachelor’s Degree in Economics from the University of Michigan.
leadership roles
included
Current and former directorships in
the last 3 years¹:
Interests in shares:
Interests in performance rights:
Interests
Plan:
in Loan Funded Share
Name:
Title:
Experience and expertise:
Nil
2,704,600 Fully Paid Ordinary Shares
Nil
Nil
Simon Scalzo
Non-Executive Director
Mr Scalzo has extensive experience both locally and in the USA market,
founding multiple successful software businesses in the Automotive
sector amongst other related industry verticals. Locally, Mr Scalzo’s
experience extends to founding Evoke Autopay, he then merged this
business into Openpay Ltd where he led the group as CEO. Mr Scalzo was
also a director of Credit Clear Ltd, where he led the group as Managing
Director. Mr Scalzo holds several director roles across many different
technology businesses, including Remitter.com, CarsFast.com, and
advisory chairman of TurboPass.com. Prior to this, Mr Scalzo was a
Partner & Board member at BDO Australia, leading BDO’s national retail
advisory practice, specialising in the retail and automotive industries.
Current and former directorships in
the last 3 years¹:
Interests in shares:
Interests in performance rights:
Interests
Plan:
in Loan Funded Share
Nil
2,038,235 Fully Paid Ordinary Shares
Nil
Nil
¹
Directorships only include directorships held for ASX listed companies in the 3 years immediately before
the end of the financial year.
4
Connexion Telematics Ltd
Directors’ Report (continued)
Company Secretary
Mr Ben Stanyer resigned as Company Secretary effective 21 October 2022, but remains Chief Financial Officer.
Ms Elizabeth Spooner was appointed as the Company Secretary on 21 October 2022. Ms Spooner is an admitted
lawyer and Company Secretary who works at Automic Group. Ms Spooner holds a Juris Doctor degree from the
Australian National University, a Bachelor of Business Administration with Bachelor of Arts and a Graduate
Diploma of Applied Corporate Governance from the Governance Institute.
Elizabeth Spooner is an experienced governance and compliance professional who works closely with a number
of boards of both listed and unlisted public companies including 1st Group Limited (ASX: 1st), Beforepay Group
Limited (ASX: B4P), BluGlass Limited (ASX: BLG), BPH Global Ltd (ASX: BP8), EDU Holdings Ltd (ASX: EDU),
Tinybeans Group Ltd (ASX: TNY) and Mendonca Investors Limited.
Principal activities
The principal activities of the entities within the Group during the year were the development and
commercialisation of its fleet management software for the automotive industry.
Review of operations
Group overview
Connexion Telematics continued to provide its Software as a Service (SaaS) solutions, the OnTRAC and
Connexion platforms, for General Motors’ (“GM”) Courtesy Transportation Program and Cadillac’s Courtesy
Transportation Alternative, hereafter referred to collectively as “CTP”.
In addition to the delivery of SaaS to GM and its US dealerships, Connexion invested significantly in its Team and
Product throughout FY23 in accordance with its corporate strategy presented to Shareholders at the most recent
AGM in November 2022. Connexion’s accounting treatment dictates that virtually all of this discretionary
investment in intangibles is expensed (“written off”) as it is made.
Strategy
The overarching strategy being executed can be described as “Come for the tool, stay for the network”.
Connexion’s “tool” is its telemetry-enabled mobility platform that streamlines fleet & rental management at
franchised automotive dealerships.
Connexion’s “network” is framed on one side by its Distribution Network of ~22% of all franchised light vehicle
dealerships in the US. Beyond its value as a B2B consumer of technology, this network holds a material supply
of assets in the form of vehicles (upon which Connexion has direct visibility), real-estate, and knowledgeable
personnel, that are available to transact with the demand side of the equation, in the form of consumers (of
both vehicle sales, rentals and subscriptions), and other 3rd party hardware, software and service partners.
When playing this long game, the “tool” is like the kindling. It is first the distribution and stickiness of the tool
that is critical, rather than early (or, in some cases, any) optimisation of its profitability. There is typically room
for optimisation later, particularly if the product generates revenue for its User, as is intended with the
Company’s long-term ambition of being a critical “Connexion” between Dealers and Consumers.
In many industries, it is common for software companies to price their “tool” as a loss-leader or, in some cases,
even distribute it for free to rapidly build a valuable network. Connexion is fortunate to already be profitable
based on its initial “tool”.
5
Connexion Telematics Ltd
Directors’ Report (continued)
Review of operations (continued)
Strategy (continued)
It is in this context that we have previously described Connexion as benefitting from two main drivers of value:
•
•
Economic Value (OEM Sales Strategy and Dealership Sales Strategy)
Strategic Value (building and commercialising the strategic value of our OEM and Dealership Networks)
Connexion’s Economic Value grows over time through the successful execution of its “Embed, Integrate,
Generate” operating model, as applied to its core mobility platforms, OnTRAC and Connexion.
The ongoing delivery of the Connexion platform to franchise dealers underpins Connexion’s sales strategy,
further growing Economic Value.
The impending launch in FY24 of Connexion’s Marketplace, populated by Commercial Partnerships, will be key
to commercialising Connexion’s Strategic Value. Connexion is in the early stages of commercialising partnerships
with complementary automotive software vendors, notably providers of solutions for DMS, toll management,
shuttle management and privacy management. There is no guarantee that any level of success will be achieved,
although the observed opportunity set amongst automotive software vendors in general is large.
Operations
The Team performed strongly throughout FY23, achieving much with modest staffing resourcing. Notable
achievements include but are not limited to:
Significant team expansion with minimal productivity disruption
Significant feature enhancements to both core platforms
Identification, scoping and development commencement of new products
•
• Navigating the global challenges of severe wage inflation ahead of budget, and with zero staff turnover
•
•
• A significant contract expansion with GM’s CTP team, including operational execution thereof
• Progress expanding elsewhere within the GM ecosystem
• Onboarding Connexion’s first non-GM dealership customers, albeit well below internal targets
Further 3rd party software vendor API work
•
•
Increased direct-to-dealership outreach and engagement
• Achieving multiple record quarterly gross and net profit results
Executing meaningful share buybacks at attractive prices
•
Whilst the shortest section of this report by word count, Operations is the fundamental driver of value for the
Connexion, and where most of Management’s focus is placed. Naturally, it is also the part of the Company
subject to the most commercial sensitivity. Further detail on the achievements listed above is found in the
various FY23 Quarterly Updates.
Capital Allocation
Long-term Shareholder value is a function of:
1.
2.
Operational performance
Capital allocation
6
Connexion Telematics Ltd
Directors’ Report (continued)
Review of operations (continued)
Capital Allocation (continued)
Too often, the latter is glossed over, at best, despite being critical to long-term wealth creation. And this is
especially common in the modern era of “VC-styled” technology companies with a tendency to overweight
narrative-validating metrics over more traditional capital allocation sense-checks.
Another misconception is that these are mutually exclusive disciplines, i.e. that if a company is buying back
shares, then its Management is twiddling its thumbs. This is likely not true for many companies, and certainly
not true at Connexion. Connexion’s Team spends virtually all its time on its operations, as we have consistently
and meaningfully grown our investment in Team and Product since the onset of COVID-19, and believe this is
already contributing well to our growth in underlying profitability.
However, this “return on investment” typically takes time for any business, which is why we are careful not to
attribute these positive results too quickly to our recent growth expenditure. Whilst everything is indeed
pointing to our GP growth deriving from our investment initiatives, it is simply too early for us to have a genuinely
reliable signal that would allow us to confidently deploy large amounts of Shareholder capital. History is littered
with companies ramping too eagerly based on false signals, and subsequently destroying Shareholder capital.
So, for now, we continue to self-impose a “growth spend budget” of that amount which, when fully expensed,
takes us down to a roughly neutral P&L.
With a strong balance sheet relative to both its market capitalisation and operational size, Connexion undertook
the following capital allocation initiatives during FY23:
Investment into Team and Product
The Company continued to invest meaningfully in its human capital, including securing numerous technical hires
mandated specifically to improve and expand Connexion’s product capabilities. Naturally, and as foreshadowed
by Management for some time, the Company’s investment in human capital will continue to impact its
profitability in the near term as it pursues what is a material long-term growth opportunity in the US. Generally
speaking, the amount of capital allocated to these “growth” initiatives is such that the Company’s Net Profit
Before Tax (“NPBT”) remains close to “neutral” (i.e. nil) for the foreseeable future, until a more reliable return-
on-investment signal can be generated. Critically, a favourable return must be earned on this expenditure, as
measured by sustainable changes in Gross Profit, for the discretionary part of the budget to increase.
Shareholders are encouraged to read the commentary regarding the flywheel effect discussed in various FY22
Quarterly Updates.
Listed Equity Strategy
During the financial year, the Company continued to execute its Listed Equity Strategy, comprising a Loan Funded
Share Plan (“LFSP”) and an On-market Share Buyback (“Buyback”).
The LFSP is material in size and designed to attract, retain and align the Team over the long-term which, for any
software company, is a core driver of value. Employee loyalty is a challenge within the software industry, and
the LFSP is just one within a suite of initiatives employed to combat this. Connexion experienced zero voluntary
staff turnover during FY23.
7
Connexion Telematics Ltd
Directors’ Report (continued)
Review of operations (continued)
Capital Allocation (continued)
Listed Equity Strategy (continued)
The Buybacks are intended to first offset any resulting dilution from the LFSP at a sensible price, and then further
permanently improve the Company’s Earnings Per Share via a material reduction in the number of shares on
issue. The tool is not used as a signal, but with the genuine desire to purchase in volume at the prevailing price.
It is also worth noting that picking what would otherwise be the absolute “bottom” of a share price very rarely
results in meaningful volume being traded at that price. Often it is better to be roughly right than precisely
wrong. The ongoing implementation of the Buyback initiative will continually consider Connexion’s existing and
anticipated profitability as measured by Gross Profit, the strength of its balance sheet, and the pricing of its
shares on the ASX. Importantly, the execution of any Buyback should not jeopardise the Company’s growth
strategy. Whilst the two are certainly not mutually exclusive, the Company commits to prioritising capital
deployment within its operations ahead of any Buyback, as required. Shareholders are encouraged to read the
commentary found in both the original Listed Equity Strategy announcement released on 8th June 2022 and the
June 2022 Quarterly Update.
Financial Performance
Connexion’s financial performance in FY23 was driven by the following key trends:
1. Revenue growth from larger vehicle inventories
2. Revenue growth from Connexion subscriptions
3. Revenue growth from feature-enhancement delivery
4. Expenditure growth from reinvestment into our Team and Products
Taking the above into account, Connexion delivered improved profitability throughout FY23, with a Net Profit
Before Tax of $2,596,220, versus a Net Profit Before Tax of $410,017 for FY22.
Total revenues from ordinary activities for the financial year were $6,629,284, a 74% increase in revenue
reported for the year ended 30 June 2022 of $3,810,852. Consolidated net assets have increased from
$5,264,188 as at 30 June 2023 to $3,915,266 as at 30 June 2022.
Gross Profit in FY23 of $5,349,640, being a 98% increase on the prior year’s Gross Profit of $2,706,421. This can
primarily be attributed to the key trends listed above. Other income totals $549,364 for the financial year, an
increase of 2,050%, due to an R&D Tax incentive refund and the realised gain on the investment in financial
assets, details can be found in note 11. Corporate and administrative expenses total $1,425,128 for the financial
year, an increase of 32%. Sales and marketing expenses total $696,704 for the financial year, an increase of 73%.
Research and development expenses total $1,143,293 for the financial year, an increase of 58%. Research and
development includes internal allocation of operational employee’s salaries and wages, as well as external
resources when working on new products and feature enhancements.
The Company incurred a negative impact to its Net Profit Before Tax of $190,428 due to an adverse movement
in the AUD/USD currency pair during the year. Specifically, this consists of a revaluation of assets, being mostly
AUD cash. Shareholders should note, however, that as a USD earner with a meaningful AUD cost base,
Connexion’s ongoing operating profitability is improved by a weaker AUD. By contrast, the immediate balance
sheet revaluation is an offsetting “one-off”.
8
Connexion Telematics Ltd
Directors’ Report (continued)
Review of operations (continued)
Financial Performance (continued)
Consistent with the prior period, the Company minimised the extent to which volatility in the AUD/USD impacted
earnings by taking the following steps:
1.
Implementing a natural hedge of currency-matching assets and operating expenditure to the extent of
available free cash (i.e. converting excess cash into AUD).
2.
Implementing a natural hedge of shifting AUD-denominated supply contracts into USD, where possible.
3. Maintaining the presentational currency of the Company as USD. From a commercial perspective,
Connexion is a US-facing organisation and should be analysed as such.
Whilst currency movements will always impact the Company so long as it transacts in multiple currencies, the
steps taken above have minimised the Company’s FX sensitivity, and will continue to do so without the cost,
complexity and execution risk of implementing synthetic hedges.
The high effective tax rate is attributable to Connexion’s non-deductible expenses, primarily relating to the Share
Based payment expenses, and adjustments recognised in relation to prior years’ tax calculations relating to an
R&D tax incentive. Due to the Group’s current year accounting profit as at 30 June 2023, the carried forward tax
losses portion of the Deferred Tax Asset has been fully utilised, and there is now an income tax expense and
income tax liability as at 30 June 2023. The minor balance of Deferred Tax Asset in the balance sheet relates to
taxable timing differences between assets and liabilities.
Business Risk
Connexion relies on one major customer, which represents approximately 99% of the Company's total revenue
for the year ended 30 June 2023. A loss of, or significant reduction from this customer would have a material
adverse effect on the Company's financial condition, results of operations, and cash flows.
This concentration of business with a single customer exposes the Company to significant risks. Economic,
business, regulatory, or other factors affecting this customer could have a direct impact on the Company's
revenue and profitability. Furthermore, any disagreements or difficulties in our relationship with this customer,
a change in the customer's business focus, financial condition, or a decision by this customer to reduce or
terminate its relationship with the Company, could significantly reduce our revenue.
Corporate
From a reporting perspective, the Company will continue to voluntarily publish Quarterly Updates to keep
Shareholders regularly informed of its progress. Shareholders are encouraged to careful examine these reports
and contact Management directly for any further clarification.
In recent years, Connexion has developed a consistent track record of tightly managing, and delivering
satisfactory returns on, invested capital. This ethos will not change. The Company’s progress remains consistent
with the multi-year plan first presented at the 2021 AGM.
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.
9
Connexion Telematics Ltd
Directors’ Report (continued)
Significant events after balance date
Other than matters already disclosed elsewhere in this Report, no matter or circumstance has arisen since 30
June 2023 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.
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 Directors held numerous meetings and discussions on an ongoing and regular basis. The conclusions of such
meetings are recorded via circular resolutions of the Board. The number of meetings of Directors held and the
number of meetings attended by each Director were as follows:
Director
Robert Downey
Aaryn Nania
Greg Ross
Simon Scalzo
Board meetings
Eligible
7
7
7
7
Attended
7
7
7
7
Interests in the shares, options, performance rights and convertible notes of the Company and related bodies
corporate
2023
Robert Downey
Aaryn Nania
Greg Ross
Simon Scalzo
2022
Robert Downey
Aaryn Nania
Greg Ross
Simon Scalzo
Peter Torre ¹
Fully paid ordinary
shares
Number
10,000,000
28,500,000
2,704,600
2,038,235
Fully paid ordinary
shares
Number
10,000,000
10,000,000
-
1,038,235
3,001,000
Performance rights
Number
Loan Funded Share Plan
Number
-
-
-
-
-
20,612,180
-
-
Performance rights
Number
Loan Funded Share Plan
Number
-
4,000,000
-
-
-
-
-
-
-
-
¹ Mr Torre resigned as a Director on 17 November 2021.
Shares issued during or since the end of the year as a result of exercise of an option
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.
10
Connexion Telematics Ltd
Directors’ Report (continued)
Unissued shares under option
As at the date of this report there are 28,277,657 unissued ordinary shares of the Company under option
pursuant to the US Equity Option Plan. Further details can be found in note 16 to the Financial Statements.
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 2023
and is included on pages 13 to 19.
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 23 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 (including Independence Standards)
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 20 and forms part of this Directors’ report for the year ended 30 June 2023.
11
Connexion Telematics Ltd
Directors’ Report (continued)
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.
Performance Rights Plan
The Performance Rights Plan (“PRP”), detailed in note 16 to the financial statements, had three of four vesting
conditions met for year 2 being during the year ended 30 June 2023. The amount of performance rights eligible
to Key Management Personnel and staff for year 2 totalled 11,525,000. During the year, of the year 2 total,
7,025,000 performance right shares were exercised, with the remaining 4,500,000 exercisable as at 30 June
2023. During the year, combining year 1 and year two, 14,325,000 performance right shares were exercised.
Employee Share Scheme
The Company established an Employee Share Scheme (“ESS”), detailed in note 16 to the financial statements,
which was approved by shareholders at the Company’s AGM, held on 17 November 2022. This ESS includes a
Loan Funded Share Plan for Australian based participants and the US Equity Option Plan for participants based
in the USA. During the period to 30 June 2023 119,133,454 loan shares were issued to Key Management
Personnel and staff pursuant to the Loan Funded Share Plan (LFSP) and none exercised under the US Equity
Option Plan. No shares have vested to date under this ESS under both schemes.
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 fourth edition of the Corporate
Governance Principles and Recommendations which 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 2023 is dated as at 17 August
2023 and was approved by the Board on the same day. The Corporate Governance Statement was announced
by the Company on 17 August 2023 and is also available on the Company’s website.
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
Aaryn Nania
Managing Director and Chief Executive Officer
Sydney, 17 August 2023
12
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.
13
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 participation in any Company incentive schemes is subject to shareholder approval in
accordance with the Corporation Act 2001 and the ASX Listing Rules.
ASX listing rules require the aggregate Non-Executive Directors remuneration be determined periodically by a
general meeting. The current aggregate remuneration limit is A$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 offer a long-term incentive plan to its Key Management Personnel during the year via the Loan
Funded Shares scheme. The Company did not offer a short incentive plan to its Directors and Key Management
Personnel during the 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 key criteria. The remaining portion of the cash bonus
and incentive payments are at the discretion of the Board. A cash bonus of U$123,750 was paid at the discretion
of the Board during the period ending 30 June 2023.
The Board is of the opinion that the continued positive results can be attributed in part to the adoption of
performance-based compensation and is satisfied that this improvement will continue to increase shareholder
wealth if maintained over the coming years.
All amounts are presented in US Dollars unless specified.
The Groups performance and share price over the past five periods are as follows:
Year
Revenue US$
Profit after tax US$
EPS US$
Share Price A$
30 June 2019
2,542,765
333,317
0.04
0.013
30 June 2020
5,494,018
2,161,374
0.25
0.015
30 June 2021
4,420,883
510,118
0.06
0.015
30 June 2022
3,810,852
145,156
0.02
0.010
30 June 2023
6,629,284
1,762,912
0.19
0.020
14
Connexion Telematics Ltd
Remuneration Report (continued)
Voting and comments made at the Company's 2022 Annual General Meeting ('AGM')
At the 2022 AGM, 96.92% of the votes received supported the adoption of the remuneration report for the year
ended 30 June 2022. The Company did not receive any specific feedback at the AGM regarding its remuneration
practices.
Details of remuneration
2023
Short-term benefits
Cash salary
and fees
US$
Cash bonus
US$
Non-
monetary
US$
Non-Executive
Directors:
Robert Downey
Greg Ross¹
Simon Scalzo¹
Executive Directors
and other KMP:
Aaryn Nania
Ben Stanyer
24,472
28,000
28,000
-
-
-
129,124
122,609
23,963
-
Total
332,205
23,963
-
-
-
-
-
-
Post-
employment
benefits
Super-
annuation
US$
Long-term
benefits
Long
service
leave
US$
Share- based
payments
Equity-settled
US$
Total
US$
2,570
-
-
-
-
-
-
-
-
27,042
28,000
28,000
16,654
12,238
1,289
1,212
67,268
24,012
238,297
160,071
31,462
2,501
91,280
481,410
¹ Mr Ross and Mr Scalzo are contracted Non-Executive Directors and are not entitled to Superannuation.
Post-
employment
benefits
Super-
annuation
US$
Long-term
benefits
Long
service
leave
US$
Share- based
payments
Equity-settled
US$
Total
US$
2,166
-
-
909
14,443
4,661
22,179
-
-
-
-
-
-
-
-
23,830
24,000
24,000
9,996
550
358
908
58,931
-
227,616
55,467
58,931
364,909
2022
Short-term benefits
Cash salary
and fees
US$
Cash bonus
US$
Non-
monetary
US$
Non-Executive
Directors:
Robert Downey
Greg Ross
Simon Scalzo
Peter Torre
Executive Directors
and other KMP:
Aaryn Nania
Ben Stanyer
Total
21,664
24,000
24,000
9,087
153,692
50,448
282,891
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
Connexion Telematics Ltd
Remuneration Report (continued)
Details of remuneration (continued)
The proportion of remuneration linked to performance and the fixed proportion are as follows:
2023
Non-Executive
Directors:
Robert Downey
Greg Ross¹
Simon Scalzo¹
Executive Directors
and other KMP:
Aaryn Nania
Ben Stanyer
Service agreements
Fixed remuneration
At risk – STI
At risk - LTI
30 June 2023
30 June 2022
30 June 2023
30 June 2022
30 June 2023
30 June 2022
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
72%
85%
74%
100%
18%
-
26%
-
10%
15%
-
-
-
-
-
Mr Nania was a Non-Executive Director of the Company until 1 February 2021 and was appointed as Managing
Director and Chief Executive Officer on 2 February 2021. Mr Nania’s employment contract is Full-Time with a
three month notice period.
Annual salary: A$200,000 (excluding superannuation)
Mr Stanyer was the Financial Controller and Company Secretary until 28 February 2022 and was appointed as
Chief Financial Officer and Company Secretary on 1 March 2022. Mr Stanyer resigned as Company Secretary
effective 21 October 2022, but remains Chief Financial Officer. Mr Stanyer’s employment contract is Full-Time
with a three month notice period.
Annual salary: A$200,000 (excluding superannuation)
As approved by shareholders at the 2021 AGM, Mr Nania is entitled to receive performance rights under the
Employer’s Incentive Performance Rights Plan (“Performance Rights”). These have generated a vesting charge
for the current year.
The number of Performance Rights to be granted shall be based on the following table:
Year
Date
Ordinary Shares
1
30 September 2021
8,000,000 ¹
2
30 September 2022
8,000,000²
3
30 September 2023
8,000,000
¹ The Performance Rights Plan had a maximum 8,000,000 ordinary shares on issue. Only two of the four vesting
conditions below were met, resulting in only 4,000,000 ordinary shares available. All 4,000,000 were
exercised in the year ending 30 June 2023.
² The Performance Rights Plan had a maximum 8,000,000 ordinary shares on issue. Three of the four vesting
conditions below were met, resulting in only 6,000,000 ordinary shares available. All 6,000,000 were
exercised in the year ending 30 June 2023.
16
Connexion Telematics Ltd
Remuneration Report (continued)
Service agreements (continued)
The vesting condition for each tranche of Performance Rights shall be measured against the following
performance criteria, with a 25% weighting for each of the below:
i.
Renewal and subsequent maintenance of the GM OnTRAC contract of commercial terms equal to or
better than the Original Contract;
ii.
Signed commercial contract with a Non-GM OEM Client;
iii.
iv.
The Company achieving NPBT against Budget for the relevant just-concluded financial year, taking into
account uncontrollable items at the discretion of the Board; and
Upon the CXZ 30-day VWAP trading at or above the Performance Price in the six months preceding each
respective eligible vesting date. Performance Prices are as follows:
a. AUD$0.025 for a vesting date of 30 September 2021;
b. AUD$0.035 for a vesting date of 30 September 2022; and
c. AUD$0.045 for a vesting date of 30 September 2023.
No other Key Management Personnel have been granted Performance Rights.
Employee Share Scheme
At the 2022 Annual General Meeting (AGM), shareholders approved the establishment of an Employee Share
Scheme, specifically a Loan Funded Share Plan. This plan provides employees with the opportunity to receive
shares and a corresponding loan to fund the acquisition of those shares. These shares are considered to meet
the definition of AASB 2 Share Based Payments and have been measured and recognised during the year to 30
June 2023.
Mr. Nania and Mr. Stanyer were among the participants in the Loan Funded Share Plan, with their participation
separately approved by shareholders at the 2022 AGM.
Under the Plan, Mr. Nania was issued 20,612,180 fully paid ordinary shares, financed by a loan of A$200,000.
Similarly, Mr. Stanyer received 17,801,400 fully paid ordinary shares, backed by a loan of A$172,727.
These loans, provided for the express purpose of acquiring shares under the Loan Funded Share Plan, were
subject to several key terms and conditions, as outlined below:
i.
ii.
iii.
The loans are non-recourse, meaning they are secured solely by the shares issued under the Plan;
The loans are interest-free, providing Mr. Nania and Mr. Stanyer with a cost-effective means of
participating in the Plan;
The loans have a term of five years from the date of issue of the shares, subject to earlier repayment in
line with the terms of the Loan Funded Share Plan.
The implementation of this Plan illustrates our commitment to aligning the interests of our key management
personnel with those of our shareholders, ensuring that their efforts contribute directly to enhancing
shareholder value. We believe that this structure not only benefits our employees but also our shareholders,
creating a clear link between remuneration and company performance.
17
Connexion Telematics Ltd
Remuneration Report (continued)
Employee Share Scheme (continued)
The terms and conditions of the loan funded shares affecting remuneration of key management personnel in
this financial year or future reporting years are as follows:
Number of loan
funded shares
issued
Issue price
AUD$
Issue date
Vesting date
and exercisable
date
Expiry date
Fair value per
share at issue
date
AUD$
20,612,180
17,801,400
0.009703
0.009703
18 November 2022
7 July 2022
7 July 2027
7 July 2027
7 July 2028
7 July 2028
0.008940
0.010018
KMP
Aaryn Nania
Ben Stanyer
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 2023.
Options
There were no options issued, held or vested by Directors or Key Management Personnel during the year ended
30 June 2023.
Performance Rights
Details of Performance Rights issued to Directors or Key Management Personnel during the year ended 30 June
2023 and 30 June 2022 are detailed in the below table and the terms are described above.
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:
2023
Balance at 1
July 2022
Received as
part of
remuneration
Exercise of
performance
rights
Disposal as a
result of
resignation
Additions
Other
Disposals
Balance as at
30 June 2023
Directors
Robert Downey
Aaryn Nania
Greg Ross
Simon Scalzo
Other KMP
Ben Stanyer
10,000,000
10,000,000
-
1,038,235
-
20,612,180
-
-
-
10,000,000
-
-
-
8,500,000
2,704,600
1,000,000
-
17,801,400
-
2,290,000
-
-
-
-
-
-
-
-
-
-
10,000,000
49,112,180
2,704,600
2,038,235
20,091,400
2022
Balance at 1
July 2021
Received as
part of
remuneration
Exercise of
performance
rights
Disposal as a
result of
resignation
Additions
Other
Disposals
Balance as at
30 June 2022
Directors
Robert Downey
Aaryn Nania
Greg Ross
Simon Scalzo
Peter Torre
Other KMP
Ben Stanyer
10,000,000
10,000,000
-
1,038,235
3,001,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,001,000
-
-
-
-
-
-
-
10,000,000
10,000,000
-
1,038,235
-
-
-
-
-
-
-
-
18
Connexion Telematics Ltd
Remuneration Report (continued)
Additional disclosures relating to key management personnel (continued)
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:
2023
Balance at
1 July 2022
Received as
part of
remuneration
Exercise of
performance
rights
Additions
Forfeited as a
result of
resignation
Forfeited due
to vesting
condition not
met
Balance as at
30 June 2023
Directors
Robert Downey
Aaryn Nania
Greg Ross
Simon Scalzo
Other KMP
Ben Stanyer
2022
Directors
Robert Downey
Aaryn Nania
Greg Ross
Simon Scalzo
Peter Torre
Other KMP
Ben Stanyer
-
4,000,000
-
-
-
-
-
-
-
-
-
(10,000,000)
-
-
-
8,000,000
-
-
-
-
-
-
-
-
-
-
(2,000,000)
-
-
-
-
-
-
-
-
Balance at
1 July 2021
Received as
part of
remuneration
Exercise of
performance
rights
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Forfeited as a
result of
resignation
Forfeited due
to vesting
condition not
met
Balance as at
30 June 2022
-
-
-
-
-
-
-
(4,000,000)
-
-
-
-
4,000,000
-
-
-
-
-
Additions
-
8,000,000
-
-
-
-
This concludes the Remuneration Report, which has been audited.
19
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 2023 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
R. P. Burt
Director
Melbourne, 17 August 2023
Level 20, 181 William Street, Melbourne VIC 3000
+61 3 9824 8555
vic.info@williambuck.com
williambuck.com.au
William Buck is an association of firms, each trading under the name of William Buck
across Australia and New Zealand with affiliated offices worldwide.
Liability limited by a scheme approved under Professional Standards Legislation.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2023
Connexion Telematics Ltd
Revenue
Cost of Sales
Gross Profit
Other income
Expenses
Research and development expenses
Sales and marketing expenses
Corporate and administrative expenses
Depreciation and amortisation expenses
Profit before income tax
Income tax expense
Consolidated
2023
US$
2022
US$
Note
4
6,629,284
3,810,852
(1,279,644)
(1,104,431)
5,349,640
2,706,421
4
549,364
25,554
(1,143,293)
(696,704)
(1,425,128)
(37,659)
(723,502)
(402,299)
(1,080,538)
(115,619)
2,596,220
410,017
6
(833,308)
(264,861)
Profit after income tax for the year attributable to the owners of
Connexion Telematics Ltd
1,762,912
145,156
Other Comprehensive Income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Total comprehensive income attributable to the owners of
Connexion Telematics Ltd
Basic earnings per share
Diluted earnings per share
(190,428)
(237,199)
1,572,484
(92,043)
Cents
Cents
8
8
0.19
0.18
0.02
0.02
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
21
Consolidated Statement of Financial Position
As at 30 June 2023
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through profit or loss
Total current assets
Non-current assets
Plant and equipment
Capitalised development costs
Deferred tax asset
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Current Tax Liability
Employee benefits
Total current liabilities
Non-current liabilities
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Connexion Telematics Ltd
Consolidated
2023
US$
2022
US$
Note
9
10
11
12
6
13
6
641,843
2,634,549
2,811,183
6,087,575
1,178,098
963,681
1,493,754
3,635,533
1,092
31,649
46,015
78,756
3,990
68,661
439,597
512,248
6,166,331
4,147,781
310,962
433,451
143,337
887,750
122,711
-
88,387
211,098
14,393
14,393
21,417
21,417
902,143
232,515
5,264,188
3,915,266
14
15
11,202,610
(153,847)
(5,784,575)
5,264,188
11,526,721
(51,861)
(7,559,594)
3,915,266
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
22
Connexion Telematics Ltd
Consolidated Statement of Changes in Equity
For the year ended 30 June 2023
Share
based
payment
reserve
US$
Loan
Funded
Share Plan
Reserve
US$
Issued
Capital
US$
Consolidated
Foreign
currency
translation
reserve
US$
Accumulated
losses
US$
Total
equity
US$
Balance as at 1 July 2022
11,526,721
245,338
Profit for the year
Other comprehensive loss for the
year, net of income tax
Total comprehensive loss for the
year
-
-
-
-
-
-
-
-
-
-
(297,199)
(7,559,594)
3,915,266
-
1,762,912
1,762,912
(190,428)
-
(190,428)
(190,428)
1,762,912
1,572,484
Share based payments
Lapse of performance rights
Exercise of performance rights
On-market Share Buyback
Foreign Exchange translation cost
-
-
141,193
(465,304)
-
82,663
(12,107)
(141,193)
-
(11,594)
159,079
-
-
-
(988)
-
-
-
-
12,582
-
12,107
-
-
-
241,742
-
-
(465,304)
-
Balance as at 30 June 2023
11,202,610
163,107
158,091
(475,045)
(5,784,575)
5,264,188
Share
based
payment
reserve
US$
Loan
Funded
Share Plan
Reserve
US$
Issued
Capital
US$
Consolidated
Foreign
currency
translation
reserve
US$
Accumulated
losses
US$
Total
equity
US$
Balance as at 1 July 2021
11,586,366
68,072
Profit for the year
Other comprehensive loss for the
year, net of income tax
Total comprehensive loss for the
year
-
-
-
-
-
-
Share based payments
Lapse of performance rights
Exercise of performance rights
On-market Share Buyback
-
-
9,502
(69,147)
186,768
-
(9,502)
-
Balance as at 30 June 2022
11,526,721
245,338
-
-
-
-
-
-
-
-
-
(60,000)
(7,704,750)
3,889,688
-
145,156
145,156
(237,199)
-
(237,199)
(237,199)
145,156
(92,043)
-
-
-
-
-
-
-
-
186,768
-
-
(69,147)
(297,199)
(7,559,594)
3,915,266
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
23
Consolidated Statement of Cash Flows
For the year ended 30 June 2023
Connexion Telematics Ltd
Consolidated
2023
US$
2022
US$
Note
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Research & Development and other government incentives
Interest received
Income tax paid
Net cash inflow from operating activities
5,407,622
(4,291,000)
24,489
50
(2,874)
1,138,287
4,049,818
(3,439,175)
88,746
74
-
699,463
9
Cash flows from investing activities
Payments for plant and equipment
Payments for investment portfolio
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issues of shares, net of costs
Payments for Share Buyback
Net cash inflow from financing activities
-
(1,169,039)
(1,169,039)
-
(1,636,040)
(1,636,040)
-
(467,875)
(467,875)
-
(69,147)
(69,147)
Net increase in cash and cash equivalents
(498,627)
(1,005,724)
Cash and cash equivalents at the beginning of the financial year
Effect of exchange rates on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
1,178,098
(37,628)
641,843
2,330,463
(146,641)
1,178,098
9
The above statement of cash flows should be read in conjunction with the accompanying notes
24
Connexion Telematics Ltd
Notes to the Financial Statements
Note 1: Basis of preparation
(a) Basis of preparation and statement of compliance
These general-purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”) and the
Corporations Act 2001, as appropriate for-profit orientated entities. These financial statements also comply with
International Financial Reporting Standards as issued by the International Accounting Standards Board (“IASB”).
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. The
adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial
performance or position of the Group. Any new or amended Accounting Standards or Interpretations that are
not yet mandatory have not been early adopted.
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 during the year were the development and
commercialisation of its fleet management software for the automotive industry. Its registered office and
principal place of business is:
Level 3, 162 Collins Street
Melbourne
Victoria, 3000
Australia
The accounting policies applied by the Group in these consolidated Finance Statements are consistent with those
applied by the Group in the previous year. The financial statements are presented in US dollars, except where
otherwise indicated.
The financial report was authorised for issue on 17 August 2023.
(b) Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group as at 30 June 2023.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the
Group loses control of the subsidiary.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee. Specifically, the Group
controls an investee if and only if the Group has:
-
-
-
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of
the investee);
Exposure, or rights, to variable returns from its involvement with the investee; and
The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all
relevant facts and circumstances in assessing whether it has power over an investee, including:
-
-
-
The contractual arrangement with the other vote holders of the investee;
Rights arising from other contractual arrangements; and
The Group’s voting rights and potential voting rights.
25
Connexion Telematics Ltd
Notes to the Financial Statements
Note 1: Basis of preparation (continued)
(b) Basis of consolidation (continued)
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control. Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are included in the statement of comprehensive income from the date
the Group gains control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (“OCI”) are attributed to the equity holders
of the parent of the Group and to the non-controlling interests, even if this results in the non- controlling
interests having a deficit balance. When necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets
and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group
are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction. If the Group loses control over a subsidiary, it:
- De-recognises the assets (including goodwill) and liabilities of the subsidiary;
- De-recognises the carrying amount of any non-controlling interests;
- De-recognises the cumulative translation differences recorded in equity;
-
-
-
-
Recognises the fair value of the consideration received;
Recognises the fair value of any investment retained;
Recognises any surplus or deficit in profit or loss; and
Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained
earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or
liabilities.
(c) Foreign currency translation
The functional currency of Connexion Telematics Ltd and its Australian subsidiaries is Australian dollars. Each
entity in the Group determines its own functional currency and is transferred to the presentational currency of
US Dollars.
The Company has progressed in securing its position in the US market with majority of revenue received in US
Dollars. On this basis, the parent entity and all the subsidiaries have changed their presentation currency from
Australian Dollars to US Dollars, effective 1 July 2020.
Foreign currency transactions
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates
ruling at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss.
Translation to presentation currency
The assets and liabilities of entities with a functional currency different to presentation currency are translated
into US Dollars using the exchange rates at the reporting date. The revenues and expenses of these entities are
translated into US Dollars using the average exchange rates, which approximate the rates at the dates of the
transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive
income through the foreign currency translation reserve in equity.
The foreign currency translation reserve is recognised in profit or loss when the entity or net investment is
disposed of.
26
Connexion Telematics Ltd
Notes to the Financial Statements
Note 1: Basis of preparation (continued)
(c) Foreign currency translation (continued)
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.
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.
27
Connexion Telematics Ltd
Notes to the Financial Statements
Note 2: Significant accounting policies (continued)
(b) Other income and expenses
Interest income
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.
(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.
28
Connexion Telematics Ltd
Notes to the Financial Statements
Note 2: Significant accounting policies (continued)
(c) Income tax expense (continued)
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.
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.
29
Connexion Telematics Ltd
Notes to the Financial Statements
Note 2: Significant accounting policies (continued)
(d) 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.
(e) 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.
(f) 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.
(g) 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.
(h) Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowances for expected credit loss (“ECL”). Trade receivables are generally
due for settlement within 30 days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a
lifetime credit loss allowance. To measure the expected credit losses, trade receivables have been grouped
based on days overdue. As the Group only has one customer and has historically always received payment in full
no ECL has been recorded in this report.
30
Connexion Telematics Ltd
Notes to the Financial Statements
Note 2: Significant accounting policies (continued)
(h) Trade and other receivables (continued)
In relation to the financial assets carried at amortised cost, AASB 9 requires an expected credit loss model to be
applied. The expected credit loss model requires the Group to account for expected credit losses and changes
in those expected credit losses at each balance 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 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.
(i) 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.
(j) 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. There has been no
development costs capitalised during the financial year.
Impairment of non-financial assets
Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.
The Group conducts an annual internal review as to whether an indicator of impairment exists at each balance
date. External factors, such as changes in expected future processes, technology and economic conditions, are
also monitored to assess for indicators of impairment. If any indication of impairment exists, an estimate of the
asset’s recoverable amount is calculated.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. Recoverable amount is the higher of an asset’s fair value less costs to dispose or its value in use. Non-
financial assets other than goodwill that suffered impairment are tested for possible reversal of the impairment
whenever events or changes in circumstances indicate that the impairment may have reversed.
31
Connexion Telematics Ltd
Notes to the Financial Statements
Note 2: Significant accounting policies (continued)
(k) Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part
of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are
subsequently measured at either amortised cost or fair value depending on their classification. Classification is
determined based on both the business model within which such assets are held and the contractual cash flow
characteristics of the financial asset unless an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred
and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is
no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are
classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i)
held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making
a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value
movements are recognised in profit or loss.
(l) Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date; and assumes that the
transaction will take place either: in the principal market; or in the absence of a principal market, in the most
advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement
is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, are used, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
(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.
32
Connexion Telematics Ltd
Notes to the Financial Statements
Note 2: Significant accounting policies (continued)
(m) Trade and other payables (continued)
Employee leave benefits (continued)
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 balance
date, the loans or borrowings are classified as non-current.
(o) Finance costs
Finance costs are expensed in the year that they are incurred.
(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 are currently three plans in place to provide these benefits, being the Performance Rights
Plan (‘PRP’) and Employee Share Scheme (‘ESS’), which comprises of a Loan Funded Share Plan and US Equity
Option Plan. These plans in place provide benefits to Employees, 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 Hybrid 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.
33
Connexion Telematics Ltd
Notes to the Financial Statements
Note 2: Significant accounting policies (continued)
(p)
Share-based payments (continued)
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.
Note 3: 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 Hybrid model, using the assumptions detailed in Note 16.
34
Notes to the Financial Statements
Note 4: Revenue and other income
Revenue
Revenue from contracts with customers
Other income
Interest income
Governments grants – R&D refund
Government incentive – EMDG
Realised gain/(loss) on investment portfolio
Income net of taxes and fees on investment portfolio
Note 5: Expenses
Expenses include the following specific expenses:
Wages and salaries
Share based payments expense – performance rights
Loan Funded Share Plan expense
Superannuation expense
Note 6: Income tax expense
(a) Income tax expense
Current tax expense – Australia
Current tax expense – United States
Current tax expense
(b) Numerical reconciliation of income tax to prima facie tax
benefit
Profit from continuing operations before income tax
Tax at the Australian tax rate of 25% (2022: 25%)
Non-deductible expenses
R&D refundable rebate
Non-assessable income
Initial recognition of previously unrecognised deferred tax assets
Other deferred tax assets and tax liabilities not recognised
Tax expenditure of subsidiaries operating in different jurisdictions
Differences in tax rates of subsidiaries operating in different
jurisdictions
Adjustments recognised in the current year in relation to the
current tax of prior years
Current tax expense
35
Connexion Telematics Ltd
Consolidated
2023
US$
2022
US$
6,629,284
3,810,852
50
357,345
24,489
63,709
103,771
549,364
74
64,723
24,023
(91,828)
28,562
25,554
Consolidated
2023
US$
2022
US$
1,180,458
82,663
159,079
125,200
1,026,396
199,546
-
102,026
Consolidated
2023
US$
2022
US$
827,033
6,275
833,308
261,987
2,874
264,861
2,596,220
649,055
57,409
(89,336)
-
(12,635)
-
6,275
410,017
102,504
49,887
(16,181)
-
-
36,016
3,730
-
(2,450)
222,540
833,308
91,355
264,861
Notes to the Financial Statements
Note 6: Income tax expense (continued)
(c) Tax losses
Connexion Telematics Ltd
Consolidated
2023
US$
2022
US$
Tax losses for which a deferred tax asset has been recognised
Tax benefit at 25% (2022: 25%)
-
-
1,758,386
439,597
(d) Deferred tax asset
Deferred tax asset
(e) Current tax liability
Current tax liability
46,015
439,597
433,451
-
The deferred tax asset comprises of taxable timing differences of assets and liabilities.
Note 7: Segment reporting
Identification of reportable operating segments
During the year ended 30 June 2023 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 2023 99% of sales revenue was from one customer located in the USA
(2022: 100% revenue from one customer). All revenue is recorded over time for rendering of services.
Note 8: 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:
Consolidated
2023
0.19
0.18
2022
0.02
0.02
Consolidated
2023
US$
2022
US$
Earnings from continued operations used in the calculation of basic
earnings per share
1,762,912
145,156
36
Connexion Telematics Ltd
Notes to the Financial Statements
Note 8: Earnings per share (continued)
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
2023
Number
2022
Number
Weighted average number of ordinary shares for the purpose of
basic earnings per share
919,251,768 880,485,164
Shares deemed to be issued for no consideration in respect of:
• Performance shares (including US options plan)
43,252,862
43,945,972
Weighted average number of ordinary shares for the purpose of
diluted earnings per share
962,504,631 924,431,139
Note 9: 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
Consolidated
2023
US$
2022
US$
641,843
1,178,098
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.
37
Notes to the Financial Statements
Note 9: Cash and cash equivalents (continued)
Reconciliation of profit for the year to net cash flows from operating activities
Profit after income tax expense for the year
Non cash foreign exchange movement
Equity settled share-based payment
Depreciation and amortisation
Investment portfolio movement
Inventory write-off
(Increase) / decrease in assets:
Trade and other receivables
Deferred tax asset
Increase / (decrease) in liabilities:
Trade and other payables
Employee benefits
Tax Provisions
Net cash from operating activities
Note 10: Trade and other receivables
Trade receivables
Less: allowance for credit losses
Other receivables
Connexion Telematics Ltd
Consolidated
2023
US$
2022
US$
1,762,912
145,156
(128,888)
241,742
37,659
(167,480)
-
(17,829)
199,546
115,619
63,266
2,915
(1,670,868)
393,582
105,462
261,131
188,251
47,926
433,451
(202,123)
26,320
-
1,138,287
699,463
Consolidated
2023
US$
2022
US$
2,572,946
-
2,572,946
61,603
2,634,549
918,050
-
918,050
45,631
963,681
(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 17 includes disclosures relating to the credit risk exposures and analysis relating to the allowance for
expected credit losses.
38
Connexion Telematics Ltd
Notes to the Financial Statements
Note 10: Trade and other receivables (continued)
Aged receivables
The aging of trade receivables as at 30 June 2023 and 30 June 2022 is detailed in the table below:
Current
1 month
2 months
3 months
Older
Note 11: Financial assets at fair value through profit or loss
Current Assets
Investment in financial assets
Reconciliation
Reconciliation of the fair values at the beginning and end of the current
and previous financial periods are set out below:
Opening Fair value
Net additions
Net disposals
Revaluation taken to profit or loss
Net exchange difference on translation
Closing fair value
Consolidated
2023
US$
2022
US$
1,090,805
736,138
746,003
-
-
2,572,946
308,703
322,138
287,209
-
-
918,050
2023
US$
2022
US$
2,811,183
1,493,754
1,493,754
1,169,039
-
167,480
(19,090)
2,811,183
-
1,636,040
-
(142,286)
-
1,493,754
The revaluation taken to profit or loss number above of $167,480 is comprised of $63,709 realised gain of
investments and $103,771 of income net of taxes and fees. Refer to note 18 for further information on fair value
measurement.
39
Notes to the Financial Statements
Note 12: Capitalised development costs
Carrying value
Development asset – cost
Development asset – accumulated amortisation
Carrying value
Reconciliation
Cost
Opening balance as at 1 July
Additions
Removal of fully amortised Capital Development
Net exchange difference on translation
Closing balance as at 30 June
Amortisation
Opening balance as at 1 July
Amortisation charge
Removal of fully amortised Capital Development
Net exchange difference on translation
Closing balance as at 30 June
Connexion Telematics Ltd
Consolidated
2023
US$
2022
US$
500,938
(469,289)
31,649
519,762
(451,101)
68,661
519,762
-
-
(18,824)
500,938
451,101
34,879
-
(16,691)
469,289
563,732
-
-
(43,970)
519,762
375,882
110,299
-
(35,080)
451,101
Carrying value
31,649
68,661
Development costs are capitalised when it is probable that the project will be a success considering its
commercial and technical feasibility; the Group is able to use or sell the assets; the Group 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. During the financial
year, there were no development costs that were capitalised.
Note 13: Trade and other payables
Trade payables
Other payables
Consolidated
2023
US$
2022
US$
187,006
123,956
310,962
58,586
64,125
122,711
(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 20.
40
Notes to the Financial Statements
Note 14: Issued capital
Ordinary shares on issue
Ordinary shares issued and fully paid
Less: Treasury Shares
Movement in ordinary shares on issue
Date
Detail
Connexion Telematics Ltd
Consolidated
2023
US$
2022
US$
11,202,610
-
11,202,610
11,595,868
(69,147)
11,526,721
Number
Issue price
(cents)
US$
1 July 2021
Opening balance
880,165,112
11,586,366
8 December 2021
10 December 2021
11 April 2022
Conversion of performance rights
Conversion of performance rights
Conversion of performance rights
200,000
183,333
483,334
30 June 2022
Closing balance
26 August 2022
4 November 2022
21 November 2022
24 November 2022
24 November 2022
8 December 2022
23 December 2022
30 December 2022
1 March 2023
7 March 2023
13 April 2023
15 May 2023
16 June 2023
Conversion of performance rights
Conversion of performance rights
Cancellation of ordinary shares
Tranche A – Loan Shares
Tranche B – Loan Shares
Conversion of performance rights
Cancellation of ordinary shares
Tranche C – Loan Shares
Conversion of performance rights
Cancellation of ordinary shares
Conversion of performance rights
Cancellation of ordinary shares
Tranche E – Loan Shares
30 June 2023
Closing balance
881,031,779
3,000,000
10,000,000
(40,124,817)
80,268,575
20,612,180
750,000
(21,446,912)
9,475,248
300,000
(29,160)
275,000
(10,422,476)
8,777,451
942,466,868
0.011
0.011
0.011
0.010
0.010
0.007
-
-
0.010
0.007
-
0.010
0.007
0.010
0.012
-
2,150
1,974
5,378
11,595,868
31,068
96,671
(264,508)
-
-
7,612
(143,918)
-
3,044
(192)
2,798
(125,833)
-
11,202,610
41
Notes to the Financial Statements
Note 14: Issued capital (continued)
Movement in treasury shares on issue
Date
Detail
1 July 2021
Opening balance
Connexion Telematics Ltd
Issue price
(cents)
Number
-
US$
-
June 2022
Purchase of shares through
Treasury Reserve
(10,000,000)
0.007
(69,147)
30 June 2022
Closing balance
(10,000,000)
(69,147)
July 2022
August 2022
October 2022
November 2022
November 2022
December 2022
December 2022
March 2022
April 2022
May 2022
June 2022
Purchase of shares through
Treasury Reserve
Purchase of shares through
Unmarketable Parcel buyback
Purchase of shares through
Treasury Reserve
Purchase of shares through
Treasury Reserve
Cancellation of ordinary shares
Purchase of shares through
Treasury Reserve
Cancellation of ordinary shares
Cancellation of ordinary shares
Purchase of shares through
Treasury Reserve
Cancellation of ordinary shares
Net exchange difference on
translation
30 June 2023
Closing balance
(10,000,000)
0.007
(67,894)
(6,213,909)
0.007
(43,697)
(20,000,000)
0.006
(127,709)
(10,000,000)
40,124,817
(10,000,000)
21,446,912
29,160
(5,809,456)
10,422,476
-
-
0.007
0.007
0.007
0.007
0.007
0.016
0.012
(66,802)
264,508
(67,178)
143,918
192
(94,595)
125,833
2,571
-
Ordinary shares
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.
Treasury shares
Treasury shares are used to record the purchase of shares by the Company in the open market. The shares are
bought back on-market value. The account is recognised at purchase price.
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.
42
Connexion Telematics Ltd
Notes to the Financial Statements
Note 15: 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 the exchange differences arising from the translation
of entities with a functional currency other than USD.
Note 16: Share-based payment plans
Movement in performance rights
Date
Detail
1 July 2021
Opening balance
8 December 2021
10 December 2021
21 February 2022
11 April 2022
30 June 2022
Conversion of performance rights
Conversion of performance rights
Forfeiture of performance rights
Conversion of performance rights
Vesting charge of performance
rights
30 June 2022
Closing balance
26 August 2022
4 November 2022
21 February 2022
8 December 2022
1 March 2023
13 April 2023
30 June 2023
Conversion of performance rights
Conversion of performance rights
Forfeiture of performance rights
Conversion of performance rights
Conversion of performance rights
Conversion of performance rights
Vesting charge of performance
rights
Number
49,000,000
(200,000)
(183,333)
(10,099,999)
(483,334)
-
38,033,334
(3,000,000)
(10,000,000)
(3,841,667)
(750,000)
(300,000)
(275,000)
-
30 June 2023
Closing balance
19,866,667
Performance Rights Plan (“PRP”)
Fair value at
grants date
(cents)
0.011
0.011
0.011
0.010
0.010
0.010
0.010
0.010
US$
68,072
(2,150)
(1,974)
(25,635)
(5,378)
212,403
245,338
(31,068)
(96,671)
(12,107)
(7,612)
(3,044)
(2,798)
71,069
163,107
The Company established a PRP, which was approved by shareholders at the Company’s AGM, held on 25
November 2020. There are no new Performance Rights granted in the 2023 financial year.
As approved by shareholders, the Company has issued the following performance rights under the PRP:
•
•
25,000,000 performance rights to other Officers and Employees of the Company; and
24,000,000 performance rights to Aaryn Nania (or his nominee/s).
43
Connexion Telematics Ltd
Notes to the Financial Statements
Note 16: Share-based payment plans (continued)
Performance Rights Plan (“PRP”) (continued)
AASB 2 – Share based payments requires the Company to estimate the expected fair value of the performance
rights on issue date that will be recorded on the formal grant date. Upon formal grant date the Company will
perform a reassessment of the fair value of the performance rights with any subsequent difference being
recorded through the statement of profit or loss and other comprehensive income.
The above performance rights each convert into one (1) ordinary share for no consideration on exercise by the
holder once vested. The total number of Performance Rights to be granted shall be based on the following table:
Year
Date
Ordinary Shares
1
30 September 2021
16,333,334¹
2
30 September 2022
15,366,6662
3
30 September 2023
15,366,6663
¹ The Performance Rights Plan had a maximum 16,333,334 ordinary shares on issue. Only two of the four
vesting conditions below were met, resulting in only 8,166,667 ordinary shares available. All 8,166,667
performance rights have been converted to ordinary shares by 30 June 2023.
2 The Performance Rights Plan had a maximum 15,366,666 ordinary shares on issue, a decrease of 966,667
due to staff resignations. Three of the four vesting conditions below were met, resulting in only 11,525,000
ordinary shares available. 7,025,000 performance rights were converted to ordinary shares, while 4,500,000
remain exercisable as at 30 June 2023.
3 The maximum Performance Rights Plan for year 3 has decreased by 966,667 to 15,366,666 due to staff
resignations and no longer eligible for Performance Rights.
The vesting condition for each tranche of Performance Rights shall be measured against the following
performance criteria, with a 25% weighting for each of the below:
i.
Renewal and subsequent maintenance of the GM OnTRAC contract of commercial terms equal to or
better than the Original Contract;
ii.
Signed commercial contract with a Non-GM OEM Client;
iii.
iv.
The Company achieving NPBT against Budget for the relevant just-concluded financial year, taking into
account uncontrollable items at the discretion of the Board; and
Upon the CXZ 30-day VWAP trading at or above the Performance Price in the six months preceding each
respective eligible vesting date. Performance Prices are as follows:
a. AUD$0.025 for a vesting date of 30 September 2021;
b. AUD$0.035 for a vesting date of 30 September 2022; and
c. AUD$0.045 for a vesting date of 30 September 2023.
As at 30 June 2023, vesting conditions i, ii, and iii. were met for year two and the performance rights had vested.
The performance rights which were converted are detailed above in note 14, with 4,500,000 performance rights
eligible to be converted. Employees who resigned and had performance right options forfeited upon their
resignation; these amounts were included in the cessation of performance rights in note 14. The fair value of
each performance right was AUD 1.5 cents, being the share price on the day of issue. This value was confirmed
by an independent valuation.
44
Connexion Telematics Ltd
Notes to the Financial Statements
Note 16: Share-based payment plans (continued)
Employee Share Scheme (“ESS”)
The Company established an ESS, which was approved by shareholders at the Company’s AGM, held on 17
November 2022. This ESS includes a Loan Funded Share Plan for Australian based participants (see (a) below)
and the US Equity Option Plan for participants based in the USA (see (b) below).
(a) Movement in Loan Funded Share Plan shares
During the period 119,133,454 loan shares were issued to one executive and staff pursuant to the Loan Funded
Share Plan (LFSP). The loan shares have been valued by an independent expert as of issue date and have vesting
criteria based on achieving employment service periods. Details are as follows:
Date
Detail
1 July 2022
Opening balance
7 July 2022
18 November 2022
18 November 2022
18 November 2022
16 June 2023
Tranche A – Loan Shares
Tranche B – Loan Shares
Tranche C – Loan Shares
Tranche D – Option Shares
Tranche E – Loan Shares
Fair value per
share at issue
date
AUD$
0.010018
0.008940
0.009028
0.009028
0.017963
Number
-
80,268,575
20,612,180
9,475,248
28,277,657
8,777,451
30 June 2023
Closing balance
147,411,111
2023
US$
-
101,494
24,561
7,601
22,684
1,751
158,091
Tranche
Tranche A
Tranche B
Tranche C
Tranche E
Number of
loan shares
Service based vesting conditions
Fair value per
share at issue
date
AUD$
Total fair
value at
vesting date
AUD$
80,268,575
20,612,180
9,475,248
8,777,451
Vesting on 7 July 2027
Vesting on 7 July 2027
Vesting on 18 November 2027
Vesting 16 June 2028
0.010018
0.008940
0.009028
0.017963
804,130
184,273
85,543
157,669
1,231,615
Total
110,356,003
(b) Movement in US Equity Option Plan options
During the period 28,277,657 option shares were issued to staff pursuant to the US Equity Option Plan. This plan
is only offered to USA based staff, as they are ineligible for the LFSP. The shares have been valued by an
independent expert as of issue date and have vesting criteria based on achieving employment service periods.
Details are as follows.
45
Connexion Telematics Ltd
Notes to the Financial Statements
Note 16: Share-based payment plans (continued)
Movement in options (continued)
Number of
option shares
Service based vesting conditions
Fair value per
share at issue
date
AUD$
Total fair
value at
vesting date
AUD$
28,277,657
Vesting on 18 November 2027
0.009028
255,291
28,277,657
255,291
Tranche
Tranche D
Total
Expenses arising from share-based payments
Net charges arising from share-based payment transactions recognised during the period were US$241,742
(2022: US$186,768). The expenses were comprised of US$82,633 for PRP and US$159,079 for LFSP and the US
Equity Options Plan.
The valuation model inputs used by the independent valuer were as follows:
Tranche
Grant Date
Option
Expiry Date
Share price
at grant
date
(cents)
AUD$
Exercise
price
Marketability
discount
Expected
Volatility
Tranche A
Tranche B
Tranche C
Tranche D
Tranche E
07/07/2022 07/07/2028
18/11/2022 07/07/2028
18/11/2022 18/11/2028
18/11/2022 18/11/2028
16/06/2023 16/06/2029
0.011
0.010
0.010
0.010
0.010
0.009703
0.009703
0.0101
0.0101
0.020336
0.00%
0.00%
0.00%
0.00%
0.00%
132.41%
131.48%
131.48%
131.48%
129.12%
Risk-free
interest
rate
3.19%
3.43%
3.43%
3.43%
3.94%
The independent valuer assumed the dividend yield to be nil, due to no history of dividends paid to
shareholders.
Note 17: 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 the previous period.
The capital structure of the Group consists of cash and cash equivalents, borrowings (currently none) 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.
46
Connexion Telematics Ltd
Notes to the Financial Statements
Note 17: Financial instruments (continued)
Exposure to currency risk
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial
liabilities denominated in a currency that is not the entity's functional currency. The risk is measured using
sensitivity analysis and cash flow forecasting. The consolidated entity is most exposed to fluctuations in the USD
to AUD foreign exchange rate. Should this rate increase or decrease by 10% it would increase or decrease the
profit after tax for the year by $473,161.
The group’s exposure to foreign currency risk at the reporting date was as follows, based on notional amounts:
2023
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Balance sheet exposure
2022
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Balance sheet exposure
AUD
US$
544,841
2,634,549
(296,310)
2,883,080
AUD
US$
1,094,989
963,681
(118,031)
1,940,639
USD
US$
66,303
-
(14,652)
51,651
USD
US$
49,743
-
(4,680)
45,063
CAD
US$
30,699
-
-
30,699
CAD
US$
33,366
-
-
33,366
Total
641,843
2,634,549
(310,962)
2,965,430
Total
1,178,098
963,681
(122,711)
2,019,068
The following significant exchange rates (US$1.00) applied during the period.
Average rate
Year-end date spot rate
12 months ended
30 June 2023
1.4854
1.3395
12 months ended
30 June 2022
1.3789
1.2659
30 June
2023
1.5006
1.3235
30 June
2022
1.4462
1.2872
AUD
CAD
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 through the instruments above. The Group has reduced
its foreign exchange risk through initiatives mentioned in the Review of operations in the Directors Report.
47
Connexion Telematics Ltd
Notes to the Financial Statements
Note 17: Financial instruments (continued)
Interest rate risk
The Group is not exposed to any interest rate risk.
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.
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:
2023
Non-derivatives
Non-interest bearing
Trade and other payables
Total non-derivatives
2022
Non-derivatives
Non-interest bearing
Trade and other payables
Total non-derivatives
Weighted
average
interest
rate
%
Between
0 – 6
months
US$
Between
6 – 12
months
US$
Between
1 – 2
years
US$
Between
2 – 5
years
US$
Over
5
years
US$
Remaining
contractual
maturities
US$
0%
310,962
310,962
-
-
-
-
-
-
-
-
310,962
310,962
Weighted
average
interest
rate
%
Between
0 – 6
months
US$
Between
6 – 12
months
US$
Between
1 – 2
years
US$
Between
2 – 5
years
US$
Over
5
years
US$
Remaining
contractual
maturities
US$
0%
122,711
122,711
-
-
-
-
-
-
-
-
122,711
122,711
48
Connexion Telematics Ltd
Notes to the Financial Statements
Note 17: Financial instruments (continued)
Fair value measurements
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 2023 and 30 June 2022:
Assets
Cash and cash equivalents
Trade and other receivables
Investments
Total assets
Liabilities
Trade and other payables
Total liabilities
Note 18: Fair value measurement
Fair value hierarchy
Consolidated
2023
US$
2022
US$
641,843
2,634,549
2,811,183
6,087,575
1,178,098
963,681
1,493,754
3,635,533
310,962
310,962
122,711
122,711
The following tables detail the Group’s assets and liabilities, measured or disclosed at fair value, using a three-
level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access
at the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset of liability,
either directly or indirectly.
Level 3: Unobservable inputs for the asset of liability.
49
Connexion Telematics Ltd
Notes to the Financial Statements
Note 18: Fair value measurement (continued)
Fair value hierarchy (continued)
Consolidated – 30 June 2023
Assets
Listed ordinary shares
Unlisted ordinary shares
Total assets
Consolidated – 30 June 2022
Assets
Listed ordinary shares
Unlisted ordinary shares
Total assets
Level 1
$
Level 2
$
Level 3
$
Total
$
2,811,183
-
2,811,183
-
-
-
-
-
-
2,811,183
-
2,811,183
Level 1
$
Level 2
$
Level 3
$
Total
$
1,493,754
-
1,493,754
-
-
-
-
-
-
1,493,754
-
1,493,754
There were no transfers between levels during the financial period.
The carrying amounts of trade and other receivables, trade and other payables and other financial liabilities
approximate their fair values due to their short-term nature.
Note 19: Contingent liabilities and assets
The Group has no contingent liabilities and assets as at 30 June 2023 (2022: nil).
Note 20: 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”):
•
•
•
•
•
Robert Downey
Aaryn Nania
Greg Ross
Simon Scalzo
Ben Stanyer
50
Connexion Telematics Ltd
Notes to the Financial Statements
Note 20: Related party disclosure (continued)
Transactions with KMP
The aggregate compensation made to Directors and other KMP of the Group is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Other transactions with KMP
Consolidated
2023
US$
2022
US$
356,167
31,462
2,501
91,280
481,410
282,891
22,179
908
58,931
364,909
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 US$682 excluding GST (2022: $399
excluding GST), based on normal market rates and no amounts remained unpaid at the balance date.
There were no loans to/from related parties during the current or previous reporting period.
Note 21: Interest in subsidiaries
Connexion Telematics Ltd is the ultimate Australian parent entity and ultimate parent of the Group. The
consolidated financial statements incorporate the assets, liabilities and results of the following wholly owned
subsidiaries in accordance with the accounting policy described in Note 1:
Ownership interest
Entity name
Country of incorporation
Flexvs Pty Ltd
miRoamer Pty Ltd
Connexion Media Inc
Connexion LLC
1125816 B.C. Ltd
CXZ Mexico
Australia
Australia
United States of America
United States of America
Canada
Mexico
Note 22: Parent entity disclosures
Statement of profit or loss and other comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
51
2023
%
100
100
100
100
100
100
2022
%
100
100
100
100
100
100
Consolidated
2023
US$
2022
US$
3,185,411
(190,428)
2,994,983
1,060,973
(375,493)
685,480
Notes to the Financial Statements
Note 22: 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
2023
US$
2022
US$
5,990,573
1,529,222
(439,647)
(14,393)
7,065,755
3,552,424
1,221,672
(206,418)
(21,417)
4,546,261
11,202,610
163,107
(4,299,962)
7,065,755
11,595,868
245,338
(7,294,945)
4,546,261
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 2023 and 30 June
2022.
Contingent liabilities of the parent entity
As at 30 June 2023 Connexion Telematics Ltd has no contingent liabilities (2022: nil).
Note 23: 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 non-assurance services, including taxation
Total auditor’s remuneration
Note 24: Significant events after balance date
Consolidated
2023
US$
2022
US$
29,907
30,107
23,859
53,766
4,534
34,641
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.
52
Connexion Telematics Ltd
Directors’ Declaration
In the Directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Australian
Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board as described in Note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial
position as at 30 June 2023 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act
2001.
On behalf of the directors
Aaryn Nania
Managing Director and Chief Executive Officer
Sydney, 17 August 2023
53
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 at 30 June 2023, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies and 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 2023 and of its financial
performance for the year ended on that date; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Level 20, 181 William Street, Melbourne VIC 3000
+61 3 9824 8555
vic.info@williambuck.com
williambuck.com.au
William Buck is an association of firms, each trading under the name of William Buck
across Australia and New Zealand with affiliated offices worldwide.
Liability limited by a scheme approved under Professional Standards Legislation.
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.
RECOGNITION OF REVENUE AND RECOGNITION OF RECEIVABLES
Area of focus
Refer also to note 4
The Company has service agreements with its
customers. These service contracts have invoicing
and payment milestones included within their
terms, which may or may not be directly aligned
with the performance of services under the
contract in accordance with AASB 15 Revenue
from Contracts with Customers (‘AASB 15’).
Revenue has significantly grown in the current
financial year due to the increased volume of
transactions with its key customer. The Company’s
revenue stream has a tailored revenue recognition
model to account for revenue in accordance with
AASB 15.
This area is a key audit matter as revenue
requires:
— Applying judgement to when the performance
milestone is achieved in respect of the
contracted performance obligations;
— The significance of revenue to the Group’s
financial results; and
— Level of subjectivity involved in determining the
satisfaction of the performance obligations over
time or at a point in time.
How our audit addressed it
Our audit procedures included:
— Determining whether revenue recognised is in-
compliance with the Company’s accounting
policies for all material sources of revenue and
is in accordance with AASB 15;
— Examining and verifying a sample of contract
agreements for the achievement of performance
milestones relevant to key customer contracts;
— Examining a sample of customer contracts to
support the existence and completeness of
revenue in the period recognised by agreeing to
contract, invoices and subsequent receipts from
customers
— Performing detailed cut-off testing to assess
revenue transactions at the year-end had been
recorded in the correct financial period; and
— Examining a sample of aged trade debtors for
evidence of collectability and/or for disputes with
the services provided.
We also assessed the appropriateness of financial
statement disclosures at note 4 with respect to the
requirements of AASB 15.
ACCOUNTING FOR SHARE BASED PAYMENT ARRANGEMENTS
Area of focus
Refer also to note 16
During the year, the Company issued loan funded
shares and employee options to Key Management
Personnel and employees.
How our audit addressed it
Our audit procedures included:
— Assessing the nature of the loan funded share
arrangements and employee share awards with
respect to meeting the requirements of AASB 2;
The loan funded shares and employee share
options were assessed by management to meet
the definition of AASB 2 Share Based Payments
and included non-market vesting criteria, including
service (employment) conditions.
— Agreeing the material terms and conditions of
the new share-based payment arrangements to
plan documentation;
— Assessing the appropriateness of the
determination of the grant date for each share
based payment issued;
ACCOUNTING FOR SHARE BASED PAYMENT ARRANGEMENTS
Area of focus
Refer also to note 16
The valuation of loan funded shares and employee
share options required significant judgement and
expertise, particularly in determining the likelihood
of achieving the non-market-based conditions and
satisfying all vesting conditions.
— Examining the appropriateness of the
amortisation model for accreting share-based
payment expense to the profit or loss over the
vesting period;
— Assessing support for likely outcome of vesting
How our audit addressed it
The Group engaged an independent specialist to
appraise the fair value of the share-based payment
arrangements and recognised the vesting charge
apportioned over the service condition.
This area was considered a Key Audit Matter due
to the complexity of arrangements and judgements
applied in valuing the share-based payment
instruments issued.
Other Information
conditions used to measure share-based
payments; and
— Assessed the competence and qualification of
management’s independent specialist.
We also assessed the adequacy of financial
statement disclosures in note 16 in relation to the
loan funded share options in the Remuneration
Report and notes to the financial report.
The directors are responsible for the other information. The other information comprises the information in
the Group’s annual report for the year ended 30 June 2023 but does not include the financial report and the
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report, or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted
in accordance with the Australian Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of this financial report.
A further description of our responsibilities for the audit of these financial statements is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our 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
2023.
In our opinion, the Remuneration Report of Connexion Telematics Ltd, for the year ended 30 June 2023,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
William Buck Audit (Vic) Pty Ltd
ABN 59 116 151 136
R. P. Burt
Director
Melbourne, 17 August 2023
Connexion Telematics Ltd
Shareholder Information
The shareholder information set out below was applicable as at 11 August 2023.
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
%
83,122,546
57,112,180
47,000,000
42,312,136
39,709,625
31,118,256
28,277,657
28,071,453
25,000,000
20,091,400
20,000,000
16,455,057
16,200,000
14,159,700
14,000,000
13,257,595
12,198,517
12,000,000
11,321,500
11,254,250
8.39%
5.77%
4.74%
4.27%
4.01%
3.14%
2.85%
2.83%
2.52%
2.03%
2.02%
1.66%
1.64%
1.43%
1.41%
1.34%
1.23%
1.21%
1.14%
1.14%
542,661,872
990,611,193
54.78%
H&G HIGH CONVICTION LIMITED
1
SECOND LAGOON PTY LTD
2
GRAHAM NEWMAN PTY LTD
3
4 WESTFERRY OPERATIONS PTY LTD
5
6
7
8
9 MR NICHOLAS MICHAEL KEPHALA & MRS VIRGINIA LOUISE WALLACE
10
EMIRENE PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
ANTHONY VIGILETTI
BNP PARIBAS NOMINEES PTY LTD
BEN STANYER
SPRING HARVEST PTE LTD
DR DAVID GEORGE M WELSH
11
12 MR ROBERT CAMERON GALBRAITH
13 MR GREGORY PETER WILSON
14 MR DOUG MCPHEE
15
16 MR JIING KUEH
17 MR TAN CHING KHOON
KASSETT PTY LTD
18
PMDD SUPER PTY LTD
19
SHIH KANG THEN
20
Total Securities of Top 20 Holdings
Total of Securities
58
Connexion Telematics Ltd
Shareholder Information (continued)
Distribution of equity securities
Analysis of number of equity security holders by size of holding:
Number of
holders
of ordinary
shares
Total units
of ordinary
shares
% Issued of
Share Capital
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
Distribution of Option holders
Analysis of number of equity Option holders by size of holding:
32
13
8
335
625
1,013
5,801
32,764
60,658
22,742,287
967,769,683
990,611,193
>0.01%
>0.01%
0.01%
2.30%
97.69%
100%
64
Number of
holders
of ordinary
shares
Total units
of ordinary
shares
% Issued of
Share Capital
-
-
-
-
1
1
-
-
-
-
28,277,657
28,277,657
0.00%
0.00%
0.00%
0.00%
100%
100%
Number of
holders
Number on
issue
1
28,277,657
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Unquoted Securities
Options
Substantial holders
The following three shareholders are considered substantial holders in the Company based on their holding
and interest in other holdings.
Holder
H&G HIGH CONVICTION LIMITED
GRAHAM NEWMAN PTY LTD
SECOND LAGOON PTY LTD
Shares
% IC
83,122,546
72,000,000
57,112,180
8.39%
7.27%
5.77%
59
Connexion Telematics Ltd
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.
On-market buy-back
The Company is currently conducting an on-market buy-back.
60