K-TIG Limited and Its Controlled Entities
ABN 28 158 307 549
Consolidated Annual Report - 30 June 2023
K-TIG Limited and Its Controlled Entities
Corporate Directory
For the year ended 30 June 2023
Directorships as at the date of this
report
Stuart Carmichael, Non-Executive Chairman
Adrian Smith, Managing Director
Syed Basar Shueb, Non-Executive Director
Anthony McIntosh, Non-Executive Director
Darryl Abotomey, Non-Executive Director
Company secretary
Brett Tucker
Registered office
Principal place of business
Ground Floor
16 Ord Street
West Perth WA 6005
Building 5
9 William Street
Mile End SA 5031
Phone: (08) 7324 6800
Share registry
Auditor
Solicitors
Principal Bankers
Automic Group
Level 5, 191 St Georges Terrace
Perth WA 6000
BDO Audit Pty Ltd
BDO Centre
Level 7, 420 King William Street
Adelaide SA 5000
Hamilton Locke
Level 27, 152-158 St Georges Terrace
Perth WA 6000
Westpac Banking Corporation
275 Kent Street
Sydney NSW 2000
Stock exchange listing
K-TIG Limited shares are listed on the Australian Securities Exchange
(ASX code: KTG)
Website
www.k-tig.com
K-TIG Limited and Its Controlled Entities
Contents
Review of Operations
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
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3
17
18
19
20
21
22
52
53
56
K-TIG Limited and Its Controlled Entities
Review of Operations
For the year ended 30 June 2023
Overview
K-TIG is a transformative, industry-disrupting welding technology that seeks to change the economics of fabrication. K-
TIG’s high-speed precision welding technology welds up to 100 times faster than traditional TIG welding, achieving full
penetration in a single pass in materials up to 16mm in thickness and typically operates at twice the speed of plasma
welding.
K-TIG works across a wide range of applications and is particularly well suited to corrosion-resistant materials such as
stainless steel, nickel alloys, titanium alloys, carbon steels, and most exotic materials. It easily handles longitudinal and
circumferential welds on pipes, spooling, vessels, tanks and other materials in a single pass.
Originally developed by the CSIRO, K-TIG owns all rights, title and interest in and to the proprietary and patented
technology and has been awarded Australian Industrial Product of the Year and the DTC Defence Industry Award.
The group recorded $3.10m of revenue for the current year (2022: $3.8m). The reduction in revenue was mainly
attributable to customers delaying their commitment to purchases due to their uncertainty of the economic situation
arising from higher interest rates and the slowing down of economies across major markets.
Loss from ordinary activities for the Group after providing for income tax to $6.4m (2022: $6.0m). The increase in loss is
mainly attributable to lower revenue and gross margin, acquisition and recompliance costs associated with the Graham’s
Engineering Limited acquisition, amounting to $1.7m and continued significant investment in several strategic areas
focused on defence, nuclear, USA and UK and higher costs for travel and general expenses.
Net operating expenses (acquisition and recompliance costs) of $6.8m for the current year (2022: $8.4m) were lower by
20% year on year.
K-TIG continues working with Defence Primes and Nuclear to demonstrate the advantages of Keyhole TIG welding to
their applications. In addition, K-TIG continues to invest in R&D to expand the range of metals that can be used utilising
the K-TIG technology.
2
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2023
The Directors present their report, together with the financial statements, on K-TIG Limited (“K-TIG” or “Company”) and its
controlled entities (“consolidated group”) for the ended 30 June 2023.
Directors
The following persons were directors of K-TIG Limited during the financial year and up to the date of this report unless
otherwise stated:
Stuart Carmichael
Syed Basar Shueb
Adrian Smith
Anthony McIntosh
Darryl Abotomey
Principal activities
K-TIG is a transformative, industry-disrupting welding technology that is changing the economics of fabrication with its
proprietary high-speed precision welding technology.
Dividends
No dividends were declared or paid out during the financial year (30 June 2022: Nil).
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the consolidated group during the financial year.
Review of operations
Refer to the Review of Operations in the preceding section.
Matters subsequent to the end of the financial year
As per the ASX announcement dated 1 September 2023, the share purchase agreement “SPA” to acquire Graham
Engineering Limited “GEL” has reached its sunset date 31 August 2023 with a number of conditions precedent not yet
satisfied.
Challenging capital market conditions caused by underlying macro and geopolitical events have made the completion of
the transaction within the sunset date extremely difficult.
Notwithstanding the above, at this point in time, K-TIG remains committed to completing the SPA, and, subject to the
intentions of GEL, is willing to negotiate in good faith variations to the SPA to allow this to occur. In the event that a
variation cannot be agreed, either party may terminate the SPA.
The Company is currently exploring a number of funding options in order to complete the transaction, as such the
Company advises the supplementary prospectus dated 21 July 2023 will be withdrawn. The Company intends to lodge the
relevant supplementary (withdrawal) prospectus with ASIC and the ASX shortly.
Likely developments and expected results of operations
The Company continues to build an extensive sales pipeline in key growth markets, including the United States, United
Kingdom and Europe.
Environmental regulation
The consolidated group is not subject to any significant environmental regulation under Australian Commonwealth or State
law.
3
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2023
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Stuart Carmichael
Non-Executive Chairman (Appointed 30 June 2017)
B Com, C.A (Aust)
Mr Carmichael has extensive international corporate advisory, mergers and
acquisitions, and operational experience. Mr Carmichael held various senior
executive leadership positions with UGL, DTZ, AJG and KPMG Corporate
Finance. Mr Carmichael has extensive corporate and operational experience
across multiple geographies, having lived and worked in the US, UK, Europe,
the Middle East and Australia.
Mr Carmichael’s sector experience includes the construction, transportation
and logistics, facilities management, corporate real estate and professional
services sectors. Mr Carmichael graduated from the University of Western
Australia with a Bachelor of Commerce degree, majoring in Accounting and
Finance and is a qualified Chartered Accountant.
Other current directorships:
Non-Executive Director of De.mem Limited (ASX:DEM)
Non-Executive Director of Orexplore Technologies Limited (ASX:OXT)
Former directorships (last 3
years):
Non-Executive Director of Osteopore Limited (ASX:OSX) - October 2021
Non-Executive Director of Swick Mining Services Limited (ASX:SWK)- February
2022
Non-Executive Chairman of Schrole Limited (ASX:SCL) - May 2022
Non-Executive Director of ClearVue Technologies Limited (ASX:CPV) – June
2023
Non-Executive Director of Harvest Technology Group Limited (ASX:HTG) –
October 2022
Name:
Title:
Qualifications:
Experience and expertise:
Syed Basar Shueb
Non-Executive Director (Appointed 30 September 2019)
Bachelor of Science in Computer Engineering
Mr Shueb is the General Manager of the Pal Group of Companies, a subsidiary of the
Abu Dhabi-based Royal Group, chaired by His Highness Sheikh Tahnoon Bin Zayed
Al Nahyan, and is the Chairman of Royal Falcon Mining LLC. Mr Shueb has extensive
experience in the process, manufacturing, fabrication, construction and service
industries.
-
Other current directorships:
Former directorships (last 3 years): -
4
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2023
Name:
Title:
Qualifications:
Experience and expertise:
Adrian Smith
Managing Director (Appointed 1 November 2020)
Executive Director (Appointed 28 July 2020 – 1 November 2020)
Non-executive Director (Appointed 20 February 2020 - 28 July 2020)
B.E. (Hons), B.SC. MBA, FAICD
Mr Smith has both large public company and private SME board experience and has
demonstrated history of growing innovative, business-to-business companies in both
Managing Director and Chief Executive Officer roles.
Skilled at working with technology and business entrepreneurs to transition
companies from small start-ups into sustainable enterprises, Mr Smith brings a strong
focus on managing people and relationships to deliver exceptional performance.
Mr Smith has previously had the role of Managing Director of Rheinmetall Defence
Australia Pty Ltd. Previously, Mr Smith was the founder and Chief Executive Officer
of Sydac, a simulation and training business. Sydac was founded in 1988 and
culminated in becoming the world’s #2 supplier of railway training systems with a staff
of 135 and offices in Australia, Europe and India before negotiating an exit with
German multi-national Knorr-Bremse GmbH.
Non-Executive Director UniSA Ventures
Other current directorships:
Former directorships (last 3 years): -
Name:
Title:
Qualifications:
Experience and expertise:
Anthony McIntosh
Non-Executive Director (Appointed 23 June 2020)
B Com, GAICD
Mr McIntosh has extensive experience in investment marketing, investor relations and
strategic planning, with a focus on small caps, as well as a strong and well-established
network of stockbroking and investment fund manager.
Mr McIntosh is a graduate of the Australian Institute Company Director course and
Bond University with a Bachelor of Commerce degree majoring in marketing.
Other current directorships:
Non-Executive Director of Strategic Energy Resources Limited (ASX:SER)
Non-Executive Director of Copper Strike Resources Limited (ASX:CSE)
Non-Executive Director of Koonenberry Gold Limited (ASX:KNB)
Former directorships (last 3 years): Non-Executive Director of Echo Resources Limited (ASX: EAR) – November 2019
Non-Executive Director of Alice Queen Limited (ASX:AQX) – May 2022
Name:
Title:
Qualifications:
Experience and expertise:
Trish White
Non-Executive Director (Appointed 1 December 2021 to 7 August 2023)
AM BE BA DUniv (hc)(Adel) HonFIEAust FAICD
Ms White is a professional director and advisor who brings substantial board-level
experience in strategy, business development, major project and risk management.
Ms White has a unique set of skills and capabilities formed over a career which
spanned roles in broadcasting, defence science, national infrastructure projects,
senior cabinet minister executive in the resources and energy sector and non-
executive directorships.
Ms White is currently Non-Executive Director of Flinders Port Holdings Pty Ltd, Non-
Executive Director of Office of National Rail Safety Regulator and is a former Chair
and National President of Engineers Australia. She has held directorships in the
manufacturing, insurance and education sectors and was a senior cabinet minister in
the South Australian Government with portfolios of Transport and Infrastructure,
Urban Development and Planning, Science and Information Economy and Education.
-
Other current directorships:
Former directorships (last 3 years): -
5
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2023
Name:
Title:
Qualifications:
Experience and expertise:
David Acton
Non-Executive Director (Appointed 1 December 2021 to 31 December 2022)
Bachelor of Business, CFA
Mr Acton has extensive international equity capital markets experience with long-
standing relationships with institutional investors both in Australia and internationally.
Mr Acton has been a Senior Advisor at Rothschild Australia with a focus on Equity
capital markets since 2017. Prior to 2017, Mr Acton spent 25 years at global
investment banks with roles in equity research, distribution and capital markets.
Between 2000 and 2016, Mr Acton worked at Goldman Sachs in New York, Singapore
and Sydney as an equity specialist advising institutional investors. From 2006 to 2016
Mr Acton was a partner at Goldman Sachs JBWere and a Managing Director at
Goldman Sachs where he held board and risk committee roles.
Other current directorships:
Former directorships (last 3 years): FirstWave Cloud Technology Limited (ASX: FCT) – June 2021
-
Name:
Title:
Qualifications:
Experience and expertise:
Darryl Abotomey
Non-Executive Director (Appointed 4 April 2022)
B.Com, FCPA, MAICD
Mr Abotomey brings over 40 years of executive leadership and financial expertise
having held Board and executive leadership roles across manufacturing, global paper
and packaging distribution and automotive aftermarket industries.
Mr Abotomey was most recently Chief Executive Officer and Managing Director of
Bapcor Limited, Asia Pacific’s leading provider of vehicle parts, accessories,
equipment, service and solutions, where during his 10 years in that role he was
instrumental to the successful growth and expansion of the business in line with its
strategic growth plan.
Between 2006 and 2010, Mr Abotomey served as CFO/COO and Director of the
Board of Exego Group Pty Limited (Repco) and as an independent director of CPI
Group Ltd.
From 2000, Mr Abotomey served as a Board Director and CFO of Paperlinx Limited,
where he led the due diligence, funding and settlement negotiations for international
acquisitions. He successfully transitioned the business involving multi-country legal,
financial, statutory, business culture, cultural, tax and insurance issues.
During his time at Amcor, Mr Abotomey was CFO of Sunclipse Inc, a subsidiary of
Amcor based in the USA and held roles of regional and group general manager at
Amcor Fibre Packaging and Amcor Printing Papers Group in Australia, where he was
responsible for international trade, including logistics and supply chain. Mr Abotomey
also gained extensive experience in strategy, business restructuring, information
technology and product launching.
Other current directorships:
Former directorships (last 3 years): Bapcor Limited (ASX: BAP) – November 2011 to December 2021
Adrad Limited (ASX: AHL)
Tye Soon Limited (SGX: BFU) May 2021 to December 2021
6
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2023
Interests in the securities of the group
Director
Stuart Carmichael
Syed Basar Shueb
Adrian Smith
Anthony McIntosh
Darryl Abotomey
Trish White (5)
David Acton (6)
Ordinary
Shares (1)
Options (2)
Performance
Rights (3)
70,176
1,011,262
1,040,000
504,286
-
57,143
-
2,682,867
148,000
72,000
72,000
72,000
-
-
-
364,000
600,000
600,000
-
600,000
-
-
-
1,800,000
Long Term
Incentive (4)
-
-
800,000
-
-
-
-
800,000
(1) Ordinary shares are fully paid
(2) Unlisted options exercisable at $0.30 per option, expiring 30 Sep 2023
(3) Performance rights per director, 200,000 class A, 200,000 class B and 200,000 class C
(4) Vesting long-term incentive shares
(5) Resigned as a Director on 07 August 2023
(6) Resigned as a Director on 31 December 2022
Other current directorships quoted above are current directorships for listed entities only and exclude directorships of all other
types of entities unless otherwise stated. Former directorships (last 3 years)' quoted above are directorships held in the last 3
years for listed entities only and excludes directorships of all other types of entities unless otherwise stated.
Company secretary
Brett Tucker (Appointed 5 January 2017)
Mr. Tucker has acted as Company Secretary to several ASX listed and private companies and has been involved in numerous
public corporate acquisitions and transactions. Mr. Tucker is a Chartered Accountant with a strong corporate and compliance
background gained from experience in an international accounting practice, working in audit and taxation across a wide
range of industries.
Deborah Ho (Appointed 31 January 2019 and resigned 10 May 2023)
Ms. Ho has over seven years of experience in company secretarial, corporate compliance and financial accounting matters.
She has acted as Company Secretary and financial accountant for several publicly listed Australian companies and gained
audit experience from her time with international accounting practices. She holds a Bachelor of Commerce from Curtin
University and is an Associate Member of the Governance Institute of Australia.
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') and each Board committee held during the year
ended 30 June 2023, and the number of meetings attended by each director was:
Name
Stuart Carmichael
Syed Basar Shueb
Adrian Smith
Anthony McIntosh
Darryl Abotomey
Trish White (2)
David Acton (3)
Board Meeting
Held
15
15
15
15
15
15
7
Attended
15
-
14
14
14
14
7
Audit & Risk Committee (1)
Attended
-
-
-
-
-
-
-
Held
-
-
-
-
-
-
-
(1) These are conducted by the Board as a whole as part of board meetings
(2) Resigned as a Director on 07 August 2023
(3) Resigned as a Director on 31 December 2022
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated group, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons with authority and responsibility for planning, directing and controlling the
entity's activities, directly or indirectly, including all directors.
7
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2023
Remuneration report audited (continued)
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 information
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The Board is responsible for determining and reviewing directors and senior executives compensation arrangements. The
Board assesses the appropriateness of the nature and amount of emoluments of such officers yearly by reference to relevant
employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a
high-quality board and executive team. The expected outcome of this remuneration structure is to retain and motivate the
Directors and Senior Executives.
The board has adopted a formal Remuneration Committee Charter and Remuneration Policy as part of its Corporate
Governance Policies and Procedures. Currently, the entire Board performs the function of the Remuneration Committee.
However, given that the consolidated group remains at an early stage of development, the Board’s overall approach to
compensation remains subject to change. Accordingly, it will continue to evolve as the consolidated group grows and develops
its business.
In accordance with best practice corporate governance, the structure of non-executive director and executive
director/managing director remuneration is separate.
Non-executive directors’ remuneration
The Constitution provides that the remuneration of non-executive Directors will not be more than the aggregate fixed sum
determined by a general meeting of shareholders. The remuneration of executive Directors will be set by the Directors and
may be paid by way of a fixed salary or consultancy fee.
Fees and payments to non-executive Directors reflect the demands which are made on, and the responsibilities of, the
Directors. Non-executive Directors’ fees and payments are reviewed annually by the Board. Non-executive Directors do not
receive performance-based pay.
The maximum aggregate amount which has been approved to be paid to non-executive Directors is currently set at
A$500,000 per annum.
Executive directors
Executive Directors are not entitled to receive any additional compensation, including employee options, in their capacity as
Directors.
Chairman’s fees
The chairman’s fees are determined independently of the fees of non-executive Directors based on comparative roles in the
external market.
Additional fees
A Director may also be paid fees or other amounts as the Directors determine if a Director performs special duties or
otherwise performs services outside the scope of the ordinary duties of a Director. A Director may also be reimbursed for
out-of-pocket expenses incurred as a result of their directorship or any special duties.
Retirement allowances for directors
Superannuation contributions required under the Australian Superannuation Guarantee Legislation continue to be made and
are deducted from the Directors’ overall fee entitlements where applicable.
8
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2023
Remuneration report audited (continued)
Executive remuneration
Compensation objectives
Pursuant to the Remuneration Policy, the consolidated group’s compensation policies and practices are designed to:
(a) align executive remuneration with shareholder interests;
(b) retain, motivate and reward appropriately qualified executive talent for the benefit of the consolidated group;
(c)
(d)
(e)
to achieve a level of remuneration that reflects the competitive market in which the consolidated group operates;
to ensure that individual remuneration is linked to performance criteria if appropriate; and
to ensure that executives are rewarded for both financial and non-financial performance.
The Board aims to satisfy these objectives by adopting a compensation program for executive officers that combines base
remuneration, which is market-related, with performance-based remuneration, which is determined annually. All market
comparisons reflect an informal assessment and are based on the Board’s knowledge and experience in executive
compensation matters. The Company retained no remuneration consultant in determining the remuneration of any of the
KMP.
Overall remuneration decisions are subject to the discretion of the Board. They can be changed to reflect competitive and
business conditions in the consolidated group's and shareholders' interests to do so. Executive remuneration and other terms
of employment are reviewed annually by the Board regarding the performance and relevant comparative information.
Compensation components
In accordance with the remuneration policy, the compensation currently consists primarily of three elements: base salary,
cash bonus and long-term equity incentives. Each element of compensation is described in more detail below.
Base salary
A primary element of the Company’s compensation program is base salary. The Company believes a competitive base salary
is necessary to attract and retain qualified executive officers. Accordingly, the amount payable to an executive officer is
determined based on the scope of their responsibilities and prior experience while considering an informal evaluation of
competitive market compensation for similar positions and overall market demand for such executives at the time of hire.
Base salaries are reviewed annually and increased for merit reasons, based on the executive officer’s success in meeting
or exceeding Company and individual objectives. Additionally, base salaries can be adjusted as warranted throughout the
year to reflect promotions or other changes in the scope or breadth of the executive officer’s role or responsibilities and
market competitiveness.
Cash bonus plan
Remuneration for certain individuals is directly linked to the performance of the consolidated group. A portion of a cash bonus
and incentive payments are dependent on defined milestones being met. In addition, ad hoc cash bonuses may be paid from
time to time if deemed appropriate by the Board, based on the attainment of particular objectives.
Long-term equity incentives
Equity-based awards are a variable element of compensation that allows executive officers to be rewarded for their sustained
contributions to the consolidated group. Equity awards reward continued employment by an executive officer, with an
associated benefit to K-TIG of attracting employees, continuity and retention. Executives may participate in share,
performance rights and option schemes generally made in accordance with thresholds set in plans approved by shareholders
if deemed appropriate. However, the Board considers it appropriate to retain the flexibility to issue shares, performance rights
and options to executives outside of approved schemes in exceptional circumstances.
Voting and comments made at the Company's 2022 Annual General Meeting ('AGM')
At the 2022 AGM, 99.17% 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
Details of the consolidated group's remuneration of key management personnel are set out in the following tables.
The value of remuneration received or receivable by key management personnel for the consolidated group for the
financial year is as follows:
9
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2023
Remuneration report audited (continued)
2023
Stuart Carmichael
Syed Basar Shueb
Adrian Smith
Anthony McIntosh
Darryl Abotomey
Trish White (2)
David Acton (3)
Salary & Fees Cash Bonus (1)
Other Fees
Super-
annuation
Equity-Settled
Options
85,000
60,000
350,000
60,000
60,000
60,000
30,000
705,000
-
-
262,500
-
-
-
-
262,500
-
-
-
-
-
-
-
-
8,925
6,300
36,896
6,300
6,300
6,300
3,150
74,171
10,699
10,699
255,713
10,699
-
-
-
287,810
Total
104,624
76,999
905,109
76,999
66,300
66,300
33,150
1,329,481
(1) Cash bonus related to mutually agreed revenue and operational KPI’s being met at a maximum of 75% of base salary per Executive Services
Agreement as approved by shareholders
(2) Appointed 1 December 2021, resigned 7 August 2023
(3) Appointed 1 December 2021, resigned 31 December 2022
(4) No fees have been paid to Syed Basar Shueb but have been accrued. Since December 2022, all fees have not been paid but have been accrued
2022
Stuart Carmichael
Syed Basar Shueb
Mark Twycross
Adrian Smith
Anthony McIntosh
Trish White
David Acton
Darryl Abotomey
Salary & Fees Cash Bonus
-
-
-
262,500
-
-
-
-
262,500
74,583
49,583
17,500
350,000
49,583
35,000
35,000
15,000
626,249
Other Fees
Super-
annuation
Equity-Settled
Options
-
-
-
-
-
-
-
-
-
7,458
4,958
(831)
35,000
4,958
3,500
3,500
1,500
60,043
61,207
61,207
61,207
493,118
61,207
-
-
-
737,946
Total
143,248
115,748
77,876
1,140,618
115,748
38,500
38,500
16,500
1,686,738
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Stuart Carmichael
Syed Basar Shueb
Adrian Smith
Anthony McIntosh
Darryl Abotomey
Trish White
David Acton
Fixed Remuneration
2023
2022
57%
90%
47%
86%
34%
43%
47%
86%
100%
100%
100%
100%
100%
100%
At Risk - STI
At Risk - LTI
2023
-
-
29%
-
-
-
-
2022
-
-
23%
-
-
-
-
2023
10%
14%
28%
14%
-
-
-
2022
43%
53%
43%
53%
-
-
-
Cash bonuses are dependent on meeting defined performance measures. Adrian Smith is entitled to an STI cash bonus of
up to 75% of base salary (excluding super) payable each anniversary (01 November) subject to the satisfaction of mutually
agreed revenue and operational KPI’s. The Board has approved the maximum 75% of base salary payable, and the bonus
is accrued evenly up to 30 June 2023 on this basis. The bonus is payable on the anniversary of the commencement of
employment as Managing Director.
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details
of these agreements are as follows:
10
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2023
Remuneration report audited (continued)
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Adrian Smith
Managing Director (from 1 November 2020)
1 November 2020 (as an amendment to the existing Executive Services Agreement)
Until 1 November 2023 (1 month written notice)
Base salary of $29,166.67 per month plus superannuation
Cash bonus of up to 75% of base salary (excluding superannuation) subject to the
satisfaction of mutually agreed KPI’s
Grant of 1,800,000 after consolidated conversion (1 to 2.5 basis) long-term incentive
shares to be issued at subsequent anniversary dates of commencement of employment
in the new role
The Board will conduct a review of the terms annually
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
No ordinary shares were issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2023.
Performance rights
The terms and conditions of each grant of performance rights over ordinary shares affecting the remuneration of directors
and other key management personnel in this financial year or future reporting years are as follows:
Name
Number of
Performance
Rights
Granted
Consoliated
Conversion
(1to 2.5 basis)
Revised
Number of
Performance
Rights
Granted
Grant Date Milestone
Expiry Date
Date
Exercise
Price
Fair Value per
Performance
Right at Grant
Date
Stuart Carmichael
27/11/2020
22/12/2025
- Class A
- Class B
- Class C
Syed Shueb
- Class A
- Class B
- Class C
Anthony McIntosh
- Class A
- Class B
- Class C
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
(300,000)
(300,000)
(300,000)
-
(300,000)
(300,000)
(300,000)
(300,000)
(300,000)
(300,000)
200,000
200,000
200,000
-
200,000
200,000
200,000
200,000
200,000
200,000
Before 1 Apr 2021
Before 1 Oct 2021
Before 1 Oct 2022
27/11/2020
22/12/2025
Before 1 Apr 2021
Before 1 Oct 2021
Before 1 Oct 2022
27/11/2020
22/12/2025
Before 1 Apr 2021
Before 1 Oct 2021
Before 1 Oct 2022
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$0.0995
$0.1252
$0.1563
$0.0995
$0.1252
$0.1563
$0.0995
$0.1252
$0.1563
The Performance rights have the following milestones attached to them and are subject to the milestone dates set out below:
a) Tranche 1 (Class A): 600,000 performance rights will vest when the Company achieves a volume-weighted average
price (“VWAP”) of at least $0.35 over any twenty consecutive trading day period before 1 April 2021;
b) Tranche 2 (Class B): 600,000 performance rights will vest when the Company achieves a VWAP of at least $0.50 over
c)
any twenty consecutive trading day period before 1 October 2021; and
(Tranche 3 (Class C): 600,000 performance rights will vest when the Company achieves a VWAP of at least $0.75 over
any twenty consecutive trading day period before 1 October 2022.
Performance rights granted carry no dividend or voting rights. All performance rights were granted over unissued fully paid
ordinary shares in the Company. Performance rights vest based on the vesting period, whereby the executive becomes
beneficially entitled to the performance rights on the vesting date. Performance rights are exercisable by the holder from the
vesting date. There has not been any alteration to the terms or conditions of the grant since the grant date. No amounts are
paid or payable by the recipient regarding granting such performance rights.
11
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2023
Remuneration report audited (continued)
Tranche 1 had already vested before the relevant milestone date of 1 April 2021, and Tranche 2 has already vested before
the relevant milestone date of 1 October 2021. Accordingly, the holders had not exercised the vested performance rights as
of 30 June 2023.
The share-based payment expense recognised concerning performance rights over ordinary shares granted and the value
of performance rights exercised and lapsed for directors and other key management personnel as part of compensation
during the year ended 30 June 2023 are set out below:
Name
Stuart Carmichael
Syed Basar Shueb
Anthony McIntosh
Shared-Based
Payment
expense of
Performance
Rights
Granted
during the
Year
$
10,699
10,699
10,699
32,097
Value of
Performance
Rights
Exercised
during the
Year
$
Value of
Performance
Rights Lapsed
during the
Year
$
-
-
-
-
-
-
-
-
Remuneration
Consisting of
Performance
Rights for the
Year
%
10%
14%
14%
Options
No options were granted to directors and other key management personnel as part of compensation during the year ended
30 June 2023.
Long-term incentive shares
The terms and conditions of each grant of long-term incentive shares affecting the remuneration of directors and other key
management personnel in this financial year or future reporting years are as follows:
Name
Adrian Smith
- Tranche 1
- Tranche 2
- Tranche 3
Number of
Long term
Incentive
Share
Consolidated
Conversion
( 1 to 2.5
basis)
Number of
Long term
Incentive
Share
Grant Date
Vesting Date
Fair Value per
Share at Grant
Date
1,000,000
1,500,000
2,000,000
(600,000)
(900,000)
(1,200,000)
400,000
600,000
800,000
27/11/2020
27/11/2020
27/11/2020
01/11/2021
01/11/2022
01/11/2023
$0.27
$0.27
$0.27
On 1 November 2020, Mr Smith was appointed as Managing Director of the Company. Shares will be issued at each
employment anniversary, with 50% of shares issued subject to a voluntary escrow period of 12 months.
The share-based payment expense recognised concerning long-term incentive shares granted and the value of long-term
incentive shares lapsed for directors and other key management personnel as part of compensation during the year ended
30 June 2023 are set out below:
Long-Term Incentive Shares
Adrian Smith
Balance at the
Start of the
Year
3,500,000
Consolidated
Conversion
( 1 to 2.5
basis)
(2,100,000)
Number of
Long-Term
Incentive
Shares
Converted to
Ordinary
Shares during
the Year
Balance at the
End of the
Year
(600,000)
800,000
12
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2023
Remuneration report audited (continued)
Name
Adrian Smith
Shared-Based
Payment
expense of
Long Term
Incentive
Shares
Granted
during the
Year
$
255,713
Value of Long
Term
Incentive
Shares
Lapsed during
the Year
$
-
Remuneration
Consisting of
Long Term
Incentive
Shares for the
Year
%
28%
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each director and other members of key management
personnel of the consolidated group, including their personally related parties, is set out below:
Ordinary
Shares
Stuart Carmichael
Syed Basar Shueb
Adrian Smith
Anthony McIntosh
Darryl Abotomey
Trish White (1)
David Acton (2)
Balance at the
Start of the
Year
Consolidated
Conversion
( 1 to 2.5
basis)
Received as
part of
Remuneration
Additions /
Other
Disposals /
Other
Balance at the
End of the
Year
175,438
2,528,155
1,100,000
975,000
-
-
-
4,778,593
(105,262)
(1,516,893)
(660,000)
(585,000)
-
-
-
(2,867,155)
-
-
600,000
-
-
-
-
600,000
-
-
-
114,286
-
57,143
-
171,429
-
-
-
-
-
-
-
-
70,176
1,011,262
1,040,000
504,286
-
57,143
-
2,682,867
(1) Appointed 1 December 2021, resigned 7 August 2023
(2) Appointed 1 December 2021, resigned 31 December 2022
Performance rights holding
The number of performance rights over ordinary shares in the Company held during the financial year by each director and
other members of key management personnel of the consolidated group, including their personally related parties, is set out
below:
Performance
Rights over
Ordinary
Shares
Stuart Carmichael
Syed Basar Shueb
Adrian Smith
Anthony McIntosh
Darryl Abotomey
Trish White
David Acton
Balance at the
Start of the
Year (1)
1,500,000
1,500,000
-
1,500,000
-
-
-
Consolidated
Conversion
( 1 to 2.5
basis)
(900,000)
(900,000)
-
(900,000)
-
-
-
4,500,000
(2,700,000)
Granted upon
Appointment
Additions /
Other
Exercised
/ ( Lapsed )
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at the
End of the
Year
600,000
600,000
-
600,000
-
-
-
1,800,000
(1) 1,800,000 performance rights (600,000 per each key management personnel holding these rights) had vested and were exercisable at 30 June 2023
13
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2023
Remuneration report audited (continued)
Option holding
The number of options over ordinary shares in the Company held during the financial year by each director and other
members of key management personnel of the consolidated group, including their personally related parties, is set out below:
Options over
Ordinary
Shares
Stuart Carmichael
Syed Basar Shueb
Adrian Smith
Anthony McIntosh
Darryl Abotomey
Trish White
David Acton
Balance at the
Start of the
Year (1)
Consolidated
Conversion
( 1 to 2.5
basis)
370,000
180,000
180,000
180,000
-
-
-
910,000
(222,000)
(108,000)
(108,000)
(108,000)
-
-
-
(546,000)
Granted upon
Appointment
Additions /
Other
Exercised
/ ( Lapsed )
Balance at the
End of the
Year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
148,000
72,000
72,000
72,000
-
-
-
364,000
(1) All options are exercisable at 30 June 2023
Long-term incentive shares holding
Following approval by shareholders at the Company’s Annual General Meeting on 27 November 2020, Mr Smith is earning
up to 1,800,000 after Consolidate conversion 1 to 2.5 basis (previous amount was 4,500,000) ordinary shares in the
Company. Long-term incentive shares of 1,000,000 were converted to ordinary shares during the financial year (30 June
2022: 1,000,000).
Other transactions with key management personnel and their related parties
During the financial year, payments for company secretarial, accounting and corporate advisory fees, totalling $195,946 (30
June 2022: $120,730), were made to Ventnor Capital Pty Ltd (the director-related entity of Mr Carmichael). The current trade
and other payable balance as at 30 June 2023 $97,224 (30 June 2022: nil). All transactions were made on normal commercial
terms and conditions and at market rates.
No related party loans were held or provided by the Company at any time during the financial year (30 June 2022: nil).
This concludes the remuneration report, which has been audited.
Additional information
The earnings of the consolidated group for the five years to 30 June 2023 are summarised below:
Sales revenue
EBITDA
EBIT
Loss after income tax
2023
$
2022
$
2021
$
3,095,724
(6,061,852)
3,702,512
(5,767,474)
1,561,556
(4,233,702)
2020
$
333,366
(8,245,702)
2019
$
1,069,198
(1,641,599)
(6,251,718)
(6,431,749)
(5,954,261)
(5,962,663)
(4,473,399)
(4,482,667)
(8,407,290)
(8,411,825)
(1,686,617)
(1,690,187)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end ($) (1)
Total dividends declared (cents per share) (1)
Basic loss per share (cents per share) (1)
2023
$
0.14
-
(3.20)
2022
$
0.25
-
(3.43)
2021
$
0.44
-
(2.76)
2020
$
0.19
-
(6.97)
2019
$
-
-
-
(1) Despite the consolidated group applying the continuation method of accounting for the acquisition of Keyhole TIG Ltd in the financial year ended 30 June
2020, the TSR factors have not been presented for financial years before 30 June 2020 due to incomparable operations and capital structures.
14
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2023
Shares under option
Unissued ordinary shares of K-TIG Limited under option at the date of this report are as follows:
Unissued
ordinary
shares
Grant Date
30/09/2019
Expiry Date
30/09/2023
Exercise Price
$0.30
Balance at the
Start of the
Year
6,612,152
Consolidated
Conversion
( 1 to 2.5
basis)
(3,967,291)
Number under
Option
2,644,861
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
Company or of any other body corporate.
Shares issued on the exercise of options
There were no shares issued of K-TIG Limited during the year ended 30 June 2023 and up to the date of this report on the
exercise of options granted:
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred in their capacity as a director
or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the
Company against liability to the extent permitted by the Corporations Act 2001. The insurance contract prohibits disclosure
of the liability's nature and the premium's amount.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company
or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company or to 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 part of those proceedings.
Non-audit services
There were a total of $3,621 in non-audit services provided during the financial year by the auditor (30 June 2022: $2,352).
The directors are satisfied that the provision of non-audit services during the financial year by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
The directors are of the opinion that the services as disclosed in Note 24 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
none of the services undermines the general principles relating to auditor independence as set out in APES 110 – Part
4A of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Company,
acting as an advocate for the Company or jointly sharing economic risks and rewards.
●
Officers of the Company who are former partners of BDO Audit Pty Ltd
There are no officers of the Company who are former partners of BDO Audit Pty Ltd.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors' report.
15
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2023
Auditor
BDO Audit Pty Ltd was appointed at the last AGM, a change from BDO Audit (SA) Pty Ltd. BDO Audit Pty Ltd continues in
office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a directors resolution pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
Stuart Carmichael
Chairman
29 September 2023
Perth
16
Tel: +61 8 7324 6000
Fax: +61 8 7324 6111
www.bdo.com.au
BDO Centre
Level 7, 420 King William Street
Adelaide SA 5000
GPO Box 2018 Adelaide SA 5001
Australia
DECLARATION OF INDEPENDENCE
BY ANDREW TICKLE
TO THE DIRECTORS OF K-TIG LIMITED
As lead auditor of K-Tig Limited for the year ended 30 June 2023, I declare that, to the best of my
knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of K-Tig Limited and the entities it controlled during the period.
Andrew Tickle
Director
BDO Audit Pty Ltd
Adelaide, 29 September 2023
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
17 K-TIG Limited and Its Controlled Entities
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2023
Sales revenue
Cost of sales
Gross profit/(loss)
Other income
Expenses
Marketing expenses
Corporate expense
Service expense
Employee benefits expense
Office/workshop expense
Travel expense
R&D expense
Other expenses
Due Diligence and Pre-Acquisiton Costs
Total operating expenses
(Loss) before income tax expense
Income tax expense
(Loss) for the year
Other comprehensive income / (expense)
Total comprehensive loss for the year
Loss per share to owners of K-TIG Limited
Basic loss per share
Diluted loss per share
Note
3
4
Consolidated
2023
$
3,095,724
(1,503,759)
1,591,964
2022
$
3,702,512
(1,427,035)
2,275,477
653,925
190,583
(325,291)
(832,429)
(290,230)
(4,601,726)
(409,035)
(343,727)
(78,975)
(39,419)
(1,756,807)
(8,677,639)
(494,464)
(1,381,117)
(453,022)
(5,544,729)
(292,907)
(189,891)
(59,067)
(13,526)
-
(8,428,722)
(6,431,749)
(5,962,663)
-
-
(6,431,749)
(5,962,663)
330,012
18,474
(6,101,738)
(5,944,188)
Cents
Cents
(3.20)
(3.17)
(3.43)
(3.35)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
18
K-TIG Limited and Its Controlled Entities
Consolidated statement of financial position
As at 30 June 2023
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Financial assets
Total current assets
Non-current assets
Other receivables
Property, plant and equipment
Right-of-use-assets
Intangibles
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Amounts received in advance
Financial Liabilities
Lease Labilities
Employee benefits
Total current liabilities
Non-current liabilities
Lease liabilities
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share based payment reserve
Foreign currency translation reserve
Accumulated losses
Total Equity
Note
Consolidated
2023
$
2022
$
7
8
9
15
8
10
11
12
13
14
15
16
17
16
17
18
19
818,859
872,105
1,841,307
740,000
4,272,271
14,150
513,578
661,114
19,819
1,208,661
3,726,745
856,547
1,309,187
40,000
5,932,479
14,150
426,366
437,320
30,876
908,712
5,480,932
6,841,191
2,491,141
444,259
2,837,220
111,135
266,697
6,150,452
565,162
-
565,162
1,211,147
322,256
-
77,730
199,935
1,811,068
359,590
16,715
376,305
6,715,614
2,187,373
(1,234,683)
4,653,818
27,839,529
2,145,652
335,347
(31,555,211)
(1,234,683)
27,299,304
2,566,786
5,335
(25,217,606)
4,653,818
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
19
K-TIG Limited and Its Controlled Entities
Consolidated statement of changes in equity
For the year ended 30 June 2023
Consolidated
Balance at 1 July 2021
Loss for the year
Other comprehensive
Total comprehensive loss for
the year
Transactions with owners in
their capacity as owners
Issue of shares, net of
transaction costs
Share-based payments -
performance rights, net of
Share-based payments -
Balance at 30 June 2022
Issued Capital
$
Convertible
Note
23,443,733
-
-
-
3,585,570
-
270,000
27,299,303
-
-
-
-
-
-
-
-
Consolidated
Balance at 1 July 2022
Loss for the year
Other comprehensive
Total comprehensive loss for
the year
Transactions with owners in
Issue of shares, net of
transaction costs
Cost of Capital Raise
Share-based payments -
performance rights, net of
transaction costs
Share-based payments -
performance rights
Conversion of long term incentive
shares to director
Balance at 30 June 2023
Issued Capital
$
Convertible
Note
-
-
-
-
-
-
27,299,304
-
-
-
150,000
(140,000)
-
125,225
405,000
-
-
-
-
1,097,121
(270,000)
2,566,785
Shared Based
Payments
Reserve
$
2,566,786
-
-
-
-
109,091
(125,225)
(405,000)
Shared Based
Payments
Reserve
$
1,739,664
Foreign
Currency
Translation
Reserve
$
(13,141)
Accumulated
Losses
$
(19,254,943)
-
18,476
18,476
(5,962,663)
-
(5,962,663)
Total
$
5,915,313
(5,962,663)
18,476
(5,944,186)
-
-
-
5,335
-
-
-
3,585,570
1,097,121
-
(25,217,606)
4,653,818
Foreign
Currency
Translation
Reserve
$
Accumulated
Losses
$
Total
$
5,335
(25,123,462)
4,747,963
-
330,012
330,012
(6,431,749)
(6,431,749)
(6,431,749)
330,012
(6,101,738)
-
-
-
-
150,000
(140,000)
109,091
-
-
27,839,529
-
2,145,652
335,347
(31,555,211)
(1,234,683)
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
20
K-TIG Limited and Its Controlled Entities
Consolidated statement of cash flows
For the year ended 30 June 2023
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Other income
Interest and other finance costs paid
Net cash used / (provided) in operating activities
Cash flows from investing activities
Payments for financial assets
Payments for property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from convertible note
Payments for rights issue cost
Repayment of lease liabilities
Net cash provided / (used) by financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of the period
Note
Consolidated
2023
$
2022
$
3,202,171
(8,373,677)
(5,171,506)
10,088
643,838
(7,909)
(4,525,490)
4,068,951
(8,747,202)
(4,678,251)
683
2,953
(8,402)
(4,683,017)
-
(266,021)
(266,021)
-
(154,526)
(154,526)
150,000
2,000,000
(140,000)
(126,376)
1,883,625
(2,907,886)
3,726,745
818,859
3,585,570
-
-
(88,920)
3,496,650
(1,340,893)
5,067,638
3,726,745
30
32
7
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
21
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. Unless otherwise
stated, these policies have been consistently applied to all the years presented.
New or amended Accounting Standards and Interpretations adopted
The consolidated 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.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been adopted early.
Adoption of the new and amended accounting standards had no material financial impact on the consolidated group.
Basis of preparation
These general-purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board ('IASB').
For the year ended 30 June 2023, the consolidated group reported a loss of $6.4m (2022: $6.0m loss) and cash used in
operating activities of $5.2m (2022: $4.7m cash used). The increase in loss is mainly attributable to the lower revenue and
grow margin, acquisition and recompliance costs associated with the Graham’s Engineering Limited acquisition amounting
to $1.7m.
Notwithstanding these events, the Directors believe that it is reasonably foreseeable that the consolidated entity will
continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial
report; having prepared forecast cashflow information for a period of least 12 months from the end of the reporting period,
taking into consideration of the following factors:
• The ability to raise capital for the “GEL” acquisition
• Continued revenue growth as a result of having established operations in key markets such as the UK and USA
• Careful cashflow management, including controlling discretionary spending and prioritisation of capital expenditure
• The continued receipt of R&D tax incentives claims for eligible expenditure incurred in the year ended 30 June
2024
Should the Group be unable to maintain sufficient funding outlined above, there are material uncertainties that may cast
significant doubt about the Group to continue as a going concern. Therefore the Group may be unable to realise its assets
and extinguish its liabilities in the normal course of business. The financial report does not include any adjustments relating
to the amounts or classification of recorded assets and liabilities that might be necessary should the Group not continue as
a going concern.
The Directors believe that the Group will be successful in the above matters and accordingly, have prepared the financial
report on a going concern basis.
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of financial assets and liabilities at fair value through profit or loss.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated group's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed in Note 2.
Equity structure
The equity structure (the number and type of equity instruments issued) in the financial statements reflects the equity
structure of KTG.
Earnings per share
The weighted average number of shares outstanding for the year ended 30 June 2023 is based on the combined weighted
average number of shares of the K-TIG Limited consolidated group outstanding in the year.
22
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 1. Significant accounting policies (continued)
Parent entity information
In accordance with the Corporations Act 2001, these financial statements only present the consolidated group's results.
Supplementary information about the legal parent entity is disclosed in Note 26.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of K-TIG Limited ('company' or
'parent entity') as at 30 June 2023, and the results for the year then ended. K-TIG Limited and its subsidiaries together are
referred to in these financial statements as the 'consolidated group'.
Subsidiaries are all those entities over which the consolidated group has control. The consolidated group controls an entity
when the consolidated group is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the consolidated group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated group are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the consolidated group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. Without the loss of control, a
change in ownership interest is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable
to the parent.
Where the consolidated group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary, together with any cumulative translation differences recognised in equity. In
addition, the consolidated group recognises the fair value of the consideration received and the fair value of any investment
retained together with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis
as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for allocating
resources to operating segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is K-TIG Limited's functional and presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
profit or loss.
Revenue recognition
The consolidated group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated group is expected to be entitled
in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated group:
identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction
price; allocates the transaction price to the separate performance obligations based on the relative stand-alone selling price
of each distinct good or service to be delivered, and recognises revenue when or as each performance obligation is satisfied
in a manner that depicts the transfer to the customer of the goods or services promised.
23
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 1. Significant accounting policies (continued)
Sale of goods
Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which is
generally at the time of delivery.
Rendering of services
Revenue from a contract to provide services is recognised over time as the services are rendered.
Revenue from government grants
Grant income is recognised in line with AASB 120, when there is reasonable assurance that the consolidated group has
complied with the conditions attached to the grant.
WaaS
Welding as a Service (WaaS) revenue is recognised at an amount that reflects the greater of the minimum monthly charge
or the usage rate stipulated in the contract, which the consolidated group is expected to be entitled to under an operating
lease in accordance with AASB 16. The minimum term of the license or lease period is generally three years. The license or
lease equipment is capitalised as an asset and depreciated over the expected useful life being five years. Upon signing of
the license or lease contract, the customer is generally required to make a prepayment which is recorded on the statement
of financial position as “Amounts received in advance”. After delivery and commissioning of the WaaS asset, the prepayment
is applied against the monthly fee until it is exhausted.
Interest
Interest income is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the
net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered, or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except
for:
●
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor
taxable profits; or
When the temporary taxable difference is associated with interests in subsidiaries, associates or joint ventures, and the
reversal timing can be controlled, it is probable that the temporary difference will not reverse in the foreseeable future.
●
Deferred tax assets are recognised for temporary deductible differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Conversely, previously unrecognised deferred tax assets are recognised to the extent that
it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities, and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
24
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 1. Significant accounting policies (continued)
Prior to the acquisition of Keyhole TIG Limited in September 2019, K-TIG Limited (the 'legal parent') and its wholly-owned
Australian subsidiaries had formed an income tax consolidated group under the tax consolidation regime. K-TIG Limited is
in the process of adding Keyhole TIG Limited to that group. The legal parent and each subsidiary in the consolidated tax
group continue to account for their own current and deferred tax amounts. Accordingly, the consolidated tax group has
applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to the
consolidated tax group members.
In addition to its own current and deferred tax amounts, the legal parent also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the
consolidated tax group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the consolidated tax group. The tax funding arrangement ensures that the
intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a
contribution by the legal parent to the subsidiaries nor a distribution by the subsidiaries to the legal parent.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
consolidated group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within
12 months after the reporting period, or the asset is cash or cash equivalent unless restricted from being exchanged or used
to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the consolidated group's normal operating cycle;
it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period, or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, and other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value. For the statement of cash flows presentation purposes, cash
and cash equivalents also include bank overdrafts, shown within borrowings in current liabilities on the statement of financial
position.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30
days.
The consolidated group has applied the simplified approach to measuring expected credit losses, which uses a lifetime
expected loss allowance. In addition, trade receivables have been grouped based on days overdue to measure the expected
credit losses.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Inventories
Materials and components, and finished goods are stated at the lower of cost and net realisable value on a 'first in first out'
basis. Cost comprises of direct materials. Costs of purchased inventory are determined after deducting rebates and discounts
received or receivable.
Stock in transit is stated at the lower of cost and net realisable value. Cost comprises of purchase and costs, net of rebates
and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated completion costs
and the costs necessary to make the sale.
25
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 1. Significant accounting policies (continued)
Financial assets
Financial assets are measured at amortised cost if they are held within a business model whose objective is to hold the
financial assets and collect its contractual cash flows. The contractual terms of the financial assets give rise to cash flows
that are solely principal payments and interest on the principal amount outstanding. After initial recognition, these are
measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is
immaterial. The consolidated group’s cash and cash equivalents, trade and other receivables fall into this category of financial
instruments.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred, and the
consolidated group 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, its carrying value is written off.
Impairment of financial assets
The consolidated group recognises a loss allowance for expected credit losses on financial assets, which are measured at
amortised cost. The measurement of the loss allowance depends upon the consolidated group's assessment at the end of
each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition,
based on reasonable and supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit
loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that are attributable to a
default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is
determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit
losses. The amount of expected credit loss recognised is measured based on the probability-weighted present value of
anticipated cash shortfalls over the instrument's life discounted at the original effective interest rate.
Property, plant and equipment
Plant and equipment are stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment over
their expected useful lives as follows:
Leasehold improvements
WaaS assets
Plant and equipment
Computer Equipment
2 years
5 years
2.5 - 20 years
3 years
If appropriate, the residual values, useful lives and depreciation methods are reviewed and adjusted at each reporting date.
Leasehold improvements are depreciated over the unexpired lease period or the estimated useful life of the assets,
whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
consolidated group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Any revaluation surplus reserve relating to the disposed item is transferred directly to retained profits.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the
cost of inventories.
Right-of-use assets are depreciated on a straight-line basis over the unexpired lease period or the asset's estimated useful
life, whichever is shorter. Where the consolidated group expects to obtain ownership of the leased asset at the end of the
lease term, the depreciation is over its estimated useful life. Right-of-use assets are subject to an impairment or adjusted for
any remeasurement of lease liabilities.
26
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 1. Significant accounting policies (continued)
The consolidated group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term
leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to
profit or loss as incurred.
Intangible assets
Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are
subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less
amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible
assets are measured as the difference between net disposal proceeds and the intangible asset's carrying amount. The method
and useful lives of finite life intangible assets are reviewed annually. Changes in the expected consumption pattern or useful
life are accounted for prospectively by changing the amortisation method or period.
Patents and trademarks
Significant costs associated with patents and trademarks are deferred and amortised on a straight-line basis throughout their
expected benefit, their finite life of 10 years. Amortisation expense is recognised as R&D expense in the profit or Loss.
Impairment of non-financial assets
Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less disposal costs and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated group before the end of the
financial year, which are unpaid. Due to their short-term nature, they are measured at amortised cost and are not
discounted. As a result, the amounts are unsecured and are usually paid within 30 days of recognition.
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.
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the statement
of financial position, net of transaction costs.
A convertible note is assessed on initial recognition for any element that may indicate an equity component, being a fixed
dollar value for a fixed amount of equity instruments. Any instrument to demonstrating this is recognised as a liability.
A convertible note liability is assessed for any embedded derivatives. If an embedded derivative is identified, it is recognised
at fair value and subsequently remeasured at each balance date with movements through the profit or loss. Any remaining
value of the convertible note is assessed as a financial liability at amortised cost, with the remaining value amortised using
the effective interest rate that unwinds the balance to its expected maturity value. Refer to Note 15 for specific application of
this policy.
Leases
As a lessee
For any new contracts entered into by the group, the consolidated group considers whether a contract is or contains a lease.
A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period
of time in exchange for consideration’. To apply this definition, the consolidated group assesses whether the contract meets
three key evaluations which are whether:
- The contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by
being identified at the time the asset is made available to the consolidated group;
- The consolidated group has the right to obtain substantially all of the economic benefits from the use of the identified
asset throughout the period of use, considering its rights within the defined scope of the contract;
- The consolidated group has the right to direct the use of the identified asset throughout the period of use. The
consolidated group assesses whether it has the right to direct ‘how and for what purposes’ the asset is used throughout
the period of use.
27
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 1. Significant accounting policies (continued)
As a lessor
The consolidated group’s accounting policy under AASB 16 has not changed from the comparative period. As a lessor, the
consolidated group classified its leases as either operating or finance leases. A lease is classified as a finance lease if it
transfers substantially all the risks and rewards incidental to ownership of the underlying asset and classified as an operating
lease if it does not.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the lease term, discounted using the interest rate implicit in the lease or, if that
rate cannot be readily determined, the consolidated group's incremental borrowing rate. Lease payments comprise of fixed
payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected
to be paid under residual value guarantees, and the exercise price of a purchase option when the exercise of the option is
reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on
an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured
if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual
guarantee; lease term; the certainty of a purchase option; and termination penalties. When a lease liability is remeasured,
an adjustment is made to the corresponding right-of-use asset or to profit or loss if the carrying amount of the right-of-use
asset is fully written down.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
Provisions
Provisions are recognised when the consolidated group has a present (legal or constructive) obligation as a result of a past
event, it is probable the consolidated group will be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation.
If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The
increase in the provision resulting from the passage of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date, are measured at the amounts expected to be paid when the liabilities
are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured at the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels,
the experience of employee departures and periods of service. Expected future payments are discounted using market yields
at the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated
future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for
rendering services.
28
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 1. Significant accounting policies (continued)
The cost of equity-settled transactions are measured at fair value on the grant date. Fair value is independently determined
using either the Black-Scholes option pricing model or a Monte Carlo simulation that takes into account the exercise price,
the term of the option, the impact of dilution, the share price at the grant date and the expected price volatility of the underlying
share, the expected dividend yield and the risk-free interest rate for the term of the option, together with non-vesting
conditions that do not determine whether the consolidated group receives the services that entitle the employees to receive
payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting date, less amounts already recognised in previous
periods.
Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value
of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated group or employee, the failure to satisfy the condition is
treated as a cancellation. If the condition is not within the control of the consolidated group or employee and is not satisfied
during the vesting period, any remaining expense for the award is recognised over the remaining vesting period unless the
award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
is treated as if they were a modification.
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 market participants' assumptions when pricing the asset or liability, assuming they act in their
economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation
techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value are
used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date, and
transfers between levels are determined based on a reassessment of the lowest input level that is significant to the fair value
measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is
unavailable, or the valuation is deemed significant. External valuers are selected based on market knowledge and reputation.
Where there is a significant change in the fair value of an asset or liability from one period to another, an analysis is
undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where
applicable, with external sources of data.
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.
29
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 1. Significant accounting policies (continued)
Dividends
Dividends are recognised when declared during the financial year and are no longer at the company's discretion.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments
or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree. In addition, all acquisition costs are expensed
as incurred to profit or loss.
On the acquisition of a business, the consolidated group assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic conditions, the consolidated
group’s operating or accounting policies and other pertinent conditions in existence at the acquisition-date.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed, and the fair value of the
consideration transferred. The fair value of any pre-existing investment in the acquiree is recognised as goodwill. However,
suppose the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets
acquired, being a bargain purchase to the acquirer. In that case, the difference is recognised as a gain directly in profit or
loss by the acquirer on the acquisition date, but only after a reassessment of the identification and measurement of the net
assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously
held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based
on new information obtained about the facts and circumstances that existed at the acquisition date. The measurement
period ends either earlier (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
Earnings per share
Basic earnings per share
Basic earnings per share are calculated by dividing the profit attributable to the owners of K-TIG Limited, excluding any costs
of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the
financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into account the
after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration concerning dilutive potential ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST unless the GST incurred is not
recoverable from the tax authority. In this case, it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from or payable to the tax authority are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
30
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 1. Significant accounting policies (continued)
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory
have not been adopted early by the consolidated group for the annual reporting period ended 30 June 2022. Accordingly,
the consolidated group has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates
concerning assets, liabilities, contingent liabilities, revenue and expenses. Management believes management's judgements,
estimates and assumptions based on historical experience and other factors, including expectations of future events, to be
reasonable under the circumstances. However, the resulting accounting judgements and estimates will seldom equal the
related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Share-based payment transactions
The consolidated 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 using either the Binomial or Black-
Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting
estimates and assumptions relating to equity-settled share-based payments would not impact the carrying amounts of assets
and liabilities within the next annual reporting period. Still, they may impact profit or loss and equity.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit
loss rate for each group. These assumptions include recent sales experience and historical collection rates.
Estimation of useful lives of assets
The consolidated group determines the estimated useful lives and related depreciation and amortisation charges for its
property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of
technical innovations or some other event. Therefore, the depreciation and amortisation charge will increase where the useful
lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or
sold will be written off or written down.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The consolidated group assesses the impairment of non-financial assets other than goodwill and other indefinite life
intangible assets at each reporting date by evaluating conditions specific to the consolidated group and to the particular asset
that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves
fair value-less disposal costs or value-in-use calculations, which incorporate a number of key estimates and assumptions.
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and a lease liability. Judgement
is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying
asset will be exercised or an option to terminate the lease will not be exercised when ascertaining the periods to be included
in the lease term. In determining the lease term, all facts and circumstances that create an economical incentive to exercise
an extension option or not to exercise a termination option are considered at the lease commencement date. Factors
considered may include the importance of the asset to the consolidated group's operations; comparison of terms and
conditions to prevailing market rates; incurrence of significant penalties; the existence of significant leasehold improvements;
and the costs and disruption of replacing the asset. The consolidated group reassesses whether it is reasonably certain to
exercise an extension option or not exercise a termination option if there is a significant event or significant change in
circumstances.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to discount
future lease payments to measure the present value of the lease liability at the lease commencement date. Such a rate is
based on what the consolidated group estimates it would have to pay a third party to borrow the funds necessary to obtain
an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment.
31
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 2. Critical accounting judgements, estimates and assumptions (continued)
Employee benefits provision
As discussed in Note 1, the liability for employee benefits expected to be settled more than 12 months from the reporting
date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all
employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases
through promotion and inflation have been taken into account.
Note 3. Revenue
Revenue from contracts with customers
Sale of goods
Rendering services
Other trading revenue
Revenue from Waas lessor arrangements
Disaggregation of revenue
The disaggregation of revenue from contracts with the customer is as follows:
Geographical regions
United States
Rest of the World
Asia Pacific (including New Zealand)
United Kingdom
Australia
Timing of revenue recognition
Revenue recognised at a point in time
Revenue recognised over time
Note 4. Other Income
Interest received
Other income
Research & development tax incentive
Net gain on disposal of property, plant and equipment
Consolidated
2023
$
2,700,073
297,128
35,752
3,032,953
62,770
3,095,724
2022
$
3,380,832
179,676
18,267
3,578,775
123,737
3,702,512
Consolidated
2023
$
1,188,290
565,692
559,897
541,034
240,811
3,095,724
2022
$
1,089,414
516,385
706,998
457,616
932,099
3,702,512
Consolidated
2023
$
3,032,953
62,770
3,095,724
2022
$
3,578,775
123,737
3,702,512
Consolidated
2023
$
10,088
8,576
635,262
-
653,925
2022
$
683
2,892
186,947
61
190,583
32
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 5. Expenses
Loss before income tax from continuing operations includes the following specific expenses:
(6,431,749)
(5,962,663)
Consolidated
2023
$
2022
$
Depreciation Expense
Leasehold improvements
Plant and equipment
Computer equipment
WaaS assets
Right-of-use assets
Amortisation
Amortisation of intangibles
Finance Costs
Interest and finance charges on credit cards and premium financing
Interest and finance charges on lease liabilities
Interest on convertible note
Interest on convertible note at amortised cost
Net Foreign Exchange (Gain) / Loss
Net foreign exchange (gain) / loss
Rent
Rental expenses relating to operating leases not recognised due to short period or low value
Superannuation and Pension Expense
Defined Contribution superannuation and pension expense
Professional Fees
General legal fees
Due Diligence and Pre-Acquisiton Costs
Share-Based Payment Expense
Share Based Payments Expense
Performance rights issued to directors
Long-term incentive shares granted to director
Performance rights issued to previous director
Performance rights issued to employees
5,947
112,672
35,938
24,253
106,657
285,467
11,057
11,057
8,610
34,200
61,196
76,025
180,031
52,065
52,065
2,788
2,788
46,077
77,958
25,337
26,358
80,458
256,188
11,057
11,057
6,810
1,592
-
-
8,402
(18,136)
(18,136)
57,436
57,436
279,195
279,195
242,451
242,451
9,121
1,756,807
1,765,928
203,235
32,097
255,713
10,699
(95,274)
203,235
15,625
-
15,625
-
244,828
493,118
-
360,975
1,098,921
33
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 6. Income tax expense
Loss before income tax expense
Consolidated
2023
$
2022
$
(6,431,749)
(5,962,663)
Prima facie tax payable from ordinary activities at 25% (2022: 25%)
(1,607,937)
(1,490,666)
Due diligence and pre-acquisition costs
Non-deductible expenses
Non-assessable income
Share based payments
Deferred tax asset not recognised
Income tax expense
403,797
196,521
(158,815)
50,809
1,115,625
-
3,883
(46,737)
274,730
1,258,789
-
-
Deductible temporary differences, unused tax losses and unused tax credits for which no deferred tax assets have been
recognised due to the uncertainty of future recovery. A re-assessment was carried out of unused tax losses from prior
periods before the reverse takeover in September 2019; the balances are as follows:
Unused tax losses - revenue
Unused tax losses - capital
Deductible temporary differences
Potential benefit at 25% (2022: 25%)
Note 7. Cash and cash equivalents
Cash at bank
Consolidated
2023
$
21,043,862
2,181,918
6,201,491
29,427,271
2022
$
17,352,438
2,181,918
5,669,646
25,204,002
7,356,818
6,301,001
Consolidated
2023
$
818,859
2022
$
3,726,745
The carrying amounts of cash and cash equivalents approximate their fair value and are denominated in the following
currencies:
Australian dollar
British pound
Euro
United states dollar
Consolidated
2023
$
446,228
54,500
21,351
296,780
818,859
2022
$
3,298,056
95,331
77,454
255,904
3,726,745
34
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 8. Trade and other receivables
Current
Trade Receivables
Trade receivables
Provision for expected losses
Other Receivables
GST and VAT receivables
Prepayments
Other receivables
Trade and Other Receivables
Non-current
Other Receivables
Other receivables
Consolidated
2023
$
2022
$
237,207
-
237,207
94,760
246,033
294,104
634,898
322,956
(10,071)
312,884
86,547
217,688
239,428
543,663
872,105
856,547
14,150
14,150
14,150
14,150
Allowance for expected credit losses
The consolidated group has recognized $ Nil (30 June 2022: $10,071) in profit or loss in respect of the expected credit
losses for the year ended 30 June 2023 due to the upfront nature of equipment sales and payments received during the next
period from customers.
Consolidated
Not overdue
0 to 3 months overdue
3 to 6 months overdue
Over 6 months overdue
Note 9. Inventories
Materials and components
Finished goods
Goods in transit
Expected Credit Loss Rate
Carrying Amount
2023
%
0%
0%
0%
0%
2022
%
0%
0%
0%
100%
2023
$
97,562
113,608
-
26,037
237,207
2022
$
32,917
137,949
142,019
10,071
322,956
Allowance for Expected Credit
Losses
2023
$
2022
$
-
-
-
-
-
-
-
-
10,071
10,071
Consolidated
2023
$
581,099
1,260,208
-
1,841,307
2022
$
776,438
265,098
267,651
1,309,187
35
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 10. Property, plant and equipment
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Computer and equipment - at cost
Less: Accumulated depreciation
WaaS assets - at cost
Less: Accumulated depreciation
Consolidated
2023
$
224,814
(189,232)
35,583
666,558
(288,395)
378,163
139,644
(91,363)
48,281
121,266
(69,716)
51,550
2022
$
183,307
(183,285)
22
449,015
(175,723)
273,292
132,673
(55,425)
77,248
121,267
(45,463)
75,804
513,578
426,366
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance as at 1 July 2021
Additions
Disposals
Depreciation expense
Balance as at 30 June 2022
Additions
Depreciation expense
Balance as at 30 June 2023
Note 11. Right-of-use assets
Land and buildings
Less: Accumulated depreciation
Leasehold
Improvements
46,099
Plant and
Equipment
Computer
Equipment
276,368
23,108
WaaS Assets
202,124
Total
547,699
-
-
(46,077)
22
41,507
(5,947)
35,583
74,882
-
(77,958)
273,292
217,543
(112,672)
378,163
79,477
-
(25,337)
77,248
6,971
(35,938)
48,281
-
(99,962)
(26,358)
75,804
-
(24,253)
51,551
154,359
(99,962)
(175,730)
426,366
266,022
(178,809)
513,578
Consolidated
2023
$
767,771
(106,657)
661,114
2022
$
437,320
-
437,320
The consolidated group leases office and warehouse equipment under either short-term or low-value agreements, so have
been expensed as incurred and not capitalised as right-of-use assets (Note 5).
36
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
30 June 2023
Note 12. Intangibles
Trademarks - at cost
Less: Accumulated amortisation
Consolidated
2023
$
110,569
(90,750)
19,819
2022
$
110,569
(79,693)
30,876
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Balance at 1 July 2022
Additions
Amortisation expense
Note 13. Trade and other payables
Trade payables
Other payables
Accrued expenses
Refer to note 21 for further information on financial instruments.
Note 14. Amounts received in advance
Amounts Received in Advance
Consolidated
2023
$
30,876
-
(11,057)
19,819
2022
$
41,933
-
(11,057)
30,876
Consolidated
2023
$
1,416,857
247,875
826,409
2,491,141
2022
$
411,148
438,592
361,407
1,211,147
Consolidated
2023
$
444,259
444,259
2022
$
322,256
322,256
Reconciliation
Reconciliation of the written down value at the beginning and end of the current and previous financial year are set out
below:
Balance at 01 July
Sales and service
Transfer to revenue
Balance at 30 June
Consolidated
2023
$
322,256
556,172
(434,169)
444,259
2022
$
170,945
556,172
(404,861)
322,256
Unsatisfied performance obligations - Sales and service
The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the end of the
reporting period was $444,259 as at 30 June 2023 (30 June 2022: $322,256) and is expected to be recognised as revenue
in future periods as follows:
37
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 14. Amounts received in advance (continued)
Within 6 months
6 to 12 months
1-2 years
2-3 years
3-4 years
4-5 years
Note 15. Financial Liabilities
Financial liability at amortised cost
Financial liability at fair value
Financial liability coupon interest expense
Balance at 01 July
Financial liability at amortised cost
Interest expense of financial liability at amortised cost
Balance at 30 June
Balance at 01 July
Financial liability at fair value
Movement in fair value
Balance at 30 June
Balance at 01 July
Financial liability coupon interest expense
Balance at 30 June
Consolidated
2023
$
302,367
44,330
46,700
37,175
10,348
3,339
444,259
2022
$
215,810
18,360
13,267
42,757
29,353
2,709
322,256
Consolidated
2022
$
2023
$
2,313,238
462,787
61,195
2,837,220
Consolidated
2022
$
2023
$
-
2,242,053
71,185
2,313,238
Consolidated
2022
$
2023
$
-
457,947
4,840
462,787
Consolidated
2022
$
2023
$
-
61,195
61,195
-
-
-
-
-
-
-
-
In March 2023, the consolidated group issued 2,000 convertible notes with a face value of $1,000 for proceeds of
$2,000,000. The notes have an interest of 10% per annum, simple and non-compounding accruing daily. Interest is
repayable on conversion or redemption in cash or at the election of the consolidated group and subject to shareholder
approval, through the issue of shares issued at the conversion price at maturity.
Subject to satisfaction of the following conversion conditions, the Note will automatically convert into ordinary shares in the
consolidated group upon the next equity raise of equal to or greater than $4,000,000:
a) The consolidated group obtaining shareholder approval for the conversion of the Notes into shares and options in
the capital of the consolidated group.
b) The consolidated group obtaining approval the Notes are not inconsistent with Listing Rule 6.1; and
c) The consolidated group completing a future capital raise of no less than $4,000,000
38
K-TRIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 15. Financial Liabilities (continued)
On conversion of the Notes, and subject to satisfaction of the conversion conditions, the note holders will received one
unquoted options for every share issued to conversion with an exercise price equal to the conversion price and expiring 36
months after the conversion date (Conversion Options).
In the event the conversion conditions are not satisfied , the consolidated group must, prior to maturity
a) Seek shareholder approval for the issue of 20,000,000 options with an exercise price equal to the consolidated
group’s 20 day VWAP as at the date of the shareholder meeting, expiring 36 months after the issued date, such
that each noteholder is issued 10,000 options per note (Redemption Options) and pay the monies payable.
In the event the shareholder approval for the redemption options is not obtained, reimburse the Noteholder a
further $350 for each note in addition to the principal and accrued interest.
b)
The number of redemption options was varied as part of the consolidated group’s share consolidation such that 8,000,000
are now on hand.
The consolidated group has identified an embedded derivative, being an instrument where its value changes in response
to a change in a specified financial instrument price, being the 8,000,000 Redemption Options. This instrument is a
financial liability valued at fair value with movements taken through the statement of profit or loss.
To assess fair value, the consolidated group has firstly utilised a Monte Carlo model to estimate the 20 day VWAP. The
results are then applied to a Black Scholes model to estimate the value of the average value of the option. This approach
has been applied to the two scenarios where redemption options could be issued being;
a) A successful capital raise with conversion options not approved by shareholders but redemption options approved
(Scenario 1)
b) An unsuccessful capital raise with redemption options approved (Scenario 2)
A probability factor of each scenario has then been estimated and applied against each scenario to finalise the fair value
estimate. The inputs used in the fair value model for each scenario are:
Input
Spot price - adjusted for share consolidation
Risk free rate
Volatility
Conversion timing
Probability
Fair value per option
Scenario 1
Scenario 2
$0.3625
3.5512%
100%
Mid February 24
12.50%
$0.2303
$0.3625
3.5512%
100%
Early March 25
12.50%
$0.2277
As the inputs are unobservable, the fair value is a level 3 estimate.
The fair value on initial recognition of $2,242,053 for the embedded derivative is subtracted from the value of the host
liability being $2,700,000. This host liability is the maximum principal repayment under the note, being the initial $1,000 per
note plus the additional $350. The remaining amount on initial recognition is then unwound back to $2,700,000 at maturity
using the effective interest method.
A financial asset of $700,000 is also recorded on initial recognition. This represents the value of the optionality that the
consolidated group holds through its shareholders to opt for the settlement option that maximise their economic benefit.
This value will be held at cost and considered for impairment indicators when it becomes probable that the shareholders
will opt for a conversion option where the settlement option exceeds the carrying value of the convertible note components
being the host liability at amortised cost, the embedded derivative at fair value and the financial asset at cost.
39
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 16. Lease liabilities
Current
Non current
Balance at 01 July
Adoption of AASB 16
Interest expense
Repayments
Balance at 30 June
Note 17. Employee benefits
Current
Non-current
Note 18. Issued capital
Consolidated
Ordinary shares - fully paid
Series A preference shares
Consolidated
2023
$
111,135
565,162
676,296
2022
$
77,730
359,590
437,320
Consolidated
2023
$
437,320
308,439
19,859
(89,322)
676,296
2022
$
85,209
437,320
1,592
(86,801)
437,320
Consolidated
2023
$
266,697
-
266,697
2022
$
199,935
16,715
216,650
2023
Shares
73,328,415
30 June 2022
Shares
181,111,261
2023
$
30 June 2022
$
27,839,529
27,299,304
-
-
-
-
73,328,415
181,111,261
27,839,529
27,299,304
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion
to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company
does not have a limited amount of authorised capital. On a show of hands, every member present at a meeting in person or
by proxy shall have one vote, and upon a poll each share shall have one vote.
Capital risk management
The consolidated group’s objectives when managing capital is to safeguard its ability to continue as a going concern so that
it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital. Capital is regarded as total equity, as recognised in the consolidated statement of financial position,
plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents.
To maintain or adjust the capital structure, the consolidated group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
40
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 18. Issued capital (continued)
Movements in ordinary shares for the financial year
Date
1 Jul 2022
30 Dec 2022
30 Dec 2022
20 Mar 2023
31 Mar 2023
5 Jun 2023
31 Dec 2022
Details
Balance
Conversion of long term shares to director
Directors placement of shares
Cost of Capital Raise
Employee Incentive shares
Consolidated Conversion (1 to 2.5 basis)
Balance
Number of
Shares
181,111,261
1,500,000
428,571
-
280,000
(109,991,417)
73,328,415
$
27,299,304
405,000
150,000
(140,000)
125,225
-
27,839,529
As at 30 June 2023, up to 8,020,036 deferred consideration shares are to be issued in 3 tranches based on the cumulative
revenue over 48 months from 1 January 2020.
a) Tranche 1: expired;
b) Tranche 2: up to 4,010,018 deferred consideration shares to be issued if K-TIG achieves $60,000,000 of cumulative
revenue within 48 months from 1 January 2020; and
c) Tranche 3: up to 4,010,018 deferred consideration shares to be issued if K-TIG achieves $15,000,000 of cumulative
EBITDA within 48 months from 1 January 2020.
Note 19. Reserves
Options reserve
Performance rights reserve
Consolidated
2023
$
871,990
1,273,662
2,145,652
2022
$
871,990
1,694,796
2,566,786
The reserves are used to recognise share-based payment transactions. Amounts will be transferred to issued share capital
upon share options or performance rights being exercised, or long-term incentive shares being converted.
Movements in options reserve for the year
Date
1 Jul 2022
Details
Balance
26 May 2023
Consolidated Conversion
Movements in performance rights reserve for the year
Date
1 Jul 2022
30 Dec 2022
3 Mar 2023
31 May 2022
26 May 2023
30 Jun 2023
30 Jun 2023
30 Jun 2023
Details
Balance
Conversion of long term shares to director
Share based payments - performance rights to Staff
Options lapsed for employees
Consolidated Conversion
Share based payments - performance rights to Directors
Share based payments - performance rights to previous Director
Share based payments - performance rights to Staff
Number of
Options
6,612,152
(3,967,291)
2,644,861
Number of
Performance
Rights
10,830,000
(1,500,000)
(280,000)
(1,000,000)
(4,830,000)
-
-
-
3,220,000
$
871,990
-
871,990
$
1,694,796
(405,000)
(125,225)
(197,720)
-
287,810
10,699
8,302
1,273,662
Refer to Note 33 for more details on the calculation of the fair value of the performance rights issued and the related share-
based payment expense for the year.
41
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 19. Reserves (continued)
On 1 November 2020, Mr Smith was appointed as Managing Director of the Company. Shares will be issued to Mr Smith at
each anniversary of employment as follows, with 50% of shares issued subject to a voluntary escrow period of 12 months as
follows after consolidate version:
- 400,000 shares to be issued on 1 November 2021;
- 600,00,000 shares to be issued on 1 November 2022; and
- 800,000 shares to be issued on 1 November 2023.
Refer to Note 33 for more details on the calculation of the fair value of the long-term incentive shares granted and the related
share-based payment expense for the year.
Note 20. Dividends
No dividends were paid during the financial year ended 30 June 2023 (2022: Nil). Franking credits available for subsequent
periods based on a 25% tax rate is Nil (30 June 2022: 25%).
Note 21. Financial instruments
Financial risk management objectives
The consolidated group’s activities expose it to a variety of financial risks: market risk (including foreign currency risk, price
risk and interest rate risk), credit risk and liquidity risk. The consolidated group’s overall risk management program focuses
on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of
the consolidated group.
Risk management is carried out by senior finance executives (‘finance’) in consultation with the Board of Directors (‘the
Board’). Finance identifies and evaluates financial risks within the consolidated group’s operating units. Finance reports to
the Board monthly.
Market risk
Foreign currency risk
The consolidated group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency
risk through foreign exchange rate fluctuations. These transactions include customer sales agreements and supplier
agreements.
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.
To protect against exchange rate movements, the consolidated group monitors its cash balances in foreign currencies. In
addition, it utilises accumulated foreign currencies to purchase supplies to mitigate the exposure to currency changes.
The carrying amount of the consolidated group’s foreign currency denominated financial assets and financial liabilities at the
reporting date were as follows:
Consolidated
US dollars
Euros
British pound
Assets
Liabilities
2023
$
1,221,651
129,923
1,147,740
2,499,314
2022
$
909,162
127,974
122,892
1,160,028
2023
$
180,643
3,577
1,387,045
1,571,266
2022
$
214,693
3,667
52,495
270,855
The consolidated group had net financial assets denominated in foreign currencies of 928,049 as at 30 June 2023 (30 June
2022: net assets $889,174). Based on this exposure, had the Australian dollar weakened by 10% against these foreign
currencies with all other variables held constant, the consolidated group’s loss before tax for the year would have been
$92,804 lower (30 June 2022: $88,917 lower), and equity would have been $92,804 lower (30 June 2022: $88,917 lower).
The percentage change is the expected overall volatility of the significant currencies, which is based on management’s
assessment of reasonable possible fluctuations taking into consideration movements over the last 6 months each year and
the spot rate at each reporting date. As a result, the actual foreign exchange gain for the year ended 30 June 2023 was
$52,065 (30 June 2022: $18,136).
42
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 21. Financial instruments (continued)
Price risk
The consolidated group is not exposed to any significant price risk; refer to the market risk commentary above.
Interest rate risk
There are no loans or borrowings subject to interest rate risk as at 30 June 2023 or 30 June 2022.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
consolidated group. The consolidated group has a strict process of obtaining advance payment for all equipment sales prior
to shipment. The consolidated group is exposed to customer credit for its WaaS licence customers in relation to the ongoing
monthly payments after the initial Advance Payment has been consumed. Furthermore, K-TIG retains the full title of the
products provided under a WaaS operating licence agreement. This exposure is managed carefully with close interaction
with the customer. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying
amount, net of any provisions for impairment of those assets, as disclosed in the consolidated statement of financial position
and notes to the financial statements. The consolidated group does not hold any collateral.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than 1 year.
Liquidity risk
Vigilant liquidity risk management requires the consolidated group to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to pay debts as and when they become due and payable.
The consolidated group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Remaining contractual maturities
The following tables detail the consolidated group’s remaining contractual maturity for its financial instrument liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which
the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities; therefore, these totals may differ from their carrying amount in the statement of financial position.
Consolidated -
2023
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest Bearing
Lease Liabilities
Consolidated -
2022
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest Bearing
Lease Liabilities
Weighted
Average
Interest Rate
1 Year or Less
Between 1
and 2 years
Between 2
and 5 Years
Over 5 Years
Remaining
Contractual
Maturities
%
-
-
4.94
$
$
$
$
$
1,416,857
247,875
-
-
-
-
-
-
1,416,857
247,875
111,135
1,775,866
118,288
118,288
355,558
355,558
91,315
91,315
676,296
2,341,027
Weighted
Average
Interest Rate
1 Year or Less
Between 1
and 2 years
Between 2
and 5 Years
Over 5 Years
Remaining
Contractual
Maturities
%
-
-
4.94
$
$
$
$
$
-
-
-
-
83,156
83,156
276,433
276,433
-
-
-
411,148
438,592
437,320
1,287,060
411,148
438,592
77,731
927,471
43
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 21. Financial instruments (continued)
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Note 22. Key management personnel disclosures
Short-term employee benefits
Post-employment benefits
Share-based payments
Consolidated
2023
$
967,500
74,171
287,810
1,329,481
2022
$
888,749
60,043
737,946
1,686,738
Note 23. Remuneration of auditors
During the financial year, the following fees were paid or payable for services provided by BDO, the auditor of the company,
its network firms and unrelated firms:
Audit services - BDO Audit Pty Ltd
Audit of financial statements
Review of half year financial statements
Total audit and review of financial statements
Non-Audit services - BDO Audit Pty Ltd
Business advice and consulting (1)
Total non-audit fees
Consolidated
2023
$
2022
$
31,415
18,000
49,415
41,000
18,000
59,000
3,621
3,621
2,352
2,352
Note 24. Contingent assets and liabilities
Contingent assets
No contingent assets are noted as at 30 June 2023 (30 June 2022: Nil).
Contingent liabilities
In the opinion of the Directors, the consolidated group has contingencies concerning deferred consideration shares as at 30
June 2023 (30 June 2022: deferred consideration shares and consultancy services agreement).
Deferred Consideration Shares
During the financial year ended 30 June 2020, K-TIG Limited completed the 100% acquisition of Keyhole TIG Limited. Part of
the acquisition consideration includes up to 30,075,135 deferred consideration shares. Refer to Note 17 for terms of
consideration shares.
Note 25. Commitments
There are no lessee commitments as at 30 June 2023 related to equipment operating lease commitments (30 June 2022: $0).
The consolidated group has recognized the facility lease commitments as right-of-use assets at its primary place of business.
Refer to Note 11 for right-of-use assets.
Lessor commitments receivable
Lessor commitments relate to operating lease payments to be received from WaaS license agreements. Licenses have a
minimum term of 0-3 years (generally 3-year minimum terms). As at 30 June 2023, all operating lease payments to be received
are payable in US dollars or Euros, and for the purposes of the maturity analysis have been translated at the spot rate at the
reporting date. The maturity analysis of undiscounted operating lease payments to be received is below. The lessor
commitments receivable include one license with a customer with no minimum term with a maximum term of 10 years, where
the maximum term could likely be 5 years.
Within 1 year
1-2 years
44
Consolidated
2023
$
24,141
-
24,141
2022
$
60,744
22,540
83,284
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 26. Related party transactions
Parent entity
K-TIG Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in Note 27.
Key management personnel
Disclosures relating to key management personnel are set out in Note 21, and the remuneration report is included in the
directors’ report.
Transactions with related parties
The following transactions occurred with related parties:
Ventnor Capital Pty Ltd provided company secretarial, accounting and corporate advisory services
(director-related entity of Mr Carmichael)
Consolidated
2023
$
86,996
2022
$
120,730
86,996
120,730
Receivable from and payable to related parties:
No receivables balances are outstanding at the reporting date in relation to transactions with related parties.
Payables balances outstanding at the reporting date in relation to transactions with related parties:
Consolidated
2023
$
-
226,513
32,375
437,500
696,388
2022
$
120,730
148,166
-
175,000
443,896
Ventnor Capital Pty Ltd provided company secretarial, accounting and corporate advisory services
(director-related entity of Mr Carmichael) (1)
Directors fees payable (2)
Director Salary (3)
Directors cash bonus payable (4)
(1) Stuart Carmichael ceased being a director and shareholder of Ventnor Capital Pty Ltd effective 01 February 2023
(2) Director's fees accrued awaiting payment
(3) Director salary accrued awaiting payment
(4) Expected director to achieve defined performance KPI’s; payment to be made at the anniversary date (01 November)
Loans to/from related parties
No loans to/from related parties were outstanding as of 30 June 2023 or 30 June 2022.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
45
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 27. Parent entity information
Below is supplementary information about the legal parent entity (K-TIG Limited) for the full year ended 30 June 2023.
Statement of profit / (loss) and other comprehensive income
Operating Loss after income tax
Due Diligence and Acquisition Costs
Total comprehensive loss
Statement of financial position
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
Net assets / (liabilities)
Equity
Issued capital
Reserves (1)
Accumulated losses
Total equity
Consolidated
2023
$
1,246,560
1,756,807
3,003,367
2022
$
5,991,505
5,991,505
1,364,848
3,315,684
-
-
1,364,848
3,315,684
4,976,490
-
4,976,490
518,302
-
518,302
(3,611,641)
2,797,382
43,686,730
5,289,153
(52,587,525)
(3,611,641)
46,671,253
5,710,287
(49,584,158)
2,797,382
1) Relates to option reserve and performance right/performance share reserve
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity has not entered into any guarantees in relation to the debts of its subsidiaries.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2023 and 30 June 2022.
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2023 and 30 June 2022.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated group, as disclosed in Note 1.
Note 28. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned subsidiaries
in accordance with the accounting policy described in Note 1. Details of the legal parent’s subsidiary at the end of the
reporting period are as follows:
Name
Kabuni USA Inc.
Stirling Minerals Pty Limited
Keyhole TIG Pty Limited
Keyhole TIG (USA) Inc.
Keyhole TIG (UK) Pty Ltd
Principal place of business / Country of
Incorporation
United States
Australia
Australia
United States
United Kingdom
Ownership Interest
2022
%
100%
100%
100%
100%
100%
2023
%
100%
100%
100%
100%
100%
Note 29. Events after the reporting period
As per the ASX announcement dated 1 September 2023, the share purchase agreement “SPA” to acquire Graham
Engineering Limited “GEL” has reached its sunset date 31 August 2023 with a number of conditions precedent not yet
satisfied.
46
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 29. Events after the reporting period (continued)
Challenging capital market conditions caused by underlying macro and geopolitical events have made the completion of
the transaction within the sunset date extremely difficult.
Notwithstanding the above, at this point in time, K-TIG remains committed to completing the SPA, and, subject to the
intentions of GEL, is willing to negotiate in good faith variations to the SPA to allow this to occur. In the event that a
variation cannot be agreed, either party may terminate the SPA.
The Company is currently exploring a number of funding options in order to complete the transaction, as such the
Company advises the supplementary prospectus dated 21 July 2023 will be withdrawn. The Company intends to lodge the
relevant supplementary (withdrawal) prospectus with ASIC and the ASX shortly.
Note 30. Reconciliation of profit after income tax to net cash from operating activities
Loss after income tax expense for the year
Adjustments for:
Depreciation
Amortisation of trademarks
Property, plant and equipment written-off
Share based payments
Change in operating assets and liabilities:
(Increase)/decrease in trade receivables
(Increase)/decrease in other receivables and prepayments
(Increase)/decrease in inventories
Increase/(decrease) in trade payables
Increase/(decrease) in income in advance
Increase/(Decrease) in employee benefits
Increase/(Decrease) in Financial Liabilities
Net cash to (used in) operating activities
Note 31. Non-cash investing and financing activities
Share based payments expense
Note 32. Changes in liabilities arising from financing activities
Balance at 30 June 2021
Additions
Cash (used) in financing activities
Balance at 30 June 2022
Additions
Cash (used) in financing activities
Balance at 30 June 2023
47
Consolidated
2023
$
2022
$
(6,431,749)
(5,962,663)
285,467
11,057
-
109,091
256,241
11,057
-
1,098,921
349,357
-
(532,120)
1,374,138
122,003
50,047
137,220
(4,525,490)
392,508
(344,052)
(635,914)
336,269
151,311
13,306
-
(4,683,017)
Consolidated
2023
$
109,091
2022
$
1,098,921
Consolidated
Lease Liability
$
85,209
437,320
(85,209)
Total
$
85,209
437,320
(85,209)
437,320
437,320
308,439
(69,463)
676,296
308,439
(69,463)
676,296
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 33. Loss per share
Loss after income tax attributable to the owners of K-TIG Limited
(6,431,749)
(5,962,663)
Consolidated
2023
$
2022
$
Basic loss per share
Diluted loss per share
Weighted average number of ordinary shares
Weighted average number of ordinary shares used in calculating basic loss per share
Note 34. Share-based payments
Options
30 June 2023
No options were granted during the financial year.
Set out below are the options exercisable at the end of the financial year:
Cents
Cents
(3.20)
(3.17)
(3.43)
(3.35)
Number
Number
200,743,189
173,779,754
Grant Date
29/01/2018
30/09/2019
21/02/2020
26/06/2020
Expiry Date
30/04/2021
30/09/2023
30/09/2023
30/09/2023
Exercise Price
$0.23
$0.30
$0.30
$0.30
Balance at the
Start of the
Year
-
5,472,152
960,000
180,000
6,612,152
Consolidated
Conversion
( 1 to 2.5
basis)
-
(3,283,291)
(576,000)
(108,000)
(3,967,291)
2023
2022
Number
-
2,188,861
384,000
72,000
2,644,861
Number
-
5,472,152
960,000
180,000
6,612,152
2023
Grant Date
30/09/2019
21/02/2020
26/06/2020
Expiry Date Exercise Price
30/04/2021
30/09/2023
30/09/2023
$0.23
$0.30
$0.30
2022
Grant Date
30/09/2019
21/02/2020
26/06/2020
Expiry Date Exercise Price
30/04/2021
30/09/2023
30/09/2023
$0.23
$0.30
$0.30
Balance at the
Start of the
Year
5,472,152
960,000
180,000
6,612,152
Consolidated
Conversion
( 1 to 2.5
basis)
(3,283,291)
(576,000)
(108,000)
(3,967,291)
Granted
-
-
-
-
Exercised
-
-
-
-
Balance at the
Start of the
Year
5,472,152
960,000
180,000
6,612,152
Granted
-
-
-
-
Exercised
-
-
-
-
Expired /
Cancelled
-
-
-
-
Balance at the
End of the
Year
2,188,861
384,000
72,000
2,644,861
Balance at the
End of the
Year
5,472,152
960,000
180,000
6,612,152
Performance Rights
The performance rights are subject to the satisfaction of certain milestones and the Board’s discretion as per the tables
listed below. Mark Twycross resigned as a director on 1 December 2021. The board exercised their discretion to remove the
service conditions of his unvested (class c) performance shares. This modification has no impact on the fair value of the
performance rights or the other vesting conditions.
48
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 34. Share-based payments (continued)
As per the General meeting held on 26 May 2023, the consolidation conversion of rights will be on the basis of the of 1
security for every 2.5 securities. The table below is reflective of the consolidated conversion.
Class
A
B
C
Number of
Performance
Rights
800,000
Milestone
The Company achieving of at least $0.35 over twenty consecutive trading day period
before Milestone Date
Milestone Date
1 April 2021
800,000
The Company achieving of at least $0.50 over twenty consecutive trading day period
before Milestone Date
1 October 2021
800,000
The Company achieving of at least $0.70 over twenty consecutive trading day period
before Milestone Date
1 October 2021
Set out below are the performance rights exercisable at the end of the financial year:
Grant Date
27/11/2020
27/11/2020
Expiry Date
22/12/2025
22/12/2025
Exercise Price
-
-
Balance at the
Start of the
Year
2,000,000
2,000,000
4,000,000
Consolidated
Conversion
( 1 to 2.5
basis)
(1,200,000)
(1,200,000)
(2,400,000)
2023
2022
Number
Number
800,000
800,000
1,600,000
2,000,000
2,000,000
4,000,000
2023
Grant Date
27/11/2020
27/11/2020
27/11/2020
Expiry Date Exercise Price
22/12/2025
22/12/2025
22/12/2025
-
-
-
2022
Grant Date
27/11/2020
27/11/2020
27/11/2020
Expiry Date Exercise Price
22/12/2025
22/12/2025
22/12/2025
-
-
-
Balance at the
Start of the
Year
2,000,000
2,000,000
2,000,000
6,000,000
Consolidated
Conversion
( 1 to 2.5
basis)
(1,200,000)
(1,200,000)
(1,200,000)
(3,600,000)
Exercised /
Expired /
Cancelled
-
-
-
-
Balance at the
End of the
Year
Vested at the
End of the
Year
800,000
800,000
800,000
2,400,000
800,000
800,000
800,000
2,400,000
Balance at the
Start of the
Year
2,000,000
2,000,000
2,000,000
6,000,000
Granted
-
-
-
-
Exercised /
Expired /
Cancelled
-
-
-
-
Balance at the
End of the
Year
2,000,000
2,000,000
2,000,000
6,000,000
Vested at the
End of the
Year
2,000,000
2,000,000
-
4,000,000
Long-term incentive shares
On 1 November 2020, Mr Smith was appointed as Managing Director of the Company. Shares will be issued to Mr Smith at
each anniversary of employment as follows, with 50% of shares issued subject to a voluntary escrow period of 12 months as
follows:
49
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 34. Share-based payments (continued)
2023
Grant Date
Adrian Smith
- Tranche 2
- Tranche 3
2022
Grant Date
Adrian Smith
- Tranche 1
- Tranche 2
- Tranche 3
Grant Date
Expiry Date
Balance at the
Start of the
Year
Consolidated
Conversion
( 1 to 2.5
basis)
Exercise
Price
Converted to
Ordinary
Shares
Balance at the
End of the
Year
27/11/2020
27/11/2020
01/11/2022
01/11/2023
$0.27
$0.27
1,500,000
2,000,000
3,500,000
(900,000)
(1,200,000)
(2,100,000)
600,000
-
600,000
-
800,000
800,000
Grant Date
Expiry Date
Exercise
Price
Balance at the
Start of the
Year
Granted
Converted to
Ordinary
Shares
Balance at the
End of the
Year
27/11/2020
27/11/2020
27/11/2020
01/11/2021
01/11/2022
01/11/2023
$0.27
$0.27
$0.27
1,000,000
1,500,000
2,000,000
4,500,000
-
-
-
-
1,000,000
-
-
1,000,000
-
1,500,000
2,000,000
3,500,000
Performance Rights to Staff
The performance rights for staff are subject to the satisfaction of certain milestones; the performance rights are valued using
the monte carlo, black scholes methods and KPI milestones. The valuation model inputs used to determine the fair value at
the grant date are as follows:
2023
Grant Date
30/04/2021
25/06/2021 (1)
26/06/2021
19/07/2021 (2)
Expiry Date
30/04/2026
25/06/2026
26/06/2026
19/07/2026
Share Price at
Grant Date
$0.425
$0.440
$0.440
$0.385
Exercise Price
-
-
-
-
Expected
Volatility
100%
100%
-
100%
Dividend
Yield
0%
0%
-
0%
Risk-Free
Interest Rate
0.070%
0.070%
-
0.035%
Fair Value at
Grant Date
$0.3090
$0.4400
$0.4400
$0.3850
(1) Employee no longer employed by the Company, performance rights are cancelled.
(2) Employee no longer employed by the Company, performance rights are cancelled.
2022
Grant Date
30/04/2021
25/06/2021
26/06/2021
19/07/2021
Expiry Date
30/04/2026
25/06/2026
26/06/2026
19/07/2026
Share Price at
Grant Date
$0.425
$0.440
$0.440
$0.385
Exercise Price
-
-
-
-
Expected
Volatility
100%
100%
-
100%
Dividend
Yield
0%
0%
-
0%
Risk-Free
Interest Rate
0.070%
0.070%
-
0.035%
Fair Value at
Grant Date
$0.3090
$0.4400
$0.4400
$0.3850
2023
Performance
Rights
- Tranche 1
- Tranche 2 (1)
- Tranche 3
- Tranche 4 (2)
Grant Date
30/04/2021
25/06/2021
26/06/2021
19/07/2021
Expiry Date
30/04/2026
25/06/2026
26/06/2026
19/07/2026
Methodology
Monte Carlo
Black Sholes
KPI Milestone
Black Sholes
Balance at the
Start of the
Year
Consolidat
ed
Conversion
( 1 to 2.5
150,000
300,000
280,000
300,000
1,030,000
(90,000)
(180,000)
(168,000)
(180,000)
(618,000)
Converted to
Ordinary
Shares
-
-
(112,000)
-
(112,000)
Balance at the
End of the
Year
60,000
-
-
-
60,000
Expired
-
(120,000)
-
(120,000)
(240,000)
(1) Employee no longer employed by the Company, performance rights are cancelled.
(2) Employee no longer employed by the Company, performance rights are cancelled.
50
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2023
Note 34. Share-based payments (continued)
2022
Performance
Rights
- Tranche 1
- Tranche 2
- Tranche 3
- Tranche 4
Grant Date
30/04/2021
25/06/2021
26/06/2021
19/07/2021
Expiry Date
30/04/2026
25/06/2026
26/06/2026
19/07/2026
Methodology
Monte Carlo
Black Sholes
KPI Milestone
Black Sholes
Balance at the
Start of the
Year
-
-
-
-
-
Converted to
Ordinary
Shares
-
-
-
-
-
Balance at the
End of the
Year
150,000
300,000
280,000
300,000
1,030,000
Granted
150,000
300,000
280,000
300,000
1,030,000
Options granted pre 01 July 2021 were considered to be granted during the current period when the employment
commenced.
Note 35. Operating Segment
The consolidated group is considered to be one operating segment based on products delivered. This operating segment is
based on the internal reports reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision
Makers (‘CODM’) in assessing performance and determining the allocation of resources. Accordingly, the information
presented in the financial statements approximates the information of the operating segment.
51
K-TIG Limited and Its Controlled Entities
Directors’ Declaration
For the year ended 30 June 2023
In the directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in Note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated group's financial position as
at 30 June 2023 and of its performance for the financial year ended on that date;
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
Stuart Carmichael
Chairman
29 September 2023
Perth
52
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF K-TIG LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of K-Tig Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2023, the consolidated
statement of profit 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 report, including a summary of significant accounting policies and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its
financial performance for the year 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 Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the group’s
ability to continue as a going concern and therefore the group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent membe r
firms. Liability limited by a scheme approved under Professional Standards Legislation.
53
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. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Revenue Recognition and measurement
KEY AUDIT MATTER
HOW THE MATTER WAS ADDRESSED IN OUR AUDIT
Refer to Note 3 of the financial report and
Our audit procedures included but were not limited to:
Note 1 for the accounting policy.
Revenue recognition was identified as a
key audit matter due to:
•
•
•
•
The significance of revenue to the
financial report
The complex nature and terms of
revenue transactions and associated
payment arrangements
The large size of individual revenue
transactions, and
Sales being recorded by overseas
•
•
•
•
•
Understanding and documenting the processes and controls
used by the Group in recording revenue
Assessing the revenue recognition policy for compliance with
AASB 15 Revenues
Checking a sample of revenue transactions to evaluate whether
they were appropriately recorded as revenue ensuring the
amounts recorded agreed to supporting evidence
Reviewing the terms and conditions of a sample of executed
sales agreements and ensuring that the accounting treatment
has been correctly applied
Checking, for a sample of revenue in advance amounts,
Group entities.
whether the amount recognised in the current period was
consistent with services supplied per the terms of the customer
agreement
Convertible Note
KEY AUDIT MATTER
HOW THE MATTER WAS ADDRESSED IN OUR AUDIT
Refer to Note 15 of the financial report
Our audit procedures included but were not limited to
and note 1 for the accounting policy.
The convertible note was identified as a
key audit matter due to;
•
Understanding and documenting key terms of the agreement
• Obtaining management’s accounting position and assessing for
compliance with Australian Accounting Standards
•
•
The significance of the liability to the
•
Assessing the fair value of the embedded derivative with the
statement of financial position
support of an auditors expert with the fair value determined
The complex nature of the terms and
conditions, including a number of
settlement options
with the assistance of an independent expert engaged by the
Group. This included assessing the reasonableness of the key
inputs used in the valuation model and methodology
•
The use of fair value measurement in
•
Reviewing the adequacy of the disclosures , including the
the accounting
significant estimates and judgements involved and the
accounting policy adopted
54
Other information
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 the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 9 to 14 of the directors’ report for the
year ended 30 June 2023.
In our opinion, the Remuneration Report of K-Tig Limited, for the year ended 30 June 2023, complies
with section 300A of the Corporations Act 2001.
55
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.
BDO Audit Pty Ltd
Andrew Tickle
Director
Adelaide, 29 September 2023
56
K-TIG Limited and Its Controlled Entities
ASX Additional Information
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows.
The information is current at 27 September 2023.
Ordinary Fully Paid Shares
Distribution of Share Holders
Shareholders
1
1,001
5,001
10,001
100,001
- 1,000
- 5,000
- 10,000
- 100,000
- and over
Number of
Holders
Number of
Shares
565
836
366
571
97
2,435
299,089
2,220,883
2,743,194
17,825,217
50,240,032
73,328,415
There were 254 holders holding a total of 62,921 ordinary shares holding less than a marketable parcel.
Top Twenty Share Holders
The names of the twenty largest holders of quoted shares are listed below:
Position
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Name
ADVANCED SCIENCE & INNOVATION COMPANY (ASIC) LLC
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR NEIL GARRY LE QUESNE
BUTTONWOOD NOMINEES PTY LTD
MR RICHARD SMITH
CITICORP NOMINEES PTY LIMITED
SYED BASAR SHUEB
SYDAC NOMINEES PTY LTD
MRS KAREN CHRISTINE JARVIS
SRG PARTNERS PTY LTD
GREAT PLAINS HOLDING COMPANY PTY LTD
MRS LYNETTE ANNE SHARMAN & MR MICHAEL DAVID SHARMAN
SWHL INVESTMENTS PTY LTD
GRAYSON NOMINEES PTY LTD
NETWEALTH INVESTMENTS LIMITED
INTERDALE PTY LTD
WIGTOWN PTY LIMITED
BBR HOLDINGS PTY LTD
JAGEN PTY LTD
GARDEN ENTERPRISES PTY LTD
Substantial Share Holders of Issued Capital
Name
ADVANCED SCIENCE & INNOVATION COMPANY (ASIC) LLC
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR NEIL GARRY LE QUESNE
Unlisted Options – exercisable at $0.30 per option expiring 30 September 2023
Number of
Shares
7,886,828
7,155,903
4,784,963
2,323,572
2,060,000
2,051,558
1,011,262
1,000,000
965,123
948,000
849,320
763,446
710,334
600,000
538,967
504,286
500,000
477,134
460,000
451,947
36,042,643
Number of
Shares
7,886,828
7,155,903
4,784,963
62,673,771
%
10.76%
9.76%
6.53%
3.17%
2.81%
2.80%
1.38%
1.36%
1.32%
1.29%
1.16%
1.04%
0.97%
0.82%
0.74%
0.69%
0.68%
0.65%
0.63%
0.62%
49.15%
%
10.76%
9.76%
6.53%
27.04%
Distribution of Option Holders
5,001
10,001
100,001
- 10,000
- 100,000
- and over
57
Number of
Holders
Number of
Options
1
20
10
31
6,000
965,157
1,673,706
2,644,863
K-TIG Limited and Its Controlled Entities
ASX Additional Information
Substantial Option Holders
Name
DIVERSE CAPITAL PTE LTD
LONHRO (WA) PTY LTD
LDHW PTY LTD
SOLAR MATE PTY LTD
SRG PARTNERS PTY LTD
SBV CAPITAL PTY LTD
ACNS CAPITAL MARKETS PTY LTD
TR NOMINEEES PTY LTD
Performance Rights
Substantial Performance Rights Holders – Class A
Name of KMP
STUART CARMICHAEL
Name of Registered Holder
SBV CAPITAL PTY LTD
MARK TWYCROSS
MR MARK TWYCROSS
SYED BASAR SHUEB
SYED BASAR SHUEB
ANTHONY MCINTOSH
MUTUAL TRUST PTY LTD
Distribution of Performance Right Holders - Class A
Substantial Performance Rights Holders – Class B
Name of KMP
STUART CARMICHAEL
SYED BASAR SHUEB
Name of Registered Holder
SBV CAPITAL PTY LTD
SYED BASAR SHUEB
ANTHONY MCINTOSH
MUTUAL TRUST PTY LTD
MARK TWYCROSS
MR MARK TWYCROSS
Distribution of Performance Right Holders - Class B
Substantial Performance Rights Holders – Class C
Name of KMP
STUART CARMICHAEL
Name of Registered Holder
SBV CAPITAL PTY LTD
SYED BASAR SHUEB
SYED BASAR SHUEB
ANTHONY MCINTOSH
MARK TWYCROSS
MUTUAL TRUST PTY LTD
MR MARK TWYCROSS
Number of
Options
259,908
216,604
200,000
170,000
159,908
148,000
141,286
140,000
1,435,768
Number of
Performance
Rights
200,000
200,000
200,000
200,000
%
9.83%
8.19%
7.56%
6.43%
6.05%
5.60%
5.34%
5.29%
54.29%
%
25.00%
25.00%
25.00%
25.00%
100,001
- and over
Number of
Holders
4
Number of
Performance
Rights
800,000
Number of
Performance
Rights
200,000
200,000
200,000
200,000
Number of
Holders
100,001
- and over
4
%
25.00%
25.00%
25.00%
25.00%
Number of
Performance
Rights
800,000
Number of
Performance
Rights
200,000
200,000
200,000
200,000
%
25.00%
25.00%
25.00%
25.00%
58
K-TIG Limited and Its Controlled Entities
ASX Additional Information
Distribution of Performance Right Holders - Class C
100,001
- and over
4
Number of
Holders
Number of
Performance
Rights
800,000
Restricted Securities
Restricted Class
Fully Paid Ordinary Shares
On-Market Buy Back
There is no current on-market buyback.
Number of Securities
883,429
Restriction Period
12 months from date of quotation
Voting Rights
All ordinary shares carry one vote per share without restriction. Options have no voting rights.
Corporate Governance
The Company’s corporate governance statement
tig.com/investors#governance
is
found on
the Company’s website at https://www.k-
59