Connecting People and Information
2023
Annual Report
Financial Year Ending 30th June 2023
Knosys Limited ACN 604 777 862
(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) ............................... 28
Financial Statements ................................. 38
Directors’ declaration ................................. 68
Independent auditor’s report .....................69
Additional information for listed companies .. 75
KNOSYS ANNUAL REPORT 2023 Knosys’ Mission
To empower organisations to
make smarter connections
with their information.
Knosys’ Mission 1
Knosys’ Mission 1
Global Clients
2 Knosys’ Mission
1
KNOSYS ANNUAL REPORT 2023 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
Corporate Directory 3
Connecting People and Information Chairman’s letter
to shareholders
Dear Shareholders,
On behalf of the Board of Knosys Limited, I have pleasure in presenting to you the 2023
Annual Report.
We are pleased to report solid financial results in FY23, with total operating revenue up
12% year on year to $9.9 million, a positive result in an extremely challenging economic
environment. Recurring revenues increased year on year by 16% due to several new contracts
signed in the second half of the last financial year, a full year contribution from the Libero
business, contract extensions of key enterprise customers, including ANZ Bank, Singtel and
Optus, and through price increases across our solutions.
Throughout the second half of the financial year, we were adversely impacted by the
economic uncertainty and lengthening in the time to contract sign-off. As a result, we
restructured operations to reduce headcount and improve operating efficiencies. Our
operating expenses increased by 9% to $12.1 million in FY23 but we expect costs to reduce in
FY24 on a growing revenue base.
Our growth strategy was further refined late in FY23 in response to the new economic
environment, to prioritise our investment into our areas of highest growth potential. This
will lead to a more targeted product development and marketing approach for our leading
Knowledge Management and Library Management solutions moving forward.
In FY23, we continued to fund our operations through operating cash flow and our net cash
outflow for the year was up only slightly on the prior year. The Board continues to pursue a
target of EBITDA breakeven and we expect to track towards this in FY24. Our cash balance
and recurring revenue remain sufficient to execute on our revised growth strategy.
We remain confident in the outlook for the year ahead, driven by increased demand for
our solutions and a strong pipeline of prospective new contracts despite the fact that the
economic situation caused several prospective customers to defer orders from 2H FY23
into FY24. We are already seeing the benefits of the strategic pivot in late 2023, with
strengthening of demand heading into FY24, particularly for our Knowledge Management
and Library Management solutions.
On behalf of the Directors, I would like to thank our Managing Director, John Thompson,
our senior management team and our staff generally for their hard work and dedication
throughout the year.
Knosys Board members and management are very conscious that shareholders and
potential investors face a very difficult Australian and world economic environment. Like
most technology companies, our company has not been immune from stock market
trends. Nonetheless, the company has experienced steady support from its shareholders.
Accordingly, on behalf of our Board and management, I would like to thank our shareholders
for their continuing support. Whilst conscious of the need to achieve stronger EBITDA,
Knosys is now moving into the next phase of its growth strategy focused on the areas of
greatest growth potential to drive sustainable earnings over the longer term.
Hon. Alan Stockdale AO
CHAIRMAN
28 August 2023
4 Chairman’s letter to shareholders
KNOSYS ANNUAL REPORT 2023 Knosys Today
FOUNDED
2015
ASX
LISTED
40
EMPLOYEES
HQ MELBOURNE,
AUSTRALIA
SAAS
SOLUTIONS
320 CUSTOMERS
GLOBALLY
16% GROWTH IN
ARR ON PCP
OPEN SOLUTIONS
WITH API
CONNECTIONS
Knosys Today 5
Managing
Director &
Operations
Report
6 Managing Director & Operations Report
KNOSYS ANNUAL REPORT 2023 Knosys has a mission to be a
leading software-as-a-service
(SaaS) company connecting
people and information.
Knosys is a global B2B SaaS
technology company with
three leading SaaS solutions,
which are designed to boost
employee productivity,
collaboration and connectivity
in the digital workplace.
Managing Director & Operations Report 7
Connecting People and Information Operation Locations
Head Office Melbourne
Brisbane
Australia
Raleigh
North Carolina
London
Germany
Singapore
New Zealand
America
Europe
Asia
320
Customers
25+
Countries
6
Offices
40
Employees
14
R&D Staff
8 Managing Director & Operations Report
KNOSYS ANNUAL REPORT 2023 Managing Director Operations Report
In FY23, Knosys delivered a strong set of financial results, with total operating revenue up 12%
and recurring revenue from license and support fees up 16%. These results were driven by new
customer acquisitions, increased revenue per customer and a full 12-month contribution from the
acquired Libero business.
Over the past year, the focus was on integration, consolidation and strategy refinement to
prioritise the areas of highest growth potential, following two years of acquisition growth, which
expanded the solution suite and increased the operational footprint globally.
FY23 Financial Highlights
Key financial metrics in the 2023 financial year:
•
License and support fee revenues increased by 16% to $9.6m (FY22: $8.3m);
• Total operating revenue for the consolidated entity increased by 12% to $9.9m (2022: $8.9m);
• Total income for the consolidated entity, including R&D rebate, increased by 15% to $10.8m
(2022: $9.5m);
• The loss for the consolidated entity after providing for income tax was $2.2m (2022: Loss of
$3.1m), including one-off acquisition costs of $30,702, non-cash charges for amortisation of
intangibles of $711,310 and non-cash share-based remuneration expense of $410,916;
• Net cash outflow from operating activities was $0.8m (2022 outflow: $0.2m); and
• The consolidated entity had net assets of $7.2m at 30 June 2023 (2022: $8.9m) and held cash
and cash equivalents of $2.0m (2022: $3.1m).
These results reflect predominately organic growth as well as the full year impact of the Libero
business (acquired August 2021).
FY23 Review of Operations
In FY23, Knosys grew recurring revenues by 16% to $9.6 million through new customer
acquisition, contract extensions with key enterprise customers, an increase in average revenue
per customer and a full 12-month contribution from the Libero business (10 months in FY22).
The Australian business accounts for 63% of total revenue which was up 12% in FY23, driven by
contract price increases for GreenOrbit and Knowledge IQ customers as well as the full year
impact in FY23 of Knowledge IQ contracts with Services Tasmania (started March 2022) and
Services SA (started June 2022), the commencement of license fees under the Health
Direct contract and a full year contribution from the Libero business.
Combined revenue from the United States, New Zealand, Europe, Asia and Rest of World,
accounts for 37% of revenue which was up 11% in FY23. United States operations benefited from
GreenOrbit’s increased revenue per customer through contract price increases, while European
operations benefited from a full 12-month contribution from the Libero business.
Over the past year, Knosys successfully implemented initiatives to increase the average revenue
per customer across the domestic and international customer base, including upselling and
relinquishing uneconomic customers. The sales and marketing team focused on new business
lead generation, tender responses and the renewal and expansion of existing customer contracts
across all solutions. In addition, Knosys successfully implemented a program to transition more
customers to multi-year contracts to build Lifetime Contract Value (LCV).
Managing Director Operations Report 9
Connecting People and Information
117%
Increase in
operating
revenue since
FY21
320
Customers
85%
Gross Profit
Margin
~6%
Customer churn
per annum
Annual Recurring Revenue (ARR)
FY23 Key Highlights
$9.5m
ARR as at
July 2023
20%
R&D spend as
% of Revenue
s
n
o
i
l
l
i
M
12
10
8
6
4
2
0
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23*
July’23**
Run Rate
KM
GO
LIB
*FY16 - FY23 reflects actual licence and support fee revenue for the year
**July’23 ARR reflects July’23 month’s recurring revenue annualised to give an annual run rate
10 Managing Director Operations Report
KNOSYS ANNUAL REPORT 2023
FY23 Review of Operations (cont’d)
Key customer contract renewals and extensions in FY23 included:
• ANZ Bank three-year contract extension to June 2025 for KnowledgeIQ , with a total contract
value over $5 million;
• Singtel two-year contract extension to January 2025 for KnowledgeIQ , with a total contract
value of $750K;
• Optus additional one-year contract extension to January 2025 for KnowledgeIQ , with a total
contract value over $1 million;
• Over 15 public library customers renewed, with multi-year contracts
These renewals provide visibility on our recurring revenue base over the years ahead and enable
strategic investment decisions to be made on our product development roadmap.
Although Knosys grew revenues in FY23, the company was impacted by a lengthening of time
frames to finalise and proceed to contract sign-off, reflecting the mixed economic signals and
corporate planning uncertainty affecting some customers. Most of these delayed contracts have
been pushed back into FY24 with decisions expected in the current financial year.
In FY23, Knosys increased investment in solution development and further refined the sales and
marketing strategy to build a portfolio of market leading SaaS solutions across key industry
verticals, including Health, Financial Services, Retail and Government. The future roadmap for
all solutions was updated with new advanced features, a distinct marketing position and clear
target markets.
Growth in the top line was achieved with disciplined cost control and self-funded investment
through operating cash flow. In early 2023, Knosys restructured its support and testing
capability through onshoring operations previously delivered by a team in India. This operational
restructure delivered improved customer support and enhanced product development
capability in a more efficient manner.
Over the past year, employee costs increased in line with market trends by 3% to $7.9 million and
operational expenses were up 9% to $12.1 million. Operating cash flow was carefully managed
with limited cash burn of $0.8m in FY23. The cash balance of $2 million as at 30 June 2023
increased to $4.2m in late July due to the timing of cash receipts.
Review, refocus and restructure in June 2023
In the last quarter of FY23, Knosys refined its business strategy to meet the changing market
conditions, prioritising specific solution development and customer acquisition in the areas
of highest potential growth of Libero library management and knowledge management. Both
solutions have the potential to be leaders in their respective markets, as they are considered
business critical to existing and potential customers.
The strategic review of the Knosys solution portfolio included an assessment of the opportunity
provided by the increased awareness and capability of Artificial Intelligence (AI). The updated
roadmap includes consideration of the integration of emerging AI services that will deliver
enhanced and new capacility in the Knosys solutions.
The refocused growth strategy was supported by a restructure of operations in late Q4,
which should result in an estimated $1m reduction in future annual operating costs, achieved
primarily through a reduction in head count. This continued focus on reducing group operational
costs positions the Company well to pursue its objective of operating at a minimum of
breakeven EBITDA.
FY23 Review of Operations (cont’d) 11
Connecting People and Information Solution portfolio
Knosys has a mission to empower Governments and their agencies and 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.
Knosys generates revenue from three SaaS solutions across Knowledge Management, Employee
Experience and Library Management and operates a shared services model for product
development, customer support, and sales and marketing.
12 FY23 Review of Operations (cont’d)
KNOSYS ANNUAL REPORT 2023 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.
FY23 Review of Operations (cont’d) 13
Connecting People and Information Revenue by product and geography
Knosys has a diversified revenue base, by product and by geography.
FY23 Revenue by Product
24%
36%
40%
KM
GO
LIB
FY23 Revenue by Geography
4% 2%
6%
18%
70%
AUS & NZ
US
ROW
EU
ASIA
14 FY23 Review of Operations (cont’d)
KNOSYS ANNUAL REPORT 2023 2
Customers
Expect
Consistency
1
Remote
Workers
3
Information
Governance &
Compliance
4
Content
Explosion
and Silos
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.
FY23 Review of Operations (cont’d) 15
Connecting People and Information Knosys is a global
organisation bringing
people and technology
solutions together
16 FY23 Review of Operations (cont’d)
KNOSYS ANNUAL REPORT 2023 Growth Strategy
In order to achieve its strategic growth goals,
Knosys has outlined a five pillar growth strategy.
1
Grow revenue
from existing
customers
• Increase numbers of users, and sites through
upselling to existing customers.
• Expand sales to existing customers via upsell of
solutions and cloud upgrade projects
2
New customers
and new
markets
• Structure sales and marketing activity to
accelerate pipeline growth and new customer
acquisition in key markets.
• Expand sales activity into key markets not
already purchasing.
3
4
5
Grow our
brand
awareness
• Attract new and retain customers.
• Attract and retain top employee talent
• Strengthen our brand to support better price points
and more wins.
• Be a thought leader and industry innovator
Expand
solutions
offering and
Intellectual
Property (IP)
• Expand solutions offering through investment in
additional features and technology services such as
Artificial Intelligence (AI).
• Build out unique capabilities on the Library
management and Knowledge management solutions.
Accelerate
growth
through
acquisitions
• Pursue strategic, technology aligned and
operationally compatible acquisitions, if the
opportunity, timing and funding align.
FY23 Review of Operations (cont’d) 17
Connecting People and Information Sales & Marketing
Finance & Ad min
Custo m er Support
Our People
By Region
8%
8%
2%
82%
Number of Employees
AU
UK
US
EU
By Department
20
15
10
5
0
Non-Exec Director
Technology
Executive
40
Employees
30%
Female
70%
Male
Knosys advises that within the digital and technology workforce, we are sitting
above the average for the number of women employed, with women composing
30% of all Knosys staff and 38% of executive, middle management, and Board of
Director positions.
18 FY23 Review of Operations (cont’d)
KNOSYS ANNUAL REPORT 2023 Our People
Our people are one of our greatest strengths and diversity and equity of opportunity are
integral elements of Knosys’ open and inclusive culture. Knosys strongly believes that diverse
and inclusive teams are more creative, resourceful and knowledgeable. They generate broader
perspectives and ideas, and they improve overall engagement. Ultimately Knosys’ goal is to
encourage and support all forms of diversity within the workforce and create an environment
where all employees are valued and feel able to be their full selves in the workplace. During
FY2023 we continued to focus on supporting the health and wellbeing of our people and
implemented a new HR hub to develop a range of resources and programs for all team members
going forward.
Outlook
Knosys enters FY24 with a strong foundation of recurring revenue and a strengthening pipeline
of enterprise and mid-market opportunities. There are early signs of improved market demand
after many months of delayed decision making from customers at the corporate level around the
procurement of new technology projects. The refined growth strategy to prioritise investment
in Library Management and Knowledge Management Solutions is expected to deliver benefits
in FY24 and beyond. The focus will remain firmly on disciplined cost control in FY24 as the
Company continues to target EBITDA breakeven.
I would like to thank the whole Knosys team for their dedication and hard work over the past
year. I would also like to thank our shareholders, for their ongoing support as we reposition the
Company for sustainable growth in the years ahead.
John Thompson
Managing Director
28 August 2023
Melbourne
FY23 Review of Operations (cont’d) 19
Connecting People and Information Board of
Directors
20 Board of Directors
KNOSYS ANNUAL REPORT 2023 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
X2M Connect Limited
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 director 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
Board of Directors 21
Connecting People and Information 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, Chairman of Dubber Corporation Limited and is a Member of the Advisory
boards for Clipboard, Alex 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.
Neil Wilson
Non-Executive Director
Directorships held in other
listed entities in the last 3 years
Dubber Corporation Limited
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
22 Board of Directors
KNOSYS ANNUAL REPORT 2023 Directors’
Report
Directors’ Report 23
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 2023.
Directors
The following persons were directors of Knosys Limited during the period from 1 July 2022 to the date
of this report, unless otherwise stated:
Hon. Alan Stockdale
Non-executive Chairman
John Thompson
Managing Director
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 and financial performance
Refer to Managing Directors Report on page 23.
Material business risks
The material business risks faced by the consolidated entity that could have an effect on
its financial prospects include:
Growth, profitability and positive cashflow
The ability of the consolidated entity to self-fund its operations and strategic plans is
dependent on its ability to maintain and grow its revenue line and its ability to manage
operational expenses to achieve positive or near breakeven operational results and
cashflows.
Loss of key customers
The consolidated entity’s top two enterprise customers contribute 17% and 10% of annual
revenue respectively. The loss of the commercial relationship with either one of these
customers could cause a material reduction in annual revenue, if not replaced with new
business, and would require the company to reduce its operational costs accordingly.
Technological advancements
The consolidated entity operates in the information technology environment which
is subject to rapid changes and developments in products and solutions. Without an
appropriate level of research and development by the consolidated entity its solutions risk
becoming outdated and uncompetitive.
24 Directors’ Report
KNOSYS ANNUAL REPORT 2023
Competitive environment
The consolidated entity continually researches the market in order to understand and
adapt to the competitive environment in which it operates, however existing competitors
and new entrants to the market who may have greater resources and/or new leading-
edge technologies could reduce the competitiveness of the consolidated entity’s
solutions and pose a risk to it maintaining and growing recurring revenues.
Access to capital markets
The consolidated entity’s ability to grow rapidly or to deal with unforeseen adverse
commercial outcomes may depend in part on its ability to access equity funding. There
can be no assurance that any such equity funding will be available to the consolidated
entity on favourable terms and, if so, the consolidated entity may not be able to take
advantage of growth opportunities or respond fully to adverse circumstances.
Legislative change
The consolidated entity is subject to the general legislative frameworks of the markets
in which it operates and is therefore affected by any legislative changes, along with its
competitors. The consolidated entity invests in research and development and regularly
receives an annual tax rebate of $500,000 or greater. The consolidated entity is currently
of the size where a change in tax legislation, that adversely affects the consolidated
entity’s ability to claim this rebate, could compromise the consolidated entity’s ability to
fully fund its desired level of research and development.
Supplier relationships
The consolidated entity relies on its world leading primary hosting provider to host SaaS
solutions and managed services to the majority of its customers. Should the provider
suffer outages due to exceptional circumstances which cause disruption to the hosting
service the consolidated entity’s products and services may also be disrupted.
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
There were no significant changes in the state of affairs of the consolidated entity during the financial
year, other than those matters mentioned above.
Directors’ Report 25
Connecting People and Information Matters subsequent to the end of the financial year
No matter or circumstance has arisen since 30 June 2023 that has significantly affected, or may
significantly affect the consolidated entity’s operations, the results of those operations, or the
consolidated entity’s state of affairs in future financial years.
Likely developments and expected results of operations
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 well placed to expand its customer base, in particular in Australia, US and Europe, and to
enhance its product offerings through internal developments and further advances in technologies.
The consolidated entity has a growing sales pipeline in its global markets. The Company plans to
accelerate its investment in product development in its knowledge management and library services
products in the year to June 2024 in order to enable the Company to remain a leading provider in its
chosen markets.
Given the size and competitive nature of the market in which the consolidated entity operates,
further information on likely sales opportunities, planned product development and the expected
results of operations of the consolidated entity have not been included in this report. The directors
have utilised the exemption in s299A(3) and have not disclosed further details as they believe it would
be likely to result in competitors gaining a commercial advantage and could lead to unreasonable
prejudice to the operations and financial prospects of the consolidated entity.
Environmental regulation
The consolidated entity is not subject to any significant environmental regulation under Australian
Commonwealth or State law apart from instruments applicable to all companies.
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 25 years. Stephen
holds a Bachelor of Commerce from the University of Melbourne and is a current member of
Chartered Accountants Australia and New Zealand, a Fellow of the Governance institute of Australia
and a member of The Australian Institute of Company Directors.
26 Directors’ Report
KNOSYS ANNUAL REPORT 2023
Meetings of directors
Director attendance at Board and standing Board committee meetings held from 1 July 2022 to 30 June 2023, is
set out in the table below:
Hon. Alan Stockdale
John Thompson
Kathrin Mutinelli
Neil Wilson
FULL BOARD
AUDIT COMMITTEE
Attended
Held
Attended
Held
12
12
12
12
12
12
12
12
-
-
1
1
-
-
1
1
Held: represents the number of meetings held while the director was a member of the Board or of the
committee
The standing audit committee was established during the financial year, with audit committee duties
previously being undertaken by the full Board.
Directors’ Report 27
Connecting People and Information 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 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 2023. 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.
28 Directors’ Report
KNOSYS ANNUAL REPORT 2023
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.
Revenue
9,947,859
8,916,995
4,594,082
3,137,317
2,909,228
2023
$
2022
$
2021
$
2020
$
2019
$
Profit / (loss) before transaction
costs and income tax expense
Profit / (loss) attributable to
owners of the parent entity
Dividends paid
Revenue growth
Change in operating result
Change in share price
(2,121,481)
(2,535,746)
15,525
(908,391)
(771,912)
(2,195,604)
(3,050,548)
(543,838)
(908,391)
(771,912)
-
11.6%
28.0%
(3.2%)
-
94.1%
(461%)
(59%)
-
46.4%
40.1%
75%
(8.6%)
-
7.8%
(17.7%)
(16%)
(30%)
-
10.8%
4.2%
25%
(31%)
Return on capital employed
(27.0%)
(32.5%)
Revenue and profit before tax are two of the financial performance targets considered in setting the Short-
Term Incentive (STI). Revenue and profit before tax amounts are in accordance with Australian Accounting
Standards (AASB’s). Operating result is operating profit or loss as reported in the statement of profit or loss.
Directors’ Report 29
Connecting People and Information 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 2023
consisted of the following directors of Knosys Limited:
•
•
•
•
Alan Stockdale - Non-Executive Chairman
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
$
75,000
50,228
55,000
Cash
bonus
Non-
monetary
Super-
annuation
Long
service
leave
Equity-settled
Total
$
-
-
-
$
-
-
-
$
7,875
5,274
-
$
-
-
-
$
-
-
-
$
82,875
55,502
55,000
322,962
52,700
37,902
26,991
13,428
185,110
639,093
260,063
35,300
2,316
763,253
88,000
40,218
27,298
67,438
7,150
95,654
427,781
20,578
280,764
1,260,251
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
248,003
48,000
10,205
759,881
121,000
54,452
27,497
67,459
12,012
25,281
166,130
511,847
465,036
1,493,109
2023
Non-Executive Directors:
Alan Stockdale
Kathrin Mutinelli
Neil Wilson
Executive Director:
John Thompson
Other Key Management Personnel:
Stephen Kerr
2022
Non-Executive Directors:
Alan Stockdale
Peter Pawlowitsch
Kathrin Mutinelli
Neil Wilson
Executive Director:
John Thompson
Other Key Management Personnel:
Stephen Kerr
30 Directors’ Report
KNOSYS ANNUAL REPORT 2023
For the financial year, the actual proportions of fixed remuneration and of remuneration linked to
performance are as follows:
2023
Fixed remuneration
At risk - STI
At risk - LTI
Non-Executive Directors:
Alan Stockdale (Chairman)
Kathrin Mutinelli
Neil Wilson
Managing Director:
John Thompson
100%
100%
100%
63%
-%
-%
-%
8%
(14.6% available)
-%
-%
-%
29%
Other Key Management Personnel:
Stephen Kerr
70%
8%
(13.3% available)
22%
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
100%
100%
100%
100%
51%
-%
-%
-%
-%
10%
(13% available)
Other Key Management Personnel:
Stephen Kerr
58%
9%
(12% available)
-%
-%
-%
-%
39%
33%
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service
agreements. Details of these agreements are as follows:
Name:
Title:
John Thompson
Chief Executive Officer
Agreement commenced:
18 July 2016
Term of agreement:
No fixed term
Details:
Annual base salary package for the year ending 30 June 2023 of $377,057
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 $52,700 relating to
performance in the 2023 year was assessed as a bonus entitlement for
the 2023 financial year.
Directors’ Report 31
Connecting People and Information 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 package for the year ending 30 June 2023 of
$287,361 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 $35,300 relating to performance in the 2023 year
was assessed as a bonus entitlement in the 2023 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 each issue of loan funded shares 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.
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.
32 Directors’ Report
KNOSYS ANNUAL REPORT 2023
Options
The terms and conditions of each issue of options 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 2023 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 (including loan funded shares) 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
Kathrin Mutinelli
Neil Wilson
John Thompson
Stephen Kerr
500,000
700,000
750,000
2,417,857
3,228,902
7,596,759
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
700,000
750,000
2,417,857
3,228,902
7,596,759
Directors’ Report 33
Connecting People and Information
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
1,775,000
7,775,000
-
-
-
1,980,000
4,020,000
6,000,000
585,750
1,189,250
1,775,000
2,565,750
5,209,250
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.
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.
34 Directors’ Report
KNOSYS ANNUAL REPORT 2023
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
28 August 2023
Melbourne
Directors’ Report 35
Connecting People and Information
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 2023 there have
been:
— no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in
relation to the audit; and
— no contraventions of any applicable code of professional conduct in relation to the audit.
William Buck Audit (Vic) Pty Ltd
ABN 59 116 151 136
R. P. Burt
Director
Melbourne, 28 August 2023
Level 20, 181 William Street, Melbourne VIC 3000
+61 3 9824 8555
vic.info@williambuck.com
williambuck.com.au
William Buck is an association of firms, each trading under the name of William Buck
across Australia and New Zealand with affiliated offices worldwide.
Liability limited by a scheme approved under Professional Standards Legislation.
Knosys empowers
organisations.
Boosting productivity,
collaboration and
connectivity in the
digital workplace.
Directors’ Report 37
Connecting People and Information Financial
Statements
Consolidated
30 June 2023
ABN 96 604 777 862
38 Financial Statements
KNOSYS ANNUAL REPORT 2023 Contents
Statement of profit or loss and other comprehensive income ........40
Statement of financial position ...........................................................41
Statement of changes in equity ......................................................... 42
Statement of cash flows ..................................................................... 43
Notes to the financial statements ..................................................... 44
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 28 August 2023, in accordance with
a resolution of directors. The directors have the power to amend and reissue the financial
statements.
Financial Statements 39
Connecting People and Information
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2023
Revenue
Research and development tax refund
Other income
Expenses
Consolidated
Notes
2023
$
2022
$
3
2
9,947,859
8,916,995
858,149
39,278
539,643
7,608
Licence fee and support expense
(1,572,143)
(1,189,504)
Payments to suppliers for research and development activities
(499,501)
(228,198)
Employee benefits expense
4
(7,876,739)
(7,613,162)
Depreciation and amortisation expense
Legal and accounting expense
Travel and accommodation expense
Finance costs
Administration and corporate expense
(876,847)
(927,925)
(321,075)
(260,917)
(143,287)
(147,439)
(4,135)
(9,600)
(1,673,040)
(1,623,247)
Profit / (Loss) before acquisition costs1 and income tax
(2,121,481)
(2,535,746)
Transaction costs related to acquisition of businesses
Loss before income tax
Income tax expense
4
5
(30,702)
(499,196)
(2,152,183)
(3,034,942)
(43,421)
(15,606)
Loss after income tax expense for the year attributable
to owners of the Knosys Limited
(2,195,604)
(3,050,548)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
(51,533)
(27,747)
Total comprehensive loss for the year attributable
to owners of Knosys Limited
(2,247,137)
(3,078,295)
Loss per share for loss attributable to the
owners of the parent
Basic and diluted loss per share
Cents
Cents
27
(1.04)
(1.44)
1This is a non-GAAP disclosure included due to the material level of transaction costs related to acquisition of businesses
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
40 Financial Statements
KNOSYS ANNUAL REPORT 2023
Statement of financial position
As at 30 June 2023
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
2023
$
2022
$
6
7
8
9
10
11
12
13
14
12
13
2,017,110
3,095,702
2,427,234
2,382,668
650,000
550,000
325,554
337,008
5,419,898
6,365,378
8,173,786
8,885,095
89,557
157,662
73,986
79,761
8,421,005
9,038,842
13,840,903
15,404,220
911,388
1,038,554
708,378
89,958
741,667
94,705
5,017,665
4,534,870
6,727,389
6,409,796
24,050
68,739
-
-
24,050
68,739
6,751,439
6,478,535
7,089,464
8,925,685
15
25
17,488,521
17,488,521
1,452,442
1,041,526
(80,823)
(29,290)
(11,770,676)
(9,575,072)
Total equity
7,089,464
8,925,685
The above statement of financial position should be read in conjunction with the accompanying notes
Financial Statements 41
Connecting People and Information
Statement of changes in equity
For the year ended 30 June 2023
Consolidated
Balance at 1 July 2021
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total
equity
$
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 accumulated losses on expiry of share
74,000
(74,000)
based remuneration instruments
-
-
-
1,265,250
720,892
-
Balance at 30 June 2022
17,488,521
1,012,236
(9,575,072)
8,925,685
Consolidated
Balance at 1 July 2022
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total
equity
$
17,488,521
1,012,236
(9,575,072)
8,925,685
Loss after income tax expense for the year
Foreign currency translation
Total comprehensive loss for the year
-
-
-
-
(2,195,604)
(2,195,604)
(51,533)
-
(51,533)
(51,533)
(2,195,604)
(2,247,137)
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 issued capital on realisation of share
based remuneration instruments
-
-
-
-
410,916
-
-
-
-
-
410,916
-
Balance at 30 June 2023
17,488,521
1,371,619
(11,770,676)
7,089,464
The above statement of changes in equity should be read in conjunction with the accompanying notes
42 Financial Statements
KNOSYS ANNUAL REPORT 2023 Statement of cash flows
For the year ended 30 June 2023
Consolidated
Notes
2023
$
2022
$
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
Net cash (used in) / from operating activities
24
10,386,088
9,305,715
(11,920,093)
(9,998,059)
758,149
39,278
(4,135)
-
(43,421)
(784,134)
489,643
7,608
(9,600)
-
(15,606)
(220,299)
Cash flows from investing activities
Cash (paid) / received on acquisition of business
-
(2,726,183)
Payment of transaction costs related to acquisition
of businesses
Payments for plant and equipment
Net cash (used in) / from investing activities
(30,702)
(569.857)
(124,653)
(155,355)
(59,494)
(3,355,534)
Cash flows from financing activities
Repayment of lease liability
Proceeds from issue of shares
Share issue transaction costs
(139,103)
-
-
(126,130)
265,250
-
Net cash from financing activities
(139,103)
139,120
Net increase (decrease) in cash and cash equivalents
(1,078,592)
(3,436,713)
Cash and cash equivalents at the beginning of the
financial year
Cash and cash equivalents at the end of the
financial year
3,095,702
6,532,415
2,017,110
3,095,702
The above statement of cash flows should be read in conjunction with the accompanying notes
Financial Statements 43
Connecting People and Information NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
Notes to the financial statements
30 June 2023
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.
44 Financial Statements
KNOSYS ANNUAL REPORT 2023 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
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.
Financial Statements 45
Connecting People and Information NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
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.
46 Financial Statements
KNOSYS ANNUAL REPORT 2023 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
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.
Financial Statements 47
Connecting People and Information NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
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.
48 Financial Statements
KNOSYS ANNUAL REPORT 2023 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
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, the Binomial
Option Valuation model or the Hoadley Barrier 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.
Financial Statements 49
Connecting People and Information NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
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.
Diluted Loss per share is calculated as net profit/loss attributable to members of the Company, adjusted
for:
•
•
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
2023 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 2023.
50 Financial Statements
KNOSYS ANNUAL REPORT 2023 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
Standard
AASB 2020-1 Amendments to
Australian Accounting Standards
- Classification of liabilities as
Current or Non-Current
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 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
judgements are relevant to these financial statements:
Estimation of accrued research and development tax refund
As at 30 June 2022 the consolidated entity had accrued $550,000 in accrued research
and development tax refund credits in-respect of the 2022 tax return. The directors of the
consolidated entity engaged an industry expert to prepare and lodge this return. An amount
of $758,149 was receipted into the bank in June 2023 in regard to the 2022 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 $650,000 for the 2023 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.
Financial Statements 51
Connecting People and Information NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
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
52 Financial Statements
Consolidated
2023
$
9,644,055
303,804
9,947,859
2022
$
8,298,529
618,466
8,916,995
KNOSYS ANNUAL REPORT 2023 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
Note 4. Expenses
Consolidated
2023
$
2022
$
Loss before income tax includes the following
specific expenses:
Transaction costs related to acquisition of businesses
30,702
499,196
Transaction costs incurred in 2023 are residual
stamp duty and associated legal costs related to the
acquisition of the LIBERO business, which completed
on 31 August 2021.
Employee benefits expense
Superannuation expense - Accumulation fund
Share based payments expense
533,928
410,916
408,650
720,892
Note 5. Income tax expense
Income tax expense
Current Tax benefit
Deferred tax - origination and reversal of temporary differences
Deferred tax assets not recognised
Aggregate income tax expense
Unrecognised deferred tax assets
Consolidated
2023
$
2022
$
(359,549)
(318,250)
24,093
378,877
43,421
(19,210)
353,066
15,606
Unused tax losses for which no deferred tax asset has been recognised
1,258,952
880,076
Numerical reconciliation of income tax expense and tax at the
statutory rate
Loss before income tax expense
(2,152,183)
(3,034,942)
Tax at the statutory tax rate of 25% (30 June 2021 26%)
(538,046)
(758,735)
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
6,371
361,111
102,729
(96,504)
5,700
305,556
177,723
51,601
(214,537)
(134,911)
(378,876)
(353,066)
378,876
353,066
43,421
43,421
15,606
15,606
Financial Statements 53
Connecting People and Information
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
Note 6. Current assets - trade receivables
Trade receivables
The aging analysis of trade receivables is as follows:
Consolidated
2023
$
2022
$
2,427,234
2,382,668
Past due but not impaired
Total
$
2,427,234
2,382,668
2023
2022
Neither past
due nor impaired
$
< 30 days
$
30-60 days
$
61-90 days
$
90+ days
$
2,255,047
2,150,082
61,552
129,391
78,983
94,401
23,915
5,219
7,737
3,575
As at 30 June 2023 no trade receivables were impaired (2022: 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
2023
$
296,448
29,106
325,554
2022
$
311,231
25,777
337,008
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 1st July 2022
3,303,215
4,947,268
634,612
8,885,095
Amortisation
-
(553,396)
(157,913)
(711,309)
Carrying value at 30 June 2023
3,303,215
4,393,872
476,699
8,173,786
Cost as at 30 June 2023
3,303,215
5,533,000
790,000
9,626,215
Accumulated Amortisation at 30 June 2023
-
(1,139,128)
(313,301)
(1,452,429)
Carrying value at 30 June 2023
3,303,215
4,393,872
476,699
8,173,786
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.
54 Financial Statements
KNOSYS ANNUAL REPORT 2023
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
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 7.5% has been estimated
for years 2 to 5 of the model. This is a conservative estimate on the future growth of the
business.
b.
Projected cash flows have been discounted using a pre-tax discount rate of 13.97% (2022:
13.7%). The consolidated entity is debt free and is therefore not subject to borrowing costs
and the beta used is based on market available data.
c.
An annual growth rate of 2.5% (2021: 2.5%) has been estimated in the calculation of terminal
value being in line with comparable market companies.
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 2023 and accordingly, no impairment loss
has been recognised.
Sensitivity to changes in assumptions
The impairment model is most sensitive to the following assumptions:
•
•
•
Revenue forecasts assumption;
Employment costs; and
Discount rate.
A rise in the discount rate to over 20% would result in an impairment. No other reasonable
possible change in assumptions would result in an impairment charge being recognised.
Financial Statements 55
Connecting People and Information NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
Note 9. Right of use asset
Buildings - right-of-use
Accumulated depreciation
Consolidated
2023
$
2022
$
541,336
406,980
(451,779)
(332,994)
89,557
73,986
The consolidated entity leases its Melbourne based head office under an agreement of four years
duration, with a further one year extension on the current lease. 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
Carrying value at 30 June 2021
Additions
Depreciation
Carrying value at 30 June 2022
Cost as at 30 June 2022
Accumulated depreciation at 30 June 2022
Carrying value at 30 June 2022
Additions
Depreciation
Carrying value at 30 June 2023
Cost as at 30 June 2023
Accumulated depreciation at 30 June 2023
Carrying value at 30 June 2023
fittings
equipment
$
46,534
8,110
(48,641)
6,003
173,363
(167,360)
6,003
41,384
(9,828)
37,559
214,747
(177,188)
37,559
$
49,538
50,529
(26,309)
73,758
229,868
(156,110)
73,758
84,859
(38,514)
120,103
314,727
(194,624)
120,103
Total
$
96,072
58,639
(74,950)
79,761
403,231
(323,470)
79,761
126,243
(48,342)
157,662
529,474
(371,812)
157,662
56 Financial Statements
KNOSYS ANNUAL REPORT 2023 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
Note 11. Current liabilities - trade and other payables
Trade payables
Other payables
Consolidated
2023
$
154,937
756,451
911,388
2022
$
150,929
887,625
1,038,554
The table below summarises the maturity profile of the consolidated entities current trade and other
payables.
2023
2022
Total
$
154,937
150,929
On demand
$
< 3 months
$
3 to 12 months
$
-
-
154,937
146,740
-
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
2023
$
2022
$
Provision for employee benefits - current
Provision for employee benefits - current
708,378
741,667
Provision for employee benefits - non-current
Provision for employee benefits - non-current
24,050
68,739
Note 13. Lease liabilities
Lease Liability - current
Lease liability - current
Lease Liability - non-current
Lease liability - non-current
Consolidated
2023
$
2022
$
89,958
94,705
-
-
Financial Statements 57
Connecting People and Information NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
Note 14. Current liabilities - Contract liabilities
Contract liabilities
Consolidated
2023
$
2022
$
5,017,665
4,534,870
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 FY23 and FY24 years
4,534,870
2,893,063
9,617,129
7,465,040
Balances acquired on acquisition of business
-
1,081,918
Transfer to revenue - performance obligations satisfied
(9,134,334)
(6,905,151)
5,017,665
4,534,870
Note 15. Equity - issued capital
Consolidated
2023
$
2022
$
17,488,521
17,488,521
No. of shares
Legal Parent
2023
No. of shares
Legal Parent
2022
Date
216,138,698
207,242,147
-
-
6,896,551
2,000,000
216,138,698
216,138,698
Ordinary shares - fully paid
Movements in ordinary share capital
Details
Legal parent
Balance at start of year
Issue of share capital to shareholder on completion of
acquisition of Libero business
31 Aug 2021
Issue of share capital to shareholders on exercise of options
16 Dec 2021
Balance at end of year
58 Financial Statements
KNOSYS ANNUAL REPORT 2023 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
Details
Consolidated entity
Date
2023
$
2022
$
As at start of the financial year
17,488,521
16,149,271
Issue of share capital to shareholder on completion of
acquisition of Libero business
Repayment of loan on loan funded shares
Issue of share capital to shareholders on exercise of
options
31 Aug 2021
8 Dec 2021
16 Dec 2021
Transfer from share-based payments reserve
31 Dec 2021
-
-
-
-
1,000,000
25,250
240,000
74,000
Balance as at end of the financial year
17,488,521
17,488,521
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 exercised
Options issued during the year
Balance at end of year
No. of
options
Legal Parent
2023
No. of
options
Legal Parent
2022
Date
10,550,000
2,000,000
16 Dec 2021
23 Dec 2021
-
-
(2,000,000)
10,550,000
10,550,000
10,550,000
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.
Financial Statements 59
Connecting People and Information NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
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
2023
$
2022
$
67,173
22,785
-
71,398
23,307
-
89,958
94,705
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.
60 Financial Statements
KNOSYS ANNUAL REPORT 2023
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
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
2023
$
891,471
280,764
67,438
20,578
2022
$
935,333
465,036
67,459
25,281
1,260,251
1,493,109
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
2023
$
2022
$
Assurance services - William Buck
Audit or review of the financial statements
57,211
51,800
Other services - William Buck
Taxation advice
14,072
17,883
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
Profit (Loss) after income tax
Total comprehensive profit (loss)
Statement of financial position
Legal Parent
2023
$
100,998
100,998
2022
$
(1,033,657)
(1,033,657)
Financial Statements 61
Connecting People and Information
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Contingent liabilities
Legal Parent
2023
$
2022
$
1,808,563
1,988,386
18,885,842
18,362,237
27,339
27,339
15,648
15,648
24,623,643
24,623,643
1,442,442
1,031,526
(7,207,582)
(7,308,580)
18,858,503
18,346,589
The legal parent entity had no contingent liabilities as at 30 June 2023 and 30 June 2022.
Capital commitments - Property, plant and equipment
The legal parent entity had no capital commitments for property, plant and equipment as at 30 June
2023 and 30 June 2022.
Significant accounting policies
The accounting policies of the 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
Ownership interest
Principal place
of business /
Country of
incorporation
2023
%
2022
%
Principal activities - Operating company for the Knosys
knowledge management business, providing operational
Australia
100%
100%
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
Australia
100%
100%
Principal activity - Provider of sales and marketing resources
Singapore
100%
100%
to sell Knosys Platform in Singapore and surrounding regions.
Greenorbit Pty Ltd
Principal activity - Australian operating company of the
GreenOrbit business, providing operational
Australia
100%
100%
infrastructure, employees, sales resources, research,
development and customer support
62 Financial Statements
KNOSYS ANNUAL REPORT 2023
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
Name
Greenorbit Inc.
Ownership interest
Principal place
of business /
Country of
incorporation
2023
%
2022
%
Principal activity - Provider of sales and marketing
resources to sell and support the GreenOrbit intranet
United States
100%
100%
software in USA
Greenorbit Software Limited
Principal activity - Provider of sales and marketing resources
United Kingdom
100%
100%
to sell and support the GreenOrbit intranet software in UK
Greenorbit Software Pvt Ltd
Principal activity - Provider of customer support to
GreenOrbit customers and software development services to
the GreenOrbit business
Libero Systems Pty Ltd
India
100%
100%
Principal activity - Provider of sales and marketing resources
Australia
100%
100%
to sell and support the GreenOrbit intranet software in UK
Libero IS GmbH
Principal activity - Provider of sales resources for the Libero
business and customer support to Libero customers
Germany
100%
100%
Note 23. Events after the reporting period
No matter or circumstance has arisen since 30 June 2023 that has significantly affected, or may
significantly affect the consolidated entity’s operations, the results of those operations, or the
consolidated entity’s state of affairs in future financial years.
Note 24. Reconciliation of profit after income tax to net
cash from operating activities
Consolidated
2023
$
2022
$
Loss after income tax expense for the year
(2,195,604)
(3,050,548)
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
876,847
410,916
30,702
927,925
720,892
499,196
(44,566)
482,795
(171,169)
559,889
(100,000)
(50,000)
11,454
(127,165)
(51,533)
(77,980)
(59,046)
345,894
(27,747)
84,415
Net cash used in operating activities
(784,134)
(220,299)
Financial Statements 63
Connecting People and Information NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
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 2023 the following loan funded shares had been granted:
Grant date
Issue date
Loan expiry
date
Issue
price
Balance
at 30 June
2022
Number
Issued
during
the
period
Number
Loan
repaid
during the
period
Number
Forfeited
during
the
period
Number
Balance
at 30 June
2023
Number
Vested at
end of the
period
Number
Share-
based
payments
expense
for 2023 $
28/11/2017
19/02/2018 18/02/2028
$0.06
1,200,000
30/01/2018 19/02/2018 18/02/2028
$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
1,900,000
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
Total
Weighted average issue price
10,975,000
$0.124
Weighted average remaining contractual life (years)
There were no loan shares issued during the financial year.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,200,000 1,200,000
1,600,000 1,600,000
250,000
250,000
550,000
550,000
1,900,000 1,900,000
1,000,000 1,000,000
0
0
0
0
0
0
500,000
500,000
227
725,000
725,000
2,544
3,250,000 1,072,500
81,784
10,975,000 8,797,500
84,555
$0.124
$0.118
3.74
During the year the loan expiry dates for 2,800,000 fully vested loan funded shares, issued on 19
February 2018, were extended to 18 February 2028. There was no additional share based payment
expense recognised in relation to the extension of the expiry period.
64 Financial Statements
KNOSYS ANNUAL REPORT 2023 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
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
Sold
during the
period
Number
Forfeited
during the
period
Number
Balance
at 30 June
2022
Number
Vested
at end
of the
period
Number
Share-
based
payments
expense
for 2022
$
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
0
0
0
0
0
0
-
-
-
-
-
-
-
-
1,000,000
1,000,000
500,000
375,000
14,456
725,000
543,750
25,451
3,250,000
682,500
155,408
Total
11,225,000
3,250,000
250,000
3,250,000 10,975,000
8,101,250
195,315
Weighted average issue price
$0.114
$0.124
$0.114
Weighted average remaining contractual life
(years)
3.68
For the loan funded shares issued during the 2022 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
05/10/2021
13/10/2026
$0.14
$0.150
0.00%
80%
0.00%
0.790%
Options issued to Directors, executives and employees
Employee Incentive Plan - Options
The Knosys Limited Employee Incentive Plan (EIP) has been established by the consolidated entity, 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.
Financial Statements 65
Connecting People and Information
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
As at 30 June 2023 the following options had been granted:
Option grant
date
Option expiry
date
Exercise
price
Balance
at 30 June
2022
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
Share-based
payments
expenses for
2023 $
Balance at
30 June 2023
Number
8/12/2021
01/07/2026
$0.15
10,550,000
-
-
-
10,550,000
3,481,500
326,361
Weighted average exercise price
$0.15
Weighted average remaining contract life (years)
There were no options issued during the financial year.
$0.15
3.0
$0.15
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.
As at 30 June 2022 the following options had been granted:
Option grant
date
Option expiry
date
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
Share-based
payments
expenses for
2022 $
Balance at
30 June 2022
Number
8/12/2021
01/07/2026
$0.15
-
10,550,000
-
-
10,550,000
2,215,500
525,577
Weighted average exercise price
Weighted average remaining contract life (years)
$0.15
4.0
$0.15
For the options issued during the 2022 financial year, 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%
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.
66 Financial Statements
KNOSYS ANNUAL REPORT 2023 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2023
Geographical information
Australia
United States
New Zealand
Europe
Asia
Rest of World
Sales to external
customers
Geographical
non-current assets
June 2023
$
June 2022
$
June 2023
$
June 2022
$
6,300,034
5,616,734
8,421,005
9,038,842
1,759,392
1,486,950
675,816
712,369
635,963
482,858
380,038
341,397
196,616
276,687
-
-
-
-
-
-
-
-
-
-
9,947,859
8,916,995
8,421,005
9,038,842
Concentration of key customers
The concentration of customers for the 2023 year was as follows:
•
•
A major customer in Australia and New Zealand in the finance sector represented 17.1% of operating revenue
A major customer in Australia in the telecommunications sector represented 10.4% of operating revenue
The concentration of customers for the 2022 year was as follows:
•
•
A major customer in Australia and New Zealand in the finance sector represented 16.1% of operating revenue
A major customer in Australia in the telecommunications sector represented 12.4% of operating revenue
Note 27. Loss per share
Consolidated
2023
$
2022
$
Loss after income tax attributable to the owners the parent
(2,247,137)
(3,078,295)
Weighted average number of ordinary shares used in calculating
basic and diluted earnings per share
Basic loss per share
Number
Number
216,138,698
214,041,202
Cents
(1.04)
Cents
(1.44)
The 10,550,000 (2022: 10,550,000) 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.
Financial Statements 67
Connecting People and Information
Directors’ declaration
In the directors’ opinion:
•
the attached financial statements and notes comply with the Corporations Act 2001, the Australian
Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements;
•
the attached financial statements and notes comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board as described in note 1 to the
financial statements;
•
the attached financial statements and notes give a true and fair view of the consolidated entity’s
financial position as at 30 June 2023 and of its performance for the financial year ended on that
date; and
•
there are reasonable grounds to believe that the company will be able to pay its debts as and
when they become due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the
Corporations Act 2001.
On behalf of the directors
Hon. Alan Stockdale AO
Director
28 August 2023
Melbourne
68 Directors’ declaration
KNOSYS ANNUAL REPORT 2023
Independent
Auditor’s
Report
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 subsidiaries (the consolidated
entity)), which comprises the consolidated statement of financial position as at 30 June 2023, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies and other explanatory
information, and the directors’ declaration.
In our opinion, the accompanying financial report of the consolidated entity, is in accordance with the
Corporations Act 2001, including:
i. giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial
performance for the year ended on that date; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the consolidated entity in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and
Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Level 20, 181 William Street, Melbourne VIC 3000
+61 3 9824 8555
vic.info@williambuck.com
williambuck.com
William Buck is an association of firms, each trading under the name of William Buck
across Australia and New Zealand with affiliated offices worldwide.
Liability limited by a scheme approved under Professional Standards Legislation.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
RECOGNITION OF REVENUE UNDER SERVICE CONTRACTS
How our audit addressed it
Our audit procedures included:
— Examining management’s revenue recognition
model to assess if in compliance with AASB 15;
— Examining and verifying a sample of customer
contracts for the achievement of performance
milestones relevant to key customer contracts;
— Examining a sample of customer contracts to
support the existence and completeness of
revenue recognised in the period by agreeing to
contract, invoices and subsequent receipts from
their customers; and
— Performing detailed cut-off testing to assess if
revenue transactions at the year-end had been
recorded in the correct financial period.
We also assessed the appropriateness of financial
statement disclosures at note 3 with respect to the
requirements of AASB 15.
Area of focus
Refer also to notes 1, 3 and 14
The consolidated entity 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 (‘AASB 15’).
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 judgement in determining the period to
which the revenue should be attributed. In applying
its revenue 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.
This area was considered a Key Audit Matter due
to judgements involved and the significance of the
revenue amount.
IMPAIRMENT OF NON-CURRENT ASSETS INCLUDING GOODWILL AND INTANGIBLE ASSETS
Area of focus
Refer also to notes 1 and 8
As disclosed in Note 8, the carrying value of the
Group’s goodwill and intangible assets was $8.2
million. This amount is reflective of the acquisitions
of the GreenOrbit Group and Libero Group
completed in prior financial periods.
As required by Australian Accounting Standards,
the Group assesses at the end of each reporting
period whether there is any indication that its non-
current assets may be impaired. In addition,
goodwill and indefinite life intangibles are tested for
impairment at least annually.
The consolidated entity 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. The Group has disclosed in note 8
the Group’s impairment approach including the
significant underlying assumptions applied.
This area was considered a Key Audit Matter due
to complexity of judgements involved in the
impairment process and the significance of the
carrying amounts of the balances.
How our audit addressed it
Our audit procedures included:
— Assessing the appropriateness of the allocation
of goodwill and intangible assets to the Group’s
identified CGU;
— An examination of the discounted cashflow
model, testing for:
a. its arithmetical accuracy;
b. the reasonableness key assumptions
applied to approved forecast 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; and
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.
— Assessed the Group’s current year actual results
in comparison to prior year forecasts to assess
forecast accuracy;
— Assessed the discount rates through comparing
the weighted average cost of capital for the
Group with comparable businesses; and
— Performed sensitivity analysis in respect of the
assumptions noted above to ascertain the extent
of changes in those assumptions which either
individually or collectively would materially
impact the recoverable amount of the CGU. We
assessed the likelihood of these changes in
assumptions arising.
We also assessed the adequacy of disclosures in
relation to the impairment testing approach and
key assumptions as disclosed in note 8 of the
financial report.
Other Information
The directors are responsible for the other information. The other information comprises the information in
the consolidated entity’s annual report for the year ended 30 June 2023 but does not include the financial
report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report, or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the consolidated entity 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 consolidated
entity 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 consolidated entity
or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted
in accordance with the Australian Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of this financial report.
A further description of our responsibilities for the audit of these financial statements is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our independent auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2023.
In our opinion, the Remuneration Report of Knosys Limited, for the year ended 30 June 2023, complies with
section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
William Buck Audit (Vic) Pty Ltd
ABN 59 116 151 136
R. P. Burt
Director
Melbourne, 28 August 2023
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/
Shareholder information as at 9 August 2023
Distribution of Shareholders
Number
Number
Category (size of holding)
above 0 up to and including 1,000
above 1,000 up to and including 5,000
above 5,000 up to and including 10,000
above 10,000 up to and including 100,000
above 100,000
Totals
Holders
Ordinary Shares
28
52
65
244
202
591
4,794
193,661
549,276
10,439,000
204,951,967
216,138,698
The number of shareholdings held in less than marketable parcels is 109, with a total of 392,367 ordinary
shares, amounting to 0.18% of issued capital.
Substantial shareholders listed in the company’s register:
Shareholder
Skiptan Pty Ltd
Number
Ordinary shares
41,263,715
%
19.09
Voting Rights
The voting rights attached to each class of equity security are as follows:
Ordinary shares
—
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present
at a meeting or by proxy has one vote on a show of hands.
Additional information for listed companies 75
Connecting People and Information
20 Largest Shareholders — Ordinary Shares
Name
SKIPTAN PTY LTD
MOAT INVESTMENTS PTY LTD
MR SEAN PATRICK MARTIN
VABAKE PTY LTD
VUE-IT PTY LTD
Number of
% Held
Ordinary
of Issued
Fully Paid
Ordinary
Shares Held
Capital
41,263,715
19.09%
7,801,124
7,300,270
7,066,130
6,896,551
EARTHRISE HOLDINGS PTY LTD
6,635,000
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
JET INVEST PTY LTD
DMX Capital Partners Limited
TDF PROPERTIES PTY LTD
MAST FINANCIAL PTY LTD
BJT903 PTY LTD
HUNTINGDALE CAPITAL PTY LTD
TORRYBURN PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ADC (INVESTING) PTY LTD
5,800,935
5,595,144
5,266,257
4,388,509
4,000,000
3,440,204
3,414,286
3,280,875
2,638,792
2,400,000
JT MANAGEMENT CO PTY LTD
2,200,000
NATIONAL NOMINEES LIMITED
2,156,867
GALE ENTERPRISES (AUST) PTY LTD
2,080,889
3.61%
3.38%
3.27%
3.19%
3.07%
2.68%
2.59%
2.44%
2.03%
1.85%
1.59%
1.58%
1.52%
1.22%
1.11%
1.02%
1.00%
0.96%
0.96%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
JOHN ROBERT THOMPSON
2,075,000
Total
125,700,548
58.16%
Total issued capital - selected security class(es)
216,138,698
100.00%
Registers of securities are held at the following address:
Automic Registry Services
Level 5, 126 Phillip Street
Sydney NSW 2000
Securities Exchange Listing
Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges
of the Australian Securities Exchange Limited.
In accordance with ASX Listing Rule 4.10.19, the Consolidated Group advises that, since listing on
9 September 2015, it has used its cash in a way consistent with its business objectives.
76 Additional information for listed companies
KNOSYS ANNUAL REPORT 2023 No matter where you are
in the world, we are there
Customers around the globe depend upon
Knosys to create a business advantage to
help businesses leverage their knowledge,
information and insights and make smart
connections that drive strong outcomes.
Additional information for listed companies 77
Connecting People and Information Contact Details
Level 8, 31 Queen Street, Melbourne, Victoria, 3000
www.knosys.co
www.knoiq.com
www.greenorbit.com
www.libero.com.au