FY22
ANNUAL
REPORT
FY22 IN NUMBERS
$32.5m
Annual sales revenue
– highest ever
+97%
Increase in annual
sales revenue on FY21
+150%
Increase in annual
processing revenue
on FY21
76%
Average growth in
annual sales revenue
across past five years
$6.1m
End of year
cash balance
$23m+
New cash expected in near
term to add to end
of year balance*
$16.6m
Loss before income
tax expense
$36m
Net assets at
end of year
*Based on publicly announced dividend guidance from Reckon Limited and gross proceeds of corporate bond issue. The final amount
may be lower or higher, and will be dependent upon a number of factors including the level of debt paid down by Reckon, cash retained
and tax.
Contents
Corporate directory .......................................................................................................................................................................................... 1
About ..................................................................................................................................................................................................................... 2
Chairman’s report .............................................................................................................................................................................................. 3
Managing Director’s report ........................................................................................................................................................................... 4
Director profiles ................................................................................................................................................................................................. 5
Review of operations ....................................................................................................................................................................................... 6
Environmental, social & governance ...................................................................................................................................................... 10
Directors’ report .............................................................................................................................................................................................. 16
Auditor’s independence declaration ....................................................................................................................................................... 34
Statement of profit or loss and other comprehensive income ..................................................................................................... 35
Statement of financial position ................................................................................................................................................................. 36
Statement of changes in equity ................................................................................................................................................................ 37
Statement of cash flows ............................................................................................................................................................................... 39
Notes to the financial statements ............................................................................................................................................................ 40
Directors’ declaration .................................................................................................................................................................................... 78
Independent auditor’s report to the members of Novatti Group Limited ............................................................................... 79
Shareholder information ............................................................................................................................................................................. 83
Novatti Group Limited
Corporate directory
30 June 2022
Corporate Directory
Directors
Joint company secretaries
Registered office and principal
place of business
Share register
Auditor
Solicitors
Bankers
Corporate directory
Peter Pawlowitsch (Non-Executive Chairman)
Peter Cook (Managing Director and Chief Executive Officer)
Kenneth Lai (Non-Executive Director)
Abigail Cheadle (Non-Executive Director) - appointed on 13 December 2021
Ian Hobson
Steven Stamboultgis
Level 3
461 Bourke Street
Melbourne VIC 3000
+61 3 9011 8490
Automic Registry Services
Level 5, 191 St Georges Terrace
Perth WA 6000
+61 8 9324 2099
William Buck
Level 20
181 William Street
Melbourne VIC 3000
Milcor Legal
Level 1
6 Thelma Street
West Perth WA 6005
ANZ
388 Collins Street
Melbourne VIC 3000
Stock exchange listing
Novatti Group Limited shares are listed on the Australian Securities Exchange (ASX
code: NOV)
Website
www.novatti.com
Corporate Governance Statement
www.novatti.com/corporate-governance
Australian Financial Services
Licence
AFSL No.448066
New Zealand Financial Services
Provider
FSP613789
Financial Conduct Authority
FCA No. 900631 as an appointed representative of CFS-ZIPP Ltd (FCA No. 900027)
for issuance of e-money products
1
Novatti Group Limited
About
30 June 2021
About
Novatti enables businesses to
pay and be paid, from any
device, anywhere.
From corner stores and startups
to global organisations, our
solutions will unlock your ambitions.
2
Chairman’s report
Novatti Group Limited
Chairman’s Report
30 June 2022
Chairman’s report
On behalf of Novatti’s Board, I’m delighted to report to you on Novatti’s progress in FY22,
another milestone year in the Company’s growth journey.
Across FY22, Novatti’s team showed great discipline and commitment to executing the
growth strategy outlined to shareholders at the beginning of the financial year. In doing
so, the business has been able to achieve quite remarkable growth, including a near
doubling of annual sales revenue.
While Novatti’s year-by-year results should always be highlighted, we remain particularly
proud of the team’s ability to deliver consistently strong growth over the longer term.
Notably, across the past five years, Novatti has now achieved average annual revenue
growth of 76%, a tremendous reflection on the hard work of the entire Novatti team and
also the ability of the business to continue to scale.
There were many highlights across the year that led to this strong performance, including
forming a strong working partnership with Reckon Limited, after acquiring a 19.9% strategic stake in that business, while
also successfully acquiring and integrating ATX, a leading South East Asia fintech, which provides Novatti with a strong
platform to grow from within South East Asia.
At the same time, clearly there have been clouds appearing in global markets in recent months, particularly as concerns
emerge over rising inflation.
While Novatti has not seen any slowdown in the global shift to digital payments resulting from this, such volatility in global
markets reinforces our emphasis as a board on enabling growth while maintaining a strong balance sheet. Notably here,
Novatti strengthened its balance sheet across FY22, finishing the year with $36m in net assets.
Going forward, we will continue to take a very prudent approach to cashflow and balance sheet management to ensure
Novatti is able to continue its growth journey despite any global volatility. This will include a strong focus on increasing
returns from the investment made in Novatti’s payments ecosystem over recent years, with this ecosystem having now been
established.
Importantly, this approach will also include an increasing push towards achieving positive cashflow, which would mark a
significant next milestone in Novatti’s development.
On behalf of the Board, I particularly want to thank all the Novatti team for their efforts across the past year, and for
continuing to deliver on Novatti’s objectives.
Thank you also to all our shareholders for your continued investment and support in Novatti. I very much look forward to
continuing to work with you in FY23.
Peter Pawlowitsch
Chairman
3
Managing Director’s report
Novatti Group Limited
Managing Director’s Report
30 June 2022
Managing Director’s report
I’m delighted to report to you on Novatti’s FY22 performance, marking another year of
remarkable growth and development.
At the start of the year, we laid out our growth strategy that would be underpinned by a $40m+
capital raising. This strategy focused on delivering top-line revenue growth through:
• New and expanded markets
• Pursuing acquisition opportunities
• Leveraging Novatti’s strategic stake in Reckon Limited
Across the year we remained focused on delivering against this strategy, including:
•
•
In new and expanded markets, obtaining new principal acquiring licences from both Visa
and Mastercard, increasing our ability to bring through larger business opportunities and
margins for our acquiring business
In acquisitions, successfully acquiring and integrating ATX, a leading South East Asian fintech that also provides Novatti
with an operating platform in a key growth region
• After securing a strategic stake in leading accounting software provider, Reckon Limited, we were able to successfully
develop a strong business relationship with them, seeing our payment solutions integrated into their products, with this
integration now generating revenue
These achievements all made a substantial contribution towards delivering our overarching goal of top-line revenue growth.
For FY22, Novatti’s business near doubled, with sales revenue of $32.5m, an increase of 97% on FY21. In particular, our
processing business continues to provide the backbone of Novatti’s growth, with revenue here increasing 150% on FY21.
We remain particularly proud of our ability to deliver consistent, long-term growth, with our five-year average annual revenue
growth rate now standing at 76%.
After several years of investment and development, FY22 saw our focus shift to seeking increased leverage and returns from
our leading global, B2B payments ecosystem. This also resulted in a shift in focus towards delivering positive cashflow.
Substantial progress has already been made here as cash used in the June quarter fell 48% and we expect Novatti’s cash
usage rate to continue to fall in the quarters ahead. Further, Novatti’s FY22 pre-tax loss of $16.6m reflects substantial
investment in our newer lines of business, including Acquiring, Issuing and Emersion. Here we again believe FY22 marks a
turning point as we seek to deliver increased returns from these investments going forward.
Novatti remains in a very strong position to capture future growth, with $23m+ in new cash expected in the near term, without
diluting shareholder equity, which adds to Novatti’s end of year balance of $6.1m.1 Despite this strong cash position, future
growth will be pursued in line with our focus on delivering increased returns from our established ecosystem.
A good example here is our new stablecoin, AUDD. We believe there is enormous growth opportunities in the use of
stablecoins as a payment solution going forward, which is why we want our own product in market. To get this new product to
market, we will leverage resources of our key project partners, enabling Novatti to avoid committing substantial upfront capital.
We continue to see strong demand for Novatti’s services globally, as the macro-level shift to digital payments shows no sign
of easing. We remain confident that this strong global demand will continue to support Novatti’s growth going forward.
I’d like to sincerely thank all our team and investors for your ongoing support of Novatti. In FY23, we will seek to maintain our
track record of delivering strong, long term growth, while shifting our focus towards delivering positive cashflow.
Peter Cook
Managing Director
1 Based on publicly announced dividend guidance from Reckon Limited and gross proceeds of corporate bond issue. The final amount may be lower or
higher, and will be dependent upon a number of factors including the level of debt paid down by Reckon, cash retained and tax.
4
Novatti Group Limited
Director Profiles
30 June 2022
Director profiles
Director profiles
Peter Pawlowitsch
Non-Executive Chairman
BCom, CPA, MBA, FGIA
• Extensive experience as a director and officer of ASX-listed entities
• Non-Executive Chairman of Family Zone Cyber Safety (ASX:FZO), Executive Director of Dubber (ASX:DUB), Non-
Executive Director of VRX Silica (ASX:VRX)
• Experience in operational management, business administration and project evaluation in the IT, hospitality and mining
sectors across past 15 years
Peter Cook
Managing Director and Chief Executive Officer
BSc, Grad Dip Computing, Grad Dip Securities, GAICD
• Over 25 years’ experience as a director and executive with multiple companies
•
•
Former Non-Executive Director and Deputy Chairman of Senetas Corporation (ASX:SEN)
Founded and led multiple telco and payments companies, including Unidial Pty Ltd and Ezipin Canada Inc
Kenneth Lai
Non-Executive Director
Bachelor of Science (Computer Science)
• Over 14 years of leadership experience in the payments industry
• Managing Director and owner of Prestige Team Limited, an investment company with a portfolio in Hong Kong and
Southeast Asia
• Prestige Team Limited has interests in real estate, payment processing, digital marketing and information technology
support services
Abigail Cheadle
Non-Executive Director, Chair of Audit, Risk and Compliance Committee
Bachelor of Business (Accounting), MAICD
• Chartered Accountant with more than 30 years of experience working across Asia, Europe, Middle East, Australia
• Non-executive director of LGI Ltd and Shriro Holdings Limited (ASX: SHM)
•
Former non-executive director of Isentia (ASX: ISD), SurfStitch (ASX: SRF) and QANTM Intellectual Property Limited
(ASX: QIP)
5
Novatti Group Limited
Review of Operations
30 June 2022
Review of operations
Financial results
Review of operations
FY22 saw Novatti deliver four consecutive quarters of record sales revenue. As a result, annual sales revenue grew to
$32.5m, an increase of 97% on the previous financial year.
These results continue Novatti’s track-record of delivering consistent and strong, long term growth. Across the past five
years, Novatti’s sales revenue has now grown by an average of 76% annually.
This growth continues to be greatly supported by Novatti’s core processing business, where annual revenue grew 150% on
FY21. This business carries strong momentum into FY23, growing 157% year-on-year in the June quarter alone to deliver
quarterly sales revenue of more than $10m.
Across FY22, receipts from customers increased 82% to $62m, highlighting the growth and increasing scale of Novatti’s
business.
Novatti’s loss before income tax expense of $16.6m for the year reflects substantial investment in newer lines of business,
including Acquiring, Issuing, and Emersion. A significant contributor here was the increase in employee benefits by $11.5m
on FY21, reflecting the increase in Novatti’s team across FY22 to facilitate the broader growth across the business.
FY22 is expected to mark a turning point here as management seeks increased returns from these recent investments.
6
Novatti Group Limited
Review of Operations
30 June 2022
Notably, Novatti has already shifted its focus towards delivering positive cashflow. Substantial progress has already been
made here as cash used in the June quarter fell 48% on the previous quarter.
Novatti finished the year with $6.1m in cash and expects to receive more than $23m in new cash in the near term, based on
publicly announced dividend guidance from Reckon Limited and gross proceeds of a corporate bond issue announced by
Novatti after the completion of the financial year.
Fundraising
At the start of FY22, Novatti successfully completed a $40m+ capital raising to implement a new growth strategy. The focus
of this new strategy was:
• New and expanded markets
• Pursuing acquisitions
• Strategic investment in Reckon Limited
The achievements that flowed from this new strategy are discussed in the Operations section below.
At the completion of FY22, Novatti had 335,297,521 ordinary, fully paid shares issued.
After the completion of the financial year, Novatti announced that it has secured commitments for $10.5m in new growth
funds through a corporate bond issue. The bonds are secured and will be issued for a fixed term of five years from the date
funds are received by Novatti, with interest at 90 day BBSW plus 650bps. Completion of the issue occurred on 12 August
2022.
7
Novatti Group Limited
Review of Operations
30 June 2022
Operations
Across FY22 year, Novatti focused on delivering the growth strategy outlined at the start of FY22, which included:
• New and expanded markets
• Pursuing acquisitions
• Strategic investment in Reckon Limited
Highlights flowing from the delivery of this strategy are discussed below:
New and expanded markets
Acquiring
Novatti’s acquiring business enables merchants, particularly those in e-commerce to accept payment from consumers,
including through credit cards, direct debits, and other mechanisms such as Alipay and WeChat Pay.
During the financial year, Novatti was awarded Principal Acquiring licences by both Visa and Mastercard. The awarding of
these additional licences enables Novatti to bring through larger business opportunities and margins.
Exposure to growth in digital assets
Novatti announced the launch of its new stablecoin, AUDD. AUDD will provide a digital representation of the Australian dollar
and will be secured with a 1:1 backing of AUD fiat value. It will be integrated into Novatti’s existing suite of payment solutions,
providing clients with a new and innovative way to pay and be paid, while creating the potential for faster and lower cost
domestic, cross-border and billing payments, as well as stablecoin-linked payment cards.
AUDD creates the potential for new revenue streams for Novatti, including conversion, transaction and merchant fees, subject
to product demand. This potential will only be increased by making AUDD available across multiple blockchain networks, in a
similar way to merchants increasing the potential for successful sales by accepting multiple payment methods. AUDD will be
issued on the open source, permission free, decentralised XRP Ledger, as well on Stellar, a network designed for stablecoins
and renowned for its speed, low-cost, and interoperability.
Leveraging blockchain will also create a secure and permanent, digital record of all transactions and account balances, which
maintains the integrity of each transaction and provides a strong framework to maintain Novatti’s absolute focus on
compliance.
Importantly, Novatti is launching this new product without committing substantial upfront capital by leveraging the resources
of key project partners. This approach enables Novatti to continue to pursue enormous growth opportunities without
substantially impacting available cash.
Expansion of partnership with Ripple
Novatti expanded its partnership with Ripple into Thailand, following the momentum of tapping on RippleNet’s On-Demand
Liquidity service for remittances between Australia and the Philippines in FY21.
Ripple’s global financial network technology, RippleNet, provides its partners with the ability to process cross-border payments
instantly, as well as providing access to emerging, high-growth capabilities, such as blockchain and the digital asset, XRP.
In expanding into Thailand, Novatti partnered with the first Thai bank, Siam Commercial Bank (SCB), through RippleNet.2
Proposed banking business
Novatti continues to work proactively with Australia’s banking regulator for the final approvals of a restricted banking licence
and remains confident in the progress on this front. During the financial year, Novatti bought back a 19.9% share of Novatti B
Holding Company Pty Ltd, the dedicated subsidiary for Novatti’s proposed banking business.
2 See: https://asia.nikkei.com/Companies/The-Siam-Commercial-Bank-Public-Co.-Ltd2
8
Novatti Group Limited
Review of Operations
30 June 2022
At the same time, Novatti continued to progress its application for an EMoney Issuing (EMI) licence in Europe, as well as its
Major Payment Institution Licence in Singapore, which would greatly enhance Novatti’s service offering in both markets.
Pursuing acquisitions
ATX, a leading South East Asian fintech, based in Malaysia, was acquired and successfully integrated by Novatti during FY22.
Founded in 2011, ATX provides traditional retail stores and kiosks with digital payment services, such as third party bill and
product payments. It has also been recognised as a top 50 rising startup in South East Asia.3
The acquisition presented strategic value for Novatti on a number of fronts, including:
• Access to an established network of 30,000+ payments touch points across Malaysia
• Providing an on-the-ground presence in South East Asia for further expansion
• ATX’s strong leadership team, including its founders who hold the positions of CEO and Director – Strategy, and who
have remained employed post acquisition
• Access to ATX’s existing innovative solutions and technology, including its e-wallets
In addition, Novatti used FY22 to develop a pipeline of other potential acquisition opportunities that could be developed further
as required in future.
Strategic investment in Reckon Limited
As part of its $40m+ capital raising at the start of the financial year, Novatti also announced the acquisition of a 19.9% strategic
stake in leading accounting software platform, Reckon Limited. This investment follows the strong synergy identified between
the needs of payments and accounting software customers.
Since that acquisition, Novatti and Reckon also commenced a business partnership, with Novatti’s payment solutions
integrated into Reckon’s products, providing value add to Reckon’s 114k cloud-based users. This partnership is now
generating revenue.
Novatti has also received more than $1.1m in dividends from its investment in Reckon, with an additional $12m+ in dividends
expected shortly.4
3 Source: Tech In Asia - 50 rising startups in Southeast Asia 2020.
4 Based on publicly announced dividend guidance from Reckon Limited. The final amount may be lower or higher, and will be dependent upon a number of
factors including the level of debt paid down by Reckon, cash retained and tax.
9
Environmental, social & governance
Novatti Group Limited
Environmental, Social & Governance
30 June 2022
Environmental, social & governance
CEO message
Novatti is committed to making a difference through our Environmental, Social & Governance (ESG) focused approach to
doing business.
As a growing company, we commenced the journey in late 2021 to develop a more formal ESG program, which we continue
to strengthen, including developing a more formal framework. This framework will enable Novatti to identify, assess and
manage those ESG areas which are most relevant to our business.
From an Environmental perspective, the nature of Novatti’s business, driven by our people and our various digital offerings,
means that Novatti is not a large consumer of energy or water. However, as we further develop our formal framework we will
be considering these areas further, particularly from a perspective of monitoring and further improving their usage.
From a Social perspective, acting ethically is critical to Novatti’s reputation and business. We have a strong culture of risk and
compliance throughout our business. To maximise the protection available to our customers we invest in banking relationships;
systems and security; fraud protection; and our processes, people and systems.
From a Governance perspective, we operate in a highly regulated industry that is subject to a complex set of laws, regulations
and industry requirements in various jurisdictions globally. Furthermore, as a company listed on the Australian Securities
Exchange (ASX) we are accountable to shareholders and ensure that the Company is properly managed and protected to
enhance shareholder value, particularly by focusing on the long-term strength of Novatti’s business.
We look forward to seeing our ESG framework develop and strengthen going forward to the benefit of all our stakeholders.
Introduction
Novatti acknowledges the constantly evolving social and sustainability requirements and its responsibility to provide
transparent reporting against these requirements to all our stakeholders. We have commenced our journey and will continue
to strengthen our skills here as we develop a more formal ESG framework.
Regulatory and business landscape
Novatti acknowledges and embraces its regulatory and business responsibilities given the importance of the services it
provides to the public. Our business is subject to a complex set of laws, regulations and industry requirements in various
jurisdictions globally. These include, but are not limited to, financial services, consumer protection, anti-money laundering,
and counter-terrorism financing, privacy and data protection, taxation, employment, corporate regulations and corporate
governance.
10
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Novatti Group Limited
Environmental, Social & Governance
30 June 2022
In addition to the regulatory landscape, Novatti has developed a sophisticated ecosystem that leverages Technology,
Licences, Partnerships and our Team to deliver its services.
Failure to comply with regulatory requirements in any of Novatti’s current (or future) jurisdictions or to respond adequately to
any regulatory change, could adversely impact Novatti’s reputation and financial performance. Failure to comply could also
result in increased compliance costs, the requirement to cease specific parts of all of Novatti’s business activities, litigation,
penalties or other regulatory enforcement action.
We have a deep appreciation for the seriousness of the regulatory environment in which we operate, and as a result, we have
developed a suite of comprehensive policies, procedures and framework to administer and manage our regulatory and
reporting requirements.
By way of example, Novatti is continually improving the Standard for Information Security Management, in addition to General
Data Protection Regulation (GDPR) and Payment Card Industry Data Security Standard (PCI DSS).
In all jurisdictions in which Novatti operates, we are focused on operating our business in a responsible and fully compliant
manner.
Governance
The Novatti Board acknowledges that it is accountable to shareholders and must ensure that the Company is properly
managed and protected to enhance shareholder value by ensuring the long-term strength of Novatti’s business.
Novatti recognises that its reputation is a valuable asset, which is based largely on the ethical behaviour of the people who
represent the Company. Novatti has established a Code of Conduct which outlines how it expects its people to not only comply
with the law, but also to conduct themselves in a manner consistent with community and corporate standards.
Novatti has established various statements and policies to support this Code of Conduct including:
• Board Charter
• Statement of Values
• Corporate Governance Statement
• Anti-Bribery and Anti-Corruption
• Risk Management, Internal Compliance and Control
• Whistleblowing
11
Novatti Group Limited
Environmental, Social & Governance
30 June 2022
• Procedures for Selection and Appointment of Directors
• Performance Evaluation for Directors and Executives
• Director Skills Matrix
• Remuneration of Directors and Executives
• Audit
• Continuous Disclosure
• Shareholders Communication
• Securities dealing by Directors and Employees
In respect to our People, Novatti has also established various policies, including, but not limited to:
• Diversity
• Employee Incentive Scheme
These policies are all available on Novatti’s website at https://novatti.com/corporate-governance/
In addition to public facing policies, Novatti has also established a “one stop shop” on its Intranet, which makes available for
all its people a suite of policies, procedures and templates for use by our teams.
These include, but not limited to the areas of:
Information Technology
• Human Resources
•
• Operational
• Marketing
• Risk & Compliance
• Legal
• Anti-Money Laundering
Business Ethics
Novatti has adopted a Code of Ethics, which details the underlying values to be applied to support the integrity of its business.
This Code operates alongside Novatti’s Anti-Bribery & Anti-Corruption policy, Anti Money Laundering Requirements, Modern
Slavery Statement and the overarching Code of Conduct.
Novatti has also implemented a Legal & Regulatory Compliance Policy Statement which provides details of the overarching
governing principles of Novatti’s approach to compliance, along with the underlying principles to support the elements of an
effective compliance program.
Data Protection and Information Security
Data Protection and Information Security is important to Novatti’s business, particularly as the business continues to grow. As
a result, Novatti recently appointed a Chief Information Security Officer (CISO) to place more emphasis on these aspects of
the business and to specifically lead Novatti’s Data Protection and Information Security.
Novatti’s Data Protection and Information Security Strategy has recently been reviewed and updated to account for the recent
growth in the business, and a number of implementations and improvement activities have been carried out, including 24x7
security monitoring, secure email gateway, vulnerability management, updating of the business continuity management
system and security awareness testing.
Novatti uses a risk-based information security management system, aligned to ISO 27001 standard. Novatti also uses the
‘Demming Cycle’ (Plan-DO-check-Act) to continuously improve our security posture and remain proactive for threats.
We continue to invest in, and work with, our partners & suppliers to maximise the protection available to our customers. This
includes working with our banking partners, service providers such as Visa and Mastercard, technology providers for fraud
protection and continuous improvement of our own processes, and systems, as well as investment in our own teams.
12
Novatti Group Limited
Environmental, Social & Governance
30 June 2022
Social
The Novatti Board acknowledges that our people are at the core of who we are. This is why we place them at the centre of
our Ecosystem. With their in-house expertise, Novatti is able to leverage and use its Technology, Licences, and Partnerships
to deliver on its Vision.
Our Vision
Our Values
Novatti places a strong emphasis on recruiting and retaining talent that enhances our values-driven culture. The accumulation
of our collective experience, shared values, and individual skills allow Novatti to deliver on its vision. Our values, amongst
others, include Integrity Always, which enable Novatti to develop stronger relationships with our team and clients.
The values that empower our people are:
13
Novattienablesbusinessesto payandbepaid,fromanydevice, anywhere.Fromcornerstoresand startupstoglobalorganisations,our solutionswillunlockyourambitions nlocking the ambitions of our team and clients starts with a positive mindset e are deliberate in what we do to focus our energy and deliver the best possible outcomes for our team and clients imple things are understood. y keeping it simple, we avoid confusion, achieve alignment, and in turn achieve great things togetherNovatti is one, connected team. ogether we celebrate our success and turn mistakes into shared learnings. y embracing each team member, we unlock their ambitions, Novatti s, and those of our clients ith integrity we develop stronger relationships with our team and our clients tart with yes ct with purpose eep it simple ntegrity always e ve got your back
Novatti Group Limited
Environmental, Social & Governance
30 June 2022
Our Workforce
Novatti’s workforce has grown and diversified as we have matured as a business and will continue to do so.
Novatti does not have any enterprise agreements - all team members are employed on above award common law contracts.
Novatti has adopted a Diversity Policy to assist it in attracting, developing and retaining people who are highly competent and
can contribute to its the long-term success and values by bringing a broader range of perspectives, experience and ideas.
Our Diversity Policy includes the provision of Equal Opportunity and Non-discrimination which is backed up by the
Whistleblower Policy its procedures.
Our Diversity Profile
Novatti’s employees in a full-time and part-time capacity as at 30 June 2022, included 40 (2021 – 39) percent women and 60
(2021 – 61) percent men.
Novatti considers a senior executive position is one which reports directly to the Managing Director /CEO (or his designate
COO or the Board). As at 30 June 2022, two (2021 – one) women qualified as a senior executive.
For 30 June 2022 the company had one (2021 – 0) woman on the Board representing 25% of the total Board. On 13 December
2021 the Company appointed Abigail Cheadle as a independent non-executive director of the Company and Chair of the
Company’s Audit and Risk Committee.
The Company has set a measurable diversity objective by 2025 to have 30% or greater:
• Of the total workforce female
• Of the workforce in senior roles female
• Board female
From 2030, Novatti has set the following measurable diversity objective of an aim of 40% or greater:
• Of the workforce female
• Of the workforce in senior roles female
• Board female
When Novatti established these diversity objectives, it was cognisant that achieving them is influenced by many factors
including:
• The need to hire the best qualified person for the available job as established by the Company’s Diversity Policy
• Changes in the number of people employed due to expansion or reduction in future business activities of the Company
• Changes in the composition of the workforce due to resignations, redundancies or terminations.
Staying Healthy and Well
The health and safety of our team members and contractors is a high priority for Novatti. There have been no work related
accidents at Novatti in the last three years.
Novatti provides wellbeing initiatives, including mental health, physical health and financial wellbeing resources, plus a work
structure that provides flexibility. Novatti has pivoted its arrangements during the Covid Pandemic which have been captured
in its Remote Working Policy.
The impact of the pandemic continues to be felt by our team members globally, with all regions at different stages of easing
restrictions. To support a safe return to our offices, we have introduced and continue to improve safety measures in line with
local government guidance in each region.
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Novatti Group Limited
Environmental, Social & Governance
30 June 2022
Moving Money Safely
As a business that moves significant monies for customers around the world every day, it is critical that Novatti manages its
risks in a way that maintains the trust of our customers, partners and banks, and meets the expectations of regulators. We
have a strong culture of risk and compliance, with particular emphasis on the responsibility that Novatti has as an
international and domestic money services provider to help prevent and detect financial crime.
Suppliers and Partners
At Novatti, we are very fortunate to work with leading banks and service providers globally. We partner with leading brands
such as Visa, MasterCard, and Apple Pay and with those partnerships comes responsibilities to ensure ethical practices and
integrity, which is the cornerstone of our values.
Novatti has adopted its own position regarding Modern Slavery and in particular the Australian Modern Slavery Act 2018.
Whilst we are not considered a reporting entity, Novatti believes that taking action to address modern slavery is good business
and in line with our values.
In addition, Novatti has also adopted an Ant-Bribery & Anti-Corruption Policy that is consistent with its commitment to
conducting business in compliance with the law in all countries in which it operates.
Environmental
As noted above, Novatti has commenced the journey to strengthen its ESG program. Novatti’s ESG framework will enable it
to best identify, assess and manage ESG areas most relevant to our business. One area of focus will be environmental.
The nature of Novatti’s business, driven by our people and the various digital offerings, means that Novatti is not a large
consumer of energy or water. However, as we further develop our formal framework, we will be considering these areas from
a perspective of monitoring and improving usage.
Sustainability is a journey. It starts with looking inwards at how we can minimise the negative impacts of our own operations
to reduce our carbon footprint and waste.
The COVID-19 pandemic has led to significant reductions in our energy usage, use of consumables, business travel and
waste. As we resume office-based work, we aim to carry this efficiency forward, exploring meaningful ways to reduce our
emissions.
15
Novatti Group Limited
Directors' report
30 June 2022
Directors’ report
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'consolidated entity' or the ‘Group’) consisting of Novatti Group Limited (referred to hereafter as the ‘Company’, ‘Novatti’
or ‘parent entity’) and the entities it controlled at the end of, or during, the year ended 30 June 2022.
Directors
The following persons were directors of Novatti Group Limited during the whole of the financial year and up to the date of
this report, unless otherwise stated:
Peter Pawlowitsch (Non-Executive Chairman)
Peter Cook (Managing Director and Chief Executive Officer)
Kenneth Lai (Non-Executive Director)
Paul Burton (Non-Executive Director) (resigned on 3 September 2021)
Steven Zhou (Non-Executive Director) (resigned on 17 March 2022)
Abigail Cheadle (Non-Executive Director) (appointed on 13 December 2021)
Principal activities
Novatti Group Limited is a leading fintech that enables businesses to pay and be paid, from any device, anywhere. Solutions
include issuing, acquiring, processing, and billing, while the Group is still in the process of applying to APRA for a restricted
banking licence.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
The loss for the consolidated entity after providing for income tax amounted to $16,627,000 (30 June 2021: $11,843,000).
Despite the challenges of COVID-19, the Group's revenue increased by 97.5% to $32,555,000 (30 June 2021: $16,482,000).
The underlying EBITDA* increased by 274% to a loss of $15,989,000 compared to the corresponding prior year of $4,280,000
loss.
During the financial year, the Group successfully raised more than $40 million (before costs) through a placement to
institutional and sophisticated investors. The net asset position improved by $27,743,000 to $36,641,000 as at 30 June 2022
(30 June 2021: $8,898,000), with $6,059,000 held in cash and cash equivalents.
30 June 2022 30 June 2021 Change
Change
$'000
$'000
$'000
%
Net loss from operations
Less:
Interest income
Add back:
Depreciation and amortisation
Finance charges
Indirect tax expenses
EBITDA
Add back/(less)
Vesting of share-based payments
Gains on fair valuation of investments
(Gains)/losses on embedded derivative
Dividends from Reckon Limited
One-off transaction costs related to investment in Reckon
Limited
Amounts accrued to vendors of the ATX transaction under
earn-out arrangements treated as employee benefits expense
Underlying EBITDA*
Cash
Operating cash flow
16
(16,627)
(11,843)
(4,784)
(34)
(35)
1
40%
(3%)
25%
(52%)
145%
58%
(14%)
802%
(125%)
-
1,481
1,507
29
(8,861)
2,087
(366)
2,860
-
372
(782)
42
(5,151)
(295)
(2,936)
(3,589)
(1,126)
-
617
-
-
(4,280)
8,798
(5,399)
771
(11,709)
(2,739)
(7,633)
-
274%
(31%)
141%
1,853
725
71
(14,012)
1,792
(3,302)
(729)
(1,126)
617
771
(15,989)
6,059
(13,032)
Novatti Group Limited
Directors' report
30 June 2022
*Underlying EBITDA is a non-IFRS measure calculated as profit before income tax, and before depreciation and amortisation,
share based payments, net finance costs, due diligence costs, gain on embedded derivative and impairment of capitalised
bank licensing costs. The Company believes this non-IFRS and operational measure is useful in monitoring and
understanding the Group’s business and they should not be considered in isolation nor as a substitute for IFRS measures.
In March 2020, the World Health Organisation declared the outbreak of a novel coronavirus (COVID-19) as a pandemic,
which continues to spread globally as well as in Australia. The spread of COVID-19 has caused significant volatility in
Australian and international markets. There is significant uncertainty around the breadth and duration of business disruptions
related to COVID-19 and therefore the Group has taken precautionary measures by temporarily closing the Company’s
offices (for all but essential services) and having arranged for its the employees to work remotely, as well as curtailing travel.
At the date of this report, the impact of these measures is not expected to significantly affect Novatti's business operations.
Significant changes in the state of affairs
On 2 July 2021, the Group launched a $45 million capital raising under a $40 million placement and a $5 million share
purchase plan to expand its presence in existing markets, enter new markets, and acquire a 19.9% interest in Reckon Limited
(ASX:RKN).
On 5 July 2021, the Group issued 37,500 fully paid ordinary shares on conversion of 37,500 unlisted options exercisable
at $0.20 per share.
On 9 July 2021, the Group completed Tranche 1 of its capital raising, by issue of 51,120,472 fully paid ordinary shares at
$0.55 per share, raising $28,116,260 before costs.
On 13 July 2021, the Group completed its previously announced acquisition of a 19.9% interest in Reckon Limited (ASX:RKN)
by payment of $22.5 million for acquisition of 22.5 million shares in Reckon and associated costs.
During July 2021, the Group issued 6,080,000 fully paid ordinary shares upon conversion of 1,520,000 convertible notes
(4 for 1). Subsequently, on 4 August 2021, the Group settled 97,500 convertible notes by way of repayment or redemption.
On 6 August 2021, the Group completed the share purchase plan and on 9 August 2021 the Group issued 452,742 fully
paid ordinary shares at $0.55 raising $249,000 before costs.
On 20 August 2021, the Group held a General Meeting for the ratification of shares issued prior and for the adoption of the
2021 Novatti Employee Incentive plan, and approval for issue of shares for Tranche 2 of the capital raising. On 27 August
2021, the Group completed Tranche 2 of the capital raising by the issue of 21,606,801 fully paid ordinary shares at $0.55
per share, raising $11,883,740 before costs.
On 1 September 2021, the Group issued 310,000 fully paid ordinary shares on conversion of 310,000 unlisted options
exercisable at $0.25 per share.
On 3 September 2021, Paul Burton resigned from Non-Executive Director of the Company.
On 1 October 2021, the Group issued the following securities:
●
●
●
●
●
600,000 fully paid ordinary shares on conversion of 600,000 unlisted options exercisable at $0.25 per share;
40,000 fully paid ordinary shares at $0.50 per share to service providers in lieu of investor relations services;
500,000 unlisted options in lieu of investor relations services exercisable at $0.66, expiring 31 December 2023;
100,000 unlisted options in lieu of investor relations services exercisable at $0.60, expiring 31 December 2022;
500,000 unlisted options in lieu of investor relations services exercisable at $0.30, expiring 30 June 2022.
On 6 October 2021, the Group bought back the 19.9% shares of Novatti B Holding Company Pty Ltd from BC
Investment Group Holdings Ltd.
On 15 October 2021, the Group issued the following securities:
●
●
●
1,000,000 fully paid ordinary shares at $0.45 per share to employees as Employee Incentives;
1,300,000 unlisted options exercisable at $0.495, expiring 15 October 2024;
1,300,000 unlisted options exercisable at $0.75, expiring 15 October 2024.
On 3 December 2021, the Group issued the following securities:
17
Novatti Group Limited
Directors' report
30 June 2022
●
●
●
2,950,000 fully paid ordinary shares on conversion of 2,950,000 unlisted options exercisable at $0.25 per share;
179,106 fully paid ordinary shares on cashless exercise of 450,000 unlisted options exercisable at $0.20 per share;
68,907 fully paid ordinary shares on cashless exercise of 400,000 unlisted options exercisable at $0.275 per share.
On 13 December 2021, Abigail Cheadle was appointed as Non-Executive Director of the Company.
On 20 December 2021, the Group issued 8,500,000 unlisted options exercisable at $0.45, expiring 30 November 2025.
On 24 December 2021, the Group issued the following securities:
●
●
32,000 fully paid ordinary shares in lieu of investor relations services;
1,350,000 fully paid ordinary shares on conversion of 1,350,000 unlisted options exercisable at $0.25 per share.
On 31 December 2021, the Group issued 1,666,667 fully paid ordinary shares on conversion of 1,666,667 unlisted options
exercisable at $0.19 per share.
On 1 January 2022, the Group completed the acquisition of 100% of the issued share capital in ATX Fintech Holding Sdn
Bhd, a leading South East Asian payments fintech, based in Malaysia. As part of the initial consideration, the Group issued
3,600,000 fully paid ordinary shares at $0.35 per share on 14 January 2022.
On 25 January 2022, the Group issued 600,000 unlisted options to employees exercisable at $0.3262, expiring 25 January
2025.
On 17 March 2022, Steven Zhou resigned from Non-Executive Director of the Company.
On 19 April 2022, the Group issued 2,575,000 unlisted options exercisable at $0.35, expiring 19 April 2025.
There were no other significant changes in the state of affairs of the consolidated entity during the financial year.
Matters subsequent to the end of the financial year
On 15 August 2022, the Group announced that it has completed and secured $10.5m in new growth funds through a
corporate bond issue. The primary purpose of the bond issue is to support collateral requirements from industry partners and
banks as Novatti grows. The $10.5m in new funding will further enable Novatti to unlock new and larger market opportunities
as well as increased transaction volumes and supplement working capital.
The bonds are secured and will be issued for a fixed term of five years from the date funds are received by Novatti, with
interest at 90 day BBSW plus 650bps. Completion of the issue occurred on 12 August 2022.
On 9 August 2022, Reckon Ltd, whom the Group has 19.9% interest in, had announced that they are expecting to declare a
partially franked special dividend of between $0.54 and $0.58 cents from the sale of the Accountants Group division, subject
to the finalisation of completion accounts, tax payments and other aspects of the completion.
No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the
consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial
years.
Likely developments and expected results of operations
Information on likely developments in the operations of the consolidated entity and the expected results of operations have
not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the
consolidated entity.
18
Novatti Group Limited
Directors' report
30 June 2022
Environmental regulation
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State
law.
Key Business Risks
The consolidated entity’s Risk Management and Internal Control Policy assists in the development of organisational
capabilities in risk management for internal control purposes. Risk management is regarded as an integral part of the
Company’s strategic planning, business planning and investment/project appraisal procedures. The focus of risk
management is the identification and treatment of risks with the objective to add maximum sustainable value to all of the
activities of the Company. Further information on Key Business Risks can be found on the entity’s Corporate Governance
Statement.
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Peter Pawlowitsch
Non-Executive Chairman
BCom, CPA MBA, FGIA
Peter is an accountant by profession, with extensive experience as a director and
officer of ASX-listed entities. He brings to the team experience in operational
management, business administration and project evaluation in the IT, hospitality and
mining sectors gained during the last 15 years
Non-Executive Chairman, Family Zone Cyber Safety Ltd (ASX: FZO)
Non-Executive Director, VRX Silica Ltd (ASX: VRX)
Executive Director, Dubber Corporation Ltd (ASX: DUB)
Former directorships (last 3 years): Non-Executive Director, Knosys Ltd (ASX: KNO)
Special responsibilities:
Interests in shares:
Interests in options:
Member of Audit, Risk and Compliance Committee
3,582,662 fully paid ordinary shares
4,166,667 unlisted options
Name:
Title:
Qualifications:
Experience and expertise:
Peter Cook
Managing Director and Chief Executive Officer
BSc, Grad Dip Computing, Grad Dip Securities, GAICD
Peter has over 25 years of experience as a director and executive with companies
including Coopers & Lybrand (now PWC), Catsco Pty Ltd and Advanced Network
Management Pty Ltd (Telstra joint venture company) and many start-up technology
companies. Peter’s career has been largely based on founding and leading multiple
telecommunications and payments companies. Unidial Pty Ltd and Ezipin Canada Inc.
are such examples and all with successful exits to private and public companies. Peter
was a non- executive Director and Deputy Chairman of ASX-listed Senetas Corporation
Limited from June 1999 to January 2006
None
Other current directorships:
Former directorships (last 3 years): Non-Executive Director, P2P Transport Limited (ASX: P2P)
Special responsibilities:
Interests in shares:
Interests in options:
Member of Audit, Risk and Compliance Committee
13,174,571 fully paid ordinary shares
8,000,000 unlisted options
19
Novatti Group Limited
Directors' report
30 June 2022
Name:
Title:
Qualifications:
Experience and expertise:
Kenneth Lai
Non-Executive Director
BSc Majoring in Computer Science
Kenneth is the managing director and wholly owner of Prestige Team Limited, an
investment company which, together with its subsidiaries, holds an investment portfolio
in Hong Kong and Southeast Asia. Prestige Team Limited has interests in real estate,
payment processing, digital marketing and information technology support services.
Kenneth has funded and invested in various Silicon Valley technology funds focusing
on business opportunities within Asia. He also co-founded Legend World Development
Technology Limited, a limited liability company incorporated in Hong Kong, which
provides information technology solutions and integrated marketing solutions to
business setups, and in which he is a shareholder and advisor.
None
Other current directorships:
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Interests in options:
Member of Audit, Risk and Compliance Committee
13,116,118 fully paid ordinary shares
1,666,667 unlisted options
Name:
Title:
Qualifications:
Experience and expertise:
Abigail Cheadle
Non-Executive Director
BCom, CA, GAICD
Abigail Cheadle is a Chartered Accountant with more than 30 years of experience
working across Asia, Europe, the Middle East, and Australia. During this time, she led
professional services practices for a number of leading firms, including EY, Deloitte,
and KordaMentha, focusing on corporate strategy and risk management. This
included 17 years working in Asia, a key growth region for Novatti. During that
time, Abigail advised and helped grow many listed companies, including during
challenging economic periods, such as the Asian Financial Crisis. Notably, while
advising the Indonesian-listed consumer finance company, BFI Finance Indonesia, its
market capitalisation grew tenfold.
Abigail concurrently also serves as a Chair of Shriro Holdings Limited (ASX: SHM)
and non-executive director of LGI Ltd. Previous non-executive director positions were
also held at ASX-listed companies: Isentia Group Ltd (ASX: ISD), SurfStitch (ASX:
SRF) and QANTM Intellectual Property Limited (ASX: QIP).
Other current directorships:
Former directorships (last 3 years): Non-Executive Director of QANTM Intellectual Property Limited (ASX: QIP), Isentia
Abigail is a Member of the Australian Institute of Company Directors and has a
Bachelor of Business (Accounting) from Queensland University of Technology.
Chair, Shriro Holdings Limited (ASX: SHM)
Special responsibilities:
Interests in shares:
Interests in options:
Group Limited (ASX: ISD)
Chair of Audit, Risk and Compliance Committee
Nil
1,500,000 unlisted options (subject to shareholders' approval at the 2022 AGM)
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
Company secretaries
Ian Hobson
Ian was appointed Company Secretary on 12 October 2015 and holds a Bachelor of Business degree, is a Chartered
Accountant and Chartered Secretary. Ian provides secretarial services and corporate, management and accounting advice
to a number of listed companies. Ian’s fees are based on a fee for service arrangement.
Steven Stamboultgis
20
Novatti Group Limited
Directors' report
30 June 2022
Steven was appointed Company Secretary on 15 March 2021 and is the Chief Financial Officer of the group. Steven holds
a Bachelor of Business Degree and Master in Commercial Law. He is a Certified Practicing Accountant.
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') and of each Board committee held during the year
ended 30 June 2022, and the number of meetings attended by each director were:
Peter Pawlowitsch
Peter Cook
Kenneth Lai
Paul Burton*
Steven Zhou***
Abigail Cheadle**
Full Board
Audit, Risk and Compliance
Committee
Attended
Held
Attended
Held
9
11
9
1
4
7
11
11
11
1
6
7
2
2
-
1
-
1
2
2
-
1
-
1
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
Paul Burton resigned from Non-Executive Director on 3 September 2021.
Abigail Cheadle was appointed as Non-Executive Director on 13 December 2021.
*
**
*** Steven Zhou resigned from Non-Executive Director on 17 March 2022.
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
●
●
●
●
●
●
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives
and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of
reward. 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 Board is responsible for determining and reviewing remuneration arrangements for its directors and executives. The
performance of the consolidated entity depends on the quality of its directors and executives. The remuneration philosophy
is to attract, motivate and retain high performance and high quality personnel.
The full Board has structured an executive remuneration framework that is market competitive and complementary to the
reward strategy of the Group.
21
Novatti Group Limited
Directors' report
30 June 2022
Additionally, the reward framework should seek to enhance executives' interests by:
●
●
●
rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth
providing a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
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.
For the year ended 30 June 2022, there was no advice from independent remuneration consultants. The Chairman’s fees
are determined independently to the fees of other non-executive directors based on similar roles in the external market. The
Chairman, nor other non-executive directors are not present at any discussions relating to the determination of their
remuneration. Non-executive directors do receive share options.
ASX listing rules require the aggregate non-executive directors’ remuneration be determined periodically by a general
meeting. The total maximum remuneration of non-executive directors was set by the Constitution and subsequent variation
is by ordinary resolution of Shareholders at a general meeting in line with the Constitution, the Corporations Act and the ASX
Listing Rules, as applicable. The maximum remuneration has been set at an amount not to exceed $500,000. The current
level of fees was approved at the Group’s 27 November 2018 Annual General Meeting.
Executive remuneration
The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of
remuneration which has both fixed and variable components.
Remuneration policies and arrangements as well as incentive targets for the Key Executive Members of the Group
including the Chief Executive Officer, Chief Operating Officer and the Chief Financial Officer are reviewed by the Board
save that the CEO is not present at any discussions relating to the determination of his remuneration.
The Group rewards its executives with a level and mix of remuneration based on their position and responsibility, which
may have both fixed and variable components.
The executive remuneration and reward framework can have four components:
●
●
●
●
base pay and non-monetary benefits
short-term performance incentives
share-based payments or long-term performance incentives
other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.
Short Term Incentive program (STI)
The STI program awards a cash bonus based on key members achieving targets from a Group, Business Unit and individual
perspective.
STI awarded to each executive depends on the extent to which specific targets set at the beginning of the financial year by
the Board or the CEO are met. Targets are set by the board for the Key Executive Members and the remaining executives
have targets set by the CEO which are approved by the board through the budgeting process.
The targets consist of financial and non-financial Key Performance Indicators ('KPIs'). These may include but are not limited
to:
22
Novatti Group Limited
Directors' report
30 June 2022
●
●
●
●
Product management and project platform implementation
Financial and Business Unit operational targets linked to the achievement of the Group’s growth in annual sales revenue
and controllable financial drivers including cash, market growth (including geographical market growth), expense
management control and capital management improvement
Corporate development matters including employment, retention, and remuneration of core personnel, leadership and
succession, cultural development and communication activities
Establishment of business operational frameworks and procedures as well as Risk Management in respect of financial
and operational issues
These measures were chosen as they represent the key drivers for the short-term success of the business and provide a
framework for delivering long-term value.
Long Term Incentive program (LTI)
LTI awards are reviewed annually to executives and are provided in order to align the remuneration of Key Executive
Members with the creation of shareholder value. LTI comprise equity instruments including shares and options, where the
incentive involves the time-based vesting of options on the basis that the executive or employee continues to be employed
by the Group and are eligible under the Company’s Employee Incentive Plan ('EIP').
The vesting of these awards is dependent on the length of time and service of the executive or employee, and alternatively,
they can also be awarded at the discretion of the Board.
In addition, the CEO has performance options that are tied to total shareholder return with that being measured by
providing share price targets.
The achievement of the Group’s strategic and financial objectives is the key focus of the efforts of the Group. As indicated
above, over the course of each financial year, the Board reviews the Group’s executive remuneration policy to ensure that
the remuneration framework remains focused on driving and rewarding executive performance, while being closely aligned
to the achievement of Group strategic objectives and the creation of shareholder value.
LTIs are based on participation of the EIP. LTI, based on equity remuneration (being either the issue of securities and or
rights or the issue of options), are made in accordance with thresholds as set out in this financial plan. By using the Group’s
EIP to offer shares and options to employees, the interest of employees is aligned with shareholder wealth. A copy of the
EIP can be found via the Group’s website.
Consolidated entity performance and link to remuneration
The following table illustrates how the Group’s remuneration strategy aligns with the Group’s strategic direction and links
remuneration outcomes to performance:
Novatti Group's business objective:
Novatti Group Limited is a leading fintech that enables businesses to pay and be paid, from any device, anywhere. Solutions
include issuing, acquiring, processing, and billing. The Group has also applied to APRA for a restricted banking licence.
Align the interest of executives with shareholders
Attract, motivate and retain high performing individuals
- The remuneration strategy incorporates “at-risk”
components, with short-term paid in cash and long-term
elements delivered in equity
- Performance is assessed against a suite of financial and
non-financial measures relevant to the success of the
Company and generating returns for shareholders
- Remuneration is competitive with companies of a similar
size and complexity
- Deferred and long-term remuneration is designed to
encourage long-term consistent performance and employee
retention
23
Novatti Group Limited
Directors' report
30 June 2022
Remuneration
Component
Fixed Remuneration
Short Term Incentive
To provide competitive fixed
remuneration set with
reference to role, market,
experience and performance.
Vehicle
Purpose
Consisting of base salary,
superannuation and
nonmonetary benefits.
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 Group and
provides additional value to
the executive.
Is paid in cash.
This is designed to reward
executives for their
contribution to the
achievement of annual
Group, business unit and
individual outcomes.
Reward executives for their
contribution to the creation of
shareholder value over the
longer term.
Link to
Performance
Reviewed annually by the
Board, based on individual
and business unit
performance, the overall
performance of the Group
and comparable market
remunerations.
Directly linked to pre-agreed
KPIs. Reviewed regularly with
the relevant executive
member. Final performance is
determined by the Board.
It aims to align the targets of
the business units with the
targets of those executives
responsible for meeting those
targets.
Long Term Performance
Equity including Options,
Shares and/or Rights.
Details 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 (KMPs) of the consolidated entity are:
●
●
●
●
●
●
Peter Pawlowitsch (Non-Executive Chairman)
Peter Cook (Managing Director and Chief Executive Officer)
Kenneth Lai (Non-Executive Director)
Paul Burton (Non-Executive Director) (resigned on 3 September 2021)
Steven Zhou (Non-Executive Director) (resigned on 17 March 2022)
Abigail Cheadle (Non-Executive Director) (appointed on 13 December 2021)
Other key management personnel:
●
●
Alan Munday (Group Chief Operating Officer)
Steven Stamboultgis (Chief Financial Officer and Company Secretary)
24
Novatti Group Limited
Directors' report
30 June 2022
Amounts of remuneration
30 June 2022
Non-Executive Directors:
Peter Pawlowitsch
Kenneth Lai^
Paul Burton*^
Steven Zhou***
Abigail Cheadle**
Executive Directors:
Peter Cook
Other Key Management
Personnel:
Alan Munday
Steven Stamboultgis
Short-term benefits
Long-term
benefits
Post-
employment
benefits
Share-
based
payments
Cash salary
and fees monetary
Non-
$
$
Annual
leave
$
Long
service
leave
$
Super-
annuation
$
Equity-
settled
$
Total
$
119,455
-
-
54,546
26,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,946
-
-
2,727
2,600
273,733
136,867
-
136,867
42,221**
405,134
136,867
-
194,140
70,821
402,579
8,329
1,312
9,690
19,000
410,600
851,510
277,574
182,022
1,062,176
-
5,400
13,729
30,569
9,410
41,291
6,870
4,697
21,257
383,877
41,364
27,500
19,222
246,878
26,127
82,995 1,067,779 2,289,227
*
**
Paul Burton resigned from Non-Executive Director on 3 September 2021.
Abigail Cheadle was appointed as Non-Executive Director on 13 December 2021. Abigail Cheadle's options are subject
to shareholders' approval at the 2022 AGM.
*** Steven Zhou resigned from Non-Executive Director on 17 March 2022.
^ $140,000 remains unpaid for director fees for Kenneth Lai and Paul Burton.
Short-term benefits
Long-term
benefits
Post-
employment
benefits
Share-
based
payments
Cash salary
and fees monetary
Non-
$
$
Annual
leave
$
Long
service
leave
$
Super-
annuation
$
Equity-
settled
$
Total
$
117,610
50,000
50,000
36,530
15,834
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,172
-
-
3,470
1,504
-
-
-
-
-
128,782
50,000
50,000
40,000
17,338
432,673
35,318
16,894
8,659
20,231
286,917
800,692
313,171
204,267
1,220,085
-
-
35,318
30,520
10,814
58,228
6,158
3,880
18,697
25,000
19,405
80,782
78,175
62,540
453,024
300,906
427,632 1,840,742
30 June 2021
Non-Executive Directors:
Peter Pawlowitsch
Kenneth Lai^
Paul Burton^
Steven Zhou
Brandon Munro*
Executive Directors:
Peter Cook
Other Key Management
Personnel:
Alan Munday
Steven Stamboultgis**
*
**
^
Brandon Munro resigned as a Director on 5 August 2020.
Steven Stamboultgis was also appointed company secretary on 15 March 2021.
$100,000 remains unpaid for director fees for Kenneth Lai and Paul Burton.
25
Novatti Group Limited
Directors' report
30 June 2022
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Peter Pawlowitsch
Kenneth Lai
Paul Burton
Steven Zhou
Brandon Munro
Abigail Cheadle
Executive Directors:
Peter Cook
Other Key Management
Personnel:
Alan Munday
Steven Stamboultgis
Fixed remuneration
At risk - STI
30 June 2022 30 June 2021 30 June 2022 30 June 2021 30 June 2022 30 June 2021
At risk - LTI
32%
-
-
30%
-
40%
100%
100%
100%
100%
100%
-
52%
64%
89%
89%
83%
79%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
68%
100%
-
70%
-
60%
-
-
-
-
-
-
48%
36%
11%
11%
17%
21%
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:
Agreement commenced:
Term of agreement:
Details:
Peter Cook
Managing Director and Chief Executive Officer
20 November 2015
The term is not fixed.
Base salary of $400,000 (including statutory superannuation). 6.7M incentive options
exercisable at variable dollar values upon the achievement of certain milestones.
Remuneration is subject to an annual review to be conducted by the Board. Factors
to be considered include personal competency progression, achievement of personal
development targets and KPIs, company remuneration policy, its financial position
and current market equivalent positions. KPIs to be agreed each year and may be
varied by mutual agreement.
The agreement may be terminated, (A) by either party without cause with six months’
notice, or at the election of the Group, immediately with payment in lieu of six months’
notice (subject to the limitation of the Corporations Act and Listing Rules). (B) By the
Group on one months’ notice, if the executive is unable to perform his duties due to
illness, accident or incapacitation, for three consecutive months or a period
aggregating more than three months in any 12-month period.
26
Novatti Group Limited
Directors' report
30 June 2022
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Alan Munday
Group Chief Operating Officer
20 November 2015
The term is not fixed.
Base salary of $304,468 (including statutory superannuation).
Remuneration is subject to an annual review to be conducted by the Board. Factors
to be considered include personal competency progression, achievement of personal
development targets and KPIs, company remuneration policy, its financial position
and current market equivalent positions. KPIs to be agreed each year and may be
varied by mutual agreement.
The agreement may be terminated, (A) without cause, with three months’ notice from
the Group or two months from the executive, or payment in lieu of notice at the
Group’s election (subject to the limitation of the Corporations Act and Listing Rules).
(B) by Novatti on one month’s notice, if the executive is unable to perform his duties
due to illness, accident or incapacitation, for three consecutive months or a period
aggregating more than three months in any 12-month period or (C), summarily
following material breach or in the case of serious misconduct.
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Steven Stamboultgis
Chief Financial Officer and Company Secretary
20 November 2015
The term is not fixed.
Base salary of $213,368 (including statutory superannuation).
Remuneration is subject to an annual review to be conducted by the Board. Factors
to be considered include personal competency progression, achievement of personal
development targets and KPIs, company remuneration policy, its financial position
and current market equivalent positions. KPIs to be agreed each year and may be
varied by mutual agreement.
The agreement may be terminated, (A) without cause, with three months’ notice from
the Group or two months from the executive, or payment in lieu of notice at the
Group’s election (subject to the limitation of the Corporations Act and Listing Rules).
(B) by Novatti on one month’s notice, if the executive is unable to perform his duties
due to illness, accident or incapacitation, for three consecutive months or a period
aggregating more than three months in any 12-month period or (C), summarily
following material breach or in the case of serious misconduct.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
There were no shares issued to key management personnel as part of compensation during the year ended 30 June 2022.
27
Novatti Group Limited
Directors' report
30 June 2022
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key
management personnel in this financial year or future reporting years are as follows:
Name
Number of
options
granted
Grant date
Vesting date and
exercisable date
Expiry date
Exercise price at grant date
Fair value
per option
Peter Pawlowitsch
Peter Pawlowitsch
Peter Cook
Peter Cook
Paul Burton*
Paul Burton*
Steven Zhou**
Steven Zhou**
Kenneth Lai
Kenneth Lai
Peter Pawlowitsch
Peter Pawlowitsch
Peter Pawlowitsch
Peter Cook
Peter Cook
Peter Cook
Alan Munday
Alan Munday
Alan Munday
Steven Stamboultgis
Steven Stamboultgis
Steven Stamboultgis
Peter Cook
Peter Cook
Peter Cook
Alan Munday
Alan Munday
Steven Stamboultgis
Steven Stamboultgis
Peter Pawlowitsch
Peter Pawlowitsch
Peter Pawlowitsch
Peter Cook
Peter Cook
Peter Cook
Abigail Cheadle***
Abigail Cheadle***
Abigail Cheadle***
Kenneth Lai
Kenneth Lai
Kenneth Lai
Alan Munday
Steven Stamboultgis
30 November 2022
833,333 27 November 2018 22 March 2019
30 November 2022
833,334 27 November 2018 22 March 2019
30 November 2022
833,333 27 November 2018 22 March 2019
30 November 2022
833,334 27 November 2018 22 March 2019
30 November 2022
333,333 27 November 2018 22 March 2019
30 November 2022
333,334 27 November 2018 22 March 2019
30 November 2022
333,333 27 November 2018 22 March 2019
30 November 2022
333,334 27 November 2018 22 March 2019
30 November 2022
333,333 27 November 2018 22 March 2019
333,334 27 November 2018 22 March 2019
30 November 2022
166,666 25 November 2019 30 November 2020 30 November 2023
166,666 25 November 2019 30 November 2020 30 November 2023
166,667 25 November 2019 30 November 2020 30 November 2023
833,333 25 November 2019 30 November 2020 30 November 2023
833,333 25 November 2019 30 November 2020 30 November 2023
833,333 25 November 2019 30 November 2020 30 November 2023
375,000 19 December 2019 31 December 2019 19 December 2022
187,500 19 December 2019 31 December 2020 19 December 2022
187,500 19 December 2019 31 December 2021 19 December 2022
300,000 19 December 2019 31 December 2019 19 December 2022
150,000 19 December 2019 31 December 2020 19 December 2022
150,000 19 December 2019 31 December 2021 19 December 2022
833,334 25 November 2020 01 December 2020 30 November 2024
833,333 25 November 2020 01 December 2020 30 November 2024
833,333 25 November 2020 01 December 2020 30 November 2024
500,000 22 December 2020 22 December 2020 22 December 2023
500,000 22 December 2020 22 December 2020 22 December 2023
400,000 22 December 2020 22 December 2020 22 December 2023
400,000 22 December 2020 22 December 2020 22 December 2023
666,667 20 December 2021 20 December 2021 30 November 2025
666,667 20 December 2021 20 December 2021 30 November 2025
666,666 20 December 2021 20 December 2021 30 November 2025
1,000,000 20 December 2021 20 December 2021 30 November 2025
1,000,000 20 December 2021 20 December 2021 30 November 2025
1,000,000 20 December 2021 20 December 2021 30 November 2025
500,000 20 December 2021 20 December 2021 30 November 2025
500,000 20 December 2021 20 December 2021 30 November 2025
500,000 20 December 2021 20 December 2021 30 November 2025
333,334 20 December 2021 20 December 2021 30 November 2025
333,333 20 December 2021 20 December 2021 30 November 2025
333,333 20 December 2021 20 December 2021 30 November 2025
19 April 2022
500,000 19 April 2022
19 April 2022
250,000 19 April 2022
19 April 2025
19 April 2025
Paul Burton resigned from Non-Executive Director on 3 September 2021.
Steven Zhou resigned from Non-Executive Director on 17 March 2022.
*
**
*** Abigail Cheadle's options are subject to shareholders' approval at the 2022 AGM.
Options granted carry no dividend or voting rights.
$0.195
$0.195
$0.195
$0.195
$0.195
$0.195
$0.195
$0.195
$0.195
$0.195
$0.200
$0.200
$0.200
$0.200
$0.200
$0.200
$0.200
$0.200
$0.200
$0.200
$0.200
$0.200
$0.270
$0.270
$0.270
$0.275
$0.275
$0.275
$0.275
$0.450
$0.450
$0.450
$0.450
$0.450
$0.450
$0.450
$0.450
$0.450
$0.450
$0.450
$0.450
$0.350
$0.350
$0.106
$0.074
$0.106
$0.074
$0.106
$0.074
$0.106
$0.074
$0.106
$0.074
$0.106
$0.086
$0.074
$0.106
$0.086
$0.074
$0.104
$0.087
$0.063
$0.104
$0.087
$0.063
$0.110
$0.114
$0.119
$0.102
$0.083
$0.102
$0.083
$0.128
$0.137
$0.146
$0.128
$0.137
$0.146
$0.128
$0.137
$0.146
$0.128
$0.137
$0.146
$0.084
$0.084
28
Novatti Group Limited
Directors' report
30 June 2022
The number of options over ordinary shares granted to and vested by directors and other key management personnel as
part of compensation during the year ended 30 June 2022 are set out below:
Name
Peter Pawlowitsch
Peter Cook
Kenneth Lai
Abigail Cheadle**
Steven Zhou*
Alan Munday
Steven Stamboultgis
Number of
Number of
Number of
Number of
options
granted
options
granted
options
vested
options
vested
during the
during the
during the
during the
year
year
year
year
30 June 2022 30 June 2021 30 June 2022 30 June 2021
2,000,000
3,000,000
1,000,000
1,500,000
1,000,000
500,000
250,000
-
2,500,000
-
-
-
1,000,000
800,000
2,000,000
3,000,000
1,000,000
1,500,000
1,000,000
937,500
675,000
-
2,500,000
-
-
-
687,500
550,000
*
**
Steven Zhou resigned from Non-Executive Director on 17 March 2022.
Abigail Cheadle's options are subject to shareholders' approval at the 2022 AGM.
Additional information
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
2022
2021
2020
2019
2018
Share price at financial year end ($)
Total dividends declared (cents per share)
Basic loss per share (cents per share)
0.155
-
(5.115)
0.640
-
(5.162)
0.310
-
(6.398)
0.165
-
(3.098)
0.225
-
(1.530)
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and other members of key management
personnel of the consolidated entity, including their personally related, controlled or joint controlled parties, is set out below:
Ordinary shares
Peter Pawlowitsch
Peter Cook
Steven Zhou
Kenneth Lai
Paul Burton*
Alan Munday
Steven Stamboultgis
Abigail Cheadle
Balance at Received Exercise
the start of
the year
as part of
remuneration
of
options
Balance at
the end of
the year
Other
3,582,662
11,507,904
-
13,116,118
263,158
50,000
20,000
-
28,539,842
-
-
-
-
-
-
-
-
-
-
1,666,667
-
-
-
-
248,013
-
1,914,680
-
3,582,662
- 13,174,571
-
-
- 13,116,118
-
50,000
268,013
-
(263,158) 30,191,364
(263,158)
-
-
-
*
Paul Burton resigned from Non-Executive Director on 3 September 2021 and “other” represents Mr Burton's holding at
his resignation date.
29
Novatti Group Limited
Directors' report
30 June 2022
Option holding
The number of options over ordinary shares in the company held during the financial year by each director and other
members of key management personnel of the consolidated entity, including their personally related, controlled or joint
controlled parties, is set out below:
Options over ordinary shares
Peter Pawlowitsch
Peter Cook
Abigail Cheadle***
Kenneth Lai
Paul Burton*
Steven Zhou**
Alan Munday
Steven Stamboultgis
Balance at
the start of
the year
Granted
Exercised
Other
Balance at
the end of
the year
2,166,667
6,666,667
-
666,667
666,667
666,667
1,750,000
1,400,000
13,983,335
2,000,000
3,000,000
1,500,000
1,000,000
-
1,000,000
500,000
250,000
9,250,000
-
(1,666,667)
-
-
-
-
-
(850,000)
(2,516,667)
-
-
-
-
(666,667)
(1,666,667)
-
-
4,166,667
8,000,000
1,500,000
1,666,667
-
-
2,250,000
800,000
(2,333,334) 18,383,334
*
**
Paul Burton resigned from Non-Executive Director on 3 September 2021 and “other” represents Mr Burton's holding at
his resignation date.
Steven Zhou resigned from Non-Executive Director on 17 March 2022 and “other” represents Mr Zhou's holding at his
resignation date.
*** Abigail Cheadle's options are subject to shareholders' approval at the 2022 AGM.
Other transactions with key management personnel and their related parties
Services
No other payments were made to Directors outside of their normal duties as Directors for Novatti Group Ltd.
Current and non-current liabilities to a Director
There are no other current or non-current liabilities outstanding to Directors of the Group as at 30 June 2022.
This concludes the remuneration report, which has been audited.
30
Novatti Group Limited
Directors' report
30 June 2022
Shares under option
Unissued ordinary shares of Novatti Group Limited under option at the date of this report are as follows:
Grant date
27 November 2018
15 November 2019
25 November 2019
19 December 2019
10 July 2020
10 July 2020
10 July 2020
10 July 2020
10 July 2020
26 October 2020
25 November 2020
22 December 2020
22 December 2020
8 February 2021
5 April 2021
7 April 2021
5 May 2021
31 May 2021
1 October 2021
1 October 2021
15 October 2021
15 October 2021
20 December 2021*
25 January 2022
5 April 2022
Expiry date
30 November 2022
30 October 2022
30 November 2023
19 December 2022
10 July 2023
1 March 2024
1 March 2025
1 March 2026
31 December 2022
26 October 2023
30 November 2024
22 December 2023
14 October 2023
8 February 2024
5 April 2024
7 April 2024
5 May 2024
31 May 2024
31 December 2023
31 December 2022
15 October 2024
15 October 2024
30 November 2025
25 January 2025
19 April 2025
Exercise
price
Number
under option
$0.190
$0.250
$0.200
$0.200
$0.200
$0.200
$0.200
$0.200
$0.200
$0.300
$0.270
$0.275
$0.300
$0.300
$0.300
$0.600
$0.750
$0.750
$0.660
$0.600
$0.495
$0.750
$0.450
$0.326
$0.350
3,666,668
2,577,500
3,000,000
4,262,500
850,000
441,667
441,667
66,666
3,200,000
1,000,000
2,500,000
3,200,000
2,000,000
200,000
300,000
100,000
100,000
400,000
500,000
100,000
1,300,000
1,300,000
8,500,000
600,000
2,575,000
43,181,668
*
The 8,500,000 unlisted options exercisable at $0.45, expiring 30 November 2025 include 1,500,000 unlisted options
granted to Abigail Cheadle of which are subject to shareholders' approval at the 2022 AGM.
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
company or of any other body corporate.
Shares issued on the exercise of options
The following ordinary shares of Novatti Group Limited were issued during the year ended 30 June 2022 and up to the date
of this report on the exercise of options granted:
Date options granted
27 November 2018
19 December 2019
22 December 2020
15 November 2019
15 September 2020
Exercise
price
Number of
shares issued
$0.190
$0.200
$0.275
$0.250
$0.250
1,666,667
216,606
68,907
10,000
5,200,000
7,162,180
Shares issued on conversion of convertible notes
On 5 July 2021, the Group issued 4,880,000 fully paid ordinary shares on conversion of 1,220,000 convertible notes (4 for
1).
31
Novatti Group Limited
Directors' report
30 June 2022
On 30 July 2021, the Group issued 1,200,000 fully paid ordinary shares on conversion of 300,000 convertible notes (4 for
1).
On 4 August 2021, the remaining 97,500 convertible notes have ceased without conversion due to repayment or redemption.
As at the date of this report, the Group has $40,000 left payable on the $1.1 million convertible note to Australian Fintech
Investment Group Pty Ltd (AFIG).
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director
or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the
company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the company
or any related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility
on behalf of the company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor
are outlined in note 24 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 24 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in Accounting
Professional and Ethical Standards (APES) 110 Code of Ethics for Professional Accountants issued by the Accounting
Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a
management or decision-making capacity for the company, acting as advocate for the company or jointly sharing
economic risks and rewards.
●
Officers of the company who are former partners of William Buck
There are no officers of the company who are former partners of William Buck.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that
Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors' report.
Auditor
William Buck continues in office in accordance with section 327 of the Corporations Act 2001.
32
Novatti Group Limited
Directors' report
30 June 2022
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
___________________________
Peter Pawlowitsch
Chairman
31 August 2022
33
Novatti Group Limited
Auditor's independence declaration
Auditor’s independence declaration
34
Novatti Group Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2022
Revenue
Other income
Statement of profit or loss and
other comprehensive income
Consolidated
Note 30 June 2022 30 June 2021
$'000
$'000
5
32,555
16,482
1,815
1,947
Expenses
Administrative and corporate costs
Client hosting fees and other direct services
Employee benefits
Foreign currency translation gains/(losses)
Marketing and selling expenses
Data management expenses
Gain on investments at fair value through profit or loss
Share based payment on investor and broker options
Share of net profit of joint ventures accounted for using the equity method
Gains/(losses) on embedded derivative - convertible note facility into Novatti Group
Ltd the parent entity
Depreciation and amortisation expense
Finance costs
6
10
33
(3,725)
(18,928)
(27,394)
403
(290)
(1,197)
3,302
(1,325)
23
729
(1,853)
(725)
(2,227)
(4,979)
(15,888)
(116)
(57)
(454)
366
(1,085)
33
(2,860)
(1,481)
(1,507)
Loss before income tax expense
Income tax expense
(16,610)
(11,826)
7
(17)
(17)
Loss after income tax expense for the year
(16,627)
(11,843)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Loss for the year is attributable to:
Non-controlling interest
Owners of Novatti Group Limited
Total comprehensive income for the year is attributable to:
Non-controlling interest
Owners of Novatti Group Limited
43
43
(43)
(43)
(16,584)
(11,886)
-
(16,627)
(31)
(11,812)
(16,627)
(11,843)
-
(16,584)
(31)
(11,855)
(16,584)
(11,886)
Cents
Cents
Basic loss per share
Diluted loss per share
32
32
(5.115)
(5.115)
(5.162)
(5.162)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
35
Novatti Group Limited
Consolidated statement of financial position
As at 30 June 2022
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets - funds in trust
Other current assets
Total current assets
Non-current assets
Investments accounted for using the equity method
Other investments at fair value through profit and loss
Plant and equipment
Right-of-use assets
Intangible assets
Security deposits
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Settlement and remittance funds payable
Lease liabilities
Contract liabilities
Convertible note facilities
Employee benefits
Total current liabilities
Non-current liabilities
Lease liabilities
Employee benefits
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Equity attributable to the owners of Novatti Group Limited
Non-controlling interest
Total equity
Statement of financial position
Consolidated
Note 30 June 2022 30 June 2021
$'000
$'000
8
9
10
11
12
13
14
15
16
17
15
17
18
19
20
6,059
8,422
52,440
928
67,849
77
27,724
529
1,790
9,322
3,704
43,146
8,798
4,138
39,019
324
52,279
804
1,030
544
1,933
4,991
2,206
11,508
110,995
63,787
16,221
52,062
273
798
40
1,959
71,353
1,829
917
255
3,001
6,817
38,609
247
876
4,907
1,314
52,770
1,971
148
-
2,119
74,354
54,889
36,641
8,898
89,336
4,981
(57,676)
36,641
-
44,144
3,803
(41,018)
6,929
1,969
36,641
8,898
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
36
Novatti Group Limited
Consolidated statement of changes in equity
For the year ended 30 June 2022
Statement of changes in equity
Consolidated
Issued
capital
$'000
Share-based
payment
reserve
$'000
Foreign
currency
translation
reserve
$'000
Accumulated
losses
$'000
Non-
Controlling
Interests
$'000
Total equity
$'000
Balance at 1 July 2020
26,685
1,756
620
(29,547)
-
(486)
Loss after income tax expense
for the year
Other comprehensive income
for the year, net of tax
Total comprehensive income for
the year
Transactions with owners in
their capacity as owners:
Lapse of expired share options
Vesting of share based
payments arrangements
Issue of shares in lieu of
consultancy fees
Issue of shares on exercise of
options
Issue of shares on conversion
of convertible notes and
exercise of bonus options held
by convertible note holders
Issue of equity in Novatti B
Holdings Pty Ltd to BC Invest
Proceeds from issue of shares,
net of transaction costs (note
19)
-
-
-
-
-
79
980
-
-
-
(341)
2,087
-
(18)
4,060
(258)
-
12,340
-
-
-
(11,812)
(31)
(11,843)
(43)
-
-
(43)
(43)
(11,812)
(31)
(11,886)
-
341
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000
-
2,087
79
962
3,802
2,000
-
12,340
Balance at 30 June 2021
44,144
3,226
577
(41,018)
1,969
8,898
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
37
Novatti Group Limited
Consolidated statement of changes in equity
For the year ended 30 June 2022
Consolidated
Issued
capital
$'000
Share-based
payment
reserve
$'000
Foreign
currency
translation
reserve
$'000
Accumulated
losses
$'000
Non-
Controlling
Interests
$'000
Total equity
$'000
Balance at 1 July 2021
44,144
3,226
577
(41,018)
1,969
8,898
Loss after income tax expense
for the year
Other comprehensive income
for the year, net of tax
Total comprehensive income for
the year
Transactions with owners in
their capacity as owners:
Vesting of share based
payments arrangements
Issue of shares in lieu of
consultancy fees
Issue of shares in lieu of staff
remuneration
Issue of shares on exercise of
options
Issue of shares on conversion
of convertible notes and
exercise of bonus options held
by convertible note holders
Reacquisition of equity in
Novatti B Holdings Pty Ltd
formerly owned by BC Invest
Proceeds from issue of shares,
net of transaction costs (note
19)
Issue of shares to acquire ATX
Fintech Holding Sdn Bhd
-
-
-
-
26
250
-
-
-
1,792
-
-
2,273
(656)
3,354
(1)
-
38,029
1,260
-
-
-
-
43
(16,627)
-
43
(16,627)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 30 June 2022
89,336
4,361
620
(57,676)
-
-
-
-
-
-
-
-
(16,627)
43
(16,584)
1,792
26
250
1,617
3,353
-
-
-
38,029
1,260
36,641
(31)
(1,969)
(2,000)
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
38
Novatti Group Limited
Consolidated statement of cash flows
For the year ended 30 June 2022
Statement of cash flows
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Receipt of research and development grant
Receipt of Government Stimulus
Interest and other finance costs paid
Dividends received
Income taxes paid
Consolidated
Note 30 June 2022 30 June 2021
$'000
$'000
62,124
(75,838)
34
-
256
(721)
(14,145)
1,126
(13)
34,155
(41,102)
38
1,114
798
(402)
(5,399)
-
-
Net cash used in operating activities
31
(13,032)
(5,399)
Cash flows from investing activities
Payment of deferred cash consideration for Emersion acquisition
Payment for purchase of business, net of cash acquired
Payments for investments in Reckon Limited
Payments for plant and equipment
Payments for intangible assets
Payments for security deposits
Proceeds from disposal of investments
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares, net of transaction costs
Proceeds from loan repaid
Repayment of borrowings
Interest and other finance costs paid on convertible notes
(Repurchase)/issue of equity to BC Invest
Proceeds from exercise of options
Repayment of lease liabilities
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
28
22
12
19
-
(2,098)
(22,517)
(147)
(326)
(1,587)
-
(810)
-
-
(177)
(240)
(1,970)
560
(26,675)
(2,637)
38,029
-
(804)
-
(2,000)
1,618
(248)
13,054
200
(400)
(244)
2,000
-
(260)
36,595
14,350
(3,112)
8,798
373
6,314
2,600
(116)
6,059
8,798
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
39
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 1. General information
Notes to the financial statements
The consolidated financial statements cover Novatti Group Limited as a consolidated entity consisting of Novatti Group
Limited (‘the Company’, ‘Novatti’ or ‘parent entity’) and the entities it controlled (collectively ‘the Group’) at the end of, or
during, the year. The financial statements are presented in Australian dollars, which is Novatti Group Limited's functional and
presentation currency.
Novatti Group Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
Level 3
461 Bourke 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, in accordance with a resolution of directors, on 31 August 2022. The
directors do not have the power to amend and reissue the financial statements.
Note 2. 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 or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial
performance or position of the consolidated entity.
Statement of Compliance
The consolidated financial statements are general-purpose financial statements which have been prepared in accordance
with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the
Corporations Act 2001.
The consolidated financial statements comply with International Financial Reporting Standards (IFRS) adopted by the
International Accounting Standards Board (IASB). For the purposes of preparing the consolidated financial statements, the
Company is a for-profit entity.
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.
Basis of preparation
The financial statements have been prepared on an accruals basis and are based on the historical cost convention, except
for the followings are recorded on a fair value basis: assets and liabilities acquired in a business combination, investments
at fair value through profit and loss, deferred consideration and embedded derivatives included in convertible notes. Unless
otherwise stated the carrying amounts of financial assets and liabilities reflect their fair value.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a
higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial
statements are disclosed in Note 2.
40
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the legal parent entity is disclosed in note 27.
Principles of consolidation
These are the financial statements of the ‘Company’ and the ‘Group’ as at 30 June 2022.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and
only if the Group has:
●
●
●
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
Exposure, or rights, to variable returns from its involvement with the investee
The ability to use its power over the investee to affect its returns
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable
to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and
other comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity.
Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results in a deficit
balance.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The
consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained
together with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis
as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation
of resources to operating segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Novatti Group Limited's functional and presentation
currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
profit or loss.
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.
41
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
Revenue recognition
The Group 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 of the goods or services promised to the customer.
Technology
Develop, deploy and supports specialised mobile and alternate payment technology. Billing and CIS solution to service
providers in the utilities industry. Yearly licence fees are amortised over the relevant year and professional service revenue
is recognised in the month the service is provided at that point in time.
Business Automation
Provisioning of customer engagement, payment, provisioning, and subscription billing solutions. Monthly fees are charged
at a transactional level. Fees for settling up and deploying the service are charged and recognised when the service is
provided.
Acquiring
A service that enables merchants to get paid. Monthly fees are charged at a transactional level. Fees for settling up and
deploying the service are charged and recognised when the service is provided.
Alternative Payments
Revenue from Alternative Payments is a mixture of:
●
●
●
●
Fees for software as a service
Fees for the facilitation of top up vouchers
Settlement Services of financial transactions
Fees from ‘Prepaid’ reloadable cards
The revenue charges for alternative payment services are based on transactional value. Revenue is therefore recognised
when the service is provided.
Banking Services
On approval as an Authorised Deposit-Taking Institution or its full banking licence by APRA, Banking services will provide a
number of services to Australian customers for which they may charge a transactional fee and/or fee for service where the
revenue is recognised when the service is provided.
Issuing
Issuing of prepaid Visa cards under licence of Visa. Monthly fees are charged at a transactional level. Fees for settling up
and deploying the service are charged and recognised when the service is provided.
ATX Payments
ATX provides digital payment services, such as third-party bill and product payments and it is paid per transaction.
Interest
Interest revenue is recognised on a time proportional basis that takes into account the effective yield on the financial asset.
Contract liabilities
Contract liabilities includes revenue from clients whereby services are billed in advance of their anniversary dates and have
outstanding services owing for the financial year ended 30 June 2022.
Other revenue
Other revenue is recognised at the time it is received or when the right to receive payment is established.
42
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
Contract assets
Contract assets includes revenue from the sales of services unbilled as at 30 June 2022.
Government grants
Government grants, including Research and Development revenues, are recognised at the point in time where there is
reasonable assurance that the grant will be received and all attached conditions will be fulfilled.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Novatti Group Limited (the ‘head legal entity’) and its wholly owned Australian subsidiaries have formed an income tax
consolidated Group under the tax consolidation regime. The head entity and each subsidiary in the tax-consolidated Group
continue to account for their own current and deferred tax amounts. The tax-consolidated Group has applied the ‘separate
taxpayer within Group’ approach in determining the appropriate amount of taxes to allocate to members of the tax-
consolidated Group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax
consolidated Group.
Assets or liabilities arising under tax funding agreements with the tax-consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax-consolidated Group. The tax funding arrangement ensures that the
intercompany charge equals the current tax liability or benefit of each tax consolidated Group member, resulting in neither a
contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30
days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss
allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Financial assets and other investments
Financial assets and other investments are initially measured at fair value. Transaction costs are included as part of the initial
measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at
either amortised cost or fair value depending on their classification. Classification is determined based on both the business
model within which such assets are held and the contractual cash flow characteristics of the financial asset unless an
accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the
Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of
recovering part or all of a financial asset, it's carrying value is written off.
Financial assets at amortised cost
A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a business
model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual terms of the financial
asset represent contractual cash flows that are solely payments of principal and interest.
43
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost are classified as financial assets at fair value through profit or loss. Typically,
such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term
with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair
value movements are recognised in profit or loss.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets which are measured at amortised cost.
The measurement of the loss allowance depends upon the Group's assessment at the end of each reporting period as to
whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and
supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit
loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a
default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is
determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit
losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of
anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
Plant and equipment
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any
accumulated impairment. In the event the carrying amount of plant and equipment is greater than the estimated recoverable
amount, the carrying amount is written down immediately to the estimated recoverable amount and impairment losses are
recognised either in profit or loss. A formal assessment of recoverable amount is made when impairment indicators are
present.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable
amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be
received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their
present values in determining recoverable amounts.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. All other repairs and
maintenance are recognised as expenses in profit or loss during the financial period in which they are incurred.
The depreciable amount of all fixed assets is depreciated on a straight-line basis over the asset’s useful life to the Group
commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of
either the unexpired period of the lease or the
estimated useful lives of the improvements.
The estimated useful lives for the current period are as follows:
Plant and equipment
Leasehold fixtures and fittings at cost
2 years
10 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
An item of plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group.
Gains and losses between the carrying amount and the disposal proceeds are taken to the statement of profit or loss and
other comprehensive income in the period in which they arise.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the
cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and
restoring the site or asset.
44
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
Right-of-use assets are amortised on a straight-line basis over the unexpired period of the lease or the estimated useful life
of the asset, whichever is the shorter. Where 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 Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms
of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as
incurred.
Intangible assets
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and
accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The
estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any
changes in estimate being accounted for on a prospective basis.
The estimated useful lives for intangibles for the current period are:
Product Development: Technology
Customer lists
Intellectual Property: Technology - Billing Software
Brands
5 years
5 - 10 years
10 years
10 years
Intangible assets acquired in a business combination
Intangible assets, including customer lists, intellectual property and brand acquired in a business combination and recognised
separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Impairment of tangible and intangible assets
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not
possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-
generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate
assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest Group of cash-
generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised
immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is
treated as a revaluation decrease.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and
which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts
are unsecured and are usually paid within 30 days of recognition.
45
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the 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
guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an
adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset
is fully written down.
Convertible note facilities
During the year ended 30 June 2020 the Group issued convertible note tranches with conversion clauses that were both
fixed and variable. For convertible notes with variable conversion terms, at initial recognition an embedded derivative is
recognised on the statement of financial position at fair value and that embedded derivative is subsequently recorded at its
fair value thereafter, with changes in fair value going through to the statement of profit or loss and other comprehensive
income. The difference between the consideration received (net of costs) and the embedded derivative is reflected in the
principal value of the convertible note liability.
For convertible notes with fixed conversion terms, at initial recognition the separate debt component of the note is recorded
at its fair value (net of costs of the note) with the residual difference between the note and equity taken to a convertible note
reserve in equity.
Over the duration of the maturity of the convertible note, the discount applied to the note at initial recognition is unwound
through a finance charge using the effective interest rate up to the face value of the note at maturity. Costs directly attributable
to the issue of the convertible notes are amortised over the life of the underlying note
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured at the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using market yields at
the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the
estimated future cash outflows.
Share-based payments
Equity-settled and cash-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. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash
is determined by reference to the share price.
46
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using
either the Binomial or Black-Scholes option pricing model that 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 Group receives the services that entitle the employees to receive payment. No account is taken of any other
vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
●
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
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 Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the principal
market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and
best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable
inputs.
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.
47
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
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 informatio n
possible to determine fair value.
Loss per share
Basic loss per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Novatti Group Limited, excluding
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted loss per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
48
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
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.
Rounding of amounts
The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that
Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the Group for the annual reporting period ended 30 June 2022.
Note 3. 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 judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have,
on the Group based on known information. This consideration extends to the nature of the products and services offered,
customers, supply chain, staffing and geographic regions in which the Group operates. Other than as addressed in specific
notes, there does not currently appear to be either any significant impact upon the financial statements or any significant
uncertainties with respect to events or conditions which may impact the Group unfavourably as at the reporting date or
subsequently as a result of the Coronavirus (COVID-19) pandemic.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using either the Black-Scholes or Binomial
models taking into account the terms and conditions upon which the instruments were granted. The accounting estimates
and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets
and liabilities within the next annual reporting period but may impact profit or loss and equity.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit
loss rate for each group. These assumptions include recent sales experience and historical collection rates.
Revenue from contracts with customers involving performance milestones
When recognising revenue, the key performance obligation of the consolidated entity is considered to be performance
milestones detailed under each contract. Management estimates the progress against these performance milestones at each
reporting date and recognise revenue and work in progress accounts accordingly.
Fair value measurement hierarchy
The Group is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy, based on the
lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in
active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2: Inputs other than
quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3:
Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant to fair value
and therefore which category the asset or liability is placed in can be subjective.
49
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 3. Critical accounting judgements, estimates and assumptions (continued)
The investments in Slice Payments and Rent Pay Pty Ltd are Level 2 valuation investments as they are unlisted, with the
derivation of their value from the last available public information for trading in the shares of those investments at arms-length
terms. Refer to note 22 'Financial instruments' for further information on valuation of investments in unlisted entities. The
investment in Reckon Limited is a Level 1 investment, being that it is quoted on the Australian Securities Exchange.
Estimation of useful lives of finite life intangible assets
The Group determines the valuation, estimated useful lives and related amortisation charges for its finite life intangible assets.
The useful lives could change significantly as a result of technical innovations or some other event. The amortisation charge
will increase where the useful lives are less than previously estimated lives, or, technically obsolete or non-strategic assets
that have been abandoned or sold will be written off or written down.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences and carry-forward losses only if the Group considers
it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The directors
have determined that the losses to date do not validate the requirement to book any DTA for carry forward losses and will
consider the recognition of DTAs in future periods.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to discount
future lease payments to measure the present value of the lease liability at the lease commencement date. Such a rate is
based on what the consolidated entity estimates it would have to pay a third party to borrow the funds necessary to obtain
an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment.
Assessment of the conversion features of the convertible notes
During the year ended 30 June 2020, the Group issued convertible note tranches with conversion clauses that were both
fixed and variable. For the convertible note tranches with variable conversion terms, at initial recognition an embedded
derivative is recognised on the statement of financial position at fair value and that embedded derivative is subsequently
recorded at its fair value thereafter, with changes in fair value going through to the statement of profit or loss and other
comprehensive income. The difference between the consideration received (net of costs) and the embedded derivative is
reflected in the principal value of the convertible note liability.
The fixed component of the convertible note tranches in accordance with AASB 132 Financial instruments, are classified
as equity.
Deferred consideration
The deferred consideration liability is the difference between the total purchase consideration, usually on an acquisition of a
business combination, and the amounts paid or settled up to the reporting date, discounted to net present value. The
consolidated entity applies provisional accounting for any business combination. Any reassessment of the liability during the
earlier of the finalisation of the provisional accounting or 12 months from acquisition-date is adjusted for retrospectively as
part of the provisional accounting rules in accordance with AASB 3 'Business Combinations'. Thereafter, at each reporting
date, the deferred consideration liability is reassessed against revised estimates and any increase or decrease in the net
present value of the liability will result in a corresponding gain or loss to profit or loss. The increase in the liability resulting
from the passage of time is recognised as a finance cost. Refer to note 28 'Business combinations' for further information.
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.
50
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Assessment of ATX Fintech Holding Sdn Bhd (ATX)
The acquisition of ATX Fintech Holding Sdn Bhd has been accounted as a Business Combination under AASB 3. ATX
Fintech Holding Sdn Bhd is identified as a business given it has a substantive process in place to process inputs into outputs.
ATX has an integrated set of activities and assets and it provides digital payment services, such as third-party bill and product
payments.
ATX is identified as a principal under AASB 15 given it controls the specified good or service before that good or service is
transferred to a customer. For example, ATX controls the payment pins and takes the inventory risk before the payment pins
are transferred to a customer. Therefore, when ATX satisfies a performance obligation, ATX recognises revenue in the gross
amount of consideration to which it expects to be entitled in exchange for the specified good or service transferred. At the
same time, it recognises costs of sales in gross amount.
Note 4. Operating segments
Identification of reportable operating segments
The Group is organised into eight operating business segments:
(1) Technology, incorporating enterprise sales, Maintenance & Support via the Novatti Platform and Basis2 operating under
Novatti Incorporated
(2) Business Automation, incorporating Emersion Systems Pty Ltd and Novatti Emersion Inc.
(3) Acquiring, incorporating Novatti Acquiring Holdings Pty Ltd and Novatti Acquiring Services (AUS) Pty Ltd
(4) Alternative Payments, incorporating Flexewallet Pty Ltd, Flexe Payments (South Africa) Pty Ltd and Flexe Payments
Ltd
(5) Banking Services, incorporating the banking services under Novatti B Holding Company Pty Ltd
(6) Issuing, incorporating Flexewallet (NZ) Limited and Vasco Pay Pty Ltd
(7) ATX Payments, incorporating ATX Fintech Holding Sdn Bhd
(8) Corporate Overheads, the overhead segment that holds the financial assets for the Group and captures the corporate,
public running costs and overheads costs
These operating business 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.
The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted
for internal reporting to the CODM are consistent with those adopted in the financial statements. The information reported to
the CODM is on at least a monthly basis.
51
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 4. Operating segments (continued)
Types of products and services
The principal products and services of each of these operating segments are as follows:
Technology
Platform: Develops, deploys and supports specialised mobile and alternate payment
technology, primarily through the deployment of the Novatti Platform.
Business Automation
Acquiring
Alternative Payments
Banking Services
Issuing
ATX Payments
Billing Solutions: Basis2 trading under Novatti Inc. provides a technologically advanced
billing and CIS solution to service providers in the utilities industry.
Emersion: Automates business processes including customer engagement, billing,
collections, subscription management and embedded payments.
Novatti Acquiring: Enables businesses to accept payments online for e-commerce with a
strong focus on mobile point-of-sales as key growth area.
TransferBridge: Provides a comprehensive global network that interconnects emerging
payment platforms, remittance operators, financial institutions, retailers, utilities and other
types of cross border payment settlement offerings.
Flexewallet and Flexe Payments: Offers customers an alternative payment method in the
form of a prepaid cash voucher. Vouchers can be used for a multitude of payment methods
such as prepaid account top-ups and for secure online payment of goods and services.
Vouchers are available in a variety of currencies and locations globally.
Novatti B Holding Company Pty Ltd, on approval as a Restricted Authorised Deposit-Taking
Institution ('RADI') or its banking licence by APRA, Novatti B Holding Company Pty Ltd will
offer new banking services to Australian customers with a focus on the migrant
demographic.
Vasco Pay Pty Ltd and Novatti Group Ltd: Provides a payment system centred around
reloadable prepaid cards that meets the needs and wants of international and local
university and college students.
ATX Fintech Holding Sdn Bhd: Provides large, established payments network across
Malaysia, including 30k+ touch points.
Intersegment transactions
Intersegment transactions were made at market rates. Intersegment transactions are eliminated on consolidation.
Intersegment receivables, payables and loans
Intersegment loans are initially recognised at the consideration received. Intersegment loans are eliminated on consolidation.
Major customers
During the year ended 30 June 2022, approximately 27.12% (30 June 2021: 25.43%) of the consolidated entity's external
revenue was derived from sales to customers as follows:
Customer A
Customer B
Consolidated Consolidated
30 June 2022 30 June 2021
%
%
10.03%
17.09%
27.12%
13.98%
11.45%
25.43%
52
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 4. Operating segments (continued)
Operating segment information
Business
Alternative Banking
Technology
Automation
Acquiring
Payments
Services
Issuing
Corporate
ATX
Payments
Overheads
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
3,876
-
3,876
2,439
-
2,439
868
-
868
17,946
-
17,946
-
-
-
1,625
-
1,625
5,801
-
5,801
-
1,781
1,781
32,555
1,781
34,336
2,551
(2,995)
(3,205)
2,547
(2,404)
(2,586)
(54)
(7,866)
(14,012)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,853)
34
(725)
(54)
(1,853)
34
(725)
(54)
2,551
(2,995)
(3,205)
2,547
(2,404)
(2,586)
(54)
(10,464)
(16,610)
5,535
2,640
889
44,657
72
17,174
10,160
29,868
5,644
955
790
43,607
499
16,835
3,909
2,115
(17)
(16,627)
110,995
110,995
74,354
74,354
Consolidated -
30 June 2022
Revenue
Sales to external
customers
Other revenue
Total revenue
EBITDA
Depreciation and
amortisation
Interest revenue
Finance costs
Other taxes
Profit/(loss)
before income
tax expense
Income tax
expense
Loss after
income tax
expense
Assets
Segment assets
Total assets
Liabilities
Segment
liabilities
Total liabilities
53
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 4. Operating segments (continued)
Business
Alternative Banking
Technology Automation Acquiring Payments Services
Issuing
Corporate
Overheads
Total
Consolidated -
30 June 2021
Revenue
Sales to external
customers
Other revenue
Total revenue
EBITDA
Depreciation and
amortisation
Interest revenue
Finance costs
Other taxes
Profit/(loss)
before income
tax expense
Income tax
expense
Loss after
income tax
expense
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
4,956
-
4,956
2,229
-
2,229
-
-
-
8,362
-
8,362
-
-
-
935
-
935
-
1,912
1,912
16,482
1,912
18,394
(964)
(1,305)
(118)
1,690
(1,553)
(362)
(6,248)
(8,860)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,481)
35
(1,507)
(13)
(1,481)
35
(1,507)
(13)
(964)
(1,305)
(118)
1,690
(1,553)
(362)
(9,214)
(11,826)
6,491
3,154
2
40,756
2,035
2,414
8,935
5,373
1,117
17
37,834
353
2,410
7,785
(17)
(11,843)
63,787
63,787
54,889
54,889
For the breakdown of operating segment revenue into disaggregated revenue components, refer to note 5.
Geographical information
Australia
Malta
Mauritius
United States
Malaysia
Brazil
Gibraltar
Channel Islands
Other
Sales to external customers
30 June 2022 30 June 2021 30 June 2022 30 June 2021
Geographical non-current
assets
$'000
$'000
$'000
$'000
7,604
3,265
-
2,069
7,316
5,564
2,140
1,515
3,082
7,727
1,887
2,304
1,836
-
-
-
-
2,728
35,951
-
-
-
7,195
-
-
-
-
11,508
-
-
-
-
-
-
-
-
32,555
16,482
43,146
11,508
The geographical non-current assets above are exclusive of, where applicable, financial instruments, deferred tax assets,
post-employment benefits assets and rights under insurance contracts.
54
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 5. Revenue
30 June 2022
Sales revenue:
Technology
Business Automation
Acquiring
Alternative Payments
Banking Services
Issuing
ATX Payments
30 June 2021
Sales revenue
Technology
Business Automation
Acquiring
Alternative Payments
Banking Services
Issuing
ATX Payments
Timing of
revenue
recognition
Timing of
revenue
recognition
Services
provided
at point in
time
$
Services
provided
over time
$
Consolidated
2022
$
2,176
1,354
868
17,946
-
1,625
5,801
1,700
1,085
-
-
-
-
-
3,876
2,439
868
17,946
-
1,625
5,801
29,770
2,785
32,555
Timing of
revenue
recognition
Timing of
revenue
recognition
Services
provided
at point in
time
$
Services
provided
over time
$
Consolidated
2021
$
3,203
-
-
8,362
-
935
-
1,753
2,229
-
-
-
-
-
4,956
2,229
-
8,362
-
935
-
12,500
3,982
16,482
Note 6. Client hosting fees and other direct services
Settlement services
Tokenised technology commission
Issuing costs related to program management and Visa
Voucher top up, payment and distribution costs associated with the Malaysian subsidiary
Cross border settlement costs
Hosting and other direct services
Consolidated
30 June 2022 30 June 2021
$'000
$'000
5,932
2,422
1,307
4,976
1,697
2,594
1,768
-
357
-
1,425
1,429
18,928
4,979
55
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 7. Income tax expense
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense
Tax at the statutory tax rate of 25% (2021: 26%)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Adjustment for tax rate differences in foreign jurisdictions
Adjustment for tax exempt research and development tax
Adjustments from prior periods
Adjustment for changes in tax rates
Share-based payments
Adjustment for R&D accounting expense included within R&D incentive
Other non-deductible expenses
Current year tax losses not brought to account
Current year temporary differences not brought to account
Adjustments in respect of current income tax of previous year
Adjustment for changes in tax rates
Prior year income tax losses utilised in the current year
Income tax expense
Deferred tax assets not brought to account:
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 25% (2021: 26%)
Note 8. Trade and other receivables
Current assets
Trade and other receivables
Less: Allowance for expected credit losses
Contract assets
Consolidated
30 June 2022 30 June 2021
$'000
$'000
(16,610)
(11,826)
(4,153)
(3,075)
101
-
3,276
-
406
-
18
(352)
4,831
(1,188)
(3,276)
-
2
16
(290)
1,439
132
393
338
(25)
(1,072)
2,003
995
(1,777)
(132)
-
17
17
Consolidated
30 June 2022 30 June 2021
$'000
$'000
28,625
21,100
7,156
5,486
Consolidated
30 June 2022 30 June 2021
$'000
$'000
5,703
(221)
5,482
3,076
(55)
3,021
2,940
1,117
8,422
4,138
Allowance for expected credit losses
The consolidated entity has recognised additional provision of $166,000 (2021: $32,000 of credit) in statement of profit or
loss and other comprehensive income in respect of the expected credit losses for the year ended 30 June 2022.
Other than the provision noted above, management are of the opinion that these receivables are reflective of fair value and
should not be impaired.
56
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 8. Trade and other receivables (continued)
The ageing of the past due but not impaired receivables are as follows:
Current
3 to 6 months overdue
Over 6 months overdue
Trade receivables
Contract assets
Note 9. Financial assets - funds in trust
Current assets
Settlement funds*
Remittance funds*
Client visa funds
* Refer to note 14 Current liabilities – Settlement and Remittance funds payable
Note 10. Other investments at fair value through profit and loss
Non-current assets
Investment in Slice Payments
Investment in Rent Pay Pty Ltd
Investment in Reckon Limited
Consolidated
30 June 2022 30 June 2021
$'000
$'000
4,802
153
527
5,482
2,940
2,114
217
690
3,021
1,117
8,422
4,138
Consolidated
30 June 2022 30 June 2021
$'000
$'000
27,441
7,947
17,052
15,913
18,371
4,735
52,440
39,019
Consolidated
30 June 2022 30 June 2021
$'000
$'000
452
250
27,022
780
250
-
27,724
1,030
For all of these investments, the directors consider that the Company has less than a significant influence. Accordingly, they
are all held at fair value through profit or loss. The investments in Slice Payments and Rent Pay Pty Ltd are Level 2 valuation
investments as they are unlisted, with the derivation of their value from the last available public information for trading in
the shares of those investments at arms-length terms. The investment in Reckon Limited is a Level 1 investment, being that
it is quoted on the Australian Securities Exchange. The Reckon Limited shares were originally acquired at $1.00 per share.
As at 30 June 2022 the value of those shares increased to $1.20 per share, contributing to a fair valuation gain of $4.50
million.
57
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 11. Right-of-use assets
Non-current assets
Buildings - right-of-use
Less: Accumulated amortisation
Consolidated
30 June 2022 30 June 2021
$'000
$'000
2,761
(971)
2,526
(593)
1,790
1,933
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2020
Foreign exchange differences
Amortisation expense
Balance at 30 June 2021
Additions
Additions through business combinations (note 28)
Amortisation expense
Balance at 30 June 2022
Buildings -
Right-of-use
$'000
2,244
1
(312)
1,933
165
70
(378)
1,790
58
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 12. Intangible assets
Non-current assets
Brand Asset
Less: Accumulated amortisation
Intellectual property - at cost
Less: Accumulated amortisation
Customer Lists
Less: Accumulated amortisation
Licences
Less: Accumulated amortisation
Other intangible assets
Product development
Less: Accumulated amortisation
Consolidated
30 June 2022 30 June 2021
$'000
$'000
4,973
(470)
4,503
2,588
(991)
1,597
3,789
(1,830)
1,959
475
(166)
309
51
1,643
(740)
903
568
(173)
395
847
(347)
500
3,619
(1,206)
2,413
475
(71)
404
46
1,643
(410)
1,233
9,322
4,991
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2020
Additions
Exchange differences
Amortisation expense
Balance at 30 June 2021
Additions
Exchange differences
Additions through business
combinations (note 28)
Amortisation expense
Brand Asset
$'000
Intellectual
Property
$'000
Customer
Lists
$'000
Licences
$'000
Other
Product
Intangible
Assets
$'000
Developme
nt
$'000
Total
$'000
452
-
-
(57)
395
-
-
584
-
-
(84)
500
158
(15)
4,405
(297)
1,105
(151)
3,061
-
(165)
(483)
2,413
-
170
-
(624)
-
475
-
(71)
404
-
-
-
(95)
309
46
-
-
-
46
-
-
5
-
51
1,561
-
-
(328)
1,233
-
-
5,704
475
(165)
(1,023)
4,991
158
155
-
(330)
5,515
(1,497)
903
9,322
Balance at 30 June 2022
4,503
1,597
1,959
59
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 13. Trade and other payables
Current liabilities
Trade payables
Sundry creditors and accrued expenses
Deferred consideration related to ATX acquisition*
Income tax payable
Other payables
* Refer to note 28 'Business combinations' for further information on deferred consideration.
Note 14. Settlement and remittance funds payable
Current liabilities
Settlement funds payable*
Remittance funds payable*
Client visa funds payable
*Client Funds held for Settlement and Remittance, refer to note 9.
Note 15. Lease liabilities
Current liabilities
Office lease liabilities for Melbourne, United Kingdom, Malta and Malaysia
Non-current liabilities
Office lease liabilities for Melbourne, United Kingdom, Malta and Malaysia
Refer to note 22 for further information on financial instruments.
Consolidated
30 June 2022 30 June 2021
$'000
$'000
6,969
8,201
1,012
39
-
3,596
3,012
-
13
196
16,221
6,817
Consolidated
30 June 2022 30 June 2021
$'000
$'000
27,441
7,947
16,674
15,913
18,371
4,325
52,062
38,609
Consolidated
30 June 2022 30 June 2021
$'000
$'000
273
247
1,829
1,971
2,102
2,218
60
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 16. Contract liabilities
Current liabilities
Contract liabilities
Reconciliation of the values at the beginning and end of the current and previous financial
year:
Opening balance
Amounts billed in advance (ex GST)
Less revenue recognised over a period of time
Note 17. Employee benefits
Current liabilities
Annual leave
Long service leave
Non-current liabilities
Long service leave
Provision for employee-related costs*
Consolidated
30 June 2022 30 June 2021
$'000
$'000
798
876
Contract liabilities
2022
$
2021
$
876
2,707
(2,785)
861
3,997
(3,982)
798
876
Consolidated
30 June 2022 30 June 2021
$'000
$'000
1,469
490
914
400
1,959
1,314
138
779
917
148
-
148
2,876
1,462
* the provision for employee-related costs relates to the earn-out milestone payments to ATX executive staff.
Note 18. Other non-current liabilities
Non-current liabilities
Deferred consideration related to ATX acquisition*
Other payables related to ATX subsidiary
* Refer to note 28 'Business combinations' for further information on deferred consideration.
Consolidated
30 June 2022 30 June 2021
$'000
$'000
117
138
255
-
-
-
61
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 19. Issued capital
Ordinary shares - fully paid
335,297,521 244,203,326
89,336
44,144
Consolidated
30 June 2022 30 June 2021 30 June 2022 30 June 2021
Shares
Shares
$'000
$'000
62
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 19. Issued capital (continued)
Movements in ordinary share capital
Details
Date
Shares
$'000
1 July 2020
3 July 2020
3 July 2020
185,210,500
700,000
175,000
7 July 2020
15 September 2020
15 September 2020
5 November 2020
8 December 2020
40,000,000
800,000
200,000
51,038
20,000
Balance
Issue of shares on conversion of convertible notes
Issue of shares on exercise of options
Issue of placement shares to institutional and sophisticated
investors
Issue of placement shares to Directors
Issue of shares in lieu of consultancy fees
Issue of shares on cashless exercise of options
Issue of shares on exercise of options
Issue of shares on conversion of convertible notes and compound
interest
Issue of shares on exercise of options
Issue of shares on conversion of convertible notes and compound
interest
Issue of shares on exercise of options
Issue of shares in lieu of consultancy fees
Issue of shares on conversion of convertible notes
Issue of shares on exercise of options
Issue of shares on conversion of convertible notes
Issue of shares on exercise of options
Issue of placement shares to sophisticated investors
Issue of shares on conversion of convertible notes
Issue of shares on exercise of options
Cost of capital raising
Issue of shares on conversion of convertible notes and compound
interest
Issue of shares on exercise of options
Issue of shares on conversion of convertible notes and compound
interest
Issue of shares on exercise of options
Cash received for exercise of options
26 February 2021
26 February 2021
19 March 2021
19 March 2021
19 March 2021
24 March 2021
24 March 2021
23 April 2021
23 April 2021
13 May 2021
21 May 2021
21 - 28 May 2021
4 June 2021
4 June 2021
15 June 2021
18 June 2021
30 June 2021
5 July 2021
5 July 2021
9 July 2021
30 July 2021
Balance
Issue of shares on conversion of convertible notes
Issue of shares on exercise of options
Issue of shares to sophisticated and institutional investors
Issue of shares on conversion of convertible notes
Issue of shares to existing shareholders under Share Purchase Plan 9 August 2021
Issue of shares to sophisticated and institutional investors
Issue of shares on exercise of options
Issue of shares on exercise of options
Issue of shares in lieu of consultancy fees
Issue of shares to employees
Issue of shares on exercise of options
Issue of shares in lieu of consultancy fees
Issue of shares on exercise of options
Issue of shares on exercise of options
Issue of shares to acquire ATX Fintech Holding Sdn Bhd
Cost of capital raising
27 August 2021
1 September 2021
1 October 2021
1 October 2021
15 October 2021
3 December 2021
24 December 2021
24 December 2021
31 December 2021
14 January 2022
844,811
280,000
406,332
115,000
115,163
1,660,000
250,000
1,618,032
210,000
6,833,713
190,000
555,000
-
1,381,084
300,000
1,125,153
1,162,500
-
244,203,326
4,880,000
37,500
51,120,472
1,200,000
452,742
21,606,801
310,000
600,000
40,000
1,000,000
3,198,013
32,000
1,350,000
1,666,667
3,600,000
-
26,685
183
-
10,000
200
50
18
6
354
87
170
39
29
696
83
875
71
3,000
103
183
(870)
925
100
753
386
18
44,144
2,692
10
28,116
662
249
11,884
103
199
17
250
1,046
9
448
467
1,260
(2,220)
Balance
30 June 2022
335,297,521
89,336
63
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 19. Issued capital (continued)
Ordinary shares
Ordinary shares entitle the holder to participate in dividends, when declared 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.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide
returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost
of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt.
The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding
relative to the current company’s share price at the time of the investment.
Note 20. Reserves
Foreign currency reserve
Share-based payments reserve
Consolidated
30 June 2022 30 June 2021
$'000
$'000
620
4,361
577
3,226
4,981
3,803
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign
operations.
Share-based payments reserve
The option reserve is used to record the fair value of options issued to employees and directors as part of their remuneration.
It is also used to record the fair value of options in other share-based payment transactions. The balance is transferred to
Issued Capital when options are exercised and balance is transferred to retained earnings when options lapse.
Note 21. Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 22. Financial instruments
Financial risk management objectives
The Group is exposed to risks that arise from the use of its financial instruments. This note describes Novatti Group’s
objectives, policies and processes for managing those risks and the methods used to measure them. There have been no
substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and processes for managing
those risks or the methods used to measure them from previous periods unless otherwise stated in this Note.
The Group’s Audit, Risk & Compliance Committee oversees how management monitors compliance with the Group’s risk
management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks
faced by the Group.
64
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 22. Financial instruments (continued)
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
●
●
●
●
●
●
Cash at bank and on deposit
Trade receivables
Financial assets at fair value through profit or loss
Trade and other payables
Lease liabilities
Convertible note facilities
Client funds held for settlement and remittance are not recognised as financial instruments as the net value of the two net
off in total.
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and whilst
retaining ultimate responsibility for them, has delegated the authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the Group’s finance function. The Board receives regular reports
from the Chief Financial Officer through which it reviews the effectiveness of the processes put in place and the
appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the
Group’s competitiveness and flexibility. Further details regarding these policies are set out below.
Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade and other
receivables and other financial assets. The Group’s exposure to credit risk arises from potential default by the counter-
party, with maximum exposure equal to the carrying amount of these instruments. Exposure at the reporting date is
addressed in each applicable note.
Clients of the Group range from financial service providers, telecommunication operators to airline companies. New client
contracts may require customers to pay fees based on ‘project milestone arrangements’ in accordance with agreed upon
contract terms. Moving from milestone to milestone requires the payment of each to move onto the next. In addition,
companies may be charged for on-going service and maintenance contracts on a monthly or quarterly basis based on the
initial contract value and last up to 5 - 10 years.
Transactional sales obligations are settled generally on 21-day terms and after receipt from distributors.
The Group undertakes transactions with a large number of customers and regularly monitors payments in accordance with
credit terms, the financial assets that are neither past due nor impaired, are expected to be received in accordance with the
credit terms. Refer to note 8 trade and other receivable for the ageing analysis.
The Group does not have any material credit risk exposure for other receivables or other financial instruments.
Market risk
Foreign currency risk
The Group’s policy is, where possible, to allow Group entities to settle liabilities denominated in their functional currency with
the cash generated from their own operations in that currency. Where Group entities have liabilities denominated in a
currency (and have insufficient reserves of that currency to settle them), cash already denominated in that currency will,
where possible, be transferred from elsewhere within the Group.
In order to monitor the continuing effectiveness of this policy, the Board receives a monthly forecast, analysed by the
geographical region’s cash balances, commitments and receipts, converted to the Group’s main functional currency,
Australian Dollars (AUD).
The Group is exposed to currency risk on cash at bank, accounts receivable and payable accounts and on its financial assets
in Canadian Dollars (CAD) to fund its Canadian operations, Euro (EUR) and Great British Pounds (GBP) to service its
European Operations in the UK, also US Dollars (USD) and New Zealand Dollars (NZD).
65
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 22. Financial instruments (continued)
The carrying amount of the consolidated entity's foreign currency denominated financial assets and financial liabilities at the
reporting date were as follows:
Consolidated
CAD
USD
EUR
GBP
NZD
MYR
Assets
Liabilities
30 June 2022 30 June 2021 30 June 2022 30 June 2021
$'000
$'000
$'000
$'000
449
969
39,206
5
8,034
1,560
1,219
1,090
11,428
-
2,544
-
(334)
(275)
(1,572)
(141)
(6)
(2,703)
(1,109)
(206)
(432)
(15)
-
-
50,223
16,281
(5,031)
(1,762)
The following tables below illustrate the sensitivity of the net result for the year and equity in regard to the Group’s financial
assets and financial liabilities compared with the currency on deposit and AUD exchange rate. It assumes a +/- 5% change
in the exchange rate for the year ended at 30 June 2022. This percentage has been determined based on average market
volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Group’s foreign currency
financial instruments held at each reporting date. This assumes that other variables, in particular interest rates, remain
constant.
Consolidated - 30 June 2022
% change
profit before
tax
Effect on
equity
% change
profit before
tax
Effect on
equity
AUD strengthened
Effect on
AUD weakened
Effect on
CAD
USD
EUR
GBP
NZD
MYR
5%
5%
5%
5%
5%
5%
(5)
(33)
(1,792)
6
(382)
54
(2,152)
AUD strengthened
Effect on
Consolidated - 30 June 2021
% change
profit before
tax
Effect on
equity
CAD
USD
EUR
GBP
NZD
5%
5%
5%
5%
5%
(5)
(42)
(524)
1
(121)
(691)
-
-
-
-
-
-
-
-
-
-
-
-
-
5%
5%
5%
5%
5%
5%
6
37
1,981
(7)
423
(60)
2,380
AUD weakened
Effect on
% change
profit before
tax
Effect on
equity
5%
5%
5%
5%
5%
6
47
579
(1)
134
765
-
-
-
-
-
-
-
-
-
-
-
-
-
Price risk
The Group is exposed to other price risk on its investments in listed and unlisted entities. These investments are classified
on the statement of financial position as investment assets initially recorded at cost and are subsequently measured at fair
value through the statement of profit or loss. The investments are in three different entities. The assets and liabilities within
these investments indirectly expose the Group to equity price risks. It is not considered practicable to ‘look through’ the
investments to analyse these risks in detail.
66
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 22. Financial instruments (continued)
If the fair value of investments increased by 10% this would have increased total comprehensive income for the Group by
$2,772,400. A decrease of 10% would have reduced total comprehensive income by the same amount.
Investments measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy:
●
●
●
Level 1 – the instrument has quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 – a valuation technique is applied using inputs other than quoted prices within Level 1 that are observable for
the financial instrument, either directly (i.e. as prices), or indirectly (i.e. derived from prices)
Level 3 – a valuation technique is applied using inputs that are not based on observable market data (unobservable
inputs)
30 June 2022
Assets
Shares in listed entities
Shares in unlisted entities
30 June 2021
Assets
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
27,022
-
27,022
-
702
702
-
-
-
27,022
702
27,724
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$
Shares in unlisted entities
-
-
1,030
1,030
Reconciliation
Reconciliation of the fair values at the beginning and end of the current and previous
financial year are set out below:
Opening fair value
Additions
Disposals
Revaluation increments
Revaluation decrements
Closing fair value
30 June 2022 30 June 2021
$'000
$'000
1,030
22,517
-
4,505
(328)
860
364
(560)
366
-
27,724
1,030
These investments are in private entities where obtaining input values is not readily possible. Input values recognised were
based on judgement and most recent transaction values.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due. The Group’s policy is to ensure that it will always have sufficient cash to
allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash balances to meet expected
requirements for a period of at least three months.
The Group also seeks to reduce liquidity risk by ensuring that its cash deposits are earning interest at the best rates. At
balance date, these reports indicate that the Group is expected to have sufficient liquid resources to meet its obligations
under all reasonably expected circumstances.
As at 30 June 2022, the financial liabilities of the Group include:
●
●
●
Trade and other payables. For further details including breakdown of balances, refer to trade and other payables in note
13 for a breakdown of account balances
Lease liabilities. Refer to note 15 for a summary of the outstanding lease liabilities
Convertible note facilities.
67
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 22. Financial instruments (continued)
The contractual amounts of financial liabilities are equal to their carrying values.
Remaining contractual maturities
The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which
the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Consolidated - 30 June 2022
Non-derivatives
Non-interest bearing
Trade payables and other
payables
Interest-bearing - fixed rate
Convertible note facilities
Lease liabilities
Total non-derivatives
Consolidated - 30 June 2021
Non-derivatives
Non-interest bearing
Trade payables and other
payables
Interest-bearing - fixed rate
Borrowings
Convertible note facilities
Lease liabilities
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years
$'000
Over 5 years
$'000
Remaining
contractual
maturities
$'000
-
16,221
-
9.00%
5.21%
40
273
16,534
-
1,829
1,829
-
-
-
-
-
-
-
-
16,221
40
2,102
18,363
Weighted
average
interest rate
%
1 year or less
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years
$'000
Over 5 years
$'000
Remaining
contractual
maturities
$'000
-
6,817
-
-
9.00%
5.21%
700
4,207
247
11,971
-
-
1,971
1,971
-
-
-
-
-
-
-
-
-
-
6,817
700
4,207
2,218
13,942
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 23. Key management personnel disclosures
Directors
The following persons were directors of Novatti Group Limited during the financial year:
Peter Pawlowitsch (Non-Executive Chairman)
Peter Cook (Managing Director and Chief Executive Officer)
Kenneth Lai (Non-Executive Director)
Paul Burton (Non-Executive Director)
Steven Zhou (Non-Executive Director)
Abigail Cheadle (Non-Executive Director)
(resigned on 3 September 2021)
(resigned on 17 March 2022)
(appointed on 13 December 2021)
68
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 23. Key management personnel disclosures (continued)
Other key management personnel
The following persons also had the authority and responsibility for planning, directing and controlling the major activities of
the consolidated entity, directly or indirectly, during the financial year:
Alan Munday
Steven Stamboultgis
(Group Chief Operating Officer)
(Chief Financial Officer and Company Secretary)
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated entity
is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Note 24. Remuneration of auditors
Consolidated
30 June 2022 30 June 2021
$
$
1,117,196
82,995
21,257
1,067,779
1,313,631
80,782
18,697
427,632
2,289,227
1,840,742
During the financial year, the following fees were paid or payable for services provided by William Buck, the auditor of the
Company, its network firms and unrelated firms:
Audit services - William Buck
Audit or review of the financial statements
Other services - William Buck
Preparation of the tax return and associated tax services (including R&D)
Other matters
Consolidated
30 June 2022 30 June 2021
$
$
98,500
86,000
71,560
6,070
49,460
-
77,630
49,460
176,130
135,460
Note 25. Contingent liabilities
Deposits under non-current assets are refundable collateral held on application of the Visa issuing licence and Currency
Cloud float. The conditions in place for the deposits are relating to a) the Visa partnership; b) the Currency Cloud float; and
c) Visa collateral.
Programs managed under the Novatti Visa licence requires Novatti clients to maintain 6 days float in accounts held by Novatti
for the client. Where a client's business model fails, their float is held by Novatti and is used to settle outstanding card
payments. In the unlikely event that the client funds fall short of clearing their outstanding Visa settlements, the cash on
deposit will be used for the shortfall. The Currency Cloud float enables expedient payments. Where the client does not
forward the balance of the funds for cross-border payments, Novatti is at risk of the unpaid balance of that transaction.
The consolidated entity had no other contingent liabilities as at 30 June 2022 and 30 June 2021.
69
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 26. Related party transactions
Parent entity
Novatti Group Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 29.
Key management personnel
Disclosures relating to key management personnel are set out in note 23 and the remuneration report included in the
directors' report.
Transactions with related parties
There were no transactions with related parties during the current and previous financial year.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from Directors
There were no other Director related services that have been provided to the Group outside of the Directors normal fiduciary
duties and responsibilities as Directors of the Group other than as outlined in this report.
Loans to/from related parties
Loan provided to the Group’s joint venture partner, High Impact. This loan agreement is for a total of USD 24,462 (AUD
35,509) as at 30 June 2022 (2021: USD 24,462 (AUD 30,307)). The loan is on commercial terms and interest has been
calculated daily at 6% per annum.
There were no other loans to or from related parties at the current reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 27. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit/(loss) after income tax
Total comprehensive income
Parent
30 June 2022 30 June 2021
$'000
$'000
252
252
(7,391)
(7,391)
70
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 27. Parent entity information (continued)
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Foreign currency reserve
Share-based payments reserve
Accumulated losses
Total equity
Parent
30 June 2022 30 June 2021
$'000
$'000
48,121
42,956
100,307
46,759
14,335
7,901
14,335
7,901
92,853
534
4,361
(11,776)
47,061
-
3,825
(12,028)
85,972
38,858
Prepaid deposit entered into by the parent entity in relation to the debts of its subsidiaries
There exists a prepaid deposit for offices leased in Melbourne. As at 30 June 2022, this totalled $83,010 (2021: $83,010).
No other prepaid deposit exist.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2022 (2021: Nil).
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2022 (2021: Nil).
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 2, except
for the following:
●
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
71
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 28. Business combinations
Acquisition of ATX Fintech Holding Sdn Bhd
On 1 January 2022, the Group completed the acquisition of 100% of the issued share capital in ATX Fintech Holding Sdn
Bhd, a leading South East Asian payments fintech, based in Malaysia. The acquisition enables Novatti to scale the existing
ATX business, introduce additional Novatti services, such as billing, and further expand across South East Asia. The
acquisition has been accounted as a Business Combination under AASB 3. The acquired business contributed revenues of
$5,793,000 and loss after tax of $736,000 to the consolidated entity for the period from 1 January 2022 to 30 June 2022. If
the acquisition occurred on 1 July 2021, the full year contributions would have been revenues of $9,450,000 and loss after
tax of $828,000.
The provisional fair values of the identifiable net assets acquired are detailed below:
Cash and cash equivalents
Trade receivables
Other receivables
Inventories
Plant and equipment
Right-of-use assets
Brand asset
Intellectual property
Other intangible assets
Trade payables
Other payables
Lease liability
Other liabilities
Acquisition-date provisional fair value of the total consideration transferred
Cash used to acquire business, net of cash acquired:
Acquisition-date provisional fair value of the total consideration transferred
Less: deferred consideration
Less: shares issued by company as part of consideration
Net cash used
Fair value
$'000
1,051
939
191
227
105
70
4,405
1,105
5
(1,911)
(467)
(74)
(108)
5,538
5,538
(1,129)
(1,260)
3,149
Acquisition costs
Transaction costs of approximately $114,000 associated with the acquisition have been expensed and are included within
the administrative and corporate costs in the income statement.
Deferred consideration
Deferred consideration upon the purchase of ATX Fintech Holding Sdn Bhd is expected to be payable upon the subsidiary
achieving agreed Gross Revenue targets for financial year ending 31 December 2022 and 31 December 2023. Directors
have considered the agreed targets and have determined the liability recognised on the acquisition is reasonable.
72
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 29. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 2:
Name
Principal place of business /
Country of incorporation
Ownership interest
30 June 2022 30 June 2021
%
%
Novatti Group Ltd Subsidiaries
Novatti Pty Ltd
Flexe Payments Pty Ltd
Flexe Payments (AUS) Pty Ltd
Flexe Payments (MLT) Ltd
Flexe Payments (UK) Ltd
Novatti Commerce Solutions Inc.
Novatti Commerce Solutions (MLT) Ltd
Novatti Technologies Ltd
Novatti Inc.
Vasco Pay Pty Ltd
Novatti B Holding Pty Ltd
Novatti IBA Pty Ltd
Novatti Billing Solutions Pty Ltd
UAB Novtec Global*
Emersion Systems Pty Ltd
Novatti Acquiring Holdings Pty Ltd
Novatti Acquiring Services (AUS) Pty Ltd
Novatti Acquiring Services (NZ) Pty Ltd
Novatti Tech Europe Ltd
Novatti Emersion Inc.
ATX Fintech Holding Sdn Bhd
Novatti Global Services Pty Ltd
Emavilis Holdings Limited
Nisaki Holding Limited
China Payments Services Pty Ltd
Novatti Singapore Services Pte Ltd
AUDC Pty Ltd
Novatti Transactions and Technology International Ltd Cyprus
Australia
South Africa
Australia
Malta
United Kingdom
Canada
Malta
United Kingdom
United States of America
Australia
Australia
Australia
Australia
Lithuania
Australia
Australia
Australia
New Zealand
Cyprus
United States of America
Malaysia
Australia
Cyprus
Cyprus
China
Singapore
Australia
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
65.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
80.1%
80.1%
100.0%
100.0%
100.0%
100.0%
100.0%
-
100.0%
100.0%
-
-
-
-
-
-
-
-
Novatti Pty Ltd Subsidiaries
Flexewallet Pty Ltd
Flexewallet (NZ) Ltd
TransferBridge Pty Ltd
* Proceeding with voluntary deregistration.
Note 30. Events after the reporting period
Australia
New Zealand
Australia
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
On 15 August 2022, the Group announced that it has completed and secured $10.5m in new growth funds through a
corporate bond issue. The $10.5m in new funding will enable Novatti to unlock new and larger market opportunities as well
as increased transaction volumes. The primary purpose of the bond issue is to support collateral requirements from industry
partners and banks as Novatti grows.
The bonds are secured and will be issued for a fixed term of five years from the date funds are received by Novatti, with
interest at 90 day BBSW plus 650bps. Completion of the issue occurred on 12 August 2022.
No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the
consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial
years.
73
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 31. Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Write off of property, plant and equipment
Share-based payments
Unrealised foreign exchange (gain) / loss
(Gain) / loss on convertible notes
Bad debt expense
Equity investments received for services rendered
Share of joint venture loss / (profit)
Non-cash finance charges
Gain on investments at fair value through profit or loss
Change in operating assets and liabilities:
Increase in trade and other receivables
Decrease in inventories
Increase in trade and other payables
Decrease in provision for income tax
Increase in employee benefits
Increase/(decrease) in deferred income
Consolidated
30 June 2022 30 June 2021
$'000
$'000
(16,627)
(11,843)
1,853
127
1,902
(432)
(729)
279
(249)
-
113
(3,302)
(2,995)
27
6,333
(13)
634
47
1,481
111
2,180
1
2,860
-
(364)
33
1,094
(366)
(1,714)
-
963
-
427
(262)
Net cash used in operating activities
(13,032)
(5,399)
Note 32. Loss per share
Loss after income tax
Non-controlling interest
Consolidated
30 June 2022 30 June 2021
$'000
$'000
(16,627)
-
(11,843)
31
Loss after income tax attributable to the owners of Novatti Group Limited
(16,627)
(11,812)
Weighted average number of ordinary shares used in calculating basic loss per share
325,048,215 228,847,775
Weighted average number of ordinary shares used in calculating diluted loss per share
325,048,215 228,847,775
Number
Number
Basic loss per share
Diluted loss per share
Cents
Cents
(5.115)
(5.115)
(5.162)
(5.162)
As at 30 June 2022, the Group has 43,181,668 unlisted options on issue (2021: 36,070,835). These options are considered
to be non-dilutive whilst the Group is in a loss position.
Note 33. Share-based payments
Options issued under employee share option plan
74
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 33. Share-based payments (continued)
A share option plan has been established by the Group and approved by shareholders at a general meeting, whereby the
Group may, at the discretion of the Board, grant options over ordinary shares in the Company to certain key management
personnel and staff of the Group.
The Employee Share Option Plan is designed to provide long-term incentives for Senior Management (including Directors)
and staff to deliver long-term shareholder returns. Options are issued for nil consideration and are granted in accordance
with performance guidelines established by the Board.
The options granted during the year ended 30 June 2022 were calculated based on the Binomial model method of calculation
for share-based payments.
The following share-based payment arrangements were in existence during the current financial year and are supported by
the table below.
Set out below are summaries of options granted under the plan:
30 June 2022
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
27/11/2018
25/11/2019
19/12/2019
10/07/2020
10/07/2020
10/07/2020
10/07/2020
10/07/2020
26/10/2020
25/11/2020
22/12/2020
22/12/2020
08/02/2021
05/04/2021
07/04/2021
05/05/2021
31/05/2021
15/10/2021
15/10/2021
20/12/2021
25/01/2022
05/04/2022
30/11/2022
30/11/2023
19/12/2022
10/07/2023
01/03/2024
01/03/2025
01/03/2026
31/12/2022
26/10/2023
30/11/2024
22/12/2023
14/10/2023
08/02/2024
05/04/2024
07/04/2024
05/05/2024
31/05/2024
15/10/2024
15/10/2024
30/11/2025
25/01/2025
19/04/2025
$0.190
$0.200
$0.200
$0.200
$0.200
$0.200
$0.200
$0.200
$0.300
$0.270
$0.275
$0.300
$0.300
$0.300
$0.600
$0.750
$0.750
$0.495
$0.750
$0.450
$0.326
$0.350
-
5,333,335
-
3,000,000
-
4,750,000
-
850,000
-
441,667
-
441,667
-
66,666
-
3,200,000
-
1,000,000
-
2,500,000
-
3,600,000
-
2,000,000
-
200,000
-
300,000
-
100,000
-
100,000
-
400,000
1,300,000
-
1,300,000
-
8,500,000
-
600,000
-
2,575,000
-
28,283,335 14,275,000
(1,666,667)
-
(487,500)
-
-
-
-
-
-
-
(400,000)
-
-
-
-
-
-
-
-
-
-
-
(2,554,167)
3,666,668
-
3,000,000
-
4,262,500
-
850,000
-
441,667
-
441,667
-
66,666
-
3,200,000
-
1,000,000
-
2,500,000
-
3,200,000
-
2,000,000
-
200,000
-
300,000
-
100,000
-
100,000
-
400,000
-
1,300,000
-
1,300,000
-
8,500,000
-
600,000
-
-
2,575,000
- 40,004,168
Weighted average exercise price
$0.237
$0.458
$0.205
$0.000
$0.318
(i)
The 3,666,668 unlisted options exercisable at $0.19, expiring 30 November 2022 have market performance conditions.
(ii) The 3,000,000 unlisted options exercisable at $0.20, expiring 30 November 2023 have market performance conditions.
(iii) The 2,500,000 unlisted options exercisable at $0.27, expiring 30 November 2024 have market performance conditions.
(iv) The 8,500,000 unlisted options exercisable at $0.45, expiring 30 November 2025 have market performance conditions.
75
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 33. Share-based payments (continued)
30 June 2021
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
27/11/2018
25/11/2019
19/12/2019
10/07/2020
10/07/2020
10/07/2020
10/07/2020
10/07/2020
26/10/2020
25/11/2020
22/12/2020
22/12/2020
08/02/2021
05/04/2021
07/04/2021
05/05/2021
31/05/2021
30/11/2022
30/11/2023
19/12/2022
10/07/2023
01/03/2024
01/03/2025
01/03/2026
31/12/2022
26/10/2023
30/11/2024
22/12/2023
14/10/2023
08/02/2024
05/04/2024
07/04/2024
05/05/2024
31/05/2024
$0.190
$0.200
$0.200
$0.200
$0.200
$0.200
$0.200
$0.200
$0.300
$0.270
$0.275
$0.300
$0.300
$0.300
$0.600
$0.750
$0.750
-
9,000,000
-
3,500,000
-
5,370,000
850,000
-
441,667
-
441,667
-
66,666
-
3,200,000
-
1,000,000
-
2,500,000
-
3,600,000
-
2,000,000
-
200,000
-
300,000
-
100,000
-
100,000
-
400,000
-
17,870,000 15,200,000
-
(166,667)
(355,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(521,667)
Expired/
forfeited/
other
Balance at
the end of
the year
(3,666,665)
(333,333)
(265,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,333,335
3,000,000
4,750,000
850,000
441,667
441,667
66,666
3,200,000
1,000,000
2,500,000
3,600,000
2,000,000
200,000
300,000
100,000
100,000
400,000
(4,264,998) 28,283,335
Weighted average exercise price
$0.185
$0.273
$0.200
$0.191
$0.237
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
Grant date
Expiry date
15/10/2021
15/10/2021
15/10/2021
15/10/2021
15/10/2021
15/10/2021
15/10/2021
15/10/2021
20/12/2021
20/12/2021
20/12/2021
20/12/2021
20/12/2021
20/12/2021
25/01/2022
05/04/2022
15/10/2024
15/10/2024
15/10/2024
15/10/2024
15/10/2024
15/10/2024
15/10/2024
15/10/2024
30/11/2025
30/11/2025
30/11/2025
30/11/2025
30/11/2025
30/11/2025
25/01/2025
19/04/2025
Share price Exercise
at grant date
price
Expected
volatility
%
Dividend
Risk-free
Fair value
yield
%
interest rate at grant date
%
$0.450
$0.450
$0.450
$0.450
$0.450
$0.450
$0.450
$0.450
$0.275
$0.275
$0.275
$0.275
$0.275
$0.275
$0.290
$0.235
$0.495
$0.495
$0.495
$0.750
$0.750
$0.750
$0.750
$0.750
$0.450
$0.450
$0.450
$0.450
$0.450
$0.450
$0.326
$0.350
70.00%
70.00%
70.00%
70.00%
70.00%
70.00%
70.00%
70.00%
70.00%
70.00%
70.00%
70.00%
70.00%
70.00%
70.00%
70.00%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.98%
0.98%
0.98%
0.98%
0.98%
0.98%
0.98%
0.98%
0.98%
0.98%
0.98%
0.98%
0.98%
0.98%
0.98%
2.46%
$0.197
$0.160
$0.110
$0.147
$0.123
$0.076
$0.125
$0.079
$0.128
$0.137
$0.146
$0.100
$0.074
$0.040
$0.125
$0.084
These options have different tranches with different vesting periods.
Bonus options issued for convertible notes
On 30 March 2020 the Group issued 3,500,000 bonus options to the convertible note holders. These options were valued
using the Binomial model method of calculation for share-based payments.
Set out below are summaries of bonus options granted to convertible note holders:
76
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2022
Note 33. Share-based payments (continued)
30 June 2022
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
15/11/2019
18/02/2020
30/10/2022
30/10/2022
$0.25
$0.25
1,475,000
1,112,500
2,587,500
-
-
-
(10,000)
-
(10,000)
-
-
-
1,465,000
1,112,500
2,577,500
30 June 2021
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
15/11/2019
18/02/2020
30/10/2022
30/10/2022
$0.25
$0.25
2,275,000
1,225,000
3,500,000
-
-
-
(800,000)
(112,500)
(912,500)
-
-
-
1,475,000
1,112,500
2,587,500
Options issued to consultants
On 15 September 2020 and 1 October 2021, the Group issued 7,000,000 and 1,100,000 unquoted options to consultants
in lieu of investor relation service fees. These options were valued using Black-Scholes valuation model.
Set out below are summaries of options granted to consultants:
30 June 2022
Grant date
Expiry date
15/09/2020
01/10/2021
01/10/2021
01/10/2021
31/12/2021
30/06/2022
31/12/2022
31/12/2023
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired
Balance at
the end of
the year
$0.25
$0.30
$0.60
$0.66
5,200,000
-
-
-
-
500,000
100,000
500,000
(5,200,000)
-
-
-
-
(500,000)
-
-
-
-
100,000
500,000
5,200,000
1,100,000
(5,200,000)
(500,000)
600,000
30 June 2021
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
15/09/2020
31/12/2021
$0.25
7,000,000
7,000,000
-
-
(1,800,000)
(1,800,000)
-
-
5,200,000
5,200,000
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
Grant date
Expiry date
01/10/2021
01/10/2021
01/10/2021
30/06/2022
31/12/2022
31/12/2023
Share price Exercise
at grant date
price
Expected
volatility
Dividend
Risk-free
Fair value
yield
interest rate at grant date
$0.43
$0.43
$0.43
$0.30
$0.60
$0.66
70.00%
70.00%
70.00%
-
-
-
0.98%
0.98%
0.98%
$0.167
$0.086
$0.122
77
Novatti Group Limited
Directors' declaration
30 June 2022
In the directors' opinion:
Directors’ declaration
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at
30 June 2022 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Peter Pawlowitsch
Chairman
31 August 2022
78
Novatti Group Limited
Independent auditor's report to the members of Novatti Group Limited
Independent auditor’s report to the
members of Novatti Group Limited
79
Novatti Group Limited
Independent auditor's report to the members of Novatti Group Limited
80
Novatti Group Limited
Independent auditor's report to the members of Novatti Group Limited
81
Novatti Group Limited
Independent auditor's report to the members of Novatti Group Limited
82
Novatti Group Limited
Shareholder information
30 June 2022
The shareholder information set out below was applicable as at 29 August 2022.
Shareholder information
Ordinary shares
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Number
of holders
of ordinary
shares
Number
of
ordinary
shares
%
of ordinary
shares
229
1,322
656
147,346
3,758,101
5,309,621
1,416 49,734,740
370 276,347,713
3,993 335,297,521
0.04
1.12
1.58
14.83
82.42
100.00
Holding less than a marketable parcel
829
1,193,327
0.36
Unquoted options
5,001 to 10,000
10,001 to 100,000
100,001 and over
Number of
holders
of
unquoted
options
Number
of
unquoted
options
%
of unquoted
options
50,000
5
50
3,062,500
48 38,569,168
0.12
7.35
92.53
103 41,681,668
100.00
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Novatti Group Limited
Shareholder information
30 June 2022
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
1. BRAYTER LIMITED
2. CITICORP NOMINEES PTY LIMITED
3. CORANGAMITE PTY LTD
4. XIADI CHEN
5. MADAM QING LI
6. EMERSION SOFTWARE SYSTEMS PTY LTD
7. MR ZHIYU NING
8. MR FREEMAN XIN WANG
9. PORTMAN TRADING PTY LTD
10. BROADGATE INVESTMENTS PTY LTD
11. JINGTIAN LI
12. DASISTAS PTY LTD
13. NATIONAL NOMINEES LIMITED
14. J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
15. BNP PARIBAS NOMINEES PTY LTD
16. SASHI KUMAR A/L A KOVINDSAMY
17. NETWEALTH INVESTMENTS LIMITED
18. MR HUITONG SONG
19. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
20. BLOCKGROVE PTY LTD
Ordinary shares
29 August
2022
% of total
Number held shares issued
46,631,507
15,700,790
13,174,571
12,500,000
10,407,452
4,592,276
4,407,000
4,011,904
3,909,092
3,909,091
3,571,428
3,427,802
3,306,372
2,909,224
2,890,046
2,867,236
2,631,201
2,580,000
2,434,996
2,312,632
13.91
4.68
3.93
3.73
3.10
1.37
1.31
1.20
1.17
1.17
1.07
1.02
0.99
0.87
0.86
0.86
0.78
0.77
0.73
0.69
148,174,620
44.19
Unquoted equity securities
There are no unquoted equity securities.
There are no holders of unquoted equity securities holding 20% or greater of the number of unquoted equity securities on
issue.
Substantial holders
BRAYTER LIMITED 46,631,507 shares.
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
There are no other classes of equity securities.
Securities subject to voluntary escrow
Class
Ordinary shares
Expiry date
14 January 2024
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Number
of shares
3,600,000
Novatti Group Limited
Shareholder information
30 June 2022
Use of funds
Since admission, the Company has used its cash in a way consistent with business objectives.
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Novatti Group Ltd
ABN 98 606 556 183
Level 3, 461 Bourke St
Melbourne, Victoria
AUSTRALIA 3000
G.P.O. Box 171
380 Bourke St
Melbourne, Victoria
AUSTRALIA 3001
86
t. +61 3 9011 8490
www.novatti.com