Level 3/461 Bourke St, Melbourne VIC 3000
2023/24
Annual
Report
Novatti Group Limited
2
Annual Report FY24 | Novatti Group Limited
FY24 in numbers
3
About Novatti
4
Corporate directory
5
Chairman’s Report
6
CEO’s Report
7
Review of Operations
8
Investments
10
Environmental, Social and Governance
12
Directors’ Report
22
Auditor’s independence declaration
41
Consolidated statement of profit or loss and
42
other comprehensive income
Consolidated statement of financial position
44
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
48
Consolidated entity disclosure statement
81
Directors’ declaration
83
Independent auditor’s report to the members of
84
Novatti Group Limited
Shareholder information
91
Contents
47
45
3
3
FY24 in numbers
$42.9m
Annual sales revenue
+10% on FY23
$29.2m
Operating expenses
(ex IBOA)
20% improvement on FY23
$7m+
Cost reduction program
implemented to be
reflected in FY25
44%
Gross Margin
(Payments AU/NZ)
FY23: 37%
$2.8b
GTV (Payments AU/NZ)
+23% on FY23
-$12.0m
Underlying EBITDA
+20% on FY23
4
Annual Report FY24 | Novatti Group Limited
About Novatti
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.
5
Annual Report FY24 | Novatti Group Limited
Novatti Group Limited
Corporate directory
Directors
Peter Pawlowitsch (Non-Executive Chairman)
Peter Cook (Executive Director)
Kenneth Lai (Non-Executive Director)
Killian Murphy (Non-Executive Director)
Joint company secretaries
Ian Hobson
Steven Stamboultgis
Registered office and
Level 3 461 Bourke Street
principal place of business
Melbourne VIC 3000
+61 3 9011 8490
Share register
Automic Registry Services
Level 5, 191 St Georges Terrace
Perth WA 6000
+61 8 9324 2099
Auditor
William Buck
Level 20
181 William Street
Melbourne VIC 3000
Bankers
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
6
Annual Report FY24 | Novatti Group Limited
Chairman’s Report
FY24 saw a great deal of change across Novatti’s business, as new CEO, Mark Healy,
implemented a strategy to transform a group of independent businesses into a
focused Payments Solutions business.
This strategy included three objectives: simplify the business, introduce a market led,
customer focus, and ultimately lift financial performance, which is now benchmarked
against a positive cashflow and a 3-year, 70%+ margin target.
The implementation of this strategy came at the right time as we saw the continued
slowdown in capital markets globally, particularly within the growth sector. Novatti’s
response to changing market conditions was aided by the ongoing whole of business
strategic review, implemented by Mark, which identified a number of significant
opportunities for optimisation and divestment across the business. This included the
divestment of interests in both Reckon Limited and the International Bank of Australia,
and the repayment of a $10.5m bond, creating more flexibility in the business to
respond to changing conditions.
Alongside the continued growth in revenue, enhanced focus on margin, and the
removal of $7m in annualised costs, we have sought to prudently manage Novatti’s
balance sheet across the year, without impacting growth in core business.
Despite challenging capital market conditions, we remain incredibly optimistic about
the macro level opportunity within payments. As an example, a local study from The
University of Sydney Business School1 highlighted that:
•
45% of Australian businesses believe they need to improve their payments
systems
•
81% of medium and large businesses said payments are critical for their digital
transformation
•
83% of businesses that invested in digital payments reported improved revenue
or customer relationships
These results emphasise the importance of Novatti’s focus on unlocking the growth
potential within the core Payments AU/NZ division, which will only benefit further from
the commercial and operational changes flowing under new leadership.
Across this year of great change, the Novatti team worked tirelessly to continue
the growth in the business. On behalf of the Board, I want to thank all Novatti team
members for their fantastic work and efforts. Likewise, thank you to all our Novatti
shareholders for your continued investment and support. I look forward to updating
you on the results emerging from the initiatives implemented in FY24 in the year ahead.
Peter Pawlowitsch
Chairman
Alongside the
continued growth in
revenue, enhanced
focus on margin,
and the removal of
$7m in annualised
costs, we have
sought to prudently
manage Novatti’s
balance sheet
across the year,
without impacting
growth in core
business.
1 The future of digital payments for businesses in Australia, The University of Sydney,
https://go.stripe.global/digital-payments-au-report
7
Annual Report FY24 | Novatti Group Limited
CEO’s Report
Novatti is now one year into its strategic transformation, which was the dominant
theme of FY24.
The business today looks vastly different to that from the start of FY24. It has been
streamlined and re-directed under a simplified strategy, all now underpinned by long
term financial targets and systematic execution.
Some of the major initiatives undertaken as part of this transformation across FY24
include:
•
Implementing long term financial targets, including 3-year, 70%+ margins
•
$7m in annualised costs removed
•
Divestment of non-core interests, including Reckon Limited and International
Bank of Australia
•
Simplified the business to position payments as core
•
Streamlined access to multiple products
•
Developed a pipeline of 500+ new merchants expected for onboarding by end
of H1 FY25
The impact of all these individual initiatives is highlighting through the financial results
that are now emerging. As a start, across FY24 revenue was up 10% YoY to $42.9m, a
new record. Further, normalised operating expenses fell 20%, while underlying EBITDA
improved 20%.
The restructuring of the business has also unlocked strong traction and future growth
potential for the core Payments AU/NZ division, with this segment already delivering
the largest gross margin contribution across Novatti, despite starting from a lower
revenue base compared with other divisions.
Now into FY25, we are absolutely committed to deepening Novatti’s turnaround as
we move towards achieving our 3-year, 70%+ margin target and run rate of positive
operating cashflow by the end of H1 FY25.
I would like to thank all shareholders for your engagement and feedback over the
past 12 months. I look forward to accelerating Novatti’s turnaround and achieving our
targets.
Mark Healy
CEO
Into FY25, we
are absolutely
committed to
deepening Novatti’s
turnaround as we
move towards
achieving our
3-year, 70%+
margin target and
run rate of positive
operating cashflow
by the end of H1
FY25.
8
Financial Update
Across FY24, Novatti generated $42.9 million in sales revenue, an increase of 10%
on the previous financial year. The revenue rise represented organic growth with
Novatti not undertaking any major acquisitions during FY24, a year where the
priority was to streamline Novatti’s previously fragmented business units.
Novatti’s underlying EBITDA loss of $12.0 million in FY24 was a 20% improvement
on the previous year, primarily attributable to Novatti’s streamlined organisation
structure which facilitated cost reductions across the Company. Operating expenses
were reduced by 20% for FY24, without sacrificing revenue.
In total $7m+ in annualised costs
have been removed since the start
of FY24.
As a core objective of the new
strategy, Novatti repositioned its
brand, product and target customer
profile within the core Payments
AU/NZ division. Positive results from
this approach were seen in Q4
with several large commercial wins
announced in key target markets.
Going forward, the continued
streamlining and management of
customer accounts is expected to
increase margin for Payments AU/NZ, which was 44% across FY24 (FY23: 37%) as
Novatti progresses towards its stated three year 70% target.
Novatti concluded FY24 with $9.5m in cash and cash equivalents. $4.3m of this was
attributable to the discontinued operations of International Bank of Australia. Novatti
sold its stake for $2.87m in Q1 FY25, which is not reflected in the cash balance at 30
June 2024.
Review of operations
Novatti Group FY24 Performance (ex IBOA)
FY22
FY23
FY24
Revenue
Operating Expenses
50
45
40
35
30
25
20
15
10
5
-
$ M
32.9
29.4
39.0
36.6
42.9
29.2
9
Annual Report FY24 | Novatti Group Limited
Operations Update
FY24 was a year of transition for Novatti which
completed the first year of a 3-year turnaround
strategy under a new Executive Leadership team,
headed by CEO Mark Healy, who was appointed to
the role in June 2023. Key to the strategy is Novatti’s
stated 3-year target to increase gross margins on
payment processing to 70%, a target that is achievable
based on peer comparisons, simplifying the business,
and introducing a market led, customer focussed
commercial strategy.
Streamlining the business throughout FY24, Novatti
consolidated 12 separately operated businesses
with independent teams, down to four core divisions
(Payments AU/NZ, Payments International, Technology
Solutions, Investments) and the deployment of shared
services and processes. This streamlining strategy
saw $7m in annualised expenses removed from
Novatti while still maintaining a growth profile and
undertaking selective reinvestment into the marketing
strategy, customer experience and payments platform
consolidation.
With the progressive deployment of the transformation
initiatives across structure, process and technology,
Novatti was able to reduce FY24 expenses (ex IBOA)
by 20% compared to FY23.
Novatti continues to attract strong growth within its
Payments AU/NZ business, particularly within merchant
acceptance. As at the end of Q4 FY24, 732 merchants
were using Novatti for their payments acceptance, a
13% increase since the start of FY24. This result is net of
intentionally offboarded customers following a review
of their financial performance and risk profile during
FY24.
This review into the financial and operating
performance of customers and services remains
ongoing as part of the strategic review. For example,
during Q4 Novatti ceased offering wholesale (as
opposed to B2B) cross border payment services due to
the high compliance costs and low overall profitability.
While this specific customer segment contributed
~$1.5m to annual revenue, it is not considered to
contribute positively to Novatti’s long term financial
targets, particularly positive cashflow and margins.
Novatti will still continue to provide cross-border
support for B2B customers going forward, as this
is considered an important differentiator as a
complementary product to existing and new mid-
sized customers, and still aligns with long-term
financial targets.
As part of the strategy to simplify Novatti, all
businesses within the portfolio have been undergoing
a strategic review with a focus on their contribution to
Novatti’s immediate goal to achieve positive operating
cash flow, and long-term goal of contribution towards
Novatti’s 70% gross margin on payment processing.
This ongoing review contributed to Novatti divesting
its stake in Reckon Limited in November 2023 for $8.9
million and fully repaying its $10.5 million corporate
bond facility. Following the FY24 reporting period,
Novatti also divested its stake in IBOA Group Holdings
Pty Ltd (IBOA) for $2.87 million which was settled in
July 2024.
10
Annual Report FY23 | Novatti Group Limited
Investments
As part of streamlining Novatti down to four divisions, Novatti’s stakes
in AUDD, International Bank of Australia and Reckon Limited were
transitioned to the Investments division, to reflect their operations
independent of Novatti management. All assets within the Investments
division have been subject to a strategic review that commenced in
FY24 to assess their alignment with Novatti’s long-term financial goals,
be self-funding and/or offer future synergies with existing Novatti
payment services.
Stablecoin and Digital Currencies
AUDD progressed its commercial strategy, accelerating the further
reach of its stablecoin services through partnerships and integrations
with new blockchains.
In July 2024, AUDD completed a pre-seed funding round, which raised
$306k from industry investors at $0.20 per share. The previous funding
round completed in January 2024 was at $0.12 per share. The increased
price for the July round reflects continued investor interest in AUDD, the
growth of the ecosystem, and increased use of AUDD stablecoin, which
exceeded $100 million for the 6 months ended 30 June 2024.
At $0.20 per share, AUDD completed the pre-seed funding round at a
$5.1 million pre-money valuation. Novatti holds 20 million shares in AUDD
and does not intend to increase its investment in the future.
All assets within the
Investments division
have been subject
to a strategic review
that commenced
in FY24 to assess
their alignment with
Novatti’s long-term
financial goals, be
self-funding and/or
offer future synergies
with existing Novatti
payment services.
11
Annual Report FY24 | Novatti Group Limited
International Bank of Australia
Subsequent to the end of the FY24 reporting period, Novatti announced
on 25 July 2024 that it had executed a binding agreement to sell all
of its interest in International Bank of Australia (IBOA) for $2.87m. This
followed the strategic review of IBOA finding it unlikely to contribute to
Novatti’s long term financial goals.
Under the terms of IBOA’s restricted authorised deposit-taking licence,
IBOA was required to obtain an Authorised Deposit Taking Licence or
cease its banking business by 2 November 2024. The Novatti board was
not prepared to provide the additional capital required to underwrite
IBOA’s financial independence and enable it to obtain a full licence. The
sale was completed on 30 July 2024.
Reckon Limited
In November 2023, Novatti divested its 19.9% stake in Reckon Limited and
utilised proceeds to fully repay its $10.5m corporate bond facility as part
of the Company’s ongoing strategy to streamline its business. Interest
payments of approx. $1.1m per year were saved as a result of the early
redemption of the bond, contributing to the Company’s aim of achieving
positive operating cashflow while also removing limitations on certain
strategic activities.
12
Annual Report FY23 | Novatti Group Limited
Environmental, Social
and Governance
Novatti is committed to environmental and social responsibility. As an
emerging Company, we are committed to Environmental, Social and
Governance (ESG), which we will continue to strengthen over time,
including a formal framework. Novatti acknowledges the constantly
evolving social and sustainability requirements and its responsibility to
provide transparent reporting against these requirements to all our
stakeholders. Ongoing formalisation will enable Novatti to identify, assess
and manage those ESG areas which are most relevant to our business.
Novatti is also committed to running our business in an ethical manner.
The Company acknowledges and embraces our 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.
In addition to the regulatory landscape, Novatti has developed a
sophisticated ecosystem that leverages Technology, Licences, Partnerships
and our Team to deliver its services.
In all jurisdictions in which Novatti operates, we are focused on operating
our business in a responsible and compliant manner.
Digital payment
solutions empower
financial inclusion
and literacy, support
sustainability
programs and
help connect our
communities
13
13
From office recycling
programs to
promoting eco-
conscious practices
among our employees,
our People Experience
team continues to be
a driving force behind
our sustainability
journey
Environmental
Sustainability is a journey. It starts with looking inwards at how we
can minimise the potential negative impacts of our own operations
to reduce our carbon footprint and waste. The adaptation of our
office environments has led to reductions in our energy usage, use of
consumables, business travel and office waste. Novatti has formally
adopted a hybrid working framework and a reduced office footprint
which enables lower carbon emissions. The People Experience team
plays a pivotal role in championing environmental sustainability initiatives
across our global footprint. From office recycling programs to promoting
eco-conscious practices among our employees, our People Experience
team continues to be a driving force behind our sustainability journey. By
integrating sustainability into our daily operations and company culture,
we not only aim to reduce our environmental footprint but also inspire
change in the communities that we service.
The nature of Novatti’s business, driven by our people and the various
digital offerings, means that Novatti is not a significant 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.
14
Annual Report FY24 | Novatti Group Limited
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 to deliver on our 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. The values that
empower our people are:
Unlocking the ambitions of our team and clients starts
with a positive mindset
We are deliberate in what we do to focus our energy and
deliver the best possible outcomes for our team and clients
By keeping it simple, we avoid confusion, achieve alignment,
and in turn achieve great things together
Novatti is one, connected team. Together we celebrate our
success and turn mistakes into shared learnings.
With integrity we develop stronger relationships with our team
and our clients
15
15
Novatti has adopted
a Diversity Policy to
assist it in attracting,
developing and
retaining people who
are highly competent
and can contribute to
its long-term success
and values
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 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 Novatti’s Whistleblower Policy and
procedures
Our Diversity Profile
The Company has set a diversity objective by 2025 to have 30% or
greater female representation in the total workforce, in senior roles and
on the Board of Directors.
The Company has set a diversity objective by 2030 to have 40% or
greater female representation in the total workforce, in senior roles and
on the Board of Directors.
16
Annual Report FY24 | Novatti Group Limited
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.
As at 30 June 2024, Novatti’s employees in a full-time
and part-time capacity included 40% female (2023 -
39%) and 60% male (2023 - 61%).
Novatti considers a senior role as one which is on or
reporting into the CEO. As at 30 June 2024, three
females (2023 – four) held a senior role, representing
33% of the CEO’s full time reports
Health and Wellness
The health and safety of our team members and
contractors remains a top priority for Novatti. Over
the last five years, there have been no work-related
accidents at Novatti, which speaks to the strength of
our secure working environment and our dedication to
the well-being of our team. This year, we enhanced our
focus on Diversity, Equity, and Inclusion (DE&I), leading to
recognition at the 2024 Fintech Australia awards, where
we proudly received the Best Workplace Diversity award.
Our flexible working structure continues to empower
team members to achieve a work-life balance that
suits their individual needs, fostering both personal and
professional growth. These initiatives align with our core
values and corporate responsibility, ensuring that every
team member thrives.
Novatti prioritises
employee well-being by
offering initiatives and
activities which cover
mental health, physical
fitness and financial
stability
17
Annual Report FY24 | Novatti Group Limited
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 o Risk Management, Internal
Compliance and Control
•
Whistleblowing o Procedures for Selection and Appointment of
Directors
•
Performance Evaluation for Directors and Executives
•
Director Skills Matrix
•
Remuneration of Directors and Executives
•
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:
•
Conflict of Interest
•
Diversity and Inclusion
•
Modern Slavery
•
Employee Incentive Scheme
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.
18
Annual Report FY24 | Novatti Group Limited
These policies are all available on Novatti’s website at:
https://novatti.com/corporate-governance.
In addition to public facing policies, Novatti has an internal Intranet for
staff providing a suite of policies, procedures and templates for use by
our teams.
These include, but not limited to the areas of:
•
Human Resources
•
Information Technology
•
Operational
•
Marketing
•
Risk and Compliance
•
Information Security
•
Legal
•
Anti-Money Laundering
Business Ethics
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.
Novatti has adopted a Code of Ethics, which details the underlying
values to support the integrity of its business. This Code operates
alongside Novatti’s Anti-Bribery and Anti-Corruption policy, Anti
Money Laundering Requirements, Modern Slavery Policy
and the overarching Code of Conduct. Novatti has also
implemented a Legal and Regulatory Compliance
Novatti has adopted a
Code of Ethics, which
details the underlying
values to support the
integrity of its business
19
Annual Report FY24 | Novatti Group Limited
Data security and
information protection
are embedded in our
operational practices
and provides a secure
environment for both
data and systems.
Data Protection and Information
Security
Novatti places paramount importance on data protection and
information security. Our information security management system
is ISO 27001:2013 certified. This investment reflects our commitment
to global information security standards, proactive risk mitigation and
continuous improvement. Additionally, we employ a “Defence in Depth”
strategy to safeguard data, creating multiple layers of protection. Our
multi-layered cybersecurity defence system includes network security,
access controls, data encryption, employee training, incident response
plans, penetration testing and 24x7 security monitoring.
Data security and information protection are embedded in our
operational practices and provides a secure environment for both data
and systems.
Moving Money Safely
As a business that moves significant funds 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 payments services provider to help
prevent and detect financial crime.
We look forward to seeing our ESG framework develop and strengthen
going forward to the benefit of all our stakeholders.
20
Annual Report FY24 | Novatti Group Limited
Annual Report
30 June 2024
ACN 606 556 183
+61 3 9011 8490
www.novatti.com
Level 3, 461 Bourke St
Melbourne, Victoria
AUSTRALIA 3000
Novatti Group Ltd
ABN 98 606 556 183
G.P.O. Box 171
380 Bourke St
Melbourne, Victoria
AUSTRALIA 3001
Novatti Group Limited
Directors' report
30 June 2024
22
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 2024.
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 (Executive Director)
Kenneth Lai (Non-Executive Director)
Killian Murphy (Non-Executive Director)
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.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
The Group's revenue increased by 10.1% to $42,899,000 (30 June 2023: $38,979,000). The underlying EBITDA* improved
by 20% to a loss of $12,048,000 compared to the corresponding prior year of $14,989,000 loss.
The loss for the consolidated entity after providing for income tax amounted to $20,603,000 (30 June 2023: $26,545,000).
The net asset position decreased from $15,234,000 to $241,000 as at 30 June 2024, with $5,208,000 held in cash and cash
equivalents excluding asset held for disposal.
2024
2023
Change
Change
$'000
$'000
$'000
%
Net loss from operations
(20,603)
(26,545)
5,942
(22%)
Less:
Interest income
(1,445)
(503)
(942)
187%
Add back:
Depreciation and amortisation
2,113
2,211
(98)
(4%)
Finance charges
1,504
1,382
122
9%
Indirect tax expenses
-
109
(109)
(100%)
EBITDA
(18,431)
(23,346)
4,915
(21%)
Add back/(less)
Vesting of share-based payments
1,057
2,265
(1,208)
(53%)
Losses/(gains) on fair valuation of investments
2,639
15,877
(13,238)
(83%)
(Gains)/losses on embedded derivative
(823)
-
(823)
-
Dividends from Reckon Limited
(563)
(13,511)
12,948
(96%)
Termination payments
953
387
566
146%
Loss from discontinued operations
3,120
3,339
(219)
(7%)
Underlying EBITDA*
(12,048)
(14,989)
2,941
(20%)
Cash
5,208
18,215
(13,007)
(71%)
Operating cash flow
(13,425)
1,393
(14,818)
(1064%)
* 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, fair value movement on embedded derivative, restricting costs
and discontinued operations. 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.
Novatti Group Limited
Directors' report
30 June 2024
23
Significant changes in the state of affairs
On 16 November 2023, the Company announced that it had agreed the sale of its 19.9% holding in Reckon Limited (ASX:
RKN) ("Reckon") at $0.40 per share for an aggregate price of $8.9 million and would redeem and fully repay its $10.5 million
corporate bond facility.
Convertible notes
On 2 January 2024, the Company received binding commitments for the issue of convertible notes ("Notes") in the amount of
$3.5 million, comprising $2.75 million from professional and sophisticated investors and an additional $750,000 from directors
and management. The issue of the Notes occurred over two tranches.
Tranche 1 comprised binding commitments to raise $1.46 million (before costs of the offer) and the Notes were issued on 8
January 2024.
Tranche 2 comprised binding commitments to raise a further $2.04 million (before costs of the offer) and the Notes were
issued on 15 February 2024 following shareholder approval.
The key terms and conditions of the Notes are as follows:
●
Each Note has a face value of $1.00.
●
Each Note attracts a coupon of 10% per annum, payable quarterly in arrears. Noteholders may elect prior to the issue
of the Notes to receive interest either in cash or capitalise accrued interest on a monthly basis.
●
Notes have a maturity date of 22 December 2026.
●
Notes (including any capitalised interest) may be converted by Noteholders into fully paid ordinary shares in the Company
(Shares) at any time up to the maturity date. The conversion price is the lower of 6 cents and the next capital raising
price, subject to a floor price of 4 cents.
●
The Company may not redeem the Notes prior to the maturity date.
●
Notes issued to non-directors and management will be secured by way of a general security agreement with the Company
and share mortgages over three operating subsidiary companies in the Novatti group. Notes issued to directors and
management will be unsecured but otherwise on the same terms.
The Company also issued 29,166,167 options to Noteholders with an exercisable price of 9.5 cents each and expiring on 31
January 2027 ("Options") on 22 February 2024.
Share Purchase Plan
On 4 March 2024, upon completion of a Share Purchase Plan ("SPP"), the Company issued 13,708,376 shares at $0.06 (6
cents) per share and raised $823,000. The Company also issued 6,854,194 free-attaching Options with an exercise price of
9.5 cents each and expiring on 31 January 2027.
Self funding for key growth initiatives
On 24 January 2024, the Company announced that AUDD had closed its pre-seed funding round and raised $600,000 before
costs. The completion of this funding round resulted in AUDD obtaining a pre-money valuation of $2,400,000, with the
Company, through AUDC Pty Ltd retaining an 80% interest.
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 25 July 2024, the Company announced that it had entered into a binding agreement with Eurus Capital Pty Ltd for the sale
of 100% of its shares in IBOA Group Holdings Pty Ltd for $2.87 million. The sale was completed on 30 July 2024.
No other matter or circumstance has arisen since 30 June 2024 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.
Novatti Group Limited
Directors' report
30 June 2024
24
Likely developments and expected results of operations
As part of the strategy to simplify Novatti, all businesses within the portfolio have been undergoing a strategic review with a
focus on their contribution to Novatti’s immediate goal to achieve positive operating cash flow, and long-term goal of
contribution towards Novatti’s 70% gross margin on payment processing.
The strategic review remains ongoing, including the review of the financial and operating performance of customers and
services. For example, during Q4 Novatti ceased offering wholesale (as opposed to B2B) cross border payment services due
to the high compliance costs and low overall profitability. While this specific customer segment contributed ~$1.5m to annual
revenue, it is not considered to contribute positively to Novatti’s long term financial targets, particularly positive cashflow and
margins. Novatti will still continue to provide cross-border support for B2B customers going forward, as this is considered an
important differentiator as a complementary product to existing and new mid-sized customers, and still aligns with long-term
financial targets. The new strategy initiated in FY24 is focussed on the Payments AU/NZ Division and growth through payment
solutions targeted at mid-sized businesses and software distribution platforms.
The Company believes there is significant growth opportunities with the use of stablecoins as a future payment solution.
Providing a fully collateralised digital representation of the Australian dollar, AUDD has been developed to meet continuing
strong demand for digital currencies and improved payment services. The Company continues to see strong demand for its
services globally, as the macro-level shifts to digital payments shows no sign of easing. The Company remains confident that
this strong global demand will continue to support its growth going forward.
Environmental regulation
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State
law.
Key business risks
Going concern
The financial statements for the period ended 30 June 2024 have been prepared on the basis that the entity is a going concern,
which contemplates the continuity of normal business activity, realisation of assets and settlement of liabilities in the normal
course of business. During the 12 month period the entity recorded revenue of $42,899,000, a net loss after tax of $20,603,000
and incurred net cash outflows from operating activities of $13,425,000.
The Group’s ability to continue as a going concern is dependent upon its ability to generate positive cash flow from its business
operations. The above matters described indicate that a material uncertainty exists that may cast significant doubt about the
entity’s ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its
liabilities in the normal course of business.
The financial statements have been prepared on the basis that the entity is a going concern, which contemplates the
continuity of normal business activity, realisation of assets and settlement of liabilities in the normal course of business for
the following reasons:
●
The Directors are planning for the business to reduce net operating cash outflows during FY25 by increasing cash
receipts from customers and further reducing costs in order to work towards positive future operating cash flow;
●
The Group owns a number of investments that the Group can potentially sell;
●
The entity has historically demonstrated its ability to raise funds to satisfy its cash requirements;
●
Management are actively considering the future capital requirements of the entity and will consider all funding options as
required;
●
The Directors are able and willing to defer amounts owed to them in cash or settle outstanding obligations, including
director fees in equity instruments (subject to shareholder approval if applicable) until such time as the Group has
sufficient working capital to settle the obligations in cash;
●
The Group is undertaking a simplification strategy to extract more value from existing resources rather than adding extra
cost and has the ability to scale back certain activities that are non-essential to existing customers so as to conserve
cash; and
●
Post year end, the Group divested 100% of its remaining interest in the IBOA Group Holdings Pty Ltd raising $$2.87
million in cash. The directors may consider, if required, the sale or dilution of the Group’s interest in other non-core
business assets.
Novatti Group Limited
Directors' report
30 June 2024
25
Regulatory and licencing risk
The Company operates in a complex regulatory environment and in jurisdictions that have varying degrees of enactment and
implementation of regulations.
The financial services sector in Australia and other markets in which the Company operates are subject to stringent and
complex regulations. A failure to comply with financial license conditions, or related regulatory requirements including KYC
and AML, may adversely affect the Company and its business units.
In addition, changes to the regulations themselves or the way such regulations are interpreted, implemented or enforced may
affect the Company’s platforms or products in those jurisdictions or the ability of the Company or its partners to conduct
business in those jurisdictions.
Growth and Profitability (dependent on increasing market penetration)
The Company continues to trade in a loss-making position, incurring operating cash outflows as it strives to achieve positive
operating cash flows through growth.
The Company’s future growth and profitability is dependent on continuing to increase customer acquisition and usage of its
products, particularly in the focus area of Payments AU/NZ. Its key strengths are the strong market and domain knowledge of
payments, flexible approaches to value exchange, and the breadth of payments capabilities to drive tailored solutions into
new target verticals.
A failure to continue to innovate and add new functionality to its platforms, and to operate its platforms at a standard that will
retain clients and attract new clients could lead to customers not renewing their engagement with the Company which could
adversely impact the Company’s financial performance and/or operations. If the Company is not able to grow revenues and
cash receipts, reduce operating costs or obtain additional financing as needed, it may be required to reduce the scope of its
operations and may be prevented from progressing the commercialisation of its technology.
Reliance on key suppliers and third party platforms
The Company relies on a range of third-party vendors and suppliers to deliver services to customers in a range of markets,
including white labelled platforms, onboarding, processing, transaction facilitation, distribution and banking facilities. The
Company expects there is a need to transition away from at two key platforms providers in the near term which will involve
execution and customer migration risks. In some cases, limited alternatives are in place or implementing alternatives may
involve significant time and cost. If single suppliers were to discontinue operations, adjust their risk appetite or otherwise
restrict services, the Company may need to limit the scope of operations, discontinue certain products or withdraw from certain
markets.
The Company’s products and services are intended for use across a number of internet access platforms, mobile and desktop
devices and software operating systems. The Company depends on the ability of its products and services to operate on such
platforms, devices and operating systems however it cannot control the maintenance, upkeep and continued supply of
effective service from external suppliers in these areas. Any changes in such platforms, operating systems or devices that
adversely affect the functionality of the Company’s products and services or give preferential treatment to competitive products
and services could adversely affect usage of the Company’s products and services.
Reliance on access to and confidence in telecommunications and internet access
In some instances, the Company will depend on the ability of the end consumer and its customers to access a deployed
solution over telecommunications and internet access and to feel confident processing financial transactions online.
Novatti Group Limited
Directors' report
30 June 2024
26
Ability to run effective and reliable financial and payments systems.
The Company develops, deploys, maintains and operates financial and payments systems technology. There is little tolerance
for error or downtime is such systems and the Company must maintain effective and reliable system performance for all
customers. Should the Company experience significant and unanticipated errors and downtime, there may be a loss of
ongoing confidence in the Company’s products that may negatively impact ongoing revenue and sales prospects.
Operational Risk
Operational risk relates to the risk of loss resulting from inadequate or failed internal processes, people and systems, or from
external events which affect our business. Our business is exposed to operational risks such as external and internal fraud,
processing errors, system or hardware failure and failure of information security systems. Loss from operational risk events
could divert investment from new products into remediation of existing systems and processes, damage client relations or our
reputation, adversely affect our financial results or position, as well as divert staff away from their core roles to remediation
activity. In addition, losses could include legal or remediation costs and loss of property and/or information.
Reliance on key senior staff
The Company’s operational success will depend substantially on the continuing efforts of senior executives. The loss of
services of one or more senior executives may have an adverse effect on the Company’s operations.
Reliance on continual product development
The Company’s ability to grow the use of its products and generate revenue will depend in part on its ability to continue to
innovate and develop features for existing products and additional products.
Competition
The Company competes with other businesses and companies. Many of these companies have greater financial and other
resources than the Company and, as a result, may be in a better position to compete for future business opportunities.
Changes in technology
The Company’s success will depend, in part, on its ability to expand its products and grow its business in response to changing
technologies, customer behaviours and third-party service providers’ demands and competitive pressures. Further, the cost
of responding to changing technologies is unpredictable and may impact the Company’s profitability or, if such cost is
prohibitive, may reduce the Company’s capacity to expand or maintain its business.
Data loss, theft or corruption
The Company, its hosting providers, and networks are required to adhere to their own and customers’ security and compliance
standards. If adequate safeguards and measures to mitigate breaches are not provided and maintained, it could negatively
impact upon the Company’s reputation, revenues and profitability. If the Company’s security measures are breached, or if its
products are subject to cyber-attacks that expose or restrict customer access to the platform or their data, its’ solutions may
be perceived as less secure than competitors and customers may stop using the Company’s products.
Liquidity and realisation risk
There can be no guarantee that an active market in the shares will be maintained or that the price of the shares will increase.
A Company with a limited free float may experience relatively few potential buyers or sellers at any given time and this may
increase the volatility of the market price of the shares.
Additional requirements for capital
The Company’s capital requirements depend on numerous factors. Depending on the Company’s ability to generate income
from its operations, the Company may require further financing in the future. Any additional equity financing will dilute
shareholdings, and further debt financing, if available, may involve restrictions on financing and operating activities. If the
Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations or scale
back its product or market development.
Potential acquisitions
As part of its business strategy, the Company may make acquisitions of, or significant investments in, complementary
companies or prospects although no such acquisitions or investments are currently planned. Any such transactions will be
accompanied by risks commonly encountered in making such acquisitions.
International business risks
The Company has operations internationally. Wherever the Company sets up operations it is exposed to a range of political
and multi-jurisdictional risks such as risks relating to labour practices, environmental matters, difficulty in enforcing contracts,
changes to or uncertainty in the relevant legal regime (including in relation to taxation and foreign investment and practices of
government and regulatory authorities) and other issues in foreign jurisdictions in which the Company operates. Businesses
Novatti Group Limited
Directors' report
30 June 2024
27
that operate across multiple jurisdictions face additional complexities from the unique business requirements in each
jurisdiction.
Sustainability and climate change risk
Environmental, Social and Governance (ESG) risks are becoming increasingly relevant to all businesses in Australia. The
possible effects of climate change may impact the prosperity of economies, environments and societies all around the
world. Although our operations are not subject to any particular and significant environmental regulation under any law of the
countries in which we operate, this area and associated governmental responses have potential impact on our business in
unknown ways.
The Management Risk Committee consisting of the CEO, CFO and Head of Corporate Services meet on a regular basis to
review the company's risk profile, risk register and risk control posture against open and any new risks. Any significant changes
in risk profile or risks are discussed, documented, assessed and then action plans updated or established as required to
ensure a suitable level of mitigation relative to the risk appetite of the Company.
Information on directors
Name:
Peter Pawlowitsch
Title:
Non-Executive Chairman
Qualifications:
BCom, CPA MBA, FGIA
Experience and expertise:
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
Other current directorships:
Non-Executive Chairman, Qoria Ltd (formerly Family Zone Cyber Safety Ltd) (ASX:
QOR)
Non-Executive Director, VRX Silica Ltd (ASX: VRX)
Executive Director (40%), Dubber Corporation Ltd (ASX: DUB)(Acting CEO from 1
March 2024 to 9 September 2024), Dubber Corporation Ltd (ASX: DUB)
Former directorships (last 3 years):
Non-Executive Director, Knosys Ltd (ASX: KNO)
Special responsibilities:
Member of Audit, Risk and Compliance Committee
Interests in shares:
4,067,295 fully paid ordinary shares
Interest in convertible notes:
500,000 convertible notes
Interests in options:
6,316,581 unlisted options and 4,166,667 listed options
Name:
Peter Cook
Title:
Executive Director (retired as Managing Director and Chief Executive Officer on 15 June
2023)
Qualifications:
BSc, Grad Dip Computing, Grad Dip Securities, GAICD
Experience and expertise:
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
Other current directorships:
None
Former directorships (last 3 years):
Non-Executive Director, P2P Transport Limited (ASX: P2P)
Special responsibilities:
Member of Audit, Risk and Compliance Committee
Interests in shares:
13,674,571 fully paid ordinary shares
Interest in convertible notes:
125,000 convertible notes
Interests in options:
20,064,503 unlisted options and 1,041,667 listed options
Novatti Group Limited
Directors' report
30 June 2024
28
Name:
Kenneth Lai
Title:
Non-Executive Director
Qualifications:
BSc Majoring in Computer Science
Experience and expertise:
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.
Other current directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
None
Interests in shares:
13,309,971 fully paid ordinary shares
Interest in convertible notes:
Nil
Interests in options:
4,179,546 unlisted options and nil listed options
Name:
Killian Murphy
Title:
Non-Executive Director
Experience and expertise:
Mr Murphy is a Stockbroker with more than 15 years of experience working in capital
markets across Ireland, UK, US and Australia. He currently works for MST Financial, a
research driven full service Stockbroker servicing domestic and international institutional
investors. Prior role includes Head of Industrials for Petra Capital as well as CIMB
Australia and Davy (UK and Ireland).
During this time, he has worked with a number of established and emerging tech and
payments companies, assisting them in crafting their message for institutional investors
and accessing growth capital.
Mr Murphy holds a Master of Arts (Economics) and a Bachelor of Arts (Hons) in
Economics from University College Dublin, National University of Ireland.
Other current directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Audit, Risk and Compliance Committee
Interests in shares:
Nil
Interests in convertible notes:
Nil
Interests in options:
2,651,118 unlisted options and nil listed options
'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.
Chief Executive Officer
Mark Healy
Mark has held several senior roles in the Payments industry including most recently as Managing Director of Global Payments
Oceania, and prior roles as Chief Operating Officer for Ezidebit and eWAY, and Managing Director (UK), EVP and Chief Risk
Officer for the Neovia Financial (now Paysafe) Group in the United Kingdom.
Chief Financial Officer
Dharshini Mendez
Dharshini has held multiple senior leadership roles focused on driving organisational growth and has extensive experience in
transformation and change management across Telstra, Australia Post and ASX listed Melbourne IT. Dharshini's academic
credentials include a Bachelor of Business Studies (Hons) Degree and Masters in Business Accounting and is also a Certified
Practicing Accountant (CPA).
Novatti Group Limited
Directors' report
30 June 2024
29
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
Steven was appointed Company Secretary on 15 March 2021 and was the Chief Financial Officer of the group till 31 March
2023. Steven holds a Bachelor of Business Degree and Master in Commercial Law. He is a Certified Practicing
Accountant. Steven’s fees are based on a fee for service arrangement.
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') held during the year ended 30 June 2024, and the
number of meetings attended by each director were:
Full Board
Audit, Risk and Compliance
Committee
Attended
Held
Attended
Held
Peter Pawlowitsch
17
17
2
2
Peter Cook
17
17
2
2
Kenneth Lai
15
17
-
-
Killian Murphy
15
17
2
2
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
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.
Novatti Group Limited
Directors' report
30 June 2024
30
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 2024, 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 ("CEO"), and the Chief Financial Officer are reviewed by the Board with the CEO does 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 may award a cash bonus or equity instrument (shares or options) 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:
Novatti Group Limited
Directors' report
30 June 2024
31
●
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 objectives for the Company’s financial performance, scale and customer
engagement. 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.
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
- Remuneration is competitive with companies of a similar
size and complexity
- Performance is assessed against a suite of financial and
non-financial measures relevant to the success of the
Company and generating returns for shareholders
- Deferred and long-term remuneration is designed to
encourage long-term consistent performance and employee
retention
Novatti Group Limited
Directors' report
30 June 2024
32
Remuneration
Link to
Component
Vehicle
Purpose
Performance
Fixed Remuneration
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.
To provide competitive fixed
remuneration set with
reference to role, market,
experience and performance.
Reviewed annually by the
Board, based on individual
and business unit
performance, the overall
performance of the Group and
comparable market
remunerations.
Short Term Incentive
Is paid in cash or equity.
This is designed to reward
executives for their
contribution to the
achievement of annual Group,
business unit and individual
outcomes.
Directly linked to pre-agreed
KPIs. Reviewed regularly with
the relevant executive
member. Final performance is
determined by the Board.
Long Term Performance
Equity including Options,
Shares and/or Rights.
Reward executives for their
contribution to the creation of
shareholder value over the
longer term.
It aims to align the targets of
the business units with the
targets of those executives
responsible for meeting those
targets.
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 (Executive Director)
●
Kenneth Lai (Non-Executive Director)
●
Killian Murphy (Non-Executive Director)
Other key management personnel:
●
Mark Healy (Chief Executive Officer)
●
Alan Munday (Group Chief Operating Officer) (Resigned on 31 August 2023)
●
Dharshini Mendez (Chief Financial Officer)
Novatti Group Limited
Directors' report
30 June 2024
33
Amounts of remuneration
Short-term
benefits
Short-term benefits
Long-term
benefits
Post-
employment
benefits
Share-
based
payments
Salary
Non-
Annual
Long
service
Super-
Equity-
and fees
monetary
leave
leave
annuation
settled
Total
2024
$
$
$
$
$
$
$
Non-Executive Directors:
Peter Pawlowitsch ^
-
-
-
-
14,250
111,650
125,900
Kenneth Lai ^
-
-
-
-
-
96,723
96,723
Killian Murphy ^
-
-
-
-
7,125
53,618
60,743
Executive Directors:
Peter Cook #, ***
131,158
13,977
2,875
1,716
20,728
228,755
399,209
Other Key Management
Personnel:
Alan Munday *
276,641
-
-
-
4,583
8,810
290,034
Dharshini Mendez **
310,606
9,300
19,542
606
27,500
57,919
425,473
Mark Healy ***
323,106
33,945
28,956
2,049
27,500
468,529
884,085
1,041,511
57,222
51,373
4,371
101,686
1,026,004
2,282,167
^ All Non-Executive Directors received ZEPOs in lieu of cash.
# Peter Cook received cash salary and ZEPOs in lieu of cash during the year ended 30 June 2024.
* Resigned as Group Chief Operating Officer on 31 August 2023. Alan Munday's cash salary includes annual and long service
leave pay-out of $149,568 and termination payment of $78,424.
** Salary and fees include communication allowance.
*** The short-term non-monetary benefits of Peter Cook and Mark Hearly have been settled share-based payments.
Short-term
benefits
Short-term benefits
Long-term
benefits
Post-
employment
benefits
Share-
based
payments
Cash salary
Non-
Annual
Long
service
Super-
Equity-
and fees
monetary
leave
leave
annuation
settled
Total
2023
$
$
$
$
$
$
$
Non-Executive Directors:
Peter Pawlowitsch
89,186
-
-
-
9,364
413,200
511,750
Kenneth Lai
-
-
-
-
-
275,467
275,467
Steven Zhou
-
-
-
-
-
-
-
Killian Murphy(i)
20,736
-
-
-
2,178
275,467
298,381
Abigail Cheadle(ii)
23,529
-
-
-
2,471
-
26,000
Executive Directors:
Peter Cook
318,000
-
18,588
21,959
14,250
826,400
1,199,197
Other Key Management
Personnel:
Alan Munday
291,895
-
30,188
19,122
27,500
9,281
377,986
Steven Stamboultgis(iii)
230,746
4,050
(55,957)
(17,318)
17,229
4,640
183,390
Dharshini Mendez(iv)
63,716
-
(1,943)
123
6,677
58,139
126,712
Mark Healy(v)
14,885
-
1,335
29
1,269
32,638
50,156
1,052,693
4,050
(7,789)
23,915
80,938
1,895,232
3,049,039
Novatti Group Limited
Directors' report
30 June 2024
34
(i)
Killian Murphy was appointed on 13 October 2022
(ii)
Abigail Cheadle resigned on 28 December 2022
(iii)
Steven Stamboultgis resigned as Chief Financial Officer effective 31 March 2023
(iv)
Dharshini Mendez was appointed as Chief Financial Officer on 3 April 2023
(v)
Mark Healy was appointed as Chief Executive Officer on 15 June 2023
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Fixed remuneration
At risk - STI
At risk - LTI
Name
2024
2023
2024
2023
2024
2023
Non-Executive Directors:
Peter Pawlowitsch
11%
19%
-
-
89%
81%
Kenneth Lai
-
-
-
-
100%
100%
Killian Murphy
12%
8%
-
-
88%
92%
Abigail Cheadle
-
100%
-
-
100%
-
Executive Directors:
Peter Cook
39%
31%
4%
-
57%
69%
Other Key Management
Personnel:
Alan Munday
97%
98%
-
-
3%
2%
Steven Stamboultgis
-
97%
-
-
-
3%
Dharshini Mendez
84%
54%
2%
-
14%
46%
Mark Healy
43%
38%
4%
-
53%
62%
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:
Mark Healy
Title:
Chief Executive Officer
Agreement commenced:
15 June 2023
Term of agreement:
The term is not fixed.
Details:
Base salary of $322,500 (excludes 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 between the Executive and the Board.
The agreement may be terminated, (A) with six months’ notice from the Group or six
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 six months'
notice period, if the executive is unable to perform his duties due to illness, accident or
incapacitation, for six consecutive months or a period aggregating more than six months
in any 12-month period or (C), summarily following material breach or in the case of
serious misconduct.
Novatti Group Limited
Directors' report
30 June 2024
35
Name:
Dharshini Mendez
Title:
Chief Financial Officer
Agreement commenced:
17 April 2023
Term of agreement:
The term is not fixed.
Details:
Base salary of $310,000 (excludes statutory superannuation).
Remuneration is subject to an annual review at review date to be conducted by the
Remuneration Committee (or in the absence of a Remuneration Committee, the
Managing Director). Factors to be considered include personal competency
progression, achievement of personal development targets and KPIs, company
remuneration policy, financial position and performance and current market equivalent
positions. KPIs to be agreed each year and may be varied by mutual agreement
between the Executive and the Remuneration Committee.
The agreement may be terminated, (A) with three months’ notice from the Group or three
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 three
months' notice period, if the executive is unable to perform his duties due to illness,
accident or incapacitation, for six consecutive months or a period aggregating more than
six 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 2024.
Options
The table below set out the options over ordinary shares issued to directors and other key management personnel as part of
compensation that were outstanding as at 30 June 2024.
Name
Service /
Market
conditions
Number of
options
granted
Grant date
Vesting date
and
exercisable
date
Expiry date
Exercise
price
Fair value
at per
option
grant date
Peter Cook
Market
833,334
25/11/2020
01/12/2020
30/11/2024
$0.27
$0.11
Peter Cook
Market
833,333
25/11/2020
01/12/2020
30/11/2024
$0.27
$0.11
Peter Cook
Market
833,333
25/11/2020
01/12/2020
30/11/2024
$0.27
$0.12
Peter Pawlowitsch
Market
666,667
20/12/2021
20/12/2021
30/11/2025
$0.45
$0.13
Peter Pawlowitsch
Market
666,667
20/12/2021
20/12/2021
30/11/2025
$0.45
$0.14
Peter Pawlowitsch
Market
666,666
20/12/2021
20/12/2021
30/11/2025
$0.45
$0.15
Peter Cook
Market
1,000,000
20/12/2021
20/12/2021
30/11/2025
$0.45
$0.13
Peter Cook
Market
1,000,000
20/12/2021
20/12/2021
30/11/2025
$0.45
$0.14
Peter Cook
Market
1,000,000
20/12/2021
20/12/2021
30/11/2025
$0.45
$0.15
Kenneth Lai
Market
333,334
20/12/2021
20/12/2021
30/11/2025
$0.45
$0.13
Kenneth Lai
Market
333,333
20/12/2021
20/12/2021
30/11/2025
$0.45
$0.14
Kenneth Lai
Market
333,333
20/12/2021
20/12/2021
30/11/2025
$0.45
$0.15
Alan Munday
Service
250,000
19/04/2022
19/04/2022
19/04/2025
$0.35
$0.08
Alan Munday
Service
125,000
19/04/2022
19/04/2023
19/04/2025
$0.35
$0.08
Alan Munday
Service
125,000
19/04/2022
19/04/2024
19/04/2025
$0.35
$0.08
Mark Healy
Service
833,333
06/07/2022
06/07/2022
06/07/2025
$0.25
$0.09
Mark Healy
Service
833,333
06/07/2022
06/07/2023
06/07/2025
$0.16
$0.11
Mark Healy
Service
833,334
06/07/2022
06/07/2024
06/07/2025
$0.16
$0.11
Peter Pawlowitsch
Market
1,000,000
23/11/2022
23/11/2022
30/11/2026
$0.20
$0.14
Peter Pawlowitsch
Market
1,000,000
23/11/2022
23/11/2022
30/11/2026
$0.20
$0.14
Peter Pawlowitsch
Market
1,000,000
23/11/2022
23/11/2022
30/11/2026
$0.20
$0.14
Peter Cook
Market
2,000,000
23/11/2022
23/11/2022
30/11/2026
$0.20
$0.14
Peter Cook
Market
2,000,000
23/11/2022
23/11/2022
30/11/2026
$0.20
$0.14
Novatti Group Limited
Directors' report
30 June 2024
36
Name
Service /
Market
conditions
Number of
options
granted
Grant date
Vesting date
and
exercisable
date
Expiry date
Exercise
price
Fair value
at per
option
grant date
Peter Cook
Market
2,000,000
23/11/2022
23/11/2022
30/11/2026
$0.20
$0.14
Kenneth Lai
Market
666,667
23/11/2022
23/11/2022
30/11/2026
$0.20
$0.14
Kenneth Lai
Market
666,667
23/11/2022
23/11/2022
30/11/2026
$0.20
$0.14
Kenneth Lai
Market
666,666
23/11/2022
23/11/2022
30/11/2026
$0.20
$0.14
Killian Murphy
Market
666,667
23/11/2022
23/11/2022
30/11/2026
$0.20
$0.14
Killian Murphy
Market
666,667
23/11/2022
23/11/2022
30/11/2026
$0.20
$0.14
Killian Murphy
Market
666,666
23/11/2022
23/11/2022
30/11/2026
$0.20
$0.14
Dharshini Mendez
Service
500,000
17/04/2023
17/04/2023
17/04/2026
$0.18
$0.09
Dharshini Mendez
Service
500,000
17/04/2023
17/04/2024
17/04/2026
$0.18
$0.09
Dharshini Mendez
Service
500,000
17/04/2023
17/04/2025
17/04/2026
$0.18
$0.09
Mark Healy
Service
3,000,000
13/06/2023
30/06/2024
30/06/2027
$0.20
$0.06
Mark Healy
Service
795,455
13/06/2023
30/06/2024
30/06/2027
$0.00
$0.12
Mark Healy
Service
4,772,727
13/06/2023
30/06/2026
30/06/2027
$0.00
$0.12
Mark Healy
Market /
Service
1,250,000
13/06/2023
30/06/2026
30/06/2027
$0.20
$0.05
Mark Healy
Market /
Service
1,250,000
13/06/2023
30/06/2026
30/06/2027
$0.20
$0.04
Mark Healy
Market /
Service
1,250,000
13/06/2023
30/06/2026
30/06/2027
$0.20
$0.03
Peter Pawlowitsch
Market /
Service
739,421
28/11/2023
28/11/2023
30/06/2027
$0.00
$0.08
Peter Pawlowitsch
Market /
Service
311,080
28/11/2023
31/03/2024
30/06/2027
$0.00
$0.08
Peter Pawlowitsch
Market /
Service
311,080
28/11/2023
30/06/2024
30/06/2027
$0.00
$0.08
Peter Cook
Market
900,000
28/11/2023
30/06/2026
30/06/2027
$0.20
$0.03
Peter Cook
Market
900,000
28/11/2023
30/06/2026
30/06/2027
$0.20
$0.02
Peter Cook
Market
900,000
28/11/2023
30/06/2026
30/06/2027
$0.20
$0.01
Peter Cook
Market /
Service
1,887,230
28/11/2023
28/11/2023
30/06/2027
$0.00
$0.08
Peter Cook
Market /
Service
568,182
28/11/2023
30/06/2024
30/06/2027
$0.00
$0.08
Peter Cook
Market /
Service
3,409,091
28/11/2023
30/06/2026
30/06/2027
$0.00
$0.08
Kenneth Lai
Market /
Service
930,682
28/11/2023
28/11/2023
30/06/2027
$0.00
$0.08
Kenneth Lai
Market /
Service
124,432
28/11/2023
31/03/2024
30/06/2027
$0.00
$0.08
Kenneth Lai
Market /
Service
124,432
28/11/2023
30/06/2024
30/06/2027
$0.00
$0.08
Killian Murphy
Market /
Service
342,801
28/11/2023
28/11/2023
30/06/2027
$0.00
$0.08
Killian Murphy
Market /
Service
155,540
28/11/2023
31/03/2024
30/06/2027
$0.00
$0.08
Killian Murphy
Market /
Service
155,540
28/11/2023
30/06/2024
30/06/2027
$0.00
$0.08
50,077,693
Novatti Group Limited
Directors' report
30 June 2024
37
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 2024 are set out below:
Number of
Number of
Number of
Number of
options
options
options
options
granted
granted
vested
vested
during the
during the
during the
during the
year
year
year
year
Name
2024
2023
2024
2023
Peter Pawlowitsch
1,361,581
3,000,000
1,361,581
-
Peter Cook
8,564,503
6,000,000
2,057,685
-
Kenneth Lai
1,179,546
2,000,000
1,179,546
-
Alan Munday (a)
-
-
125,000
125,000
Killian Murphy (b)
653,881
2,000,000
653,881
-
Mark Healy (c)
-
14,818,182
4,151,515
833,333
Dharshini Mendez (d)
-
1,500,000
500,000
500,000
(a)
Alan Munday resigned as Group Chief Operating Officer on 31 August 2023
(b)
Killian Murphy was appointed as a Non-Executive Director on 13 October 2022
(c)
Mark Healy was appointed as Chief Executive Officer on 15 June 2023
(d)
Dharshini Mendez was appointed as Chief Financial Officer on 3 April 2023
Additional information
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
2024
2023
2022
2021
2020
Share price at financial year end ($)
0.041
0.120
0.155
0.640
0.310
Total dividends declared (cents per share)
-
-
-
-
-
Basic loss per share (cents per share)
(5.859)
(7.800)
(5.115)
(5.162)
(6.398)
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each director and other members of key management
personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at
Received
Exercise
Balance at
the start of
as part of
of
the end of
the year
remuneration
options (a)
Other (b)
the year
Ordinary shares
Peter Pawlowitsch
4,067,295
-
-
-
4,067,295
Peter Cook
13,674,571
-
-
-
13,674,571
Kenneth Lai
13,309,971
-
-
-
13,309,971
Alan Munday
96,983
-
-
-
96,983
Killian Murphy
-
-
-
-
-
Dharshini Mendez
-
-
-
-
-
Mark Healy
29,700
-
-
-
29,700
31,178,520
-
-
-
31,178,520
(a)
Number of shares issued represented the cashless exercise of options (refer to "option holding" section) at the intrinsic
economic value of the option derived between exercise price and VWAP on ASX over 5 trading day period immediately
preceding the exercise date.
(b)
On-market acquisition
Novatti Group Limited
Directors' report
30 June 2024
38
Balance at the
start of the
year
Granted
Free options
attached to
convertible
notes
Exercised *
Other**
Balance at the
end of the
year
Options over ordinary shares
Peter Pawlowitsch
5,500,000
1,361,581
4,166,667
-
(500,000)
10,528,248
Peter Cook
14,000,000
8,564,503
1,041,667
-
(2,500,000)
21,106,170
Kenneth Lai
3,000,000
1,179,546
-
-
-
4,179,546
Alan Munday
1,500,000
-
-
-
(1,000,000)
500,000
Dharshini Mendez
1,500,000
-
-
-
-
1,500,000
Mark Healy
14,818,182
-
1,041,667
-
-
15,859,849
Killian Murphy
2,000,000
653,881
-
-
-
2,653,881
42,318,182
11,759,511
6,250,001
-
(4,000,000)
56,327,694
*
The exercises of options were cashless and the number of shares issued were according to the intrinsic economic value
of the option derived between exercise price and VWAP on ASX over 5 trading day period immediately preceding the
exercise date.
**
Lapse of options.
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.
As at 30 June 2024, there were $880,000 (30 June 2023: $nil) of loans from related parties outstanding.
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of Novatti Group Limited under option at the date of this report are as follows:
Exercise
Number
Grant date
Expiry date
price
under option
10 July 2020
1 March 2025
$0.200
375,000
25 November 2020
30 November 2024
$0.270
2,500,000
15 October 2021
15 October 2024
$0.750
1,300,000
20 December 2021
30 November 2025
$0.450
7,000,000
25 January 2022
25 January 2025
$0.330
100,000
5 April 2022
19 April 2025
$0.350
2,325,000
6 July 2022
6 July 2025
$0.250
833,333
6 July 2022
6 July 2025
$0.157
1,666,667
30 September 2022
30 June 2026
$0.250
1,000,000
23 November 2023
30 November 2026
$0.200
13,000,000
13 December 2022
30 June 2026
$0.250
250,000
17 April 2023
17 April 2026
$0.180
1,500,000
13 June 2023
30 June 2027
$0.200
6,750,000
13 June 2023
30 June 2027
$0.000
5,568,182
28 November 2023
30 June 2027
$0.000
9,059,511
28 November 2023
30 June 2027
$0.200
2,700,000
22 February 2024
31 January 2027
$0.095
29,166,667
4 March 2024
31 January 2027
$0.095
6,854,194
18 July 2024
31 January 2027
$0.030
2,750,000
94,698,554
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.
Novatti Group Limited
Directors' report
30 June 2024
39
Shares issued on the exercise of options
There were 1,000,000 ordinary shares of Novatti Group Limited issued on the exercise of options during the year ended 30
June 2024 and up to the date of this report.
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 27 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 27 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 (including independence
standards) 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.
Novatti Group Limited
Directors' report
30 June 2024
40
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
26 September 2024
Level 20, 181 William Street, Melbourne VIC 3000
+61 3 9824 8555
vic.info@williambuck.com
williambuck.com.au
William Buck is an association of firms, each trading under the name of William Buck
across Australia and New Zealand with affiliated offices worldwide.
Liability limited by a scheme approved under Professional Standards Legislation.
Lead Auditor’s Independence Declaration under Section 307C of
the Corporations Act 2001
To the directors of Novatti Group Limited
As lead auditor for the audit of Novatti Group Limited for the year ended 30 June 2024, I declare that, to the
best of my knowledge and belief, there have been:
— no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in
relation to the audit; and
— no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Novatti Group Limited and the entities it controlled during the year.
William Buck Audit (Vic) Pty Ltd
ABN 59 116 151 136
A. A. Finnis
Director
Melbourne 26 September 2024
Novatti Group Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2024
Consolidated
Note
2024
2023
$'000
$'000
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
42
Revenue from continuing operations
5
42,899
38,979
Other income
6
2,945
16,151
Expenses
Administrative and corporate costs
(3,498)
(5,292)
Client hosting fees and other direct services
7
(25,539)
(20,731)
Employee benefits
(22,109)
(25,677)
Foreign currency translation losses
(956)
(69)
Marketing and selling expenses
(494)
(1,037)
Data management expenses
(4,225)
(3,791)
Loss on investments at fair value through profit or loss
12
(2,639)
(15,877)
Vesting charge for share-based payments
35
(1,057)
(2,265)
Gains on embedded derivative - convertible note facility
823
-
Depreciation and amortisation expense
(2,113)
(2,211)
Finance costs
(1,504)
(1,382)
Loss before income tax expense from continuing operations
(17,467)
(23,202)
Income tax expense
(16)
(4)
Loss after income tax expense from continuing operations
(17,483)
(23,206)
Loss after income tax expense from discontinued operations
8
(3,120)
(3,339)
Loss after income tax expense for the year
(20,603)
(26,545)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
186
(238)
Other comprehensive income for the year, net of tax
186
(238)
Total comprehensive income for the year
(20,417)
(26,783)
Loss for the year is attributable to:
Non-controlling interest
(442)
(235)
Owners of Novatti Group Limited
(20,161)
(26,310)
(20,603)
(26,545)
Total comprehensive income for the year is attributable to:
Continuing operations
-
-
Discontinued operations
(399)
(235)
Non-controlling interest
(399)
(235)
Continuing operations
(17,297)
(23,444)
Discontinued operations
(2,721)
(3,104)
Owners of Novatti Group Limited
(20,018)
(26,548)
(20,417)
(26,783)
Novatti Group Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2024
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
43
Cents
Cents
Earnings per share for loss from continuing operations attributable to the
owners of Novatti Group Limited
Basic loss per share
34
(5.081)
(6.880)
Diluted loss per share
34
(5.081)
(6.880)
Earnings per share for loss from discontinued operations attributable to the
owners of Novatti Group Limited
Basic loss per share
34
(0.907)
(0.990)
Diluted loss per share
34
(0.907)
(0.990)
Earnings per share for loss attributable to the owners of Novatti Group Limited
Basic loss per share
34
(5.859)
(7.800)
Diluted loss per share
34
(5.859)
(7.800)
* The above consolidated statement of comprehensive income for the year ended 30 June 2023 has been restated for
discontinued operations. Refer to note 8 for detailed information on Discontinued operations.
Novatti Group Limited
Consolidated statement of financial position
As at 30 June 2024
Consolidated
Note 30 June 2024 30 June 2023
$'000
$'000
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
44
Assets
Current assets
Cash and cash equivalents *
9
5,208
18,215
Trade and other receivables
10
8,623
7,748
Financial assets - funds in trust
11
93,403
92,444
Other current assets
525
1,131
107,759
119,538
Assets of disposal groups classified as held for sale
13
4,357
-
Total current assets
112,116
119,538
Non-current assets
Other investments at fair value through profit and loss
12
166
11,847
Plant and equipment
295
407
Right-of-use assets
353
1,509
Intangible assets
14
6,390
7,904
Security deposits
28
4,537
4,429
Total non-current assets
11,741
26,096
Total assets
123,857
145,634
Liabilities
Current liabilities
Trade and other payables
15
22,801
22,420
Settlement, remittance and visa funds payable
16
93,390
91,629
Borrowings
17
880
-
Lease liabilities
243
271
Contract liabilities
472
286
Employee benefits
19
3,078
3,338
120,864
117,944
Liabilities directly associated with assets classified as held for sale
20
396
-
Total current liabilities
121,260
117,944
Non-current liabilities
Borrowings
17
-
10,500
Lease liabilities
146
1,575
Convertible note facilities
18
2,146
-
Employee benefits
19
64
140
Total non-current liabilities
2,356
12,215
Total liabilities
123,616
130,159
Net assets
241
15,475
Equity
Issued capital
21
91,806
90,686
Reserves
22
5,972
5,401
Accumulated losses
(102,345)
(83,477)
Equity/(deficiency) attributable to the owners of Novatti Group Limited
(4,567)
12,610
Non-controlling interest
23
4,808
2,865
Total equity
241
15,475
* Cash and cash equivalent excludes cash held by International Bank of Australia, which is classified as held for sale
Novatti Group Limited
Consolidated statement of changes in equity
For the year ended 30 June 2024
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
45
Issued
capital
Equity
settled
share-
based
payments
reserve
Foreign
currency
translation
reserve
Accumulated
losses
Total equity
attributable
to owners
of the
company
Non-
controlling
interest
Total
equity
Consolidated
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Balance at 1 July 2022
89,336
4,361
620
(57,676)
36,641
-
36,641
Loss after income tax expense for the year
-
-
-
(26,310)
(26,310)
(235)
(26,545)
Other comprehensive income for the year, net of tax
-
-
(238)
-
(238)
-
(238)
Total comprehensive income for the year
-
-
(238)
(26,310)
(26,548)
(235)
(26,783)
Transactions with owners in their capacity as owners:
Issue of shares on exercise of equity settled share based payment rights
1,098
(1,098)
-
-
-
-
-
Vesting of share-based payments arrangements
-
2,265
-
-
2,265
-
2,265
Expiry of share-based payments
-
(509)
-
509
-
-
-
Issue of shares in lieu of professional services
31
-
-
-
31
-
31
Issue of shares in lieu of staff remuneration
221
-
-
-
221
-
221
Issue of shares in subsidiary to external investor
-
-
-
-
-
3,100
3,100
Balance at 30 June 2023
90,686
5,019
382
(83,477)
12,610
2,865
15,475
Novatti Group Limited
Consolidated statement of changes in equity
For the year ended 30 June 2024
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
46
Issued
capital
Equity
settled
share-
based
payments
reserve
Foreign
currency
translation
reserve
Convertible
note
reserve
Accumulated
losses
Total equity
attributable
to owners
of the
company
Non-
controlling
interest
Total
equity
Consolidated
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Balance at 1 July 2023
90,686
5,019
382
-
(83,477)
12,610
2,865
15,475
Loss after income tax expense for the year
-
-
-
-
(20,161)
(20,161)
(442)
(20,603)
Other comprehensive income for the year, net of tax
-
-
186
-
-
186
-
186
Total comprehensive income for the year
-
-
186
-
(20,161)
(19,975)
(442)
(20,417)
Transactions with owners in their capacity as owners:
Expiry of share-based payments
-
(1,293)
-
-
1,293
-
-
-
Vesting of share-based payments arrangements
-
1,057
-
-
-
1,057
-
1,057
Issue of option on inception of convertible note
-
-
-
681
-
681
-
681
Issue of shares in lieu of professional services
233
-
-
-
-
233
-
233
Issue of shares (net of transaction costs)
823
-
-
-
-
823
-
823
Issue of shares on exercise of options
60
(60)
-
-
-
-
-
-
Conversion of convertible notes into shares
4
-
-
-
-
4
-
4
Issue of shares in subsidiary to external investor
-
-
-
-
-
-
2,385
2,385
Balance at 30 June 2024
91,806
4,723
568
681
(102,345)
(4,567)
4,808
241
Novatti Group Limited
Consolidated statement of cash flows
For the year ended 30 June 2024
Consolidated
Note
2024
2023
$'000
$'000
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
47
Cash flows from operating activities
Receipts from customers (inclusive of GST)
94,453
78,282
Payments to suppliers and employees (inclusive of GST)
(108,638)
(91,708)
Interest received
1,260
668
Receipt of government grants
676
1,921
Interest and other finance costs paid
(1,722)
(1,238)
Dividends received
563
13,511
Income taxes paid
(17)
(43)
Net cash (used in)/from operating activities
33
(13,425)
1,393
Cash flows from investing activities
Payments for plant and equipment
(10)
(35)
Payments for intangible assets
14
(218)
(353)
Payments for security deposits
-
(1,573)
Proceeds from disposal of investment
8,958
-
Net cash from/(used in) investing activities
8,730
(1,961)
Cash flows from financing activities
Proceeds from issue of shares, net of transaction costs
21
823
-
Proceeds from the issue of shares of non-controlling interest
23
2,254
3,100
Proceeds from borrowings
17
2,100
10,500
Borrowings transaction costs
-
(392)
Repayment of borrowings
17
(11,720)
-
Proceeds from issue of convertible note facility
3,500
-
Repayment of convertible notes
-
(40)
Repayment of lease liabilities
(354)
(256)
Net cash (used in)/from financing activities
(3,397)
12,912
Net (decrease)/increase in cash and cash equivalents
(8,092)
12,344
Cash and cash equivalents at the beginning of the financial year
18,215
6,059
Effects of exchange rate changes on cash and cash equivalents
(654)
(188)
Cash and cash equivalents at the end of the financial year *
9
9,469
18,215
* Includes cash and cash equivalents that is classified as held for sale.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
48
Note 1. General information
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’ or 'the consolidated entity') 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 26 September 2024. The
directors do not have the power to amend and reissue the financial statements.
Note 2. Material accounting policy information
The accounting policies that are material to the consolidated entity are set out below. The accounting policies adopted are
consistent with those of the previous financial year, 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.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
Material accounting policy information
The Australian Accounting Standards Board has released guidance on what is considered to be material accounting policy
information. Such material accounting policy information relates to the following:
●
A material change in accounting policy;
●
A choice of accounting policy permitted by Australian Accounting Standards;
●
An accounting policy developed in the absence of an accounting standard that specifically applies; or
●
Transactions, other events or conditions which are complex and the accounting policy information is required in order for
the users of financial statements to understand them.
Consequently, the quantum of accounting policy information disclosed in these financial statements has been reduced from
the previous financial reporting year.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 2. Material accounting policy information (continued)
49
Going concern
The financial statements for the period ended 30 June 2024 have been prepared on the basis that the entity is a going concern,
which contemplates the continuity of normal business activity, realisation of assets and settlement of liabilities in the normal
course of business. During the 12 month period the entity recorded revenue of $42,899,000 (2023: $38,979,000), a net loss
after tax of $20,603,000 (2023: $26,545,000), a net current deficiency of $9,144,000 (2023: net current assets of
$1,594,000) and a net cash outflows from operating activities of $13,425,000 (2023: net inflows of $1,393,000).
The Group’s ability to continue as a going concern is dependent upon its ability to generate positive cash flow from its business
operations. The above matters described indicate that a material uncertainty exists that may cast significant doubt about the
entity’s ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its
liabilities in the normal course of business.
The financial statements have been prepared on the basis that the entity is a going concern, which contemplates the continuity
of normal business activity, realisation of assets and settlement of liabilities in the normal course of business for the following
reasons:
●
The Directors are planning for the business to reduce net operating cash outflows during FY25 by increasing cash
receipts from customers in order to work towards positive future operating cash flow;
●
The Group owns a number of investments that the Group can potentially sell;
●
The entity has historically demonstrated its ability to raise funds to satisfy its cash requirements;
●
Management are actively considering the future capital requirements of the entity and will consider all funding options as
required;
●
The Directors are able and willing to defer amounts owed to them in cash or settle outstanding obligations, including
director fees in equity instruments (subject to shareholder approval if applicable) until such time as the Group has
sufficient working capital to settle the obligations in cash;
●
The Group is undertaking a simplification strategy to extract more value from existing resources rather than adding extra
cost and has the ability to scale back certain activities that are non-essential to existing customers so as to conserve
cash; and
●
Post year end, the Group divested 100% of its remaining interest in the IBOA Group Holdings Pty Ltd raising $$2.87
million in cash. The directors may consider, if required, the sale or dilution of the Group’s interest in other non-core
business assets.
Should the entity not be able to continue as a going concern it may be required to realise its assets and discharge its liabilities
other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements. The
financial report does not include any adjustments relating to the recoverability or classification of recorded asset amounts, nor
the amounts or classification of liabilities that might be necessary should the Group not be able to continue as a going concern.
Basis of preparation
The financial statements have been prepared on an accruals basis and are based on the historical cost convention, except
for the following which is recorded at fair value basis: investments at fair value through profit and loss and deferred
consideration. 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.
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 30.
Principles of consolidation
These are the financial statements of the ‘Company’ and the ‘Group’ as at 30 June 2024.
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:
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 2. Material accounting policy information (continued)
50
●
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.
The financial statements are presented in Australian dollars, which is Novatti Group Limited's functional and presentation
currency.
Revenue recognition
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.
Payments AU/NZ
Acquiring
A service that enables merchants to get paid. Fees are charged at a transactional, integration and monthly level. Fees for
settling up and deploying the service are charged and recognised when the service is provided.
Issuing
Issuing of prepaid and debit Visa cards under licence of Visa. Monthly program fees are charged alongside transactional fees.
Fees for settling up and deploying the service are charged and recognised when the service is provided.
Cross Border
Service provision of cross border payments and global currency accounts to manage foreign exchange. Fees for settling up
and deploying the service and subsequent transactions are charged and recognised when the service is provided.
Novatti Billpay
Enabling payment of Australian invoices directly from a range of Asian digital wallets. Fees for settling up and deploying the
service and subsequent transactions are charged and recognised when the service is provided.
Payments International
Alternative Payments
Revenue from Alternative Payments is a mixture of:
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 2. Material accounting policy information (continued)
51
●
fees for software as a service;
●
fees for the facilitation of top up vouchers;
●
settlement Services of financial transactions; and
●
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.
ATX Payments
ATX provides digital payment services, such as third-party bill and product payments. Fees for settling up and deploying the
service and subsequent transactions are charged and recognised when the service is provided.
Technology Solutions
In this revenue stream the Consolidated Entity:
●
develops, deploys and supports specialised mobile and alternate payment technologies, whereby licence fees are
amortised over the relevant period of contract and professional service revenue is recognised as the service rendered to
the customer; and
●
provisions 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.
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 2024.
Other revenue
Other revenue is recognised at the time it is received or when the right to receive payment is established.
Contract assets
Contract assets includes revenue from the sales of services unbilled as at 30 June 2024.
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.
Discontinued operations
A discontinued operation is a component of the consolidated entity that has been disposed of or is classified as held for sale
and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan
to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The
results of discontinued operations are presented separately on the face of the statement of profit or loss and other
comprehensive income.
Funds in trust and settlement, remittance and visa funds payable
Funds in trust and settlement, remittance and visa funds payable represent funds received from customers for transactions
that have been contracted for but not yet completed. Respective receivables and payables are offset upon completion of the
transactions according to terms agreed between the Group and customers.
Non-current assets or disposal groups classified as held for sale
Non-current assets and assets of disposal groups are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continued use. They are measured at the lower of their carrying
amount and fair value less costs of disposal. For non-current assets or assets of disposal groups to be classified as held for
sale, they must be available for immediate sale in their present condition and their sale must be highly probable.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 2. Material accounting policy information (continued)
52
An impairment loss is recognised for any initial or subsequent write down of the non-current assets and assets of disposal
groups to fair value less costs of disposal. A gain is recognised for any subsequent increases in fair value less costs of disposal
of a non-current assets and assets of disposal groups, but not in excess of any cumulative impairment loss previously
recognised.
Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses
attributable to the liabilities of assets held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of disposal groups classified as held for sale are presented
separately on the face of the statement of financial position, in current assets. The liabilities of disposal groups classified as
held for sale are presented separately on the face of the statement of financial position, in current liabilities.
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
5 years
Customer lists
5 - 10 years
Intellectual Property: Technology - Billing Software
10 years
Brands
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.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 2. Material accounting policy information (continued)
53
Borrowings and convertible notes
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are
subsequently measured at amortised cost using the effective interest method.
The face value of the convertible notes is deemed to be the value of the conversion right (the derivative liability) and residual
debt liability component. The debt liability component of the convertible notes is amortised at each reporting period using the
effective interest method. The derivative liability component is revalued at each reporting date over the life of the convertible
notes.
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.
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.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangible
assets at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may
lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value
less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.
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.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 3. Critical accounting judgements, estimates and assumptions (continued)
54
Assessment of the conversion features of the convertible notes
During the year ended 30 June 2024, the Group issued convertible notes 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.
Research and Development Rebate
The consolidated entity is entitled to claim grant credits from the Australian Government in recompense for its research and
development program expenditure. The program is overseen by AusIndustry, which is entitled to audit and/or review claim
lodged for the past 4 years. In the event of a negative finding from such an audit or review AusIndustry has the right to rescind
and clawback those prior claims, potentially with penalties. Such a finding may only occur in the event that those expenditures
do not appropriately qualify for the grant program. In their estimation, considering also the independent external expertise they
have contracted to draft and claim such expenditures, the Directors of the consolidated entity consider that such a negative
review has a remote likelihood of occurring.
Note 4. Operating segments
Identification of reportable operating segments
The Group is organised into four operating business segments:
(1)
Payments AU/NZ incorporating Payments Acquiring, Card Issuing, Cross Border Payments and Novatti Billpay
(2)
Payments International incorporating ATX Payments (Malaysia) and Flexepin Payments (Europe)
(3)
Technology Solutions incorporating enterprise, automation and billing software
(4)
Investments incorporating several portfolio investments into internal (AUDD Stablecoin) and external businesses
(5)
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
and Management in assessing financial and operating performance and in determining the allocation of resources.
The accounting policies adopted for internal reporting are consistent with those adopted in the financial statements. The
information reported to the Board and management is on at least a monthly basis.
Segment information for the year ended 30 June 2023 has been restated for the change of internal reporting policy adopted
by Board of Directors and Management during the year ended 30 June 2024.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 4. Operating segments (continued)
55
Types of products and services
The principal products and services of each of these operating segments are as follows:
Payments AU/NZ
Acquiring: Enables businesses to accept a wide range of payments online and offline with a
focus on card and digital wallet acceptance.
Issuing: Provides a payment system centred around digital and physical prepaid, gift and debit
cards for a variety of fintechs and commercial enterprises.
Cross Border: provision of cross border payments and global currency accounts to manage
foreign exchange.
Novatti Billpay: enables payment of Australian invoices directly from a range of Asian digital
wallets.
Payments International
Offers customers (1) 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; and (2) Provision of large, established payments network
across Malaysia enabling prepaid top ups and bill payments.
Technology Solutions
Emersion: Automates business processes including customer engagement, billing, collections,
subscription management and embedded payments in the telecommunications industry.
Basis2: provides a technologically advanced billing and CIS solution to service providers in the
utilities industry.
Enterprise software provides general purpose technology supporting implementation of
enterprise specific payment and billing solutions.
Investments
After the full divestment of shareholdings in Reckon and the International Bank of Australia,
the key remaining product investment is AUDD which is an Australian Dollar (A$) backed
stablecoin for facilitating payments, transactions and remittances between businesses and
their customers.
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 2024, the consolidated entity did not transact with any single customer that individually
represented more than 10% of revenues (30 June 2023: nil).
Operating segment information
For the breakdown of operating segment revenue into disaggregated revenue components, refer to note 5.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 4. Operating segments (continued)
56
Payments
AU/NZ
Payments
International
Technology
Solutions
Investments
(excluding
discontinued
operations) Consolidated
Consolidated - 30 June 2024
$'000
$'000
$'000
$'000
$'000
Revenue
Revenue from ordinary activities
13,720
22,239
5,796
1,145
42,899
Other income
677
-
-
-
677
Total revenue
14,397
22,239
5,796
1,145
43,576
EBITDA
(5,465)
2,123
1,641
(386)
(2,087)
Corporate EBITDA*
(10,202)
Income from Dividends
563
Interest Income
1,445
Gain on Lease
260
Foreign currency losses
(956)
Losses in on investments at fair value through
profit or loss
(2,639)
Depreciation and amortisation
(2,113)
Finance Costs
(1,504)
Vesting charge for share-based payments
(1,057)
Gains on embedded derivative - convertible
note facility
823
Loss before income tax expense
(5,465)
2,123
1,641
(386)
(17,467)
Income tax expense
-
-
-
-
(16)
Loss after income tax expense from
continuing operations
(5,465)
2,123
1,641
(386)
(17,483)
Loss from Discontinued Operations
(3,120)
Loss after income tax expense for the year
(5,465)
2,123
1,641
(386)
(20,603)
Foreign currency translation
186
Total comprehensive income for the year,
net tax
(5,465)
2,123
1,641
(386)
(20,417)
Assets
Segment assets
29,000
55,009
2,367
3,453
89,829
Assets held for sale
4,357
Corporate assets
29,671
Total assets
29,000
55,009
2,367
3,453
123,857
Liabilities
Segment liabilities
26,745
53,521
725
2,422
83,413
Liabilities held for sale
396
Corporate liabilities
39,807
Total liabilities
26,745
53,521
725
2,422
123,616
* Corporate overhead is not classified as an operating segment.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 4. Operating segments (continued)
57
Payments
AU/NZ
Payments
International
Technology
Solutions
Investments
(excluding
discontinued
operations) Consolidated
Consolidated - 30 June 2023
$'000
Restated
$'000
Restated
$'000
Restated
$'000
Restated
$'000
Restated
Revenue
Revenue from ordinary activities
10,531
15,631
6,574
6,243
38,979
Other income
870
-
-
-
870
Total revenue
11,401
15,631
6,574
6,243
39,849
EBITDA
(6,909)
(561)
146
2,340
(4,984)
Corporate EBITDA
(11,479)
Income from Dividends
13,511
Interest Income
503
Research and development grants
1,051
Foreign currency losses
(69)
Losses on investments at fair value through
profit or loss
(15,877)
Depreciation and amortisation
(2,211)
Finance Costs
(1,382)
Vesting charge for share-based payments
(2,265)
Loss before income tax expense
(6,909)
(561)
146
2,340
(23,202)
Income tax expense
-
-
-
-
(4)
Loss after income tax expense from
continuing operations
(6,909)
(561)
146
2,340
(23,206)
Loss from Discontinued Operations
(3,339)
Loss after income tax expense for the year
(6,909)
(561)
146
2,340
(26,545)
Foreign currency translation
(238)
Total comprehensive income for the year,
net tax
(6,909)
(561)
146
2,340
(26,783)
Assets
Segment assets
38,648
74,900
4,972
4,602
123,122
Banking assets
5,669
Corporate assets
16,843
Total assets
38,648
74,900
4,972
4,602
145,634
Liabilities
Segment liabilities
37,326
72,727
6,063
1,630
117,746
Banking liabilities
314
Corporate liabilities
12,099
Total liabilities
37,326
72,727
6,063
1,630
130,159
For the breakdown of operating segment revenue into disaggregated revenue components, refer to note 5.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 4. Operating segments (continued)
58
Sales to
external
customers
Sales to
external
customers
Geographical
non-current
assets
Geographical
non-current
assets
30 June 2024 30 June 2023 30 June 2024 30 June 2023
$'000
$'000
Restated
$'000
$'000
Restated
Australia & New Zealand
17,296
10,906
4,563
18,951
Malta
12,662
7,063
-
-
Malaysia
4,245
5,626
7,178
7,145
Brazil
839
5,719
-
-
United States
3,974
2,797
-
-
Others
3,883
6,868
-
-
42,899
38,979
11,741
26,096
Note 5. Revenue
30 June 2024
Timing of revenue
recognition
Services
provided
at point in
time
Services
provided
over time
Consolidated
Sales revenue:
$'000
$'000
$'000
Payments AU/NZ
13,650
-
13,650
Payments International
22,271
-
22,271
Technology Solutions
1,768
4,028
5,796
Investments
1,182
-
1,182
38,871
4,028
42,899
30 June 2023
Timing of revenue
recognition
Services
provided
at point in
time
Services
provided
over time
Consolidated
Sales revenue:
$'000
Restated *
$'000
Restated *
$'000
Restated *
Payments AU/NZ
10,656
-
10,656
Payments International
15,550
-
15,550
Technology Solutions
2,317
4,211
6,528
Investments
6,244
-
6,244
34,767
4,211
38,978
* Revenue information has been restated based on the reassessment of operating segments. Refer to note 4 for details.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
59
Note 6. Other income
Consolidated
2024
2023
$'000
$'000
Government grants
677
1,921
Dividends
563
13,511
Gain on modification of lease
260
-
Interest **
1,445
503
Other
-
216
Other income
2,945
16,151
** The interest income for the year ended 30 June 2023 has been restated for discontinued operations. Refer to note 8 for
detailed information on Discontinued operations.
Note 7. Client hosting fees and other direct services
Consolidated
2024
2023
$'000
$'000
Settlement services
3,074
4,250
Tokenised technology commission
-
2,191
Issuing costs related to program management and Visa
2,525
1,546
Voucher top up, payment and distribution costs associated with the Malaysian subsidiary
3,142
4,108
Cross border settlement costs
1,274
1,559
Hosting and other direct services
15,524
7,077
25,539
20,731
Note 8. Discontinued operations
Description
During the year ended 30 June 2024, followed a strategic review of IBOA, management considered that it is unlikely to
contribute to the Company’s long term financial goals, as such the Company accounted for Novatti B Holding Company Pty
Ltd and Novatti IBA Pty Ltd as discontinued operations and respective assets and liabilities were accounted for under assets
of disposal group classified as held for sale and liabilities directly associated with assets classified as held for sale.
Financial performance information
Consolidated
2024
2023
$'000
$'000
Interest income
167
165
Administrative and corporate costs
(482)
(359)
Employee benefits
(2,363)
(2,588)
Data management expenses
(442)
(557)
Total expenses
(3,287)
(3,504)
Loss before income tax expense
(3,120)
(3,339)
Income tax expense
-
-
Loss after income tax expense from discontinued operations
(3,120)
(3,339)
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 8. Discontinued operations (continued)
60
Cash flow information
Consolidated
2024
2023
$'000
$'000
Net cash used in operating activities
(2,688)
(2,783)
Net cash from investing activities
-
-
Net cash from financing activities
1,616
8,100
Net (decrease)/increase in cash and cash equivalents from discontinued operations
(1,072)
5,317
Note 9. Cash and cash equivalents
Consolidated
30 June 2024 30 June 2023
$'000
$'000
Current assets
Cash at bank
5,208
18,215
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the financial year
as shown in the statement of cash flows as follows:
Balances as above
5,208
18,215
Cash and cash equivalents - classified as held for sale (note 13)
4,261
-
Balance as per statement of cash flows
9,469
18,215
Note 10. Trade and other receivables
Consolidated
30 June 2024 30 June 2023
$'000
$'000
Current assets
Trade and other receivables
8,257
6,573
Less: Allowance for expected credit losses
(26)
(1,506)
8,231
5,067
Contract assets
392
2,681
8,623
7,748
Allowance for expected credit losses
The Consolidated Entity has recognised additional provision of $26,000 (30 June 2023: $1,285,000) in statement of profit or
loss and other comprehensive income in respect of the expected credit losses for the year ended 30 June 2024.
Other than the provision noted above, management are of the opinion that these receivables are reflective of fair value and
should not be impaired.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 10. Trade and other receivables (continued)
61
The ageing of the past due but not impaired trade and other receivables are as follows:
Expected credit loss rate
Carrying amount
Allowance for expected
credit losses
30 June 2024 30 June 2023 30 June 2024 30 June 2023 30 June 2024 30 June 2023
Consolidated
%
%
$'000
$'000
$'000
$'000
Not overdue
-
-
4,711
3,174
-
-
0 to 3 months overdue
-
8%
2,296
1,815
-
(152)
Over 3 months overdue
2%
85%
1,250
1,584
(26)
(1,354)
8,257
6,573
(26)
(1,506)
Note 11. Financial assets - funds in trust
Consolidated
30 June 2024 30 June 2023
$'000
$'000
Current assets
Settlement funds*
30,906
41,800
Remittance funds*
9,958
12,644
Client visa funds*
52,539
38,000
93,403
92,444
* Refer to note 16 Settlement, Remittance and Client visa funds payable
Note 12. Other investments at fair value through profit and loss
Consolidated
30 June 2024 30 June 2023
$'000
$'000
Non-current assets
Investment in Rent Pay Pty Ltd
166
250
Investment in Reckon Limited
-
11,597
166
11,847
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 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 (ASX: RKN) ("Reckon") shares were originally acquired at $1.00 per share. On 16 November 2023, the
Company announced that it had agreed the sale of its 19.9% holding in Reckon Limited (ASX: RKN) ("Reckon") at $0.40 per
share for an aggregate price of $8.9 million and would redeem and fully repay its $10.5 million corporate bond facility.
Note 13. Assets of disposal groups classified as held for sale
Description
During the year ended 30 June 2024, followed a strategic review of IBOA, management considered that it is unlikely to
contribute to the Company’s long term financial goals, as such the Company accounted for Novatti B Holding Company Pty
Ltd and Novatti IBA Pty Ltd as discontinued operations and respective assets and liabilities were accounted for under assets
of disposal group classified as held for sale and liabilities directly associated with assets classified as held for sale.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 13. Assets of disposal groups classified as held for sale (continued)
62
Consolidated
30 June 2024 30 June 2023
$'000
$'000
Current assets
Cash and cash equivalents
4,261
-
Trade and other receivables
95
-
Prepayment
1
-
4,357
-
Note 14. Intangible assets
Consolidated
30 June 2024 30 June 2023
$'000
$'000
Non-current assets
Brand Asset
4,971
4,973
Less: Accumulated amortisation
(1,431)
(939)
3,540
4,034
Intellectual property - at cost
3,178
2,861
Less: Accumulated amortisation
(1,620)
(1,271)
1,558
1,590
Customer Lists
3,853
3,789
Less: Accumulated amortisation
(2,979)
(2,351)
874
1,438
Licences
475
475
Less: Accumulated amortisation
(356)
(261)
119
214
Other intellectual property
53
53
Product development
1,643
1,643
Less: Accumulated amortisation
(1,397)
(1,068)
246
575
6,390
7,904
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 14. Intangible assets (continued)
63
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Brand
Asset
Intellectual
Property
Customer
Lists
Licences
Other
Intangible
Assets
Product
Development
Total
Consolidated
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Balance at 1 July 2022
4,503
1,597
1,959
309
51
903
9,322
Additions
-
273
-
-
-
-
273
Exchange differences
-
-
80
-
2
-
82
Amortisation expense
(469)
(280)
(601)
(95)
-
(328)
(1,773)
Balance at 30 June 2023
4,034
1,590
1,438
214
53
575
7,904
Additions
-
317
-
-
-
-
317
Exchange differences
-
-
(6)
-
-
-
(6)
Amortisation expense
(494)
(349)
(558)
(95)
-
(329)
(1,825)
Balance at 30 June 2024
3,540
1,558
874
119
53
246
6,390
Note 15. Trade and other payables
Consolidated
30 June 2024 30 June 2023
$'000
$'000
Current liabilities
Trade payables
9,344
8,062
Sundry creditors and accrued expenses
13,457
14,358
22,801
22,420
Note 16. Settlement, remittance and visa funds payable
Consolidated
30 June 2024 30 June 2023
$'000
$'000
Current liabilities
Settlement funds payable*
30,893
41,746
Remittance funds payable*
9,958
12,622
Client visa funds payable*
52,539
37,261
93,390
91,629
*Client Funds held for Settlement, Remittance and Visa, refer to note 11 - Financial assets - funds in trust.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
64
Note 17. Borrowings
Consolidated
30 June 2024 30 June 2023
$'000
$'000
Current liabilities
Loans from related parties *
880
-
Non-current liabilities
Bond **
-
10,500
880
10,500
* Unsecured loans from related parties accrue interest at 12% per annum on the principal amount, which will accrue from day
to day. The loans are repayable on demand.
** On 15 August 2022, the Company completed a $10.5 million corporate bond issue to support growth in core payment
processing business and capital for proposed banking business. The bonds are secured over all of the assets and
undertakings of the consolidated entity other than IBOA Group Holdings Pty Ltd and its controlled subsidiaries; and are issued
for a fixed term of five years from the date funds are received by Company, with interest at 90-day BBSW plus 650bps, interest
settled quarterly and there are no equity conversion features with respect to this bond. It was fully repaid during the year ended
30 June 2024.
Refer to note 25 for further information on financial instruments.
Reconciliations of the carrying value at the beginning and end of the current and previous financial year are set out below:
Consolidated
30 June 2024 30 June 2023
$'000
$'000
Opening balance
10,500
-
Issuance of bond
-
10,500
Addition of loans from related parties
2,100
-
Repayment of bond
(10,500)
-
Repayment of loans from related parties
(1,220)
-
Closing balance
880
10,500
Note 18. Convertible note facilities
Consolidated
30 June 2024 30 June 2023
$'000
$'000
Non-current liabilities
Convertible note - host debt liability at amortised cost
1,228
-
Embedded derivative - Convertible note facility
918
-
2,146
-
As at 30 June 2024 the fair value of the embedded derivative is measured using significant unobservable inputs (Level 3
hierarchy). There has been no change in the Group’s valuation process, valuation techniques and types of inputs used in the
fair value measurement at the end of the reporting period in comparison to the methodology upon inception. There have been
no transfers between levels of fair value hierarchy during the period ended 30 June 2024.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 18. Convertible note facilities (continued)
65
30 June 2024
30 June 2023
No.
$'000
No.
$'000
Convertible notes issued during the year
3,500,000
3,500
-
-
Transfer to convertible notes reserve on issue of options
-
(693)
-
-
Transaction costs associated with issue
-
(105)
-
-
Fair value gains on embedded derivative - convertible note
facility into Novatti Group Ltd the parent entity
-
(823)
-
-
Amortisations and accrued interest charged on convertible
notes over the period
-
271
-
-
Conversion of convertible notes into shares during the year
(12,000)
(4)
-
-
Closing balance
3,488,000
2,146
-
-
On 2 January 2024, the Company received binding commitments for the issue of convertible notes ("Notes") in the amount of
$3.5 million, comprising $2.75 million from professional and sophisticated investors and an additional $750,000 from directors
and management. The issue of the Notes occurred over two tranches.
Tranche 1 comprised binding commitments to raise $1.46 million (before costs of the offer) and the Notes were issued on 8
January 2024.
Tranche 2 comprised binding commitments to raise a further $2.04 million (before costs of the offer) and the Notes were
issued on 15 February 2024 following shareholder approval.
The key terms and conditions of the Notes are as follows:
●
Each Note has a face value of $1.00.
●
Each Note attracts a coupon of 10% per annum, payable quarterly in arrears. Noteholders may elect prior to the issue
of the Notes to receive interest either in cash or capitalise accrued interest on a monthly basis.
●
Notes have a maturity date of 22 December 2026.
●
Notes (including any capitalised interest) may be converted by Noteholders into fully paid ordinary shares in the Company
(Shares) at any time up to the maturity date. The conversion price is the lower of 6 cents and the next capital raising
price, subject to a floor price of 4 cents.
●
The Company may not redeem the Notes prior to the maturity date.
●
Notes issued to non-directors and management will be secured by way of a general security agreement with the Company
and share mortgages over three operating subsidiary companies in the Novatti group. Notes issued to directors and
management will be unsecured but otherwise on the same terms.
The Company also issued 29,166,667 options to Noteholders with an exercisable price of 9.5 cents each and expiring on 31
January 2027 ("Options") on 22 February 2024.
Valuation methodology applied in valuing Convertible Notes
Upon issue of the Convertible Notes on 2 January 2024, the Group valued the Convertible Notes using the Black Scholes
option pricing model to determine the value of the embedded derivative. The Black Scholes option pricing model assumes the
option holder will exercise at expiry (i.e. the note will be converted on maturity) to predict the Group’s possible future share
prices to determine the Variable Conversion Price.
Significant unobservable inputs in applying this technique include the Company’s future share price, exercise price, expiry
date and volatility.
A Trinomial option valuation methodology has been used to determine the value of the Options issued to the noteholders.
Refer to note 25 for further information on financial instruments.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
66
Note 19. Employee benefits
Consolidated
30 June 2024 30 June 2023
$'000
$'000
Current liabilities
Annual leave
788
1,261
Long service leave
495
526
Provision for employee-related costs *
1,795
1,551
3,078
3,338
Non-current liabilities
Long service leave
64
140
3,142
3,478
*
The provision for employee-related costs relates to the deferred earn-out milestone payments to the selling shareholders
of ATX on the business achieving agreed performance targets for the two year period ending 31 December 2023.
Note 20. Liabilities directly associated with assets classified as held for sale
Description
During the year ended 30 June 2024, followed a strategic review of IBOA, management considered that it is unlikely to
contribute to the Company’s long term financial goals, as such the Company accounted for Novatti B Holding Company Pty
Ltd and Novatti IBA Pty Ltd as discontinued operations and respective assets and liabilities were accounted for under assets
of disposal group classified as held for sale and liabilities directly associated with assets classified as held for sale.
Consolidated
30 June 2024 30 June 2023
$'000
$'000
Current liabilities
Trade payables
210
-
Other payables
57
-
Employee benefits
129
-
396
-
Note 21. Issued capital
Consolidated
30 June 2024 30 June 2023 30 June 2024 30 June 2023
Shares
Shares
$'000
$'000
Ordinary shares - fully paid
355,750,444
338,656,542
91,806
90,686
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 21. Issued capital (continued)
67
Movements in ordinary share capital
Details
Date
Shares
$'000
Balance
1 July 2022
335,297,521
89,336
Issue of shares to employees
30 September 2022
1,228,000
221
Issue of shares on exercise of options
30 November 2022
1,069,869
330
Issue of shares on exercise of options
13 December 2022
145,905
90
Issue of shares on exercise of options
20 December 2022
690,247
678
Issue of shares in lieu of professional services
11 May 2023
225,000
31
Balance
1 July 2023
338,656,542
90,686
Issue of shares in lieu of professional services
15 January 2024
1,435,526
174
Share purchase plan
4 March 2024
13,708,376
823
Exercise of options on convertible notes
14 March 2024
200,000
4
Issue of shares in lieu of professional services
17 April 2024
1,000,000
60
Issue of shares in lieu of professional services
15 May 2024
750,000
59
Balance
30 June 2024
355,750,444
91,806
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 22. Reserves
Consolidated
30 June 2024 30 June 2023
$'000
$'000
Foreign currency reserve
568
381
Share-based payments reserve
4,723
5,020
Convertible note option reserve
681
-
5,972
5,401
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
68
Note 23. Non-controlling interest
Consolidated
30 June 2024 30 June 2023
$'000
$'000
Issued capital
5,485
3,100
Accumulated losses
(677)
(235)
4,808
2,865
On 25 July 2024, the Company announced that it has entered into a binding agreement with Eurus Capital Pty Ltd for the sale
of 100% of its shares in IBOA Group Holdings Pty Ltd for $2.87 million.
Note 24. Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 25. 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.
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
●
Borrowings
●
Convertible loan 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.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 25. Financial instruments (continued)
69
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 10 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).
The carrying amount of the consolidated entity's foreign currency denominated financial assets and financial liabilities at the
reporting date were as follows:
Assets
Liabilities
30 June 2024 30 June 2023 30 June 2024 30 June 2023
Consolidated
$'000
$'000
$'000
$'000
CAD
4,402
713
(452)
(454)
USD
838
1,687
(799)
(427)
EUR
25,963
71,748
(4,029)
(2,097)
GBP
2
3
(162)
(70)
NZD
26,642
16,570
(37)
(18)
MYR
2,645
3,092
(3,396)
(1,108)
60,492
93,813
(8,875)
(4,174)
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 2024. 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.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 25. Financial instruments (continued)
70
AUD strengthened
AUD weakened
Consolidated - 30 June 2024
% change
Effect on
profit before
tax
$'000
Effect on
equity
$'000
% change
Effect on
profit before
tax
$'000
Effect on
equity
$'000
CAD
5%
(188)
-
5%
208
-
USD
5%
(2)
-
5%
2
-
EUR
5%
(1,044)
-
5%
1,154
-
GBP
5%
8
-
5%
(8)
-
NZD
5%
(1,267)
-
5%
1,400
-
MYR
5%
36
-
5%
(40)
-
(2,457)
-
2,716
-
AUD strengthened
AUD weakened
Consolidated - 30 June 2023
% change
Effect on
profit before
tax
$'000
Effect on
equity
$'000
% change
Effect on
profit before
tax
$'000
Effect on
equity
$'000
CAD
5%
(12)
-
5%
14
-
USD
5%
(60)
-
5%
66
-
EUR
5%
(3,317)
-
5%
3,666
-
GBP
5%
3
-
5%
(4)
-
NZD
5%
(788)
-
5%
871
-
MYR
5%
(94)
-
5%
104
-
(4,268)
-
4,717
-
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.
Investments and embedded derivative are 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)
Level 1
Level 2
Level 3
Total
30 June 2024
$'000
$'000
$'000
$'000
Assets
Shares in unlisted entities
-
166
-
166
Liabilities
Embedded derivatives of convertible note
-
-
918
918
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 25. Financial instruments (continued)
71
Level 1
Level 2
Level 3
Total
30 June 2023
$'000
$'000
$'000
$'000
Assets
Shares in listed entities
11,597
-
-
11,597
Shares in unlisted entities
-
250
-
250
11,597
250
-
11,847
Reconciliation of the fair values at the beginning and end of the current and previous financial year are set out below:
Level 1
Level 2
Level 3
30 June 2024 30 June 2023
30 June
2024
30 June
2023
30 June
2024
30 June
2023
$'000
$'000
$'000
$'000
$'000
$'000
Opening fair value
11,597
27,474
250
250
-
-
Addition of embedded
derivatives of convertible note
-
-
-
-
(1,741)
-
Disposals of investment
(8,958)
-
-
-
-
-
Fair value gains/(losses)
(2,639)
(15,877)
(84)
-
823
-
Closing fair value
-
11,597
166
250
(918)
-
Valuation techniques for fair value measurements categorised within level 2 and level 3
The investments in shares in unlisted entities are Level 2, with the derivation of their value from the last available public
information for trading in the shares of those investments at arms-length terms.
Unobservable inputs used in calculating the embedded derivative classified as level 3 were expected future volatility and the
risk-free rate. The expected future volatility was calculated at 75% and the risk-free rate used was 3.7%.
Embedded derivatives of convertible note
Derivative liability relates to convertible note facility issued on 3 January 2024 (refer note 18 for further details). The conversion
feature on this arrangement has a capped conversion price, the variable price also contains a floor. The existence of these
caps and floors, means that this conversion feature is not considered to be an equity instrument in accordance with AASB
132, as it will not result in a fixed number of shares for fixed consideration. This conversion feature is a derivative and as a
result changes in fair value are recognised through the profit and loss (FVTPL) in accordance with AASB 9. At initial recognition
and subsequent reporting close, the derivative is required to be fair valued. The Black Scholes option pricing model assumes
the option holder will exercise at expiry (i.e. the note will be converted on maturity) to predict the Group’s possible future share
prices to determine the Variable Conversion Price.
Sensitivity analysis
The sensitivity analysis undertaken on the unobservable inputs identified no material impact to the valuation at 30 June 2024.
Unobservable inputs used in calculating the embedded derivative classified as level 3 were expected future volatility and the
risk-free rate. The expected future volatility was calculated at 75% and the risk-free rate used was 3.7%.
There were no transfers between levels during the financial year.
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.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 25. Financial instruments (continued)
72
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 2024, 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
15 for a breakdown of account balances
●
Lease liabilities. Refer to for a summary of the outstanding lease liabilities
●
Borrowings (loan from related parties and bond). Refer to note 17 for details.
●
Convertible note facility. Refer to note 18 for details.
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.
Weighted
average
interest rate
1 year or less
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Remaining
contractual
maturities
Consolidated - 30 June 2024
%
$'000
$'000
$'000
$'000
$'000
Non-derivatives
Non-interest bearing
Trade payables and other
payables
-
22,801
-
-
-
22,801
Interest-bearing - fixed rate
Loan from related parties
12.00%
880
-
-
-
880
Convertible note facilities
10.00%
-
-
1,228
-
1,228
Lease liabilities
5.12%
243
146
-
-
389
Total non-derivatives
23,924
146
1,228
-
25,298
Derivatives
Embedded derivatives of
convertible note
-
-
-
918
-
918
Total derivatives
-
-
918
-
918
Weighted
average
interest rate
1 year or less
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Remaining
contractual
maturities
Consolidated - 30 June 2023
%
$'000
$'000
$'000
$'000
$'000
Non-derivatives
Non-interest bearing
Trade payables and other
payables
-
22,420
-
-
-
22,420
Interest-bearing - variable
Bonds
9.66%
-
-
10,500
-
10,500
Interest-bearing - fixed rate
Lease liabilities
5.21%
271
1,575
1,275
-
3,121
Total non-derivatives
22,691
1,575
11,775
-
36,041
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 25. Financial instruments (continued)
73
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 26. 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)
Killian Murphy (Non-Executive Director)
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:
Mark Healy
Chief Executive Officer
Alan Munday
(Group Chief Operating Officer) (resigned as Group Chief Operating Officer effective 31
August 2023)
Dharshini Mendez
Chief Financial Officer
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated entity
is set out below:
Consolidated
2024
2023
$
$
Short-term employee benefits
1,150,106
1,048,954
Post-employment benefits
101,686
80,938
Long-term benefits
4,371
23,915
Share-based payments
1,026,004
1,895,232
2,282,167
3,049,039
Note 27. Remuneration of auditors
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:
Consolidated
2024
2023
$
$
Audit services - William Buck
Audit or review of the financial statements
173,250
170,500
Other services - William Buck
Taxation and compliance services
23,093
17,600
Other assurance services
13,200
36,500
36,293
54,100
209,543
224,600
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
74
Note 28. 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 Principal License; b) the Currency Cloud
float; and c) Visa Collateral.
As a Principal License holder for Visa Prepaid/Debit Issuing, Novatti can provide services to clients for both Visa BIN
Sponsorship and Visa Program Management. Visa requires the member to maintain a Collateral account which is held in trust
at a Visa nominated to settle all debts to merchants and any monies owed to issuers and their Visa Prepaid cardholders.
In addition, Novatti requires BIN Sponsors and/or Program Manager mandates, as part of the client contract, that the client
maintains a minimum of their 6 days Visa Settlement total in a bank account (held in Trust For the client) with the Visa
Settlement Bank (Australia ANZ and NZ ASB). This assures that the Visa daily settlement process is, and can be funded by
the client directly.
Alternatively, if a client does not agree to maintaining a float account Novatti will Direct Debit from the client’s nominated
corporate bank account to directly fund settlement daily. If this method is agreed the client is required to deposit a Security
Deposit to an In-Trust-For (ITF) account with Novatti.
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 2024 and 30 June 2023.
Note 29. Related party transactions
Parent entity
Novatti Group Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 31.
Key management personnel
Disclosures relating to key management personnel are set out in note 26 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 related parties
As at 30 June 2024 and 30 June 2023, loans from related parties are set out in the below table:
Consolidated
30 June 2024 30 June 2023
$
$
Coolbawn Crispen Pty Ltd
240,000
-
Naley Pty Ltd
240,000
-
Corangamite Pty Ltd
400,000
-
880,000
-
Disclosures relating to loans from related parties are set out in note 17.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
75
Note 30. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Parent
2024
2023
$'000
$'000
Loss after income tax
(5,467)
(7,958)
Total comprehensive income
(5,467)
(7,958)
Statement of financial position
Parent
30 June 2024 30 June 2023
$'000
$'000
Total current assets
107,352
84,985
Total assets
139,348
127,528
Total current liabilities
59,100
36,340
Total liabilities
61,246
82,820
Net assets
78,102
44,708
Equity
Issued capital
91,806
90,686
Foreign currency reserve
-
534
Share-based payments reserve
4,813
5,538
Convertible note option reserve
681
-
Accumulated losses
(19,198)
(52,050)
Total equity
78,102
44,708
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 and Adelaide. As at 30 June 2024, this totalled $83,010 (2023:
$83,010) for Melbourne office and $5,940 for the Adelaide office. No other prepaid deposit exists.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2024 (30 June 2023: Nil).
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2024 (30 June 2023: Nil).
Material accounting policy information
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.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
76
Note 31. 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:
Ownership interest
Principal place of business /
30 June 2024 30 June 2023
Name
Country of incorporation
%
%
Novatti Pty Ltd
Australia
100.0%
100.0%
Flexe Payments Pty Ltd
South Africa
100.0%
100.0%
Flexe Payments (AUS) Pty Ltd
Australia
100.0%
100.0%
Flexe Payments (MLT) Ltd
Malta
100.0%
100.0%
Flexe Payments (UK) Ltd
United Kingdom
100.0%
100.0%
Novatti Commerce Solutions Inc.
Canada
100.0%
100.0%
Novatti Commerce Solutions (MLT) Ltd
Malta
100.0%
100.0%
Novatti Technologies Ltd
United Kingdom
100.0%
100.0%
Novatti Inc.
United States of America
100.0%
100.0%
Vasco Pay Pty Ltd
Australia
100.0%
100.0%
IBOA Group Holdings Pty Ltd
Australia
80.5%
90.7%
International Bank of Australia Pty Limited
Australia
80.5%
90.7%
Intella Payments Pty Ltd
Australia
49.0%
49.0%
Novatti Acquiring Holdings Pty Ltd
Australia
100.0%
100.0%
Novatti Acquiring Services (AUS) Pty Ltd
Australia
100.0%
100.0%
Novatti Acquiring Services (NZ) Pty Ltd
New Zealand
100.0%
100.0%
Novatti Tech Europe Ltd
Cyprus
100.0%
100.0%
Novatti Emersion Inc.
United States of America
100.0%
100.0%
ATX Fintech Holding Sdn Bhd
Malaysia
100.0%
100.0%
Novatti Global Services Pty Ltd
Australia
100.0%
100.0%
Emavilis Holdings Limited
Cyprus
100.0%
100.0%
Nisaki Holding Limited
Cyprus
100.0%
100.0%
China Payments Services Pty Ltd
Australia
100.0%
100.0%
Novatti Singapore Services Pte Ltd
Singapore
100.0%
100.0%
AUDC Pty Ltd
Australia
78.4%
100.0%
Novatti Transactions and Technology International Ltd
Cyprus
65.0%
65.0%
Flexewallet Pty Ltd
Australia
100.0%
100.0%
Flexewallet (NZ) Ltd
New Zealand
100.0%
100.0%
Novatti (Malaysia) Sdn Bhd
Malaysia
100.0%
100.0%
Note 32. Events after the reporting period
On 25 July 2024, the Company announced that it had entered into a binding agreement with Eurus Capital Pty Ltd for the sale
of 100% of its shares in IBOA Group Holdings Pty Ltd for $2.87 million. The sale was completed on 30 July 2024.
No other matter or circumstance has arisen since 30 June 2024 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.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
77
Note 33. Reconciliation of loss after income tax to net cash (used in)/from operating activities
Consolidated
2024
2023
$'000
$'000
Loss after income tax expense for the year
(20,603)
(26,545)
Adjustments for:
Depreciation and amortisation
2,113
2,211
Share-based payments
1,057
2,265
Modification of lease
(260)
-
Unrealised foreign exchange (gain)/loss
956
69
(Gain)/loss on convertible notes
(823)
-
Movement of allowance for expected credit losses
26
1,285
Non-cash finance charges
271
144
Gain on investments at fair value through profit or loss
2,639
15,877
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
(354)
32
Decrease/(increase) in prepayments
606
(203)
Increase in trade and other payables
2,218
6,207
Decrease in provision for income tax
-
(39)
Increase/(decrease) in employee benefits
(1,457)
602
(Decrease)/increase in contract liabilities
186
(512)
Net cash (used in)/from operating activities
(13,425)
1,393
Note 34. Loss per share
Consolidated
2024
2023
$'000
$'000
Earnings per share for loss from continuing operations
Loss after income tax attributable to the owners of Novatti Group Limited
(17,483)
(23,206)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
344,101,532
337,310,860
Weighted average number of ordinary shares used in calculating diluted earnings per share
344,101,532
337,310,860
Cents
Cents
Basic loss per share
(5.081)
(6.880)
Diluted loss per share
(5.081)
(6.880)
Consolidated
2024
2023
$'000
$'000
Earnings per share for loss from discontinued operations
Loss after income tax attributable to the owners of Novatti Group Limited
(3,120)
(3,339)
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 34. Loss per share (continued)
78
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
344,101,532
337,310,860
Weighted average number of ordinary shares used in calculating diluted earnings per share
344,101,532
337,310,860
Cents
Cents
Basic loss per share
(0.907)
(0.990)
Diluted loss per share
(0.907)
(0.990)
Consolidated
2024
2023
$'000
$'000
Earnings per share for loss
Loss after income tax
(20,603)
(26,545)
Non-controlling interest
442
235
Loss after income tax attributable to the owners of Novatti Group Limited
(20,161)
(26,310)
Number
Number
Weighted average number of ordinary shares used in calculating basic loss per share
344,101,532
337,310,860
Weighted average number of ordinary shares used in calculating diluted loss per share
344,101,532
337,310,860
Cents
Cents
Basic loss per share
(5.859)
(7.800)
Diluted loss per share
(5.859)
(7.800)
As at 30 June 2024, the Group has 55,927,693 unlisted options on issue (30 June 2023: 56,743,184) and 36,020,861 listed
options (30 June 2023: nil). These options are considered to be non-dilutive whilst the Group is in a loss position.
Note 35. Share-based payments
Options issued under employee share option plan
A share option plan has been established by the Group and approved by shareholders at a general meeting, whereby the
Group may, at the discretion of the Board, grant options over ordinary shares in the Company to certain key management
personnel and staff of the Group.
The Employee Share Option Plan is designed to provide long-term incentives for Senior Management (including Directors)
and staff to deliver long-term shareholder returns. Options are issued for nil consideration and are granted in accordance with
performance guidelines established by the Board.
The options granted during the year ended 30 June 2024 were calculated based on the Black-Scholes model or Binomial
model method of calculation for share-based payments.
The following share-based payment arrangements were in existence during the current financial year and are supported by
the table below.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 35. Share-based payments (continued)
79
Grant date Expiry date
Service /
Market
conditions
Exercise
price ($)
Balance at
the start of
the period
Granted
Exercised
Expired /
Forfeited /
other
Balance at
the end of
the period
25/11/2019
30/11/2023
Market
$0.20
3,000,000
-
-
(3,000,000)
-
10/07/2020
10/07/2023
Service
$0.20
750,000
-
-
(750,000)
-
10/07/2020
01/03/2024
Service
$0.20
375,000
-
-
(375,000)
-
10/07/2020
01/03/2025
Service
$0.20
375,000
-
-
-
375,000
26/10/2020
26/10/2023
Service
$0.30
1,000,000
-
-
(1,000,000)
-
25/11/2020
30/11/2024
Market
$0.27
2,500,000
-
-
-
2,500,000
22/12/2020
22/12/2023
None
$0.28
2,700,000
-
-
(2,700,000)
-
22/12/2020
14/10/2023
Service
$0.30
2,000,000
-
-
(2,000,000)
-
08/02/2021
08/02/2024
Service
$0.30
200,000
-
-
(200,000)
-
05/04/2021
05/04/2024
Service
$0.30
300,000
-
-
(300,000)
-
07/04/2021
07/04/2024
Service
$0.60
100,000
-
-
(100,000)
-
05/05/2021
05/05/2024
Service
$0.75
100,000
-
-
(100,000)
-
31/05/2021
31/05/2024
Service
$0.75
400,000
-
-
(400,000)
-
15/10/2021
15/10/2024
Service
$0.50
800,002
-
-
(600,002)
200,000
15/10/2021
15/10/2024
Service
$0.75
1,400,000
-
-
(300,000)
1,100,000
20/12/2021
30/11/2025
Market
$0.45
7,000,000
-
-
-
7,000,000
25/01/2022
25/01/2025
Service
$0.33
300,000
-
-
(200,000)
100,000
05/04/2022
19/04/2025
Service
$0.35
2,375,000
-
-
(50,000)
2,325,000
06/07/2022
06/07/2025
Service
$0.25
833,333
-
-
-
833,333
06/07/2022
06/07/2025
Service
$0.16
1,666,667
-
-
-
1,666,667
30/09/2022
30/06/2026
None
$0.25
1,000,000
-
-
-
1,000,000
23/11/2023
30/11/2026
Market
$0.20
13,000,000
-
-
- 13,000,000
13/12/2022
30/06/2026
None
$0.25
250,000
-
-
-
250,000
17/04/2023
17/04/2026
Service
$0.18
1,500,000
-
-
-
1,500,000
13/06/2023
30/06/2027
Market /
Service
$0.20
6,750,000
-
-
-
6,750,000
13/06/2023
30/06/2027
Service
$0.00
5,568,182
-
-
-
5,568,182
28/11/2023
30/06/2027
Service
$0.00
-
5,159,377
-
-
5,159,377
28/11/2023
30/06/2027
None
$0.00
-
3,900,134
-
-
3,900,134
28/11/2023
30/06/2027
Market /
Service
$0.20
-
2,700,000
-
-
2,700,000
56,243,184 11,759,511
-
(12,075,002) 55,927,693
Weighted average exercise price
$0.255
$0.046
$0.000
$0.304
$0.201
The weighted average remaining contractual life of options outstanding at the end of the financial year was 2.23 years (2023:
2.49 years).
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
Share price at
grant date
Exercise
price
Barrier price
Expected
volatility
Dividend
yield
Risk-free
interest rate
Fair value
at grant
date
$
$
$
%
%
%
$
28/11/2023 30/06/2027
0.08
0.20
0.50
80.00
nil
4.21
0.025
28/11/2023 30/06/2027
0.08
0.20
0.75
80.00
nil
4.21
0.016
28/11/2023 30/06/2027
0.08
0.20
1.00
80.00
nil
4.21
0.010
28/11/2023 30/06/2027
0.08
0.00
0.00
0.00
nil
0.00
0.082
These options have different tranches with different vesting periods.
Novatti Group Limited
Notes to the consolidated financial statements
30 June 2024
Note 35. Share-based payments (continued)
80
Options issued for professional services rendered
On 12 January 2024, the Company issued 1,000,000 unlisted options for professional services rendered.
These options were valued using Black-Scholes valuation model.
Set out below are summaries of options granted in lieu of professional services rendered:
Balance at
Expired/
Balance at
30 June 2024
Exercise
the start of
forfeited/
the end of
Grant date
Expiry date
price
the year
Granted
Exercised
other
the year
01/10/2021
31/12/2023
$0.66
500,000
-
-
(500,000)
-
12/01/2024
30/06/2027
$0.04
-
1,000,000
(1,000,000)
-
-
500,000
1,000,000
(1,000,000)
(500,000)
-
Options issued from the issue of convertible note and share purchase plan not under accounted for under AASB 2
On 22 February 2024, the Company issued 29,166,667 options to Noteholders with an exercisable price of 9.5 cents each
and expiring on 31 January 2027. A Trinomial option valuation methodology has been used to determine the value of the
Options issued to the noteholders.
On 4 March 2024, the Company issued 6,854,194 options from share purchase plan with an exercisable price of 9.5 cents
each and expiring on 31 January 2027.
For the options issued to Noteholders 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
Share price at
grant date
Exercise
price
Expected
volatility
Dividend yield
Risk-free
interest rate
Fair value at
grant date
$
$
%
%
%
$
22/02/2024
31/01/2027
0.064
0.095
75.00%
Nil
3.70%
0.024
22/02/2024
31/01/2027
0.056
0.095
75.00%
NIl
3.76%
0.024
Novatti Group Limited
Consolidated entity disclosure statement
As at 30 June 2024
81
Place formed /
Ownership
interest
Entity name
Entity type
Country of incorporation
%
Tax residency
Novatti Group Limited
Body Corporate
Australia
-
Australia
Novatti Pty Ltd
Body Corporate
Australia
100.00% Australia
Flexe Payments Pty Ltd
Body Corporate
South Africa
100.00% South Africa
Flexe Payments (AUS)
Pty Ltd
Body Corporate
Australia
100.00% Australia
Flexe Payments (MLT) Ltd Body Corporate
Malta
100.00% Malta
Flexe Payments (UK) Ltd Body Corporate
United Kingdom
100.00% United Kingdom
Novatti Commerce
Solutions Inc.
Body Corporate
Canada
100.00% Canada
Novatti Commerce
Solutions (MLT) Ltd
Body Corporate
Malta
100.00% Malta
Novatti Technologies Ltd
Body Corporate
United Kingdom
100.00% United Kingdom
Novatti Inc.
Body Corporate
United States of America
100.00% United States of America
Vasco Pay Pty Ltd
Body Corporate
Australia
100.00% Australia
IBOA Group Holdings Pty
Ltd
Body Corporate
Australia
80.49% Australia
International Bank of
Australia Pty Limited
Body Corporate
Australia
80.49% Australia
Intella Payments Pty Ltd
Body Corporate
Australia
49.00% Australia
Novatti Acquiring Holdings
Pty Ltd
Body Corporate
Australia
100.00% Australia
Novatti Acquiring Services
(AUS) Pty Ltd
Body Corporate
Australia
100.00% Australia
Novatti Acquiring Services
(NZ) Pty Ltd
Body Corporate
New Zealand
100.00% New Zealand
Novatti Tech Europe Ltd
Body Corporate
Cyprus
100.00% Cyprus
Novatti Emersion Inc.
Body Corporate
United States of America
100.00% United States of America
ATX Fintech Holding Sdn
Bhd
Body Corporate
Malaysia
100.00% Malaysia
Novatti Global Services
Pty Ltd
Body Corporate
Australia
100.00% Australia
Emavilis Holdings Limited Body Corporate
Cyprus
100.00% Cyprus
Nisaki Holding Limited
Body Corporate
Cyprus
100.00% Cyprus
China Payments Services
Pty Ltd
Body Corporate
Australia
100.00% Australia
Novatti Singapore
Services Pte Ltd
Body Corporate
Singapore
100.00% Singapore
AUDC Pty Ltd
Body Corporate
Australia
78.43% Australia
Novatti Transactions and
Technology International
Ltd
Body Corporate
Cyprus
65.00% Cyprus
Flexewallet Pty Ltd
Body Corporate
Australia
100.00% Australia
Flexewallet (NZ) Ltd
Body Corporate
New Zealand
100.00% New Zealand
Novatti (Malaysia) Sdn
Bhd
Body Corporate
Malaysia
100.00% Malaysia
Novatti Group Limited
Consolidated entity disclosure statement
As at 30 June 2024
82
Basis of preparation
This Consolidated entity disclosure statement (CEDS) has been prepared in accordance with the Corporations Act 2001 and
includes information for each entity that was part of the Consolidated entity as at the end of the financial year in accordance
with AASB 10 Consolidated Financial Statements.
Determination of tax residency
Section 295 (3A)(vi) of the Corporation Act 2001 defines tax residency as having the meaning in the Income Tax Assessment
Act 1997. The determination of tax residency involves judgement as there are different interpretations that could be adopted,
and which could give rise to a different conclusion on residency.
In determining tax residency, the Consolidated entity has applied the following interpretations:
Australian tax residency
The Consolidated entity has applied current legislation and judicial precedent, including having regard to the Tax
Commissioner's public guidance in Tax Ruling TR 2018/5.
Foreign tax residency
Where necessary, the Consolidated entity has used independent tax advisers in foreign jurisdictions to assist in its
determination of tax residency to ensure applicable foreign tax legislation has been complied with (see section 295(3A)(vii) of
the Corporations Act 2001). None of the group entities are foreign tax residents.
Partnerships and Trusts
None of the entities noted above were trustees of trusts within the Consolidated entity, partners in a partnership within the
Consolidated entity or participants in a joint venture within the Consolidated entity.
Novatti Group Limited
Directors' declaration
30 June 2024
83
In the directors' opinion:
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
●
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 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 2024 and of its performance for the financial year ended on that date;
●
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable; and
●
the information disclosed in the attached consolidated entity disclosure statement is true and correct.
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
26 September 2024
Level 20, 181 William Street, Melbourne VIC 3000
+61 3 9824 8555
vic.info@williambuck.com
williambuck.com.au
William Buck is an association of firms, each trading under the name of William Buck
across Australia and New Zealand with affiliated offices worldwide.
Liability limited by a scheme approved under Professional Standards Legislation.
Independent auditor’s report to the members of Novatti Group
Limited
Report on the audit of the financial report
Our opinion on the financial report
In our opinion, the accompanying financial report of Novatti Group Limited (the Company) and its
subsidiaries (the Group) is in accordance with the Corporations Act 2001, including:
— giving a true and fair view of the Group’s financial position as at 30 June 2024 and of its financial
performance for the year then ended; and
— complying with Australian Accounting Standards and the Corporations Regulations 2001.
What was audited?
We have audited the financial report of the Group, which comprises:
— the consolidated statement of financial position as at 30 June 2024,
— the consolidated statement of profit or loss and other comprehensive income for the year then ended,
— the consolidated statement of changes in equity for the year then ended,
— the consolidated statement of cash flows for the year then ended,
— notes to the financial statements, including material accounting policy information,
— the consolidated entity disclosure statement, and
— the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the financial report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of
the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related to going concern
We draw attention to Note 2 in the financial report, which indicates that the Group incurred a net loss of
$20,603,000 during the year ended 30 June 2024 and, as of that date, the Group’s current liabilities
exceeded its current assets by $9,144,000. As stated in Note 2, these events or conditions, along with other
matters as set forth in Note 2, indicate that a material uncertainty exists that may cast significant doubt on
the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going
Concern section, we have determined that the following matters described below to be the key audit
matters to be communicated in our report:
Convertible notes Area of focus
(refer also to notes 2, 3 & 18)
During the year, the Group entered
into a convertible note arrangement
with sophisticated investors, directors
and management raising a total of
$3.5 million.
On review of the conversion features,
it was determined that there was a
value associated to the host liability
and additionally a value associated
with the embedded derivative which is
accounted for at fair value through the
statement of profit or loss and other
comprehensive income. As part of
the note issue 29.16 million share
options were also issued to the
Noteholders.
The accounting for the convertible
notes and related derivatives is a key
audit matter due to the complex
nature, including judgemental
estimates used in determining the
valuation of the convertible notes at
initial recognition, and at year end.
How our audit addressed the
key audit matter
Our procedures focused on the
appropriateness of the accounting
treatment as well as the judgements
made in determining the valuation
methodology. Our procedures
included, amongst others:
— Assessing the requirements of
AASB 9 Financial Instruments and
AASB 132 Financial instruments:
Presentation to consider whether the
convertible debt was appropriately
recognised as a hybrid arrangement.
— Utilising an external valuation
specialist to assist with assessing
the reasonableness of the valuation
method and model used to value the
embedded derivative and options
including the key inputs into the
model and the resulting valuation
amounts recognised by
management;
— Assessing the accuracy of the
calculation of the interest expense;
and
— Involving our technical accounting
specialists to assist in considering
the appropriateness of the adopted
accounting treatment.
We also considered the adequacy of
the Group’s disclosures in the notes to
the financial report.
Revenue
recognition
Area of focus
(refer also to notes 2, 3 & 5)
Consistent with the prior year the
Group continues to enter into
agreements with new trading partners
for generating new sources of
revenue within the following operating
segments:
— Payments AU/NZ
— Payments international (including
ATX)
— Technology solutions
— Investments
Each revenue stream requires a
bespoke revenue recognition model
to ensure that revenue is only
recognised:
a) when a performance milestone is
achieved;
b) can be reliably measured; and
c) there is a low likelihood for dispute
by the customer for revenues that
are recognised which are beyond
that originally scoped at the
inception of the engagement.
This matter was considered a Key
Audit Matter due to the complexity of
revenue arrangements, managements
reassessment of the segments during
the year and judgement involved when
estimating the progress towards
milestones.
How our audit addressed the
key audit matter
Our audit procedures included:
— Determining whether revenue
recognised is in-compliance with
the Group’s accounting policies
and AASB 15 Revenue from
Contracts with Customers;
— Analysing managements
determination of operating
segments was in accordance with
AASB 8 – Operating Segments,
including the change made during
the year;
— Identifying and verifying the
achievement of performance
milestones and recognition of
revenue relative to the accretion
of that achievement;
— Agreeing revenue streams to a
sample of underlying contracts
with third parties;
— Examining the existence of
revenue, both by testing to
contract, invoicing and to
subsequent receipt of the revenue
from the customer; and
— Analytically reviewing the
reasonableness of accrued
revenue and billings-in-advance
accounts.
We also assessed the
appropriateness of disclosures
attached to revenues, particularly
those mandatorily required by the
Australian Accounting Standard,
AASB 15 Revenue from Contracts
with Customers.
Share based
payments
Area of focus
(refer also to notes 2, 3 & 35)
The Group currently has options
issued to employees, key
management personnel and other
contracting parties through share-
based payment arrangements in
accordance with AASB 2 Share-
based Payment.
These options include both market
and non-market vesting criteria,
including:
— Service (employment) conditions;
— Market-based performance
conditions; and
— Other non-market performance
conditions.
The valuation of such options requires
significant judgement and expertise,
particularly in determining the
likelihood of achieving the market-
based conditions and satisfying all
non-market conditions.
The Group engages independent
specialists to appraise the fair value
of its share-based payment
arrangements that involve market-
based conditions and assessment of
satisfying non-market conditions.
This matter was considered a Key
Audit Matter due to the complexity of
arrangements and judgement applied
in valuing the share-based payments.
How our audit addressed the
key audit matter
Our audit procedures included:
— Agreeing the material terms and
conditions of any new share-
based payment arrangement to
plan documentation;
— Examining the share-based
payment arrangements to
determine the appropriateness of
identifying each share-based
payment arrangement, including
assessment of the grant date;
— Examining the appropriateness of
the amortisation model for
accreting share-based payment
expense to the profit or loss over
the vesting period;
— Assessing support for likely
outcome of vesting conditions
used to value share-based
payments;
— Assessing support for satisfaction
of achieving non-market
conditions which are not market
conditions; and
— Assessed the competence and
qualification of management’s
specialist.
We also assessed the adequacy of
disclosures in relation to the share
options in the Remuneration Report
and notes to the financial report.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2024, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Discontinued
operations and
assets held for
sale
Area of focus
(refer also to notes 2, 3, 8, 13
& 20)
Prior to 30 June 2024 the Group
determined that the sale of its banking
division (IBOA”) was highly probable
Post 30 June 2024 it was announced
that a sale of the IBOA was
completed with Eurus Capital Pty Ltd
purchasing 100% of Novatti’s
shareholding.
Due to the significance of the
transaction to the Group’s financial
position and performance this matter
was considered a key audit matter.
How our audit addressed the
key audit matter
Our audit procedures included:
— Verified that the accounting
treatment of the transaction,
including presentation and
disclosure was in accordance with
the accounting standards and
assessing whether the criteria to be
classified as held for sale, as well
as needing to be presented as a
discontinued operation has been
satisfied; and
— Verified that the sale transaction,
which was completed post year end
was highly probable, through
discussions with management and
review of the Group’s Board
meeting minutes and other
documentation to confirm the sales
process.
We have also assessed the
adequacy of disclosures in the notes
to the financial report.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of:
— the financial report (other than the consolidated entity disclosure statement) that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001; and
— the consolidated entity disclosure statement that is true and correct in accordance with the Corporations
Act 2001, and
for such internal control as the directors determine is necessary to enable the preparation of:
— the financial report (other than the consolidated entity disclosure statement) that gives a true and fair
view and is free from material misstatement, whether due to fraud or error; and
— the consolidated entity disclosure statement that is true and correct and is free of misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with the Australian Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Our opinion on the Remuneration Report
In our opinion, the Remuneration Report of Novatti Group Limited, for the year ended 30 June 2024,
complies with section 300A of the Corporations Act 2001.
What was audited?
We have audited the Remuneration Report included in of the directors’ report for the year ended 30 June
2024.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
William Buck Audit (Vic) Pty Ltd
ABN 59 116 151 136
A. A. Finnis
Director
Melbourne, 26 September 2024.
Novatti Group Limited
Shareholder information
30 June 2024
91
The shareholder information set out below was applicable as at 13 September 2024.
Ordinary shares
Number of
holders of
ordinary
shares
Number of
ordinary
shares
% of ordinary
shares
1 to 1,000
191
106,929
0.02
1,001 to 5,000
1,023
2,906,475
0.82
5,001 to 10,000
536
4,332,606
1.22
10,001 to 100,000
1,212
44,143,888
12.41
100,001 and over
380
304,260,546
85.53
3,342
355,750,444
100.00
Holding less than a marketable parcel
651
902,594
0.25
Number
of holders
Number
of
of
%
Unquoted options
unquoted
options
unquoted
options
unquoted
options
5,001 to 10,000
7
600,000
1.07
10,001 to 100,000
20
55,327,693
98.93
27
55,927,693
100.00
Convertible notes
Number of
holders of
convertible
notes
Number of
convertible
notes
% of
convertible
notes
5,001 to 10,000
1
9,191
0.26
10,001 to 100,000
10
490,809
14.07
100,001 and over
9
2,988,000
85.67
20
3,488,000
100.00
Quoted options
Number of
holders of
quoted
options
Number of
quoted
options
% of quoted
options
10,001 to 100,000
100
4,387,449
11.32
100,001 and over
52
34,383,412
88.68
152
38,770,861
100.00
Novatti Group Limited
Shareholder information
30 June 2024
92
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
13
September
2024
Number of
Ordinary
Shares Held
%
1
BRAYTER LIMITED
46,631,507
13.11%
2
CITICORP NOMINEES PTY LIMITED
16,105,532
4.53%
3
CORANGAMITE PTY LTD (LAKE CORANGAMITE A/C)
13,174,571
3.70%
4
XIADI CHEN
12,500,000
3.51%
5
MADAM QING LI
10,407,452
2.93%
6
KONGS ACCOUNTING & TAXATION PTY LTD
4,640,000
1.30%
7
SAAB INDUSTRIES PTY LTD
4,500,000
1.26%
8
MR FREEMAN XIN WANG (AFU FAMILY A/C)
4,111,904
1.16%
9
PORTMAN TRADING PTY LIMITED
3,909,092
1.10%
10 KAPAU ENTERPRISES PTY LTD (DUNDAS INVESTMENT A/C)
3,691,183
1.04%
11 SEALEX PTY LTD (THE SEAL A/C)
3,572,116
1.00%
12 JINGTIAN LI
3,571,428
1.00%
13 DASISTAS PTY LTD (DASISTAS SUPER FUND A/C)
3,499,071
0.98%
14 MR PEI LI
3,400,000
0.96%
15 NETWEALTH INVESTMENTS LIMITED (WRAP SERVICES A/C)
3,365,327
0.95%
16 MR ANDREW JONATHAN HEENEY
3,285,714
0.92%
17 RISING UPSTARTS PTY LTD
3,200,000
0.90%
18 MOORGATE INVESTMENTS PTY LTD
3,127,273
0.88%
19 MR ZHIYU NING
3,100,000
0.87%
20 BNP PARIBAS NOMINEES PTY LTD (IB AU NOMS RETAILCLIENT)
3,016,760
0.85%
Total
152,808,930
42.95%
Total issued capital
355,750,444 100.00%
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
There are no substantial holders in the Company.
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
There are no securities subject to voluntary escrow.
Use of funds
Since admission, the Company has used its cash in a way consistent with business objectives.