Connecting People and Information
Annual
Report
FY22
Financial Year Ending
30th June 2022
(ASX:KNO)
knosys.co
Contents
Knosys’ Mission .............................................. 1
Corporate Directory ......................................3
Chairman’s letter to shareholders ............... 4
Knosys Today ..................................................5
CEO & Operations Report ..............................6
Board of Directors ....................................... 20
Directors’ Report......................................... 23
Remuneration Report (audited) ............................... 26
Financial Statements ..................................36
Directors’ declaration ................................. 68
Independent auditor’s report .....................69
Additional information for listed companies .. 75
Knosys’ Mission
To empower organisations to
make smarter connections
with their information.
Knosys’ Mission 1
Knosys’ Mission 1
KNOSYS ANNUAL REPORT 2022 Global Clients
Corporate Directory
Board of Directors
Hon. Alan Stockdale AO
Non-Executive Chairman
John Thompson
CEO & Managing Director
Kathrin Mutinelli
Non-Executive Director
Neil Wilson
Non-Executive Director
Auditor
William Buck Audit (VIC) Pty Ltd
20/181 William St,
Melbourne VIC 3000
www.williambuck.com
Registers of securities are held
at the following address:
Automic Registry Services
Level 5, 126 Phillip Street
Sydney NSW 2000
Ph: 1300 288 664
Principal Place of Business
and Registered Office
Level 8, 31 Queen Street
Melbourne VIC 3000
Ph: +61 3 9046 9700
www.knosys.co
2 Knosys’ Mission
1
Corporate Directory 3
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 Chairman’s letter
to shareholders
Dear Shareholders,
On behalf of the Board of Knosys Limited, I have pleasure in presenting to you the 2022
Annual Report.
Over the past year, Knosys has matured into a multi-solution SaaS technology company with a
global footprint, low volatility revenue streams and a steadily increasing annualised recurring
revenue. We successfully integrated two acquisitions, and we also delivered organic growth
through up-selling to our expanded customer base.
Following the acquisition of Libero in August 2021, the Board decided to invest in a targeted
growth strategy in order to accelerate customer acquisition, brand awareness and revenue
growth across our expanded portfolio of solutions. We released our growth strategy to the
market in November 2021 and I am pleased to report that the execution is progressing well.
Total operating revenue increased by 94% to $8.9m in the 2022 financial year, reflecting
organic growth, the full year contribution of the GreenOrbit acquisition and the ten-month
contribution from the Libero acquisition. Our consolidated loss of $3.1m includes the increased
investment in sales & marketing and product development, and $1.95m of charges for
transaction costs, amortisation of intangibles, non-cash share based remuneration expense.
Importantly, the operating cash out-flow of $220K demonstrates the sustainability of our
business model in self-funding our investment in growth.
Organic growth and our acquisitions have increased the size and spread of the Knosys
business and helped achieve our growth objectives. The Company now has 340+ customers
in 25+ countries and is well-positioned to increase recurring revenue and lay the base for
future profitability.
At our AGM last December, Peter Pawlowitsch retired from the Board. Peter played a major role
through the establishment, listing, capital raisings and growth of Knosys and I would like to
thank Peter for his significant contribution to the company over many years.
Looking ahead, we expect to see the continuation of trends driving demand for our solutions
with the growth in remote workers, customer expectations of consistent information across
channels and the need for high quality governance and compliance on ever increasing volumes
of information. We are confident that Knosys remains well positioned to continue growing its
recurring revenue through its portfolio of market-leading SaaS solutions, over the months and
years ahead.
On behalf of the Directors, I would like to thank our Managing Director, John Thompson for his
excellent leadership, our other senior executives, including Stephen Kerr and Nic Passmore and
all our staff for their resilience and flexibility in navigating the disrupted business environment
over the past few years. I would also like to thank our shareholders for their continuing support
as we implement our growth strategy to drive sustainable earnings over the longer term.
Hon. Alan Stockdale AO
CHAIRMAN
29 August 2022
Knosys Today
FOUNDED
2015
ASX
LISTED
50+
EMPLOYEES
HQ MELBOURNE,
AUSTRALIA
SAAS
SOLUTIONS
340+ CUSTOMERS
GLOBALLY
54% GROWTH IN
ARR ON PCP
OPEN SOLUTIONS
WITH API
CONNECTIONS
4 Chairman’s letter to shareholders
Knosys Today 5
KNOSYS ANNUAL REPORT 2022 Over the past two years, Knosys has
transformed into a global software-
as-a-service (SaaS) information
technology company, offering a range
of software solutions designed to
boost productivity, collaboration and
connectivity in the digital workplace.
Knosys now has a recurring revenue
base across three SaaS solutions, Knosys
Knowledge IQ , GreenOrbit Intelligent
Intranet and Libero Library Management
across a global footprint, following the
acquisitions of GreenOrbit (March 2021)
and Libero (August 2021).
CEO &
Operations
Report
6 CEO & Operations Report
CEO & Operations Report 7
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 Operation Locations
Head Office Melbourne
CEO & Operations Report
In FY22, Knosys invested in its enhanced growth strategy through an increase in sales & marketing
spend, accelerated product development and expanded local & global operations, in order to
leverage our recent acquisitions and grow our global market share and revenue.
Over the past year, we have successfully grown and diversified our customer base and we now
generate revenue from three different solutions across key geographies. We have experienced
minimal churn in our global customer base, and our annualised recurring revenue continues to
increase through new customer acquisition and successful organic growth strategies of up-selling
Brisbane
to the larger customer base.
Australia
Raleigh
North Carolina
London
Germany
Pune, India
Singapore
New Zealand
America
Europe
Asia
340+
Customers
380K
Users
25+
Countries
7
Offices
50+
Employees
20+
R&D Staff
Knosys remains well positioned to benefit from the structural change in working arrangements
in a post COVID environment. Many businesses are redesigning their operations to be more agile
and customer focused and they are demanding solutions to connect their customers and staff to
information through a single source of truth.
Knosys’ portfolio of SaaS solutions enables staff and customers to self-service and ensure
consistency across all digital channels, and therefore remain in high demand.
FY22 Financial Highlights
Key financial metrics in the 2022 financial year:
•
•
•
•
•
License and support fee revenues increased by 120% to $8,298,529
(FY21: $3,771,143);
Total operating revenue for the consolidated entity increased by 94% to $8,916,995 (2021:
$4,594,082);
The loss for the consolidated entity after providing for income tax was $3,050,548 (2021:
$543,838), including one-off acquisition costs of $499,196, non-cash charges for amortisation
of intangibles of $741,120 and non-cash shared based remuneration expense of $720,892;
Net cash out flow from operating activities was $220,299 (2021 inflow: $580,114); and
The consolidated entity had net assets of $8,925,685 at 30 June 2022 (2021: $10,017,838) and
held cash and cash equivalents of $3,095,702 (2021: $6,532,415).
We were very pleased to deliver exceptional top line revenue growth in FY22, with near breakeven
operating cash flow.
The FY22 financial results include a ten-month contribution from the Libero acquisition (August
2021) and the full year contribution from the Green Orbit acquisition (March 2021).
Over the past year, employee costs and operational expenses increased to reflect the company’s
growth strategy and enhanced operations. The net cash out flow of just $220K demonstrates
the sustainability of the Knosys business model through its ability to self-fund the enhanced
growth strategy.
8 CEO & Operations Report
CEO & Operations Report 9
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 FY22 Key Highlights
$9.4m
ARR as at
July 2022
94%
Increase in
operating
revenue since
FY21
87%
Gross Profit
Margin
14%
(R&D spend as
% of Revenue)
340+
Customers
~9%
Customer churn
per annum
The Annualised
Recurring Revenue
(ARR) increased to
$9.4 million, up from
$6.1m in FY21.
s
n
o
i
l
l
i
M
10
9
8
7
6
5
4
3
2
1
0
160%
140%
120%
100%
80%
60%
40%
20%
0%
FY16
FY17
FY18
FY19
FY20
FY21
FY22
July’22**
ARR
KM
GO
LIB
*FY22 reflects actual recurring revenue for the year, including the impact of acquisitions
**July’22 ARR reflects July’22 month’s recurring revenue annualised to give an annual run rate
FY22 Review of Operations
Knosys has a mission to empower businesses of all sizes, from large enterprise organisations to
small companies, to make smarter connections with their information.
Our focus is on developing solutions that enable businesses to make the most of information and
knowledge assets that sit within their organisation. We offer three market leading solutions across
Knowledge Management, Employee Experience and Library Management.
Product Portfolio
Knowledge Management
Intuitive Platform
KnowledgeIQ - Intuitive platform supporting your corporate teams, call centres and
customers. Unlocking knowledge to help employees and customers find answers and
information quickly when they need it. Trusted single source of truth for everyone.
Intranet - Employee
Experience Solution
GreenOrbit - Everything your employee needs built in. Empowering digital
workplace with the best employee tools to communicate, collaborate and engage
through an intelligent intranet. Creating inspiring experiences.
Library Management
Innovative Solution
Libero - A powerful library management system to manage all your resources in the
digital workspace. Libero is cloud based enabling your employees and members to
access your library management solution anywhere, at anytime.
10 CEO & Operations Report
CEO & Operations Report 11
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 Diversifying revenue by product and geography
Over the past year, we have successfully diversified revenue by product and by geography.
In FY21, 84% of revenue was from Knowledge Management, reducing to 37% in FY22.
In FY21, 85% of revenue was from Australia and New Zealand, decreasing to 71% in FY22.
Revenue by Product
FY21
FY22
16%
24%
37%
84%
84%
39%
KM
GO
LIB
Revenue by Geography
FY21
8%
7%
FY22
3%
4%
5%
17%
85%
71%
AUS & NZ
US
ROW
EU
ASIA
1
Remote
Workers
2
Customers
Expect
Consistency
4
Content
Explosion
and Silos
3
Information
Governance &
Compliance
Industry trends driving demand for the Knosys product suite
An organisation’s ability to engage, inform, automate, modernise, and deliver the ultimate customer/employee
experience from wherever customers engage from and employees work from, is crucial to maintaining a competitive
position and sustained business success.
The Knosys solutions are extremely well positioned to fulfill that need, providing organisations with the security of
business continuity and functional productivity improvement, in an increasingly demanding environment.
The four key drivers of demand across all our solutions are:
1
2
3
4
The growth in number of remote workers, which started before covid and accelerated over
the past few years during covid and is now moving to a hybrid office/home work-model.
Increased customer expectations of consistent information across all channels, including
at the physical office, a contact centre, a mobile phone, website or chat bot.
The need for high quality governance and compliance processes, which are especially
important for organisations that operate in a highly regulated environment, as these
organisations need to be able to track and trace all interactions with their customers.
The content explosion and information overload, driving demand for our solutions which
simplify and prioritise information to ensure that workers only see the information they
need to perform their role with increasing efficiency and effectiveness.
12 CEO & Operations Report
CEO & Operations Report 13
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 Growth strategy
In order to achieve these strategic goals,
Knosys has outlined a five pillar growth strategy.
In November 2021, Knosys released its Growth Strategy to the market and we are currently one year
into our three year growth plan. Knosys is focussed on revenue growth across all product lines, but tight
control on costs is designed to balance returns with growth.
The Knosys vision is to empower organisations to make smarter connections with their information. The
market demand for the Knosys portfolio of SaaS solutions is driven by the remote workforce, customer
expectations of consistency, content explosion & siloes as well as information governance & compliance.
Knosys estimates the total market opportunity across Employee Experience, Knowledge Management
and Library Management solutions to be around $30B per annum globally.
Knosys strategic goals for 2024 are to:
Be recognised as a leading SaaS vendor in each of its
solution spaces;
Grow its global customer base to over 1,000
customers; and
Have over one million contracted users.
1
Grow revenue
from existing
customers
• Increase numbers of users, and sites through
upselling to existing customers.
• Expand sales into existing customers via cross sell of
solutions and upgrade projects to the cloud.
2
New customers
in existing and
new markets
• Invest in sales and marketing to accelerate pipeline
growth and new customer acquisition in key markets.
• Expand brand into key markets not already
purchasing.
3
Grow our
brand
awareness
• Attract new and retain customers.
• Attract and retain top employee talent
• Stronger brand translates into supporting high price
points and more wins.
• Thought leadership and industry achievements
4
Expand
solutions
offering and IP
• Expand solutions offering through investment in
additional features.
• Build out unique capabilities on the Knosys solutions.
5
Accelerate
growth
through
acquisitions
• Knosys remains open to pursuing strategic,
technology aligned and operationally compatible
acquisitions.
14 CEO & Operations Report
CEO & Operations Report 15
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 Knosys is a global
organisation bringing
people and technology
solutions together
Executing on the strategy
In FY22, Knosys focused on increasing the annual revenue per user (ARPU) of the GreenOrbit
customer base, and this translated to a material uplift on subscription fees upon renewal. Over
68% of the GreenOrbit customer base has now transitioned to the latest product release. The
legacy Intranet ID product will reach end of life in December 2022, as the final group of customers
transition to the latest GreenOrbit product release. This transition has resulted in an increase in total
annual recurring revenue for the GreenOrbit business and short to medium term increases in service
and implementation fees. This program will be completed by December 2022, at which time the
focus of resources will be on new customer opportunities.
In FY22, Knosys commenced a program to consolidate its global customer base into a single cloud
service provider to improve operating margins and minimise the need for additional cloud resources
going forward. This work is scheduled for completion in FY23.
Key contract wins in FY22 include:
New customer wins in Knowledge Management and a 3,500
user expansion from a major banking customer.
Signed a two-year contract extension with Optus for
the continued use of Knosys’ market leading Knowledge
Management platform, Knowledge IQ , with a total
contract value of over $2m.
Signed major contract extensions for our GreenOrbit intranet
solution with enterprise customers including Harvey Norman,
Healthscope and GPC.
A major contract with Healthdirect Australia for Knowledge IQ , with
an expected total contract value of over $650K over four years.
Further wins in Australia and the United States for
KnowledgeIQ , Libero and GreenOrbit solutions, signing new
customers Services TAS, Services SA, The Australian Club,
National Film and Sound Archive of Australia, Snowy Monaro
Library and Heritage Bank.
16 CEO & Operations Report
CEO & Operations Report 17
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 Our People
Outlook
Knosys enters FY23 with industry trends driving a healthy pipeline of opportunities for
our portfolio of solutions to empower customers to make smarter connections with their
information. Our annualised recurring revenue continues to grow and we are well funded to
execute our growth strategy. Net operating cash flow is expected to improve in FY23, through
increased operating leverage as revenues increase faster than operating expenditure and
investment in growth.
I would like to thank our dedicated team for their hard work over the past year. And thanks
also to our shareholders, for your ongoing support as we look forward to another strong year
of growth ahead.
John Thompson
Managing Director
29 August 2022
Melbourne
Sales & Marketing
Finance & Ad min
Custo m er Support
By Region
By Department
2%
17%
10%
2%
AU
UK
US
IN
EU
69%
25
20
15
10
5
0
Non-Exec Director
Technology
Executive
Number of Employees
59
Employees
37%
Female
63%
Male
Knosys is proud to advise that within the digital and technology workforce, we
are sitting above the average for the number of women employed, with women
composing 37% of all Knosys staff and 44% of executive, middle management,
and Board of Director positions.
18 CEO & Operations Report
CEO & Operations Report 19
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 Board of
Directors
Information on directors
HON. ALAN STOCKDALE AO NON-EXECUTIVE CHAIRMAN
Experience and expertise
Hon. Alan Stockdale AO
Non-Executive Chairman
Hon. Alan Stockdale AO served as Treasurer in the Victorian Government from
1992 to 1999 and his responsibilities included the Government reform agenda
and general financial management. As Treasurer, Alan was responsible for the
privatisation of $A30 billion of Government business enterprises. He was also
Minister for IT and Multimedia from 1996 to 1999, promoting Victoria as a leader in
the application of multimedia and new information technologies.
In the private sector, Alan was employed by Macquarie Bank for a total of six years,
co-leading the Macquarie team that successfully bid to acquire Sydney Airport.
Taking on a number of other corporate advisory roles, he was involved in a wide
range of infrastructure transactions, especially in the power, gas and transport
sectors in Australia and overseas. Alan has developed a career as a company
Chairman and director of a number of ASX-listed companies and of various unlisted
companies and not-for-profit organisations. He is Chairman of X2M Connect
Limited and has been Chairman of Axon Instruments Inc (incorporated in the USA
and listed on the ASX), Symex Holdings Limited, Senetas Corporation Limited
and a director of Marriner Financial Limited - all companies listed on the ASX. He
was previously a consultant to Metro Trains, a consultant to Maddocks Lawyers,
a member of the Advisory Board of Lazard Australia and Chairman of the Medical
Research Commercialisation Fund. He was Federal President of the Liberal Party
from 2008 to 2014. Alan holds a Bachelor of Laws and a Bachelor of Arts, both
completed at the University of Melbourne, is a Barrister of the Supreme Courts of
Victoria and NSW and the High Court of Australia and was a Fellow of the Australian
Institute of Company Directors. Alan is based in Victoria and has been a director of
Knosys since 30 April 2015.
Directorships held in other listed
entities in the last 3 years
Nil
Interests in shares
500,000 ordinary shares
Interests in options
Nil Options
KATHRIN MUTINELLI
NON-EXECUTIVE DIRECTOR
Experience and expertise
Kathrin Mutinelli
Non-Executive Director
Kathrin Mutinelli is a strategist whose career has focused on organisational growth,
specifically in Australia and across the APAC in multinational and culturally diverse
environments. Advising leaders of global organisations on strategy such as
Lockheed Martin, Sikorsky, Gulfstream and various Australian companies on capital
requirements to fund growth such as WorkPac, The Blue Space, Stacked Farm,
Zetaris, AirBolt and Alii.
As founder and Managing Director of SeventyTwo Capital, Kathrin works with a team
of specialists to support Australia’s most ambitious entrepreneurs and business
leaders to realise their growth ambitions through strategy development and
access to capital. She has also created a partnership with UQ to provide practical
experience to BAFE students with an interest in investing and was a guest lecturer
at Bond University on the topic of strategy.
Her skills were honed while a Director at Deloitte, refined through her MBA at
RMIT, and developed further through the AICD and at the Harvard Business School
where she completed her Corporate Director’s Certificate which covered board
effectiveness, compensation and risk committees.
Kathrin is based in Brisbane and has been a non—executive director at Knosys since
1 September 2021.
Directorships held in other listed
entities in the last 3 years
Nil
Interests in shares
700,000 ordinary shares
Interests in options
Nil Options
20 Board of Directors
Board of Directors 21
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 NEIL WILSON
NON-EXECUTIVE DIRECTOR
Experience and expertise
Neil Wilson is an experienced business leader and entrepreneur with corporate,
startup, founder and public company experience, having held the position of Managing
Director and Chief Executive Officer of Oakton Limited (ASX:OKN) for nine years, until its
acquisition by Dimension Data in 2014. He is a practitioner in the digital and technology
domain and has extensive experience in general management and CEO management
across private and public company scenarios.
Neil was CEO of the Victoria Racing Club (VRC) for three and a half years and was
appointed the VRC Chairman in November 2020. He is currently Chairman of Nexon
and CharterX and is a Member of the Advisory boards for Clipboard, nimbus, Alex
Neil Wilson
Non-Executive Director
Solutions and InfoCentric. Neil holds a Bachelor of Business, is a CPA and a Member of the
Australian Computer Society. Neil is based in Melbourne and has been a director since 1
December 2020.
Directorships held in other
listed entities in the last 3 years
Nil
Interests in shares
750,000 ordinary shares
Interests in options
Nil Options
JOHN THOMPSON
MANAGING DIRECTOR
Experience and expertise
John Thompson (BEng Hons, MBA) has held the role of CEO since 18 July 2016. Mr.
Thompson brings a wealth of leadership experience having worked for more than 20
years at the helm of renowned technology companies. Most recently, Mr. Thompson
spent 11 years as CEO of Sigtec and 5 years as CEO of Wavenet International, in addition
to 5 years with CS Communications and Systems in New York and London. Mr. Thompson
received a first class honours degree in Engineering from the Queensland University of
Technology and a Master of Business Administration from the City University Business
School in London. Mr. Thompson has a strong record of driving sales and revenue and
has extensive experience as a capable CEO providing pivotal leadership expertise across
UK, US, Australia and New Zealand markets for multi-national, listed, IPO and start-up
technology companies. John is based in Melbourne and has been a director since 26
September 2018.
John Thompson
Managing Director
Directorships held in other
listed entities in the last 3 years
Nil
Interests in shares
2,417,857 ordinary shares
Interests in options
6,000,000 Options
Directors’
Report
22 Board of Directors
Directors’ Report 23
KNOSYS ANNUAL REPORT 2022 Directors’ Report
The directors present their report, together with the financial statements, on the consolidated entity
(referred to hereafter as the ‘consolidated entity’) consisting of Knosys Limited (referred to hereafter as
the ‘company’ or ‘parent entity’) and the entities it controlled at the end of, or during, the year ended
30 June 2022.
Directors
The following persons were directors of Knosys Limited during the period from 1 July 2021 to the date of
this report, unless otherwise stated:
Hon. Alan Stockdale
Non-executive Chairman
John Thompson
Managing Director
Peter Pawlowitsch
Non-executive Director (retired 8 December 2021)
Kathrin Mutinelli
Non-executive Director
Neil Wilson
Non-executive Director
Each of Alan Stockdale, Kathrin Mutinelli and Neil Wilson are considered to be independent directors.
Review of operations
Refer to Managing Directors Report on page 23.
Principal activities
During the financial period the principal continuing activities of the consolidated entity were computer
software development and licencing.
Dividends
No dividends were paid or declared during the financial year.
Significant changes in the state of affairs
During the year Knosys acquired the Libero library management business at a purchase price of $5m.
The consideration for the acquisition comprised a cash payment of $4m and the issue of 6,896,551 fully
paid ordinary shares to the vendor of the Libero business. The acquisition completed on 31 August 2021
and the Libero business has contributed to the consolidated revenues and net result of the group for
ten months to 30 June 2022.
There were no significant changes in the state of affairs of the consolidated entity during the financial
year, other than those matters mentioned above.
Matters subsequent to the end of the financial year
No matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may
significantly affect the consolidated entity’s operations, the results of those operations, or the
consolidated entity’s state of affairs in future financial years.
Likely developments and expected results of operations
Knosys expects a continued expansion of the market and the adoption of its range of software
solutions designed to boost productivity, collaboration and connectivity in the digital workplace.
The Company is again well placed to expand its customer base and add to its offerings through
internal developments and further advances in technologies.
The Company will receive the benefit of a full year contribution to revenues and net results from
the Libero business in the year to 30 June 2023.
The consolidated entity has a significant sales pipeline in its global markets. The Company will
continue to invest in sales and marketing capability in the year to June 2023 in order to enable
the Company to pursue the multiple enterprise and mid-market opportunities in its sales pipeline,
with the aim of converting them into subscription based contracts.
Further information on likely developments in the operations of the consolidated entity and
the expected results of operations have not been included in this report because the directors
believe it would be likely to result in unreasonable prejudice to the consolidated entity.
Environmental regulation
The consolidated entity is not subject to any significant environmental regulation under Australian
Commonwealth or State law.
Information on directors
Refer to pages 21-22 of the annual report for director information.
Company Secretary and Chief Financial Officer
Stephen Kerr (BCom, CA, CS, FGIA) has held the role of CFO and Company Secretary since July
2015. Stephen Kerr is a qualified chartered accountant and chartered company secretary. He
is an experienced CFO and governance professional, having held senior finance positions in
private and publicly listed company environments across Australia and New Zealand for over 20
years. Stephen holds a Bachelor of Commerce from the University of Melbourne and is a current
member of Chartered Accountants Australia and New Zealand and a Fellow of the Governance
institute of Australia.
Meetings of directors
The number of meetings of the Company’s Board of Directors (‘the Board’) held from 1 July 2021
to the year ended 30 June 2022, and the number of meetings attended by each director were:
FULL BOARD
Attended
Held
Hon. Alan Stockdale
Peter Pawlowitsch
John Thompson
Kathrin Mutinelli
Neil Wilson
11
5
11
11
11
11
5
11
11
11
Held: represents the number of meetings held during the time the director held office.
24 Directors’ Report
Directors’ Report 25
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 Remuneration Report (audited)
The remuneration report details the key management personnel remuneration arrangements for
the consolidated entity, in accordance with the requirements of the Corporations Act 2001 and
its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing
and controlling the activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
•
•
•
•
•
•
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of
remuneration
The objective of the consolidated entity’s executive reward framework is to ensure reward for
performance is competitive and appropriate for the results delivered. The framework aligns executive
reward with the achievement of strategic objectives and the creation of value for shareholders. The
Board of Directors (‘the Board’) ensures that executive reward satisfies the following key criteria for
good reward governance practices:
•
•
•
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
•
transparency
The performance of the consolidated entity depends on the quality of its directors and executives.
The remuneration philosophy is to attract, motivate and retain high performance and high-quality
personnel. The executive remuneration framework is structured to be market competitive and
complementary to the strategy of the consolidated entity.
Non-executive directors’ remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role.
Non-executive directors’ fees and payments are reviewed annually by the Board. The Board may, from
time to time, receive advice from independent remuneration consultants to ensure non-executive
directors’ fees and payments are appropriate and in line with the market. No such advice was sought
for the financial year ended 30 June 2022. The chairman’s fees are determined independently to the
fees of other non-executive directors based on comparative roles in the external market. The chairman
is not present at any discussions relating to the determination of his own remuneration.
ASX listing rules require the aggregate non-executive directors’ remuneration be determined
periodically by a general meeting. The current maximum aggregate remuneration payable to non-
executive directors of the consolidated entity in any financial year is $500,000.
Executive remuneration
The consolidated entity aims to reward executives with a level and mix of remuneration based on their
position and responsibility, which has both fixed and variable components.
The executive remuneration and reward framework has four components:
•
•
•
•
base pay, superannuation and non-monetary benefits
short-term performance incentives
share-based payments
other remuneration such as long service leave
The combination of these comprises the executive’s total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed
annually by the Board, based on individual performance and the overall performance of the consolidated
entity and comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example
motor vehicle benefits) where it does not create any additional costs to the consolidated entity and
provides additional value to the executive.
The short-term incentives (‘STI’) program is designed to align the targets of the business with the targets of
those executives responsible for meeting those targets. STI payments are granted to executives based on
specific targets and/or key performance indicators (‘KPI’s’) being achieved. These targets are discussed in
further detail in the description of service agreements which forms part of this Remuneration Report.
The long-term incentives (‘LTI’) include long service leave and share-based payments. Options are awarded
to executives, vesting over a period of three years based on elapsed time and/or achievement of long-term
incentive measures.
Consolidated entity performance and link to remuneration
Remuneration for certain individuals is directly linked to the performance of the consolidated entity.
A portion of cash bonus and incentive payments are dependent on defined revenue and earnings
targets being met. The remaining portion of the cash bonus and incentive payments are at the discretion
of the Board.
In considering the performance of the consolidated entity and benefits for shareholder wealth, the
remuneration committee have regard to the following indices in respect of the current financial year and
the previous financial years.
Operating revenue
8,916,995
4,594,082
3,137,317
2,909,228
2,635,906
2022
$
2021
$
2020
$
2019
$
2018
$
Profit / (loss) before transaction
costs and income tax expense
Profit / (loss) attributable to
owners of the parent entity
Dividends paid
Operating revenue growth
Change in operating result
Change in share price
(2,535,746)
15,525
(908,391)
(771,912)
(806,067)
(3,050,548)
(543,838)
(908,391)
(771,912)
(806,067)
-
94.1%
(461%)
(59%)
-
46.4%
40.1%
75%
(8.6%)
-
7.8%
(17.7%)
(16%)
(30%)
-
10.8%
4.2%
25%
(31%)
-
224.7%
61.3%
(57%)
(69%)
Return on capital employed
(32.5%)
Revenue and profit are two of the financial performance targets considered in setting the Short-Term
Incentive (STI). Revenue and profit amounts have been calculated in accordance with Australian Accounting
Standards (AASB’s). Operating result is operating profit or loss as reported in the statement of profit or loss.
26 Directors’ Report
Directors’ Report 27
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in
the following tables.
The key management personnel of the consolidated entity during the year to 30 June 2022
consisted of the following directors of Knosys Limited:
•
•
•
•
•
Alan Stockdale - Non-Executive Chairman
Peter Pawlowitsch - Non-Executive Director (retired 8 December 2021)
John Thompson - Managing Director
Kathrin Mutinelli - Non-Executive Director
Neil Wilson - Non-Executive Director
And the following persons:
•
Stephen Kerr - Company Secretary and Chief Financial Officer
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Cash
salary and
fees
$
76,250
22,020
50,227
55,000
Cash
bonus
Non-
monetary
Super-
annuation
Long
service
leave
Equity-settled
Total
$
-
-
-
-
$
-
-
-
-
$
6,250
2,202
5,023
-
$
-
-
-
-
$
-
-
-
-
$
82,500
24,222
55,250
55,000
308,381
73,000
44,247
26,487
13,269
298,906
764,290
2022
Non-Executive Directors:
Alan Stockdale
Peter Pawlowitsch
Kathrin Mutinelli
Neil Wilson
Executive Director:
John Thompson
Other Key Management Personnel:
Stephen Kerr
248,003
48,000
10,205
27,497
12,012
166,130
511,847
759,881
121,000
54,452
67,459
25,281
465,036
1,493,109
For the financial year, the actual proportions of fixed remuneration and of remuneration linked to
performance are as follows:
2022
Fixed remuneration
At risk - STI
At risk - LTI
Non-Executive Directors:
Alan Stockdale (Chairman)
Peter Pawlowitsch
Kathrin Mutinelli
Neil Wilson
Managing Director:
John Thompson
Other Key Management Personnel:
Stephen Kerr
100%
100%
100%
100%
51%
-%
-%
-%
-%
10%
(13% available)
58%
9%
(12% available)
-%
-%
-%
-%
39%
33%
2021
Fixed remuneration
At risk - STI
At risk - LTI
Non-Executive Directors:
Alan Stockdale (Chairman)
Peter Pawlowitsch
Kathrin Mutinelli
Neil Wilson
Managing Director:
John Thompson
Other Key Management Personnel:
Stephen Kerr
Service agreements
100%
100%
57%
48%
86%
-%
-%
-%
-%
14%
(22% available)
87%
13%
(21% available)
-%
-%
43%
52%
-%
-%
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Remuneration and other terms of employment for key management personnel are formalised in service
agreements. Details of these agreements are as follows:
2021
Non-Executive Directors:
Alan Stockdale
Peter Pawlowitsch
Kathrin Mutinelli
Neil Wilson
Executive Director:
John Thompson
Cash
bonus
Non-
monetary
Super-
annuation
Long
service
leave
Equity-settled
Total
Cash
salary and
fees
$
74,304
47,945
41,857
32,083
$
-
-
-
-
$
-
-
-
-
$
4,446
4,555
3,976
-
$
-
-
-
-
$
-
-
$
78,750
52,500
35,000
80,833
35,000
67,083
-
-
402,186
290,040
298,801
57,500
15,112
24,000
6,773
Other Key Management Personnel:
Stephen Kerr
189,242
37,000
30,275
20,608
12,915
Name:
Title:
John Thompson
Chief Executive Officer
Agreement commenced:
18 July 2016
Term of agreement:
No fixed term
Details:
Annual base salary for the year ending 30 June 2022 of $362,555 including
superannuation. Remuneration to be reviewed annually by the Board,
6-month termination notice by either party, STI performance bonus of up
to $100,000 (including statutory superannuation) based on financial and
non-financial KPI’s, including achievement of budget, over achievement
of budget, new sales orders, leadership, customer relations, investor
relations, and product development. Non-disclosure, non-solicitation
and non-compete clauses apply. An amount of $73,000 relating to
performance in the 2022 year was assessed as a bonus entitlement for
the 2022 financial year.
684,232
94,500
45,387
57,585
19,688
70,000
971,392
28 Directors’ Report
Directors’ Report 29
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 Name:
Title:
Stephen Kerr
Chief Financial Officer and Company Secretary
Agreement commenced:
9 June 2015
Term of agreement:
No fixed term
Details:
Annual base salary for the year ending 30 June 2022 of $276,232
including superannuation, employment is for four days per week
during normal working hours on days agreed with the CEO and
reasonable additional hours during these days in order to perform
responsibilities and duties. Remuneration is to be reviewed
annually by the Board, 3-month termination notice by either party,
STI performance bonus of up to $60,000 (including statutory
superannuation) based on financial and non-financial KPI’s, non-
disclosure, non-solicitation and non-compete clauses. An amount
of $48,000 relating to performance in the 2022 year was assessed
as a bonus entitlement in the 2022 financial year.
Key management personnel have no entitlement to termination payments in the event of removal
for misconduct.
Share-based compensation
Loan funded shares
The terms and conditions of 1,625,000 loan funded shares granted in this financial year and which
affect the remuneration of key management personnel in this financial year or future reporting
years are as follows:
Grant date
Number of shares
Expiry date
Issue price
Fair value per loan
share at grant date
October 2021
243,750
October 2026
15.0 cents
October 2021
October 2021
October 2021
97,500
97,500
97,500
October 2026
15.0 cents
October 2026
15.0 cents
October 2026
15.0 cents
October 2021
260,000
October 2026
15.0 cents
October 2021
October 2021
October 2021
146,250
146,250
146,250
October 2026
15.0 cents
October 2026
15.0 cents
October 2026
15.0 cents
October 2021
390,000
October 2026
15.0 cents
6.3 cents
6.4 cents
6.9 cents
7.4 cents
7.8 cents
9.2 cents
9.2 cents
9.2 cents
9.1 cents
No loan funded shares were granted to directors in this financial year or affected remuneration of
directors in this financial year or future reporting years.
Participants acquire loan funded shares using a loan provided by the consolidated entity. The
loan is interest-free and limited recourse in accordance with the loan terms. The loan shares are
restricted securities. The loan terms require the loan to be repaid before a participant can receive
any proceeds from the sale of their shares. Refer Note 25 in the notes to the financial statements,
for further details and general terms of the loan funded shares.
Refer Note 25 in the notes to the financial statements, for further details and general terms of the
loan funded shares.
Options
The terms and conditions of 7,775,000 options granted this financial year and which affect the
remuneration of key management personnel in this financial year or future reporting years are as follows:
Grant date
Number of shares
Expiry date
Exercise price
Fair value per loan
share at grant date
December 2021
1,166,250
December 2021
December 2021
December 2021
466,500
466,500
466,500
December 2021
1,244,000
December 2021
December 2021
December 2021
699,750
699,750
699,750
December 2021
1,866,000
July 2026
July 2026
July 2026
July 2026
July 2026
July 2026
July 2026
July 2026
July 2026
15.0 cents
15.0 cents
15.0 cents
15.0 cents
15.0 cents
15.0 cents
15.0 cents
15.0 cents
15.0 cents
7.3 cents
7.3 cents
7.7 cents
8.3 cents
8.7 cents
10.1 cents
10.1 cents
10.1 cents
10.0 cents
6,000,000 of the above options were granted to director, John Thompson in December 2021. These
options and those issued to other key management personnel vest in accordance with the terms listed
in Note 25 of the financial statements.
Shares issued on the exercise of options.
No ordinary shares of Knosys Limited were issued to key management personnel during the year ended
30 June 2022 and up to the date of this report on the exercise of options granted.
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 entity, including their personally related
parties, is set out below:
Balance at the
start of the
year
Received
as part of
remuneration
Cessation
as a
director
Forfeited
Balance at the
end of the year
Ordinary shares
Alan Stockdale
1,000,000
Peter Pawlowitsch
2,181,578
Kathrin Mutinelli
Neil Wilson
700,000
750,000
John Thompson
3,667,857
-
-
-
-
-
Stephen Kerr
2,103,902
1,625,0001
-
(500,000)1
500,000
(1,681,578)
(500,000)1
-
-
-
-
-
-
-
700,000
750,000
(1,250,000)1
2,417,857
(500,000)1
3,228,902
10,403,337
1,625,000
(1,681,578)
(2,750,000)
7,596,759
1. Shares granted issued or forfeited as loan funded shares in the current year.
30 Directors’ Report
Directors’ Report 31
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 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 entity, including their
personally related parties, is set out below:
Options over ordinary shares
John Thompson
Stephen Kerr
Balance at
the start
of the year
Received
as part of
remuneration
Balance at
the end of
the year -
vested
Balance at
the end of
the year -
unvested
Balance at
the end of
the year
-
-
-
6,000,000
1,260,000
4,740,000
6,000,000
1,775,000
372,750
1,402,250
1,775,000
7,775,000
1,632,750
6,142,250
7,775,000
There were no other transactions with key management personnel and their related parties
This concludes the remuneration report, which has been audited.
Options
At the date of this report, the unissued ordinary shares of Knosys Limited under option are as follows:
Date of expiry
Option type
Exercise price
Number under options
1 July 2026
unlisted
$0.15
10,550,000
Each option carries no rights other than the right, once vested, to subscribe for one fully paid ordinary
share at the exercise price. 2,000,000 options were exercised during the year.
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their
capacity as a director or executive, for which they may be held personally liable, except where there is
a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors
and executives of the company against a liability to the extent permitted by the Corporations Act
2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the
premium.
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
The Board is responsible for the maintenance of audit independence. Specifically, the Board Charter
ensures the independence of the auditor is maintained by:
•
•
limiting the scope and nature of non audit services that may be provided; and
requiring that permitted non audit services must be pre approved by the Chairman of
the Board.
During the year William Buck, the Group’s auditor, has performed certain other services in addition
to the audit and review of the financial statements. The Board has considered the non audit services
provided during the year by the auditor and in accordance with the advice provided by the Board, is
satisfied that the provision of those non audit services during the year by the auditor is compatible with,
and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the
following reasons:
•
•
All non audit services were subject to the corporate governance procedures adopted by the
Group and have been reviewed by the Board to ensure they do not impact the integrity and
objectivity of the auditor; and
The non audit services provided do not undermine the general principles relating to auditor
independence as set out in APES 110 Code of Ethics for Professional Accountants (including
Independence Standards) as they did not involve reviewing or auditing the auditors own work,
acting in a management or decision making capacity for the consolidated entity, acting as an
advocate for the consolidated entity or jointly sharing risks and rewards.
Details of the amounts paid to the auditor of the consolidated entity, William Buck, for audit and non
audit services provided during the year are set out in Note 18.
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 on the following page.
Auditor
William Buck Audit (VIC) Pty Ltd continues in office in accordance with section 327 of the Corporations
Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
On behalf of the directors
Hon. Alan Stockdale AO
Director
29 August 2022
Melbourne
32 Directors’ Report
Directors’ Report 33
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE DIRECTORS OF KNOSYS LIMITED
I declare that, to the best of my knowledge and belief during the year ended 30 June 2022 there have been:
— no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in
relation to the audit; and
— no contraventions of any applicable code of professional conduct in relation to the audit.
William Buck Audit (Vic) Pty Ltd
ABN 59 116 151 136
A. A. Finnis
Director
Melbourne, 29 August 2022
Knosys empowers
organisations.
Boosting productivity,
collaboration and
connectivity in the
digital workplace.
Level 20, 181 William Street, Melbourne VIC 3000
+61 3 9824 8555
vic.info@williambuck.com
williambuck.com.au
William Buck is an association of firms, each trading under the name of William Buck
across Australia and New Zealand with affiliated offices worldwide.
Liability limited by a scheme approved under Professional Standards Legislation.
Directors’ Report 35
Connecting People and Information Financial
Statements
Consolidated
30 June 2022
ABN 96 604 777 862
Contents
Statement of profit or loss and other comprehensive income ........ 38
Statement of financial position .......................................................... 39
Statement of changes in equity .........................................................40
Statement of cash flows ......................................................................41
Notes to the financial statements ..................................................... 42
Directors’ declaration ......................................................................... 68
Independent auditor’s report ............................................................ 69
General information
The financial statements cover Knosys Limited as a consolidated entity consisting of Knosys
Limited and the entities it controlled at the end of, or during, the year. The financial statements are
presented in Australian dollars, which is Knosys Limited’s functional and presentation currency.
Knosys Limited is listed on the Australian Securities Exchange (ASX:KNO) and is incorporated and
domiciled in Australia.
Registered office and principal place of business
Part Level 8
31 Queen Street
Melbourne VIC 3000
A description of the nature of the consolidated entity’s operations and its principal activities are
included in the directors’ report, which is not part of the financial statements.
The financial statements were authorised for issue on 29 August 2022, in accordance with
a resolution of directors. The directors have the power to amend and reissue the financial
statements.
36 Financial Statements
Financial Statements 37
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 Statement of profit or loss and other comprehensive income
For the year ended 30 June 2022
Statement of financial position
As at 30 June 2022
Revenue
Research and development tax refund
Other income
Expenses
Consolidated
Notes
2022
$
2021
$
3
8,916,995
4,594,082
539,643
7,608
619,094
72,564
Licence fee and support expense
(1,189,504)
(615,753)
Payments to suppliers for research and development activities
(228,198)
(60,959)
Employee benefits expense
4
(7,613,162)
(3,505,224)
Depreciation and amortisation expense
Legal and accounting expense
Travel and accommodation expense
Finance costs
Administration and corporate expense
(927,925)
(188,363)
(260,917)
(110,638)
(147,439)
(9,600)
(26,676)
(15,398)
(1,623,247)
(747,204)
Profit / (Loss) before acquisition costs and income tax
(2,535,746)
15,525
Transaction costs related to acquisition of businesses
Loss before income tax
Income tax expense
4
5
(499,196)
(559,363)
(3,034,942)
(543,838)
(15,606)
-
Loss after income tax expense for the year attributable
to owners of the Knosys Limited
(3,050,548)
(543,838)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
(27,747)
(1,543)
Total comprehensive loss for the year attributable
to owners of Knosys Limited
(3,078,295)
(545,381)
Loss per share for loss attributable to the
owners of the parent
Cents
Cents
Basic and diluted loss per share
27
(1.44)
(0.32)
Assets
Current assets
Cash and cash equivalents
Trade receivables
Accrued research and development tax refund receivable
Prepayments & sundry receivables
Total current assets
Non-current assets
Intangible assets and goodwill
Buildings - Right-of-use asset
Plant and equipment
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Provisions
Lease liability
Contract liabilities
Total current liabilities
Non-current liabilities
Provisions
Lease liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share based payments reserve
Foreign currency translation reserve
Accumulated losses
Consolidated
Notes
2022
$
2021
$
6
7
8
9
10
11
12
13
14
12
13
15
25
3,095,702
6,532,415
2,382,668
1,934,803
550,000
500,000
337,008
221,200
6,365,378
9,188,418
8,885,095
4,926,215
73,986
79,761
184,986
96,072
9,038,842
5,207,273
15,404,220
14,395,691
1,038,554
670,254
741,667
94,705
500,608
134,853
4,534,870
2,893,063
6,409,796
4,198,778
68,739
-
93,093
85,982
68,739
179,075
6,478,535
4,377,853
8,925,685
10,017,838
17,488,521
16,149,271
1,041,526
394,634
(29,290)
(1,543)
(9,575,072)
(6,524,524)
Total equity
8,925,685
10,017,838
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
The above statement of financial position should be read in conjunction with the accompanying notes
38 Financial Statements
Financial Statements 39
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 Statement of changes in equity
For the year ended 30 June 2022
Statement of cash flows
For the year ended 30 June 2022
(296,759)
296,759
-
Cash flows from investing activities
Consolidated
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total
equity
$
Balance at 1 July 2020
8,312,409
556,216
(6,277,445)
2,591,180
Loss after income tax expense for the year
Foreign currency translation
Total comprehensive loss for the year
-
-
-
-
(543,838)
(543,838)
(1,543)
(1,543)
-
(1,543)
(543,838)
(545,381)
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction
costs (Note 15)
Share based payments (Note 25)
Transfer from share based payments reserve
to accumulated losses on expiry of share
based remuneration instruments
-
-
7,836,862
-
135,177
-
-
7,836,862
135,177
Balance at 30 June 2021
16,149,271
393,091
(6,524,524)
10,017,838
Consolidated
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total
equity
$
Balance at 1 July 2021
16,149,271
393,091
(6,524,524)
10,017,838
Loss after income tax expense for the year
Foreign currency translation
Total comprehensive loss for the year
-
-
-
-
(3,050,548)
(3,050,548)
(27,747)
-
(27,747)
(27,747)
(3,050,548)
(3,078,295)
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction
costs (Note 15)
1,265,250
-
Share based payments (Note 25)
-
720,892
Transfer from share based payments reserve
to issued capital on realisation of share
based remuneration instruments
74,000
(74,000)
-
-
-
1,265,250
720,892
-
Balance at 30 June 2022
17,488,521
1,012,236
(9,575,072)
8,925,685
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Research and development tax refund
Interest received
Interest paid
Grant revenue
Tax paid
Consolidated
Notes
2022
$
2022
$
9,305,715
4,908,218
(9,998,059)
(4,997,663)
489,643
7,608
(9,600)
-
(15,606)
615,052
19,905
(15,398)
50,000
-
Net cash (used in) / from operating activities
24
(220,299)
580,114
Cash (paid) / received on acquisition of business
(2,726,183)
1,482,025
Payment of transaction costs related to acquisition
of businesses
Payments for plant and equipment
Net cash (used in) / from investing activities
(569.857)
(559,363)
(59,494)
(3,355,534)
(32,148)
890,514
Cash flows from financing activities
Repayment of lease liability
Proceeds from issue of shares
Share issue transaction costs
Net cash from financing activities
(126,130)
265,250
-
139,120
(118,954)
3,000,000
(155,168)
2,725,878
Net increase (decrease) in cash and cash equivalents
(3,436,713)
4,196,506
Cash and cash equivalents at the beginning of the
financial year
Cash and cash equivalents at the end of the
financial year
6,532,415
2,335,909
3,095,702
6,532,415
The above statement of changes in equity should be read in conjunction with the accompanying notes
The above statement of cash flows should be read in conjunction with the accompanying notes
40 Financial Statements
Financial Statements 41
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2022
Notes to the financial statements
30 June 2022
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the
current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not
been early adopted.
The consolidated entity has assessed that these new or amended Accounting Standards and
Interpretations will not have any material effect on the financial statements of the company for this
reporting period.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian
Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’)
and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements
also comply with International Financial Reporting Standards as issued by the International Accounting
Standards Board (‘IASB’).
Historical cost convention
The financial statements have been prepared under the historical cost convention.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process of applying the consolidated entity’s
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements, are disclosed in Note 2.
Legal Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the
consolidated entity only. Supplementary information about the legal parent entity is disclosed in Note 21.
Principles of consolidation
A controlled entity is any entity controlled by an accounting acquirer. Control exists where an entity has
the capacity and power to govern the decision-making in relation to the financial and operating policies
of an investee and also participate in the variable returns of that investee.
All inter-group balances and transactions between entities in the Consolidated Entity, including any
unrealised profits or losses, have been eliminated on consolidation. Accounting policies of controlled
entities have been changed where necessary to ensure consistencies with those policies adopted by
the parent entity.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Knosys Limited’s presentation
currency. The consolidated entity operates in functional currencies relative to the specific geographical
location of the entity within the consolidated entity.
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.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the
exchange rates at the reporting date. The revenues and expenses of foreign operations are
translated into Australian dollars using the average exchange rates, which approximate the rates
at the dates of the transactions, for the period. All resulting foreign exchange differences are
recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net
investment is disposed of.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of
whether equity instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets
transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of
the acquiree and the amount of any non-controlling interest in the acquiree. For each business
combination, the non-controlling interest in the acquiree is measured at either fair value or at the
proportionate share of the acquiree’s identifiable net assets. All acquisition costs are expensed as
incurred to profit or loss.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities
assumed for appropriate classification and designation in accordance with the contractual terms,
economic conditions, the Group’s operating or accounting policies and other pertinent conditions
in existence at the acquisition-date.
Where the business combination is achieved in stages, the Group remeasures its previously held
equity interest in the acquiree at the acquisition-date fair value and the difference between the
fair value and the previous carrying amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date
fair value. Subsequent changes in the fair value of the contingent consideration classified as an
asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not
remeasured and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and
any non-controlling interest in the acquiree and the fair value of the consideration transferred
and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the
consideration transferred and the pre-existing fair value is less than the fair value of the identifiable
net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a
gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment
of the identification and measurement of the net assets acquired, the non-controlling interest in
the acquiree, if any, the consideration transferred and the acquirer’s previously held equity interest
in the acquirer.
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 on either
the earlier of
(i) 12 months from the date of the acquisition or
(ii) when the acquirer receives all the information possible to determine fair value.
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Revenue recognition
The consolidated entity recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity
is expected to be entitled in exchange for transferring goods or services to a customer. For each
contract with a customer, the consolidated entity: identifies the contract with a customer; identifies
the performance obligations in the contract; determines the transaction price which takes into account
estimates of variable consideration and the time value of money; allocates the transaction price to the
separate performance obligations on the basis of the relative stand-alone selling price of each distinct
good or service to be delivered; and recognises revenue when or as each performance obligation is
satisfied in a manner that depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer
such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any
other contingent events. Such estimates are determined using either the ‘expected value’ or ‘most
likely amount’ method. The measurement of variable consideration is subject to a constraining principle
whereby revenue will only be recognised to the extent that it is highly probable that a significant
reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint
continues until the uncertainty associated with the variable consideration is subsequently resolved.
Amounts received that are subject to the constraining principle are initially recognised as deferred
revenue in the form of a separate refund liability.
Rendering of services
Revenue from a contract to provide services is recognised over time as the services are rendered based
on either a fixed price or an hourly rate.
The consolidated entity earns revenues from its software services. Of these, a portion relates to licensing
and support of its software, which is performed over a period of time and for which revenue is recognised
over a period of time due to the customer only having a right of access over the software throughout the
contract period. For software implementation services provided to the customer, which is specified in the
customer contract, revenue is recognised over time as that implementation is performed.
Research and development tax refund income
Research and development tax refund income is measured on an accruals basis when the refund can be
reliably determined.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method
of calculating the amortised cost of a financial asset and allocating the interest income over the relevant
period using the effective interest rate, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
Refer to Note 26 segment note for a disaggregation of revenue per geographical location.
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, 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 are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other
short-term, highly liquid investments with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised
cost using the effective interest method, less provisions for impairment, doubtful debts and
rebates. Trade receivables are generally due for settlement within 30 days.
In relation to the financial assets carried at amortised cost, AASB 9 requires an expected credit
loss model to be applied. The expected credit loss model requires the Group to account
for expected credit losses and changes in those expected credit losses at each reporting
date to reflect changes in credit risk since initial recognition of the financial asset. AASB 9
requires the Group to measure the loss allowance at an amount equal to lifetime expected
credit loss (“ECL”) if the credit risk on the instrument has increased significantly since initial
recognition. If the credit risk on the financial instrument has not increased significantly since
initial recognition the Group is required to measure the loss allowance for that financial
instrument at an amount equal to the ECL within the next 12 months. The Group has adopted
the simplified approach to recognizing an ECL for trade and other receivables. Based on the
nature of the Groups’ business there have been no credit losses recorded in the previous
financial periods and non are expected in future periods and thus no ECL has been recorded.
The amount of the impairment loss is recognised in the Consolidated Statement of Profit or
Loss and Other Comprehensive Income within other expenses.
When a trade receivable, for which an impairment allowance had been recognised,
becomes uncollectible in a subsequent period, it is written off against the allowance
account. Subsequent recoveries of amounts previously written off are credited against
other expenses in the Consolidated Statement of Profit or Loss and Other
Comprehensive Income.
Plant and equipment
Recognition and measurement
Items of plant and equipment are measured at cost less accumulated depreciation and any
accumulated impairment loss. If significant parts of an item of plant and equipment have different
useful lives, then they are accounted for as separate items of plant and equipment. Any gain or
loss on disposal of an item of plant and equipment is recognised in profit or loss.
Depreciation
Depreciation is calculated to write off the costs of the items of plant and equipment over their
estimated useful lives and is generally recognised in profit and loss. Depreciation methods and
useful lives are reviewed at each reporting period and adjusted if appropriate.
The estimated useful life of plant and equipment for current and comparative periods is 3 years.
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 payment made at or before the commencement date net of any lease
incentives received, any initial direct costs incurred, and except where included in the cost of
inventories, an estimate of costs expected to be incurred for dismantling and removing the
underlying asset and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease
or the estimated useful life of the asset, whichever is the shorter. When the consolidated entity
expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is
over its estimated useful life. Right-of-use assets are subject to impairment or adjusted for any
remeasurement of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding
lease liability for short-term leases with a term of 12 months or leases of low-value assets. Lease
payments on these assets are expenses to profit or loss as incurred.
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Trade and other payables
Trade and other payables represent the liability outstanding at the end of the reporting period for
goods and services received by the Group during the reporting period, which remains unpaid. The
balance is recognised as a current liability with the amount being normally paid within 30 days of
recognition of the liability.
Provisions
Provisions are recognised when the consolidated entity has a present (legal or constructive)
obligation as a result of a past event, it is probable the consolidated entity will be required to settle
the obligation, and a reliable estimate can be made of the amount of the obligation. The amount
recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the
obligation. If the time value of money is material, provisions are discounted using a current pre-
tax rate specific to the liability. The increase in the provision resulting from the passage of time is
recognised as a finance cost.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially
measured at their fair value at the date of the acquisition. Intangible assets acquired separately are
initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently
measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost
less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the
derecognition of intangible assets are measured as the difference between net disposal proceeds and
the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets
are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for
prospectively by changing the amortisation method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested
annually for impairment, or more frequently if events or changes in circumstances indicate that it might
be impaired and is carried at cost less accumulated impairment losses. Impairment losses on goodwill
are taken to profit or loss and are not subsequently reversed.
Research and development
Research costs are expensed in the period in which they are incurred. Development costs are expensed
as they have not satisfied the requirement for capitalisation under AASB 138 - Intangible assets.
Impairment of non-financial assets
At each reporting date, the consolidated entity’s Directors review the carrying values of the
consolidated entity’s tangible and intangible assets to determine whether there is any indication that
those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being
the higher of the asset’s fair value less cost to sell and value in use, is compared to the assets carrying
value. Any excess of the assets carrying value over its recoverable amount is expensed to the statement
of profit or loss and other comprehensive income.
Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The
value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax
discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do
not have independent cash flows are grouped together to form a cash-generating unit.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave
expected to be wholly settled 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 wholly settled within 12
months of the reporting date are measured as the present value of expected future payments
to be made in respect of services provided by employees up to the reporting date using the
projected unit credit method. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are
discounted using market yields at the reporting date on national 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 the rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is
independently determined using either the Black-Scholes option pricing model or the Binomial
Option Valuation model each of which takes into account the exercise price, the term of the
option, the impact of dilution, the share price at grant date and expected price volatility of the
underlying share, the expected dividend yield and the risk free interest rate for the term of the
option, together with non-vesting conditions that do not determine whether the consolidated
entity receives the services that entitle the employees to receive payment. No account is taken of
any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding
increase in equity over the vesting period. The cumulative charge to profit or loss is calculated
based on the grant date fair value of the award, the best estimate of the number of awards that
are likely to vest and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting date less amounts
already recognised in previous periods.
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 entity or employee, the
failure to satisfy the condition is treated as a cancellation. If the condition is not within the
control of the consolidated entity or employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised over the remaining vesting period, unless the
award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation,
and any remaining expense is recognised immediately. If a new replacement award is substituted
for the cancelled award, the cancelled and new award is treated as if they were a modification.
Contract liabilities
Revenue billed in advance represents contract liabilities that the consolidated entity is obliged to
transfer services to a customer and are recognised when a customer pays consideration, or when the
consolidated entity recognises a receivable to reflect its unconditional right to consideration (whichever
is earlier) before the consolidated entity has transferred the goods or services to the customer.
46 Financial Statements
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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.
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 payment to be made over the term of the lease, discounted
using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated
entity’s incremental borrowing rate. Lease payments comprise of fixed payments, less any lease
incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be
paid under residual value guarantees, exercise price of a purchase option when the exercise of the option
is reasonably certain to occur and any anticipated termination penalties. The variable lease payments that
do not depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts
are remeasured if there is a change in the following; future lease payments arising from a change in an
index or a rate used, residual guarantees, lease term; certainty of a purchase option and termination
penalties. When a lease liability is remeasured, an adjustment is made to the following right-of-use asset,
or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
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.
Loss per share
Basic loss per share is calculated as net profit/loss attributable to members of the Company, adjusted
to exclude any costs of servicing equity (other than dividends), divided by the weighted average
number of ordinary shares on issue during the relevant period.
Standard
AASB 2020-1 Amendments to
Australian Accounting Standards
- Classification of liabilities as
Current or Non-Current
AASB 2020 -3 Amendments to
Australian Accounting Standards
- Annual Improvements 2018-
2020 and Other Amendments
AASB 2020-6 Amendments to
Australian Accounting Standards
- Classification of Liabilities as
Current or Non-current liabilities
as Current or Non-current -
Deferral of Effective Date
AASB 2021-2 Amendments to
Australian Accounting Standards
- Disclosure of Accounting
Policies and Definition of
Accounting Estimates
AASB 2021-5 Amendments to
Australian Accounting Standards
- Deferred Tax related to Assets
and Liabilities arising from a
Single Transaction
AASB 2014-10 Sale or
contribution of Assets between
an Investor and its Associate or
Joint Venture
Mandatory date for annual
reporting periods beginning
on or after
Standard to be adopted
by the company for the
reporting period beginning
1 January 2023
1 July 2023
1 January 2022
1 July 2022
1 January 2022
1 July 2022
1 January 2023
1 July 2023
1 January 2023
1 July 2023
1 January 2025
1 July 2025
Note 2. Critical accounting judgements, estimates
and assumptions
The preparation of the financial statements requires management to make judgements, estimates
and assumptions that affect the reported amounts in the financial statements. Management
continually evaluates its judgements and estimates in relation to assets, liabilities, contingent
liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions
on historical experience and on other various factors, including expectations of future events,
management believes to be reasonable under the circumstances. The resulting accounting
judgements and estimates will seldom equal the related actual results. The following key
Diluted Loss per share is calculated as net profit/loss attributable to members of the Company, adjusted for:
judgements are relevant to these financial statements:
•
•
•
•
costs of servicing equity (other than dividends);
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that
have been recognised as expenses;
and other non-discretionary changes in revenues or expenses during the period that would result
from the dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares,
adjusted for any bonus element, during the relevant period.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended and
that have not been adopted by the consolidated entity for the annual reporting period ended 30 June
2022 are listed below. The consolidated entity has assessed that these new or amended Accounting
Standards and Interpretations will not have a material effect on the financial statements of the company
for the reporting period commencing 1 July 2022.
Estimation of accrued research and development tax refund
As at 30 June 2021 the consolidated entity had accrued $500,000 in accrued research and
development tax refund credits in-respect of the 2021 tax return. The directors of the consolidated
entity engaged an industry expert to prepare and lodge this return. An amount of $489,643 was
receipted into the bank in June 2022 in regard to the 2021 tax return and R&D claim. Based upon the
methodology adopted by the industry expert, the consolidated entity has accrued a research and
development tax refund receivable of $550,000 for the 2022 financial year. Key matters considered
by the directors in calculating this accrual included the following:
•
•
•
The historical success of lodging and receipting such claims;
The quantum of eligible research and development spend made during the period; and
A consideration of any potential change in the assessment of eligibility criteria as gazetted
by the Federal government.
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Share based payments
As stated in Note 1, the consolidated entity has issued options and loans shares to directors, executives
and staff as part of their remuneration arrangements and has issued options and shares to third parties in
consideration for consultancy services received. Management judgements and estimates are required
in determining the cost of these equity-settled transactions which have been measured by taking into
account the exercise price, the term of the option, the impact of dilution, the share price at grant date
and expected price volatility of the underlying share, the expected dividend yield and the risk free interest
rate for the term of the option, together with non-vesting conditions that do not determine whether the
consolidated entity receives the services that entitle the employees to receive payment.
Goodwill and other indefinite life intangible assets
The consolidated entity tests annually, or more frequently if events or changes in circumstances indicate
impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment,
in accordance with the accounting policy stated in Note 1. The recoverable amounts of cash-generating
units have been determined based on value-in-use calculations. These calculations require the use of
assumptions, including estimated discount rates based on the current cost of capital and growth rates
of the estimated future cash flows.
Business combinations
As discussed in Note 1, business combinations are initially accounted for on a provisional basis. The fair value
of assets acquired, liabilities and contingent liabilities assumed are initially estimated by the Group taking
into consideration all available information at the reporting date. Fair value adjustments on the finalisation
of the business combination accounting is retrospective, where applicable, to the period the combination
occurred and may have an impact on the assets and liabilities, depreciation and amortisation reported.
Determination of lease term
In determining the lease term, management considers all facts and circumstances that create an
economic incentive to exercise an extension option, or not exercise a termination option. Extension
options (or periods after termination options) are only included in the lease term if the lease is
reasonably certain to be extended (or not terminated). Potential future cash outflows have not been
included in the lease liability because it is not reasonably certain that the leases will be extended (or not
terminated). The assessment is reviewed if a significant event or a significant change in circumstances
occurs which affects this assessment and that is within the control of the lessee.
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 and
future sales experience and historical collection rates.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the consolidated
entity considers it is probable that future taxable amounts will be available to utilise those temporary
differences and losses.
Note 3. Revenue
Sales revenue
Licence and support fees
Rendering of services
Revenue
Consolidated
2022
$
8,298,529
618,466
8,916,995
2021
$
3,771,143
822,939
4,594,082
Note 4. Expenses
Loss before income tax includes the following
specific expenses:
Transaction costs related to acquisition of businesses
499,196
559,363
Consolidated
2022
$
2021
$
Transaction costs incurred mainly relate to the
acquisition of the LIBERO business, which completed
on 31 August 2021, and also relate to residual costs
for the acquisition of Greenorbit Pty Ltd, which
completed on 30 March 2021.
Employee benefits expense
Superannuation expense - Accumulation fund
Share based payments expense
408,650
720,892
238,921
135,177
Note 5. Income tax expense
Consolidated
2022
$
2021
$
Income tax expense
Current Tax benefit
(318,250)
Deferred tax - origination and reversal of temporary differences
(19,210)
Deferred tax assets not recognised
Aggregate income tax expense
Unrecognised deferred tax assets
353,066
15,606
9,442
(23,316)
13,874
-
Unused tax losses for which no deferred tax asset has been recognised
880,076
527,010
Numerical reconciliation of income tax expense and tax at the
statutory rate
Loss before income tax expense
(3,034,942)
(543,838)
Tax at the statutory tax rate of 25% (30 June 2021 26%)
(758,735)
(141,398)
Tax effect amounts which are not deductible/(taxable) in
calculating taxable income:
Entertainment expenses
Research and development costs
Share based payments expense
Sundry items
Non-assessable R&D refund
Deferred tax assets not recognised
Income tax paid in foreign jurisdiction
Income tax expense
5,700
3,133
305,556
288,889
177,723
51,601
35,146
(38,679)
(134,911)
(160,965)
(353,066)
353,066
15,606
15,606
(13,874)
13,874
-
-
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Note 6. Current assets - trade receivables
Trade receivables
The aging analysis of trade receivables is as follows:
Consolidated
2022
$
2021
$
2,382,668
1,934,803
Total
$
Neither past
due nor impaired
$
< 30 days
$
30-60 days
$
61-90 days
$
90+ days
$
Past due but not impaired
2022
2021
2,382,668
2,150,082
129,391
1,934,803
1,839,491
-
94,401
69,462
5,219
25,850
3,575
-
As at 30 June 2022 no trade receivables were impaired (2021: Nil)
Refer Note 1 - Trade and other receivables, which explains how the consolidated entity manages and
accounts for trade receivables.
Note 7. Prepayments and other receivables
Prepayments
Other receivables
Consolidated
2022
$
311,231
25,777
2021
$
207,749
13,451
337,008
221,200
Note 8. Intangibles
Reconciliations of the carrying values of each class of intangibles at the beginning and end of the
current financial period, for the consolidated entity, are as follows:
Goodwill
$
Customer
contracts
$
Marketing
assets
$
Consolidated
Total
$
Carrying value at 1 July 2021 (restated)
1,603,215
3,033,000
290,000
4,926,215
Additions - Refer Note 28
1,700,000
2,500,000
500,000
4,700,000
Amortisation
-
(585,732)
(155,388)
(741,120)
Carrying value at 30 June 2022
3,303,215
4,947,268
634,612
8,885,095
Cost as at 30 June 2022
3,303,215
5,533,000
790,000
9,626,215
Accumulated Amortisation at 30 June 2022
-
(585,732)
(155,388)
(741,120)
Carrying value at 30 June 2022
3,303,215
4,947,268
634,612
8,885,095
The opening balance of intangibles arose in respect to the acquisition of Greenorbit Pty Ltd (GO) in
March 2021. At 30 June 2021 the consolidated entity was in the process of conducting a valuation of the
split of this intangible balance between identifiable and unidentifiable intangible assets. Under Australian
Accounting Standards the consolidated entity has a period of up to 12 months from acquisition date
to complete this exercise. For the purpose of the financial report for the year ended 30 June 2021 the
entire balance was recognised as Goodwill. The valuation of intangibles in respect of GO was completed
by an independent expert in this financial period and identifiable intangibles were reclassified
to Customer Contracts and Marketing Assets and are disclosed above as at 30 June 2022.
In accordance with relevant accounting standards, the completion of the provisional accounting
resulted in measurement period adjustments related to matters concerned where the facts
and circumstances existed at the acquisition date. If the matters had been known at the time,
the information would have affected the acquisition accounting. As a result, the current annual
financial report has disclosed a revision to the acquisition accounting previously disclosed for the
following account balances:
1.
An external valuation and allocation of the purchase price resulting in the recognition of a
number of specific identifiable intangible assets as outlined above which has impacted the
previously stated balance of goodwill. This resulted in a reallocation of goodwill to specific
identifiable intangible assets of Customer contracts of $3,033,000 and Marketing assets of
$290,000.
During the financial period additional intangible balances arose in respect of the acquisition of the
LIBERO business in August 2021. A valuation of intangibles in respect of LIBERO was completed
by an independent expert in this financial period and identifiable intangibles were classified as
disclosed above and as per Note 28.
The Customer Contracts and Marketing Assets are identifiable intangible assets and are subject to
amortisation, at annual rates of 10% and 20% respectively, as determined by the company, with
effect from acquisition date.
Impairment of intangibles
All intangible assets are assessed at each reporting period for indicators of impairment. The
consolidated entity operates as a single operating segment and cash generating unit being a
developer and licensor of computer software. Intangible assets with an indefinite useful life are
assessed for impairment under this cash generating unit.
The recoverable amount of the cash-generating unit is determined based on value-in-use
calculations. Value-in-use is calculated based on the present value of cash flow projections for
the next five years. The cash flows are discounted using estimated discount rate based on Capital
Asset Pricing Model adjusted to incorporate risks associated with the software development
sector.
Management has based the value-in-use calculations on five-year budget forecasts of the
software developer and licencing business. Revenue has been projected on the below
mentioned assumptions. Costs are calculated taking into account historical gross margins as
well as estimated weighted inflation rates over the period which is consistent with inflation rates
applicable to the locations in which the unit operates. Discount rates are pre-tax and reflect risks
associated with the software development business.
The following assumptions were used in the value-in-use-calculations:
a.
Revenue growth for year 1 is based on the Board approved budget of the consolidated entity,
which includes the impact of a full 12 months of revenue generation from the GreenOrbit and
Libero businesses. A revenue growth rate of 10% has been estimated for years 2 to 5 of the
model. This is a conservative estimate on the future growth of the business.
b.
c.
Projected cash flows have been discounted using a pre-tax discount rate of 13.7% (2021: 15%).
An annual growth rate of 2.5% (2021: 2.5%) has been estimated in the calculation of terminal value.
Based on the above assumptions, the recoverable amount of the cash generating unit has been
determined to exceed its carrying amount as at 30 June 2022 and accordingly, no impairment loss
has been recognised.
52 Financial Statements
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Connecting People and InformationKNOSYS ANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2022
Sensitivity to changes in assumptions
The impairment model is most sensitive to the following assumptions:
•
•
•
Revenue forecasts assumption;
Employment costs; and
Discount rate.
No reasonable possible change in assumptions would result in an impairment charge being recognised.
Note 11. Current liabilities - trade and other payables
Trade payables
Other payables
Consolidated
2022
$
150,929
887,625
2021
$
203,556
466,698
1,038,554
670,254
Note 9. Right of use asset
The table below summarises the maturity profile of the consolidated entities current trade and other
Buildings - right-of-use
Accumulated depreciation
Consolidated
2022
$
2021
$
406,980
406,980
(332,994)
(221,994)
73,986
184,986
The consolidated entity leases its Melbourne based head office under an agreement of four years
duration. The lease has an annual 3.75% escalation clause. The consolidated entity leased two
serviced offices under specific agreements. These agreements had short-term month to month lease
arrangements and are of low-value, so have been expensed as incurred and not capitalised as right-of-
use assets and are not considered material to the consolidated entity.
Note 10. Plant and equipment
Reconciliations of the carrying values of each class of property, plant and equipment at the beginning
and end of the current and previous financial years, for the consolidated entity, are as follows:
Furniture &
Office
Consolidated
fittings
equipment
Carrying value at 1 July 2020
Additions
Acquired via business combination
Depreciation
Carrying value at 30 June 2021
Cost as at 30 June 2021
Accumulated depreciation at 30 June 2021
Carrying value at 30 June 2021
Additions
Depreciation
Carrying value at 30 June 2022
Cost as at 30 June 2022
$
99,080
4,240
-
(56,786)
46,534
165,253
(118,719)
46,534
8,110
(48,641)
6,003
173,363
Accumulated depreciation at 30 June 2022
(167,360)
Carrying value at 30 June 2022
6,003
$
27,960
27,908
14,298
(20,628)
49,538
179,339
(129,801)
49,538
50,529
(26,309)
73,758
229,868
(156,110)
73,758
Total
$
127,040
32,148
14,298
(77,414)
96,072
344,592
(248,520)
96,072
58,639
(74,950)
79,761
403,231
(323,470)
79,761
payables.
2022
2021
Total
$
150,929
203,556
On demand
$
< 3 months
$
3 to 12 months
$
-
-
146,740
203,556
4,189
-
Refer Note 1 - Trade and other payables, which explains how the consolidated entity manages and accounts for
trade and other payables.
Note 12. Provisions
Consolidated
2022
$
2021
$
Provision for employee benefits - current
Provision for employee benefits - current
741,667
500,608
Provision for employee benefits - non-current
Provision for employee benefits - non-current
68,739
93,093
Note 13. Lease liabilities
Lease Liability - current
Lease liability - current
Lease Liability - non-current
Lease liability - non-current
Consolidated
2022
$
2021
$
94,705
134,853
-
85,982
54 Financial Statements
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Connecting People and InformationKNOSYS ANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2022
Note 14. Current liabilities - Contract liabilities
Contract liabilities
Consolidated
2022
$
2021
$
4,534,870
2,893,063
Reconciliation of the values at the beginning and end of the current
and previous financial year are set out below:
Opening balance
Amounts billed in advance during the year, where the performance
obligations were and will be satisfied over the FY22 and FY23 years
2,893,063
1,490,640
7,465,040
2,309,172
Balances acquired on acquisition of business refer Note 28
1,081,918
1,417,162
Transfer to revenue - performance obligations satisfied
(6,905,151)
(2,323,911)
4,534,870
2,893,063
Note 15. Equity - issued capital
Ordinary shares - fully paid
Movements in ordinary share capital
Details
Legal parent
Balance at start of year
Consolidated
2022
$
2021
$
17,488,521
16,149,271
No. of shares
Legal Parent
2022
No. of shares
Legal Parent
2021
Date
Issue of share capital to shareholders pursuant to placement
24 Dec 2020
Issue of share capital to shareholders pursuant to placement
15 Feb 2021
Issue of share capital to shareholder on completion of
acquisition of GreenOrbit Pty Ltd
31 Mar 2021
207,242,147
148,835,576
-
-
-
20,778,571
650,000
36,978,000
Issue of share capital to shareholder on completion of
acquisition of Libero business
31 Aug 2021
6,896,551
Issue of share capital to shareholders on exercise of options
16 Dec 2021
2,000,000
-
-
Details
Consolidated entity
Date
2022
$
2021
$
As at start of the financial year
16,149,271
8,312,409
Issue of share capital to shareholders pursuant to placement
24 Dec 2020
Issue of share capital to shareholders pursuant to placement
15 Feb 2021
Issue of share capital to shareholder on completion of
acquisition of GreenOrbit Pty Ltd
31 Mar 2021
-
-
-
2,909,000
91,000
4,992,030
Issue of share capital to shareholder on completion of
acquisition of Libero business
31 Aug 2021
1,000,000
Repayment of loan on loan funded shares
8 Dec 2021
25,250
Issue of share capital to shareholders on exercise of options
16 Dec 2021
240,000
Transfer from share-based payments reserve
31 Dec 2021
74,000
-
-
-
Costs of issuing shares
Balance as at end of the financial year
-
(155,168)
17,488,521
16,149,271
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.
Movements in options on issue
Details
Legal parent
Balance at start of year
Options expired / lapsed
Options exercised
Options issued during the year
Balance at end of year
No. of
options
Legal Parent
2022
No. of
options
Legal Parent
2021
Date
2,000,000
3,550,000
-
(1,550,000)
16 Dec 2021
(2,000,000)
23 Dec 2021
10,550,000
-
-
10,550,000
2,000,000
During the period 2,000,000 options (all of which were vested) were exercisable at $0.12 on 16
Balance at end of year
216,138,698
207,242,147
December 2021.
During the period 6,000,000 options were issued to a director, pursuant to shareholder approval
at the 8 December 2021 Annual General Meeting, and 4,550,000 options were issued to executives
and staff pursuant to the Knosys Limited Employee Incentive Plan. All options are unlisted and are
subject to a range of vesting conditions. Refer Note 25.
Capital risk management
The consolidated entity’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.
56 Financial Statements
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Connecting People and InformationKNOSYS ANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2022
Note 16. Financial instruments
Financial risk management objectives
The consolidated entity’s activities expose it to two financial risks: credit risk and liquidity risk. The
consolidated entity’s overall risk management program, which is managed at Board level, focuses on
the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial
performance of the consolidated entity. The consolidated entity uses different methods to measure
different types of risk to which it is exposed. These methods include ageing analysis for credit risk and
cash flow forecasting for liquidity risk.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting
in financial loss to the consolidated entity. The consolidated entity has a code of credit, including
obtaining agency credit information, confirming references and setting appropriate credit limits.
The consolidated entity obtains guarantees where appropriate to mitigate credit risk. 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 statement of financial position and
notes to the financial statements. The consolidated entity does not hold any collateral.
Liquidity risk
Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets
(mainly cash and cash equivalents) to be able to pay debts as and when they become due and payable.
All amounts payable are within agreed terms. All third party payment terms are less than 60 days (2021:
less than 60 days).
The consolidated entity manages liquidity risk by maintaining adequate cash reserves by continuously
monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and
liabilities. All liabilities are to be settled within 12 months except for lease liabilities which are to be
settled as per the following categories:
Lease liabilities
Payable at the reporting date:
Within 6 months
6 to 12 months
1 to 5 years
Foreign currency risk
Consolidated
2022
$
2021
$
71,398
23,307
-
62,721
66,092
92,018
94,705
220,831
The consolidated entity undertakes certain transactions denominated in foreign currency and is
exposed to foreign currency risk through foreign exchange rate fluctuations. The consolidated entity
monitors the materiality of foreign exchange transactions and balances and manages any material
exposures to foreign exchange rate fluctuations. At balance date there were no material foreign
currency risks.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reasonably approximate their fair value.
Note 17. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and key management personnel of the
consolidated entity is set out below:
Short-term employee benefits
Share based payments
Post-employment benefits
Long-term benefits
Consolidated
2022
$
935,333
465,036
67,459
25,281
2021
$
824,119
70,000
57,585
19,688
1,493,109
971,392
Note 18. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by William
Buck Audit (VIC) Pty Ltd (“William Buck”), the auditor of the company, its network firms and
unrelated firms:
Consolidated
2022
$
2021
$
Assurance services - William Buck
Audit or review of the financial statements
51,800
40,300
Other services - William Buck
Taxation advice
Acquisition due diligence services
17,883
-
9,463
10,000
Note 19. Contingent liabilities
The consolidated entity has no material contingent liabilities at reporting date.
Note 20. Related party transactions
Legal parent entity
Knosys Limited is the legal parent entity.
Subsidiaries
Interests in subsidiaries are set out in Note 22.
Key management personnel
Disclosures relating to key management personnel are set out in Note 17 and the remuneration
report in the directors’ report.
Note 21. Legal parent entity information
Set out below is the supplementary information about the legal parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive loss
Legal Parent
2022
$
2021
$
(1,033,657)
(377,631)
(1,033,657)
(377,631)
58 Financial Statements
Financial Statements 59
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2022
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Legal Parent
2022
$
2021
$
1,988,386
5,350,307
18,362,237
17,503,501
15,648
15,648
99,396
99,396
24,623,643
23,284,393
1,031,526
394,634
(7,308,580)
(6,274,922)
18,346,589
17,404,105
Contingent liabilities
The legal parent entity had no contingent liabilities as at 30 June 2022 and 30 June 2021.
Capital commitments - Property, plant and equipment
The legal parent entity had no capital commitments for property, plant and equipment as at 30 June
2022 and 30 June 2021.
Significant accounting policies
The accounting policies of the legal parent entity are consistent with those of the consolidated entity,
as disclosed in Note 1. The group does not designate any interests in subsidiaries as being subject to the
requirements of accounting standards specifically applicable to financial statements.
Note 22. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of Knosys Limited and
the following wholly-owned subsidiaries in accordance with the accounting policy described in Note 1:
Name
Knosys Solutions Pty Ltd
Principal activities - Operating company for the
Knosys knowledge management business, providing
operational infrastructure, employees, sales resources,
Knosys Platform research, development and customer
support.
Knosys Products Pty Ltd
Principal activity - Holder of the Knosys Platform
intellectual property.
Knosys Asia Pte Ltd (incorporated 7 August 2019)
Principal activity - Provider of sales and marketing
resources to sell Knosys Platform in Singapore and
surrounding regions.
Greenorbit Pty Ltd - Acquired 30 March 2021
Principal activity - Australian operating company
of the GreenOrbit business, providing operational
infrastructure, employees, sales resources, research,
development and customer support
Principal place
of business /
Country of
incorporation
Ownership interest
2022
%
2021
%
Australia
100%
100%
Australia
100%
100%
Singapore
100%
100%
Australia
100%
100%
Name
Greenorbit Inc. - Acquired 30 March 2021
Principal activity - Provider of sales and marketing
resources to sell and support the GreenOrbit intranet
software in USA
Greenorbit Software Limited - Acquired 30 March 2021
Principal activity - Provider of sales and marketing
resources to sell and support the GreenOrbit intranet
software in UK
Greenorbit Software Pvt Ltd - Acquired 30 March 2021
Principal activity - Provider of customer support to
GreenOrbit customers and software development
services to the GreenOrbit business
Libero Systems Pty Ltd - Incorporated on 24 June 2021
Principal activity - Provider of sales and marketing
resources to sell and support the GreenOrbit intranet
software in UK
Libero IS GmbH - Acquired 31 August 2021
Principal activity - Provider of sales resources for the Libero
business and customer support to Libero customers
Principal place
of business /
Country of
incorporation
Ownership interest
2022
%
2021
%
United States
100%
100%
United Kingdom
100%
100%
India
100%
100%
Australia
100%
100%
Germany
100%
-
Note 23. Events after the reporting period
No matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may
significantly affect the consolidated entity’s operations, the results of those operations, or the
consolidated entity’s state of affairs in future financial years.
Note 24. Reconciliation of profit after income tax to net
cash from operating activities
Consolidated
2022
$
2021
$
Loss after income tax expense for the year
(3,050,548)
(543,838)
Adjustments for:
Depreciation and amortisation
Share based payments expense
Transaction costs related to acquisition of businesses
Change in operating assets and liabilities (the changes in 2022
include the movements in balances acquired via the acquisition
of the Libero business during the financial period):
Decrease/(increase) in trade receivables
Increase /(decrease) in revenue billed in advance
(Increase) in accrued research and development tax refund
receivable
(Increase)/decrease in prepayments and other debtors
Increase in trade and other payables
(Decrease) in foreign currency translation reserves
Increase in provision for employee benefits
Net cash used in operating activities
927,925
720,892
499,196
188,364
135,177
559,363
(171,169)
559,889
(37,473)
(14,739)
(50,000)
(4,042)
(59,046)
345,894
(27,747)
84,415
(220,299)
45,260
167,261
-
84,781
580,114
60 Financial Statements
Financial Statements 61
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2022
Note 25. Share-based payments
Loan funded share plan and loan funded shares
A loan funded share plan (LFSP) has been established by the consolidated entity, whereby the
consolidated entity may, at the discretion of the Board, issue loan funded fully paid ordinary shares
in the company to personnel of the consolidated entity. Participants acquire loan funded shares
using a loan provided by the consolidated entity. The loan is interest-free and limited recourse in
accordance with the loan terms and the LFSP rules. The LFSP rules require the loan to be repaid before
a participant can receive any proceeds from the sale of their shares. The Board has the discretion to
impose such vesting conditions in relation to the loan funded shares as it deems appropriate. These may
include conditions relating to continued employment or service, performance (of the participant, the
consolidated entity or the share price) and the occurrence of specific events. The consolidated entity
has also issued loan funded fully paid ordinary shares in the company to directors and executives on the
same terms as the LFSP. The issuing of these loan funded shares gives rise to an ongoing employment
benefit expense each financial period and this is accounted for in accordance with the accounting
policy on employee benefits, as detailed in Note 1. The expense is included in the share-based payment
expense amount listed in Note 4.
As at 30 June 2022 the following loan funded shares had been granted:
Grant date
Issue date
Loan expiry
date
Issue
price
Balance
at 30 June
2021
Number
Issued
during the
period
Number
Loan repaid
during the
period
Number
Forfeited
during the
period
Number
Balance
at 30 June
2022
Number
Vested at
end of the
period
Number
28/11/2017
19/02/2018
27/11/2022
$0.06
1,200,000
30/01/2018
19/02/2018
18/02/2023
$0.10
1,600,000
26/11/2018
24/12/2018
26/11/2023
$0.08
250,000
24/12/2018
24/12/2018
24/12/2023
$0.08
550,000
27/11/2019
29/11/2019
29/11/2024
$0.101
5,400,000
27/01/2021
15/02/2021
14/02/2026
$0.175
1,000,000
29/01/2021
15/02/2021
14/02/2026
$0.175
500,000
04/06/2021
29/06/2021
28/06/2026
$0.175
725,000
-
-
-
-
-
-
-
-
05/10/2021
14/10/2021
13/10/2026
$0.15
-
3,250,000.
-
-
-
-
-
-
-
-
1,200,000
1,200,000
1,600,000
1,600,000
250,000
250,000
550,000
550,000
250,000
3,250,000
1,900,000
1,900,000
-
-
-
-
-
-
-
-
1,000,000
1,000,000
500,000
375,000
725,000
543,750
3,250,000
682,500
Total
11,225,000
3,250,000
250,000
3,250,000
10,975,000 8,101,250
Weighted average issue price
$0.110
$0.124
$0.114
The 3,250,000 loan shares granted to participants during the period were sourced from forfeited loan
shares, transferred from the relevant participants.
Loan Shares granted to executives and employees
During the period 3,250,000 loan shares were granted to executives and employees pursuant to the
Knosys Loan Funded Share Plan. The loan shares have been valued by and independent expert as of
issue date and have vesting criteria based on achieving employment service periods and on meeting
future Volume Weighted Average Price (“VWAP”) performance of Knosys shares. Detail are as follows:
Tranche
Number of
Loan Shares
Service based vesting date
Fair value per
share at issue date
Total fair value
at issue date
Tranche 1
195,000
Vested on issue
Tranche 2
195,000
Vested on 1 January 2022.
Tranche 3
195,000
To vest on 1 July 2022.
Tranche 4
195,000
To vest on 1 January 2023.
Tranche 5
520,000
To vest on 1 July 2023.
Total
1,300,000
$0.063
$0.064
$0.069
$0.074
$0.078
$12,285
$12,480
$13,455
$14,430
$40,560
$93,210
Tranche
Number of
Loan Shares
Service based vesting date
Fair value per
share at issue date
Total fair value
at issue date
Tranche 1
292,500
Vested on issue
$0.063
$18,428
Tranche 2
292,500
achieving a 20-day VWAP of
$0.092
$26,910
To vest subject to Knosys shares
AU$0.190 before 1 July 2024
To vest subject to Knosys shares
Tranche 3
292,500
achieving a 20-day VWAP of
$0.092
$26,910
AU$0.230 before 1 July 2024
To vest subject to Knosys shares
Tranche 4
292,500
achieving a 20-day VWAP of
$0.092
$26,910
AU$0.275 before 1 July 2024
To vest subject to Knosys shares
Tranche 5
780,000
achieving a 20-day VWAP of
$0.091
$70,980
AU$0.325 before 1 July 2024
Total
1,950,000
The valuation model inputs used by the independent valuer were as follows:
Loan
expiry
date
Share
price
at grant
date
Grant date
Issue
price
Marketability
discount
Expected
volatility
Dividend
yield
$170,138
Risk-free
interest
rate
05/10/2021
13/10/2026
$0.14
$0.150
0.00%
80%
0.00%
0.790%
As at 30 June 2021 the following loan funded shares had been granted:
Grant date
Issue date
Loan
expiry
date
Issue
price
Balance
at 30 June
2020
Number
Issued
during
the
period
Number
Sold
during the
period
Number
Forfeited
during
the
period
Number
Balance
at 30
June 2021
Number
Vested at
end of the
period
Number
28/11/2017
19/02/2018
27/11/2022
$0.06
1,200,000
30/01/2018
19/02/2018
18/02/2023
$0.10
1,600,000
26/11/2018
24/12/2018
26/11/2023
$0.08
250,000
24/12/2018
24/12/2018
24/12/2023
$0.08
550,000
27/11/2019
29/11/2019
29/11/2024
$0.101
6,500,000
27/11/2019
29/11/2019
29/11/2024
$0.101
1,125,000
-
-
-
-
-
-
27/01/2021
15/02/2021
14/02/2026
$0.175
29/01/2021
15/02/2021
14/02/2026
$0.175
04/06/2021
29/06/2021
28/06/2026
$0.075
-
-
-
1,000,000
500,000
725,000
Total
11,225,000
2,225,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,200,000
1,200,000
1,600,000
1,600,000
250,000
250,000
550,000
550,000
1,625,000
4,875,000
1,625,000
600,000
525,000
525,000
-
-
-
1,000,000
1,000,000
500,000
725,000
-
-
2,225,000 11,225,000 6,750,000
Weighted average issue price
$0.095
$0.110
$0.102
62 Financial Statements
Financial Statements 63
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2022
For the loan funded shares issued during the 2021 financial year, the valuation model inputs used to
determine the fair value at each vesting date, were as follows:
Grant date
Loan expiry
date
Share
price
at grant
date
Issue
price
Marketability
discount
Expected
volatility
Dividend
yield
Risk-free
interest
rate
27/01/2021
14/02/2026
$0.195
$0.175
29/01/2021
14/02/2026
$0.165
$0.175
04/06/2021
28/06/2026
$0.125
$0.175
0.00%
0.00%
0.00%
82%
82%
80%
0.00%
0.37%
0.00%
0.378%
0.00%
0.705%
Options issued to Directors, executives and employees
Employee Incentive Plan - Options
The Knosys Limited Employee Incentive Plan (EIP) was established by the consolidated entity pursuant
to shareholder approval at the 8 December 2021 Annual General Meeting, whereby the consolidated
entity may, at the discretion of the Board, grant options over ordinary shares in the company to
personnel of the consolidated entity. The options are issued for nil consideration and are granted in
accordance with time based and/or performance targets established by the Board. The consolidated
entity has also issued options in the company to a director on the same terms as options issued under
the EIP. The granting of these options gives rise to an ongoing employment benefit expense each
financial period and this is accounted for in accordance with the accounting policy on employee
benefits, as detailed in Note 1. The expense is included in the share-based payment expense amount
listed in Note 4.
As at 30 June 2022 the following options had been granted:
Option grant date
Option expiry
date
Exercise
price
8/12/2021
01/07/2026
$0.15
Weighted average exercise price
Balance
at 30 June
2021
Number
Issued during the
period
Number
Exercised
during the
period
Number
Expired or
forfeited
during the
period
Number
Vested and
exercisable
at end of the
period
Number
Balance at
30 June 2022
Number
-
-
10,550,000
-
-
10,550,000
2,215,500
$0.15
$0.15
Options issued to Directors, Executives and Employees
During the year 6,000,000 options were issued to a director, pursuant to shareholder approval at
the 8 December 2021 Annual General Meeting, and 4,550,000 options were issued to executives and
staff pursuant to the Knosys Limited Employee Incentive Plan. The options have been valued by and
independent expert as of issue date and have vesting criteria based on achieving employment service
periods and on meeting future Volume Weighted Average Price (“VWAP”) performance of Knosys
shares. Details are listed below. The granting of these options gave rise to an ongoing employment
benefit expense each financial period and this is accounted for in accordance with the accounting
policy on employee benefits, as detailed in Note 1. The expense is included in the share-based payment
expense amount listed in Note 4.
Tranche
Number of
Options
Service based vesting conditions
Fair value per option
at grant date
Total fair value
at grant date
Tranche 1
633,000
Vested on issue
Tranche 2
633,000
Vested on 1 January 2022.
Tranche 3
633,000
To vest on 1 July 2022.
Tranche 4
633,000
To vest on 1 January 2023.
Tranche 5
1,688,000
To vest on 1 July 2023.
Total
4,220,000
$0.073
$0.073
$0.077
$0.083
$0.087
$46,209
$46,209
$48,741
$52,539
$146,856
$340,554
Tranche
Number
of Options
Service based vesting conditions
Fair value
per option at
grant date
Total fair
value at
grant date
Tranche 1
949,500
Vested on issue
$0.073
$69,314
Tranche 2
949,500
Tranche 3
949,500
Tranche 4
949,500
Tranche 5
2,532,000
Total
6,330,000
To vest subject to Knosys shares achieving a
20-day VWAP of AU$0.190 before 1 July 2024
To vest subject to Knosys shares achieving a
20-day VWAP of AU$0.230 before 1 July 2024
To vest subject to Knosys shares achieving a
20-day VWAP of AU$0.275 before 1 July 2024
To vest subject to Knosys shares achieving a
20-day VWAP of AU$0.325 before 1 July 2024
$0.101
$95,900
$0.101
$95,900
$0.101
$95,900
$0.100
$253,200
$610,212
The valuation model inputs used by the independent valuer were as follows:
Option
expiry
date
Share
price at
grant
date
Grant date
Exercise
price
Marketability
Discount
Expected
volatility
Dividend
yield
Risk-free
interest
rate
08/12/2021 01/07/2026
$0.15
$0.150
0.00%
80%
0.00%
1.355%
The Options are not transferrable or tradeable. The Options will not automatically convert to Shares
upon satisfaction of the above vesting criteria, but rather the holder of the Options must complete a
notice of exercise to convert the Options to Shares, deliver this notice to the Company and pay the
requisite exercise price for each Option exercised.
2,000,000 broker options, which were exercised during the year, did not form part of this plan.
As at 30 June 2021 there were no options granted to Directors or executives.
Note 26. Segment information
Identification of reportable operating segments
The consolidated entity has one operating segment, being a developer and licensor of computer
software, however it operates across multiple geographical regions. The operating segments
are based on the internal reports that are reviewed and used by the Board of Directors (who
are identified as the Chief Operating Decision Makers (‘CODM’)) in assessing performance and in
determining the allocation of resources. There is no aggregation of operating segments.
Geographical information
Australia
United States
New Zealand
Europe
Asia
Rest of World
Sales to external
customers
Geographical
non-current assets
June 2022
$
June 2021
$
June 2022
$
June 2021
$
5,616,734
2,644,284
9,038,842
5,207,273
1,486,950
318,307
712,369
1,255,992
482,858
-
341,397
307,880
276,687
67,619
-
-
-
-
-
-
-
-
-
-
8,916,995
4,594,082
9,038,842
5,207,273
64 Financial Statements
Financial Statements 65
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2022
Concentration of key customers
The concentration of customers for the 2022 year was as follows:
Identifiable assets acquired and liabilities assumed
The fair value of the identifiable assets and liabilities of Libero as at the date of the acquisition
•
•
A major customer in Australia and New Zealand in the finance sector represented 16.1% of operating revenue
have been determined as follows:
A major customer in Australia in the telecommunications sector represented 12.4% of operating revenue
The concentration of customers for the 2021 year was as follows:
•
•
•
A major customer in Australia and New Zealand in the finance sector represented 45.4% of operating revenue
A major customer in Australia in the telecommunications sector represented 26.5% of operating revenue
A major customer in Singapore in the telecommunications sector represented 6.7% of operating revenue
Note 27. Loss per share
Consolidated
2022
$
2021
$
Cash
Trade receivables
Prepayments and other assets
Customer contracts
Marketing assets
Trade and other payables
Contract liabilities
Provisions
Net assets acquired
Purchase consideration
Loss after income tax attributable to the owners the parent
(3,078,295)
(545,381)
Issue of 6,896,551 Knosys Limited fully paid ordinary shares at 14.5c per share to
31 August 2021
$
119,951
276,696
56,763
2,500,000
500,000
(93,068)
(1,081,290)
(132,290)
2,146,134
1,000,000
2,846,134
3,846,134
1,700,000
vendor
Cash paid to vendor
Total purchase consideration
Goodwill acquired on acquisition
Acquisition costs
Transactions costs of approximately $398,000 associated with the acquisition have been expensed
and are included in Transaction costs in the income statement.
Contingent Assets and Contingent Liabilities
No contingent assets or liabilities were assumed by the Group as a result of the acquisition of Libero.
Revenue and profit contribution
Since the date of acquisition estimated revenue contributed by Libero for the ten months to 30
June 2022 was $2,090,000, with a net profit contribution of $1,100,000, before amortisation of
identifiable intangible assets. Based on pre and post-acquisition analysis of Libero, the full year
revenue contribution to the consolidated entity from Libero was estimated to be $2.4m if the
acquisition had occurred on 1 July 2021. Based on the nature of the business combination from
which Libero was acquired, it was not possible to determine the profit impact to the Group if the
acquisition had occurred on 1 July 2021.
Weighted average number of ordinary shares used in
calculating basic and diluted earnings per share
Basic loss per share
Number
Number
214,041,202
168,997,547
Cents
(1.44)
Cents
(0.32)
The 10,550,000 (2021: 2,000,000) options issued could potentially dilute basic earnings per share in the
future, but were not included in the calculation of diluted loss per share because they are anti-dilutive
for the periods presented.
Note 28. Business combinations
Acquisition of the Libero business (“Libero”)
On 31 August 2021 the consolidated entity, through its newly formed 100% owned subsidiary Libero
Systems Pty Ltd, acquired the Libero business, which includes a subsidiary company, Libero IS GmbH
in Germany. Libero is a leading Library Management Software (“LMS”) business which delivers a digital
experience in managing asset collections, employees and interactions with members for public libraries,
tertiary education institutions and other similar organisations. Libero has 116 clients located across 8
countries, predominately in Australia and Germany/EU. The Company paid net cash of $2,846,134 and
issued 6,896,551 fully paid ordinary shares to the vendor of Libero as consideration for the acquisition.
Based on the market value of Knosys Limited shares on the date of completion, the total acquisition
value of Libero was $3,846,134.
66 Financial Statements
Financial Statements 67
Connecting People and InformationKNOSYS ANNUAL REPORT 2022 Directors’ declaration
In the directors’ opinion:
•
•
•
•
the attached financial statements and notes comply with the Corporations Act 2001, the Australian
Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements;
the attached financial statements and notes comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board as described in note 1 to the
financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity’s
financial position as at 30 June 2022 and of its performance for the financial year ended on that
date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and
when they become due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the
Corporations Act 2001.
On behalf of the directors
Hon. Alan Stockdale AO
Director
29 August 2022
Melbourne
68 Directors’ declaration
Independent
Auditor’s
Report
KNOSYS ANNUAL REPORT 2022 Knosys Limited
Independent auditor’s report to members
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
Opinion
We have audited the financial report of Knosys Limited (the Company) and its controlled entities (the
Group), which comprises the consolidated statement of financial position as at 30 June 2022, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies and other explanatory
information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the Corporations Act
2001, including:
i. giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial
performance for the year then ended; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, 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.
Level 20, 181 William Street, Melbourne VIC 3000
+61 3 9824 8555
vic.info@williambuck.com
williambuck.com.au
William Buck is an association of firms, each trading under the name of William Buck
across Australia and New Zealand with affiliated offices worldwide.
Liability limited by a scheme approved under Professional Standards Legislation.
RECOGNITION OF REVENUE UNDER SERVICE CONTRACTS
How our audit addressed it
Our audit procedures included:
— Examining management’s revenue
recognition model to ensure compliance with
AASB 15;
— Testing of customer invoicing under the
contract and receipt of payment; and
— Reviewing new service contracts to
understand material terms and conditions,
including any particular seller warranties or
indemnities given and their potential impact
upon the revenue recognition model.
We have also assessed the adequacy of
disclosures in the notes to the financial report.
Area of focus
Refer also to notes 1, 3 and 14
The Group has service contracts with its customers.
These service contracts have invoicing, and payment
milestones included within their terms, which may or
may not be directly aligned with the performance of
services under the contract in accordance with AASB
15 Revenue from Contracts with Customers.
In order to accrue revenue appropriately in the
correct accounting period, management has
developed a model to recognise revenue when the
performance obligation is satisfied in each contract.
This includes identifying the specific performance
obligations within each customer agreement on
commencement.
There is a requirement for judgement in determining
the period to which the revenue should be attributed.
In designing the model management has considered:
— Compliance with AASB 15 – Revenue from
contracts with customers;
— When the performance obligation is identified and
satisfied in respect to each component of each
contract; and
— The potential for any post-contract servicing work
to be performed at the conclusion of the contract
and whether an additional performance obligation
exists.
Based on the above revenue recognition was a key
area of focus for our audit.
ACQUISITION OF THE LIBERO GROUP OF ENTITIES
Area of focus
Refer also to notes 1 and 28
The Group acquired the Libero group of entities
(“Libero”) on 31 August 2021 for a total
consideration of $3.85 million.
Accounting for this transaction is complex and
required significant judgements and estimates by
management in respect of the initial entries
recorded, specifically to determine the fair value of
assets and liabilities acquired in the context of
Australian Accounting Standards.
As such this matter has been determined as a key
area of focus for our audit.
How our audit addressed it
Our audit procedures included:
— Assessing that the acquired entity meets the
definition of a business under AASB 3 –
Business Combinations;
— Reviewing the sale and purchase agreement to
understand the key terms and conditions of the
acquisition, including the date that control
passed to the Group;
ACQUISITION OF THE LIBERO GROUP OF ENTITIES (continued)
Area of focus
Refer also to notes 1 and 28
How our audit addressed it
— Reviewing the Purchase Price Allocation
Valuation Report prepared by management’s
expert for the identifiable intangible assets of
the business and subsequent goodwill including
the evaluation of management’s expert; and
— Assessing the Group’s determination of fair
values of assets acquired by performing
specific audit procedures on opening balances
at acquisition date.
We have also assessed the adequacy of the
Group’s disclosures in respect of the acquisition in
the financial report.
ASSESSMENT OF CARRYING VALUE OF GOODWILL AND INTANGIBLE ASSETS
Area of focus
Refer also to notes 1 and 8
During the financial years ended 30 June 2021 &
30 June 2022, the group expanded its activities
through the acquisition of the GreenOrbit group and
Libero group respectively. As a result, the
acquisitions created goodwill and intangible assets
on the Group’s consolidated statement of financial
position of $8.9 million.
There is a risk that the carrying amount of goodwill
and intangible assets exceed its recoverable
amount and may be impaired.
The Group continues to operate as a single Cash
Generating Unit (“CGU”) being a developer and
licensor of computer software. Management has
assessed that the activities of the acquired groups
operate within this core activity segment.
The recoverable amount of the CGU has been
calculated based on a value-in-use discounted
cashflow model, that examines the expected
discounted cashflows of its sole CGU over a five-
year period extending from reporting date, plus a
terminal value.
Overall due to the high level of judgement involved,
and the significant carrying amounts involved, we
have determined that this is a key judgemental area
that our audit concentrated on.
er carrying amounts involved, we
How our audit addressed it
Our audit procedures included:
— A detailed analysis of any changes to the
business to determine the continued
appropriateness of a single segment and CGU;
— Reviewing the Purchase Price Allocation
Reports for both Libero Group and GreenOrbit
Group prepared by management’s expert to
determine the split of the identifiable intangible
assets and goodwill components including the
evaluation of management’s expert;
— An examination of the discounted cashflow
model, testing for
a) its arithmetical accuracy;
b) the reasonableness of the future cashflows,
comparing to historical trends of the business
and its pipeline of future sales transactions and
the overall industry climate affecting the
economics of the business model;
c) the reasonableness of key inputs into the
model, including growth rates, the discount rate
and the working capital levels associated with
the derivation of those growth rates;
— An examination of key sensitivities of the
Group’s future discounted cash flows to
changes in key inputs; and
— Cross-checking the overall net present value
derived by the model to the current enterprise
value of the business, embodied in its market
capitalisation.
We also considered the adequacy of the Group’s
disclosures in relation to the impairment testing in
the financial report.
72 Additional information for listed companies
SHARE-BASED PAYMENTS
Area of focus
Refer also to notes 1, 25 and the Remuneration
Report
During the financial year, the Group issued options
over common shares to employees of the entity, of
which includes key management personnel, in
order to provide them with long term incentives.
This is a key audit matter as the valuation of share-
based payments is complex and subject to
significant management estimates & judgements.
How our audit addressed it
Our audit procedures included:
— Determining the grant dates and evaluating
what were the most appropriate dates based on
the terms and conditions of the share-based
payment arrangements;
— Evaluating the fair values of share-based
payment arrangements by agreeing
assumptions to third party evidence;
— Evaluating the progress of the vesting of share-
based payments within the service period; and
— For the specific application of the binomial
model, we assessed the experience of the
expert used to advise the value of the
arrangements. We also assessed the
reasonableness of the assumptions detailed in
their report.
We have also assessed the adequacy of
disclosures in the notes to the financial report.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2022 but does not include the financial
report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to fraud
or error.
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.
Additional information for listed companies
Corporate Governance Statement
The company’s corporate governance statement can be found on the company website at
https://www.knosys.co/investor-centre/
Auditor’s Responsibilities for the Audit of the Financial Report
Shareholder information as at 15 August 2022
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted
in accordance with the Australian Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of this financial report.
A further description of our responsibilities for the audit of these financial statements is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
Distribution of Shareholders
Category (size of holding)
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
Above 100,000
Number
Number
Holders
Ordinary Shares
29
55
72
281
219
656
5,603
202,677
606,580
11,853,934
203,469,904
216,138,698
The number of shareholdings held in less than marketable parcels is 73, with a total of 153,550 ordinary
shares, amounting to 0.07% of issued capital.
This description forms part of our independent auditor’s report.
Substantial shareholders listed in the company’s register:
Shareholder
Skiptan Pty Ltd
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